Edit post

Edit your reply below.

Post Body
Enter your post below.
[quote user="riprap"]FutureModal (or anybody else out there), could you explain in a little more detail about RR's pricing power, and how it forces shippers to accept higher prices, ergo the continuing preference for trucks?  This sounds intriguing.... Riprap[/quote] "Force shippers to accept higher prices"?  Continuing preference for trucks?  Shippers like price and service.  They do business with whomever offers the best.  There is no preference for transportation modes (shippers don't care if it moved by magic broom), only a preference for a good deal.  Trucking is much cheaper, relative to rail, than many railfans want to think.  The smart railroad, or the smart trucker, will price very closely to each other, as does any merchant because there's no glory in leaving money on the table.  Not that either have much choice in the matter because the split between price and cost is extremely thin in transportation.  No one in railroading or trucking is obtaining a large profit margin, except on high-service express package business (FedEx and UPS) which have onerous costs of entry.  (Remember Purolator?  Airborne?)  Freight moves by truck when truck has lower costs relative to the desired service, and by rail when rail has lower costs relative to the desired service.  Trucking in general has higher costs on a line-haul basis but that's not the only cost the shipper thinks about.  He also has cost of location, cost of inflexibility, cost of time, cost of service predictability, and so forth.  The growth in rail intermodal is due to several factors: faster increase in cost of trucking vs. increase in cost of rail; overall volume increases which drive rail costs down but don't do the same for trucks (because trucking is not a batch process); shippers increasing in size enabling them to achieve volume efficiencies such as distribution centralization; and a shift toward foreign sourcing which increases line-haul distance, which increases rail's attractivness. S. Hadid
Tags (Optional)
Tags are keywords that get attached to your post. They are used to categorize your submission and make it easier to search for. To add tags to your post type a tag into the box below and click the "Add Tag" button.
Add Tag