Freight Rail and the Trucking Industry in the 20th Century

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Freight Rail and the Trucking Industry in the 20th Century
Posted by Shock Control on Saturday, March 17, 2018 10:52 PM

I'm sure there are entire books written on this topic, but I'm looking for some very general information.

At what point (decade?) did the trucking industry begin to pose a threat to freight rail?  When and how did the railroads respond?  Did any railroads attempt to get into the trucking industry, either by having their own fleet of named trucks, or by buying stock in trucking companies?  Would the latter have been viewed as a conflict of interest?

Any information is appreciated!

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Posted by Overmod on Saturday, March 17, 2018 11:47 PM

We have had some threads, at least one quite recently, on aspects of this issue.  It is not possible to address it without looking at the parallel history and 'evolution' of railroad regulation and other Government legislation and policy toward railroad institutions.  

I personally think that many railroads recognized the value of trucks, both as adjuncts to and practically as replacements for unprofitable service, almost in step with the evolution of trucks from motorized drays to high-speed freight vehicles.  The history of containerization from the mid-Twenties on is a particularly rich framework to look into ... notably including its virtual outlawing in the East just at a time many railroads would have benefited from its distinctive advantages.

Look also at the evolution of what started as the Good Roads movement and became first the idea that a network of improved roads should be 'free' and then that it should be open to trucks of adequate capability far below the pro-rata cost or wear those trucks caused.  In this connection there is a different 'railroad parallel', the general history of the Pickwick Nite Coaches and their follow-on designs being nipped almost in the bud, one great example being Missouri closing its highways to long or heavy combinations early.  I have not studied the 'push' up to the official registration requirements for motor carriers with the ICC by 1935 ... but it will likely pay you to look into it.

Be sure to stock up on your blood-pressure meds before looking at the history behind the 'Big John' cases.

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Posted by Firelock76 on Sunday, March 18, 2018 9:14 AM

Check out the Spring 2018 issue of "Classic Trains."  There's an article in it called "Railroads, Motor Carriers, and Superhighways" by Professor H. Roger Grant of Clemson University.

It'll tell you a lot of what you'd like to know without "majoring" in the subject, if you know what I mean.

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Posted by greyhounds on Sunday, March 18, 2018 2:20 PM

Firelock76
Check out the Spring 2018 issue of "Classic Trains." There's an article in it called "Railroads, Motor Carriers, and Superhighways" by Professor H. Roger Grant of Clemson University.

That sounds like a very interesting article.  I'll get the magazine and read it for sure.

I've been quite interested in this subject since I was a grad student in transportation.  Way back around 1975.

From what I've determined motor trucking became a competitive force to be rekoned with in the 1920's.  No, there were not transcontinental trucking operations then, but most freight moves shorter distances and the trucks began to take a bite at that time.  That's when trucks that could carry a decent load, 10,000 pounds, first became available.

The railroads initially saw the new trucking technology as simply a more efficient way to move freight in certain situations.  So they acquired, or contracted, trucks to replace local freight service in those situations.

Most importantly, there was a movement lead by the New York Central to establish intermodal container services that combined the best elements of trucking and rail into one through service.  This dramatically improved the efficiency of freight movements.  Most of the savings were passed through to the customer, but the railroads were able to hang on to some of the savings.  So the customers were getting better service, at lower prices, while the railroads improved earnings.  Sounds great.

But.

The then new motor freight techology was destroying the existing rail rate structure while creating a new system of moving freight.  (This is a normal economic process called "Creative Destruction.")  As a competitive response to the new trucking the rail container systems also departed from the existing rate structure.  This upset established commercial patterns and caused government intervention. 

The government ordered the rail container rates raised to non competitive levels in 1931 and killed the container services.  At that time, they had no authority over trucking rates so they couldn't do anything about those.  There was absolutely no valid economic reason for the government's action on container rates.  And trucking was going to upset/change those existing commercial patterns anyway.

After 1931 the government continued to mess with rail-truck integration.  They put all kinds of inane restrictions on such services.  They eventually tried economic regulation of trucking services but there were so many exemptions that trucking was never regulated anywhere near as much as the railroads.  When deregulation came about only around 30% of trucking was subject to economic regulation. 

