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[quote]QUOTE: Originally posted by Mark_W._Hemphill Jay: Look at it the other way around: Rail rates (as well as logistics cost as a whole) have a great deal to do with moving manufacturing offshore, because they are so *low.* High rail rates encourages manufacturing to be located very close to the point of consumption. Low rail rates encourages manufacturing to be located in low-cost places, even those at a great distance from the point of consumption. Those who want even lower rail rates than we already have would encourage the offshoring of even more things that are still manufactured in the U.S. of A. [/quote] Mark, Do you have a source for that theory, because it seems out of kilter with the basic rail transportation picture in the U.S. Don't forget, back here in the States we have a two-pronged rail system, one with captive shippers and one with at least duopoly-style competition. Most new rail dependent manufacturing dedicated to staying in the U.S. are opting for locations with competitive rail rates rather than locations that are captive to one rail system, all other things being equal. That's not suprising, given that captive rail rates can be double the rates of competitive rail rates. It's just that so many plants still operating in the U.S. were sited at a time when differential pricing was either not yet in existence or in it's tenative infancy. Most captive shippers now rue the day they chose their particular locations, but there's not much they can do about it given the investments already in place. Most captive shippers are U.S. producers for the export and domestic market. Hardly any importers are subject to rail captivity, and most of the big consumer markets in the U.S. are located in areas where at least two Class I's are competing. I think you are putting the cart before the horse in saying lower rail rates leads to manufacturing flight. It is differential pricing/captive rail rates that are the topical reason manufacturers/producers are leaving or shutting down. Since all overseas importers are free of rail captivity, whatever incentive for locating overseas would not be bolstered in any way by the U.S. rail system converting to OA. To state it again for posterity - overseas importers are already free of U.S. rail captivity. One cannot make them more free of captivity via OA. Rather OA provides a way for currently captive U.S. producers to better compete with imports in the domestic market as well as bolster U.S. exporters in the global market. At least you acknowledge that OA would lead to lower rates. Stay cool!
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