 

"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.
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Posted by ATLANTIC CENTRAL on Sunday, March 18, 2018 2:44 PM

And, without getting into all the details, just think, without the government in the way 100 years ago, or even 60 years ago, we might have a vastly different freight transportation system today.

Way more intermodal, better intermodal, faster intermodal. And, fewer, smaller, safer trucks (not that the trucks are inherently unsafe, but many of the car drivers around them are......) on the highways.

If we had better rail/truck intergration would we really need 53' trailers and rigs that weigh 20 times what a LARGE car weighs?

But of course mother government always knows best.........

Who pays for the roads the trucks use? Road use taxes on motor carriers are pretty high compared to what you pay to register your car..... It would have been interesting to get an opinion from Henry George on the topic........

But the trucks are not the only ones who use the roads to make money. I go to my construction job on them, people commute to their cubicals, and so on.........

Sheldon 

    

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Posted by greyhounds on Sunday, March 18, 2018 7:39 PM

I'll add in response to the OP's post that yes, railroads did own trucking companies.  Unfortunately,  these trucking operations fell under the 30% of trucking that was subject to economic regulation by the damn government.

Examples that I can name off hand are Santa Fe Trail, Rock Island Motor Transport, and Frisco Transportation.  The one I did the most work with was Pacific Motor Trucking, owned by the SP.  PMT was government restricted to only serve points served by the SP, on routes served by the SP.  Unless it got special dispensation from the dopes in Washington, DC it couldn't serve Houston to Chicago because the SP didn't go to Chicago.  That only makes sense if you're a government lawyer/bureaucrat.  We (ICG) would establish through routes with them with an interchange in E. St. Louis to get to Chicago. This drove the accounting department bonkers because the interchange was with a motor carrier and not another railroad.

Niether PMT, the ICG or SP could deliver or accept a truckload in a place such as Beardstown, IL.  (Site of a major pork plant.)  Since our rails didn't go there our railroad controlled truck wasn't allowed to go there.  This makes no sense at all, but it was the way the government regulation was.  Once I was more than ready to violate the stupid regulations.  They were still assembling cars in Kenosha, WI then.  We had a TOFC load of tires that was a "Shut Down" load.  If the assembly plant didn't get the needed tires they would have to shut down.  I wasn't going to just shrug my sholders and allow that to happen.  I was going to authorize, demand, and put my name on an "Illegal" truck transportation run from Chicago to Kenosha.  We did find a trucker with government "Authority" to haul the trailer.

There were other times when I pushed past the insane regulatory limits, and I'm proud that I did so. 

 

 

"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.
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Posted by Gramp on Sunday, March 18, 2018 10:10 PM

To the degree bureaucracy is needed, it’s got to have safety valves. Glad you served as one.

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Posted by greyhounds on Wednesday, March 28, 2018 9:51 PM

Firelock76

Check out the Spring 2018 issue of "Classic Trains."  There's an article in it called "Railroads, Motor Carriers, and Superhighways" by Professor H. Roger Grant of Clemson University.

It'll tell you a lot of what you'd like to know without "majoring" in the subject, if you know what I mean.

 

After some unfortunate difficulty subscribing to digital Classic Trains, I was able to read this article by H. Roger Grant.  I find it to be totally misleading and grossly inaccurate.

Grant blatantly misrepresents the government's hindering role in rail-truck coordination.  He ignores one of the most, and probably the most, important government actions.  That would be the blockage of intermodal service in 1931 by the ICC with the decision in "In the Matter of Container Service." He also ignores the severe restrictions placed on the railroads' use of trucking by the government.

He further misrepresents the diversion of LCL traiffic to trucks as a good thing for the railroads.  In actual fact, the rails fought hard to improve and keep the high revenue LCL.  It was only after the government continually blocked their efforts to improve their service to compete with the truckers that they were forced to give up and let it go as unprofitable.

This is a bad article written by someone unknowledgeable in the subject.  I don't care if he is a professor of history at Clemson.  He's wrong.

I did write my Masters Thesis on "The Transportation of LCL/LTL Freight by Railroad."  I did disagree with some professors along the way.  And I did document these things.  Those professor types, they ain't always right.  Grant sure proves that with this awful article.  

"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.
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Posted by BaltACD on Wednesday, March 28, 2018 10:18 PM

greyhounds
I did write my Masters Thesis on "The Transportation of LCL/LTL Freight by Railroad."  I did disagree with some professors along the way.  And I did document these things.  Those professor types, they ain't always right.  Grant sure proves that with this awful article.  

Goes back to the old saying - Those that can, do!  Those that can't teach.

While I never took a Masters ciriculum, I did take a Transportation speciality in my degree path.  The Profs were so far off what I had observed as day to day reality that it was laughable.

         

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Posted by Eddie Sand on Thursday, March 29, 2018 12:50 AM

I was fortunate to have been exposed to front line operating conditions in both rail and trucking after obtaining my undergraduate degree in Business Logistics, but to say it was a bumpy ride would be an understatement.

It needs to be understood first that the trucking industry is extremely diverse -- from the never-regulated (save for safety regs) movement of agricultural goods, to private carriage, to specific commodities via irregular routes, to the movement of general commodities between specified points; the last were considered the upper crust of the industry, but they were very restricted as to where they were authorized to serve, and had to interchange with other general commodity carriers -- in a manner very similar to a railroad.  

The reputation of the industry as a breeding ground for organized crime via the Teamsters' Union was legendary, but seldom much of a factor in day-to-day operation. My instructors at Penn State mostly stressed that the real money was to be made in "industrial logistics" within the corporate structure of the manufacturing, rather than the transportation industry. A handful of carriers, most notably Yellow Freight, drew praise, but the rest, including major players like Consolidated Freightways and Roadway Express were dismissed as stagnant, even if not "mobbed up".

But I wanted a slice of life at the time, and got it during a little over two years in the Central Dispatch office of the suburban-Philadelphia-based Jones Motor Co. I saw a lot, but the movement for deregulation was just beginning at the time, and ravaged the industry in earnest after 1977. Of the 100 largest carriers listed in Chilton's Commercial Car Journal in 1971, about 4 out of 5 were out of business ten years later. Yellow and Roadway, the industry's two "glamour girls", ended up merging, and are still struggling as YRC, Inc.

During the years 1975-1990 the trucking industry experienced a decline, shake-out and rebirth every bit as drastic as the concurrent decline and revival in rail freight; The Interstate Commerce Omission, authored by Nader-Raider Robert Fellmeth was probably the most-read work at the time, but it emphasised mostly safety issues which, I can state from experience, were taken seriousy, to everyone's benefit. Technology has probably allowed each mode to identify and emphasize its own strengths and, dreams of "self-driving" vehicles peddled to people with too much identification with George Jetson to the contrary, I expect each of the two to find its own niches to fill for a long time to come.

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Posted by CSSHEGEWISCH on Thursday, March 29, 2018 6:59 AM

BaltACD
 Goes back to the old saying - Those that can, do!  Those that can't teach.

Just remember to thank a teacher everytime you read one of these posts.

The daily commute is part of everyday life but I get two rides a day out of it. Paul
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Posted by tree68 on Thursday, March 29, 2018 7:16 AM

CSSHEGEWISCH
Just remember to thank a teacher everytime you read one of these posts.

Actually, my daughter was reading before she ever made contact with a teacher.  She was usually in an advanced reading group of one in elementary school...

I'd brag on myself, but I don't remember...

I kinda skimmed through that article.  I'll have to go back and re-read it with a more jaundiced eye...

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Posted by Firelock76 on Thursday, March 29, 2018 10:25 AM

Well thanks for that critique Greyhounds, I appreciate your first-hand knowledge of the subject.  I would never have known.

It'll be interesting to see what "Letters To The Editor" Classic Trains gets over this subject in the next issue.

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Posted by Deggesty on Thursday, March 29, 2018 10:35 AM

Greyhounds, I hope you have communicated with Classic Trains and pointed out the fallacies in the article--and that there is a published response to your communication.

However, I hope that there will be a better response than the one I received from Trains after I pointed out the fact that the standard warning as a train approaches a public crossing has no connection with the Morse (actually International) code for the letter "Q." I was asked permission for my information to be published--and it never was published.

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Posted by jeffhergert on Thursday, March 29, 2018 11:04 AM

Deggesty

 

However, I hope that there will be a better response than the one I received from Trains after I pointed out the fact that the standard warning as a train approaches a public crossing has no connection with the Morse (actually International) code for the letter "Q." I was asked permission for my information to be published--and it never was published.

 

That's more than I got from them. I wrote a letter about this, too.  Even pointing out that Trains, or maybe Classic Trains, once had an item about how the grade grossing signal came about, illustrated by an old Southern Ry. (IIRC) whistle post displaying two longs and two shorts.

Jeff

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Posted by Deggesty on Thursday, March 29, 2018 11:11 AM

jeffhergert

 

 
Deggesty

 

However, I hope that there will be a better response than the one I received from Trains after I pointed out the fact that the standard warning as a train approaches a public crossing has no connection with the Morse (actually International) code for the letter "Q." I was asked permission for my information to be published--and it never was published.

 

 

 

That's more than I got from them. I wrote a letter about this, too.  Even pointing out that Trains, or maybe Classic Trains, once had an item about how the grade grossing signal came about, illustrated by an old Southern Ry. (IIRC) whistle post displaying two longs and two shorts.

Jeff

 

Jeff, maybe we are both outsiders--I never had any official relationship with a railroad, and you never worked for the Southern?Smile

Johnny

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Posted by Deggesty on Thursday, March 29, 2018 11:18 AM

I can still see, in my mind, the Southern whistle post with two broad stripes and two large dots--even though it is close to seventy years since I first saw it.

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Posted by tree68 on Thursday, March 29, 2018 11:35 AM

Deggesty

I can still see, in my mind, the Southern whistle post with two broad stripes and two large dots--even though even it is close to seventy years since I first saw it.

Just a guess  - but I'm guessing that the last dot eventually morphed into the long blast carried over the crossing.  It's possible other railroads did the same thing (ie, two longs, two shorts) but someone found that it didn't provide enough warning, especially if finished too early.

But I'm guessing.  Oftimes changes like this aren't documented as such (ie, on June 1, 18XX, we'll all change to...) and slowly make their way through the system until everyone does it.

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Posted by Deggesty on Thursday, March 29, 2018 11:52 AM

tree68
I'm with you on that, Larry. I wonder if the last short was to be sounded as the engine reached the crossing--as the last long is to be held until the crossing is reached.

 

 
Deggesty

I can still see, in my mind, the Southern whistle post with two broad stripes and two large dots--even though even it is close to seventy years since I first saw it.

 

Just a guess  - but I'm guessing that the last dot eventually morphed into the long blast carried over the crossing.  It's possible other railroads did the same thing (ie, two longs, two shorts) but someone found that it didn't provide enough warning, especially if finished too early.

But I'm guessing.  Oftimes changes like this aren't documented as such (ie, on June 1, 18XX, we'll all change to...) and slowly make their way through the system until everyone does it.

 

Johnny

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Posted by jeffhergert on Thursday, March 29, 2018 12:09 PM

Deggesty

 

 
tree68
I'm with you on that, Larry. I wonder if the last short was to be sounded as the engine reached the crossing--as the last long is to be held until the crossing is reached.

 

 
Deggesty

I can still see, in my mind, the Southern whistle post with two broad stripes and two large dots--even though even it is close to seventy years since I first saw it.

 

Just a guess  - but I'm guessing that the last dot eventually morphed into the long blast carried over the crossing.  It's possible other railroads did the same thing (ie, two longs, two shorts) but someone found that it didn't provide enough warning, especially if finished too early.

But I'm guessing.  Oftimes changes like this aren't documented as such (ie, on June 1, 18XX, we'll all change to...) and slowly make their way through the system until everyone does it.

 

 

 

 

The changes happened in the 1920-1930 era.  Rule books before the 20s have the two long-two shorts.  Rule books from the 20s onward tend to have the two long-one short-one long signal.  No definite date covers all.  Even the date on the rule book doesn't mean the signal change happened on that date.  Rules could be changed by other means between the dates the books took effect.

The difference between then and now.  Back then they changed the rule to relect the practice.  Today they would write everyone up for not being to standard.

Jeff 

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Posted by wanswheel on Thursday, March 29, 2018 1:24 PM

Excerpt from Yale Law Journal (1941) http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=5120&context=fss_papers  The motor carrier industry of today has progressed far from its meager beginnings during World War I. Successfully resisting railroad efforts to stunt its growth, it has assumed within the past decade a position of substantial importance and has been largely responsible for returning transportation as a whole to a competitive pattern. Throughout its development motor carriage has displayed two distinctive characteristics. Intense competition between numerous small operators has gone hand in hand with and partly contributed to the steady process of unification of small carriers into somewhat larger units. More recently, and notwithstanding the Motor Carrier Act of 1935 with its requirement that combination transactions be "consistent with the public interest," this unification trend has been proceeding at a constantly accelerated pace…

No problem in motor carrier unification is more fascinating or more crucial than fixing the role to be played bythe railroads. Today their interest in motor carriage is substantial and constantly growing, and  while its extent is not precisely known, the trend is definitely in the direction of co-ordinated service between rail and motor carriers. Co-ordination is theoretically possible in various ways: bymeans ofco-operative formulation of joint rates and through-routes between completely independent railroads and motor carriers, byunification of the two agencies into large integrated transport companies, or bysome compromise between these two extremes. Up to the present the Commission has not prevented integration of rail and motor service because of the possibility of co-operation. At the same time the policy of the Motor Carrier Act definitely arrested as of 1935 any movement toward integrated companies controlled by railroads. Evidencing the fear of railroad domination of the motor carrier field, Section 5(2) (b) compels a carrier applicant "controlled by" or "affiliated" with a railroad to meet more restrictive unification standards than those applied to an ordinary motor carrier applicant. Not only must it be shown that the transaction is consistent with the public interest, but also that the acquiring carrier will be able "to use service by motor vehicle to public advantage in its operations" and that the acquisition will not unduly restrain competition.

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Posted by Shadow the Cats owner on Thursday, March 29, 2018 4:28 PM

Also people if you think it was easy to break into the OTR industry prior to deregulation your nuts.  You had to prove to the ICC that you found a lane that was not being served by the current carriers they were given a chance to serve those routes first if they failed to meet ICC standards only THEN where you given the authirty needed to run on the routes you found.  Yes while agriculture and other items where considered exempt and not regulated the other items that were regulated Lord help you if you wanted in on them.  

 

Why did so many of the big carriers that were thriving prior to deregulation fail in the OTR industry 3 simple reasons.  1st off they were to rigid in how they ran their routes and could not meet changing route requirements.  2nd most of the larger carriers that failed had Union drivers and in the mid to late 70's getting the Teamsters to agree to do anything that harmed the way they did business forget it that was not going to happen.  Lastly carriers that were smaller and had been on the fringe could all of a sudden haul anywhere for any customer and for any price.  As long as they made a profit for them they undercut the big boys and killed the larger carriers bottom lines.  When it costs a carrier 1.50 to run a load and your compeititor can haul it for 1.25 a mile with the same service if your a company who do you pick.

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Posted by Eddie Sand on Thursday, March 29, 2018 5:34 PM

It can be very difficult for those who weren't around in the days of regular-route, common-carrier trucking authority (and the ranks of those who were are dwindling) to visualize just how rigid the rules were in those days. 

The Jones Motor I went to work for in November of 1972 was among the nation's 25 largest motor carriers, as measured in terms of revenue. (A proposed merger with Texas-based TIME-DC would have pushed us well into the top ten, but the deal fell through). But as with every other player in the game, there were plenty of gaps in the territory we were authorized to serve.

Eessentially. our territory consisted of, on one hand, most of the East Coast north of the Potomac, including just about eveywhere that counted in Pennslvania, plus the northern half of Ohio, southeastern Michigan, and much of Illinois (though we concentrated on Chicagoland and Metro St. Louis). We also served the I-81 coridor in Virginia, and were attempting to grow service in North Carolina -- for which we had state-wide authority.

Any point not specified was off-limits; we did a good business in the rest of Ohio, but did so in cooperation with Lima-based Duff Truck Line, with which we formally interchanged traffic (including full trailerloads) at Akron.

That pattern of gaps prevailed throughout the industry, made for some strange strategies, and few carriers wanted to buy, sell, or trade their authority, So Cooper-Jarrett, known for prominence within the New York-Chicago market, had no authority into potentally-lucrative Detroit or anywhere else in Michigan. Branch Motor Express, a tough little outfit with its roots in the Garment Disrict, had acquired rights into Chicago, but was waiting to decertify the local union -- and Branch succumbed to market pressures before the union's rights expired -- and so on, and so on.

When the economy contracted during the 1974-75 recession, I found employment with a pre-fab home builder based in Milesburg, PA, near State College. Only three general-commodity truckers served the communitiy, but Altoona-based Ward concentrated on export traffic via New York, and York-based MFX solicited only truckloads.

That left only Lewistown-based Noerr Motor Freight, whch enjoyed a virtual monopoly on just about any inbound Less-than-Truckload (LTL) service anywhere in Centre and Mifflin Counties; it had interchange rights with all the other carriers at both Harrisburg and Philadelphia as well.

All this changed, and radically, with the onset of dereguation. A handful of well-financed companies could invade previously-monopolized local markets at will (not that it was always worth the investment), so it became a case of catch-as-catch-can for smaller carriers; some of those survived by retaining only irrergular-route and or specific-commodity authority. Harsh competition also quickly wiped out the resources of many once-highly-profitable and well-recognized players (Smith Transfer, McLean and Interstate, to cite a few).

Eventuallly, the dust settled, but the game was, to put things mildly, very rough. 

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Posted by MP173 on Thursday, March 29, 2018 9:50 PM

I worked for 10 years for a small LTL carrier out of NW Indiana which served Chicago to South Bend and then most of northern Indiana.   I managed their "traffic dept" from 1980 until I left the industry in 1990...and saw quite a bit of change.  

My employer did a heavy amount of interline business with most of the large carriers.  You mentioned Cooper Jarrett (route of the relays), Branch, Jones, etc.  We interlined with all of those.  One by one, they fell off.  Branch did have authority to Chicago but interlined to us at South Bend, until they shut down.  

The relationships changed during the 1980s, from straight interline to "cartage agent" in which we would deliver their freight on their bills (as their agent) and receive a flat percentage, rather than interline splits.  

We had interline agreements with over 100 carriers and did a large amount with Consolidated Freightways...they would bring 2 to 6 pups (28 ft) of LTL to our terminal nightly.  

The advent of non union carriers, such as Conway (CCX) changed things dramatically.  CCX was owned by Consolidated Freightways and was their hedge on union operation.  CF ultimately failed and Conway is still in business (XPO Logistics purchased them 2 years ago).

Lots of strong regional LTL carriers failed...American, Associated, Branch, CJ, Crouse, Holmes, Briggs, Campbell 66 (Humpin to Please), Commercial Truck Lines of Indiana, Commercial Lovelace, Smith, Transcon...I could go on.  I still have old routing guides downstairs in the basement along with a few tariffs, etc.

In 1990, I entered the world of sales with a large format screen printing company (decals, primarily to trucking fleets).  I still have my foot in the trucking door, but it was a great decision to move into away.   A few of my best customers are very passionate trucking company owners but they face challenges on a daily basis.  Fortunately they are receiving very good rates these days as the ELPs have changed the industry.

Ed

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Posted by greyhounds on Thursday, March 29, 2018 11:36 PM

MP173
Lots of strong regional LTL carriers failed...American, Associated, Branch, CJ, Crouse, Holmes, Briggs, Campbell 66 (Humpin to Please), Commercial Truck Lines of Indiana, Commercial Lovelace, Smith, Transcon...I could go on. I still have old routing guides downstairs in the basement along with a few tariffs, etc.

Heck fire Ed, you could leave out the word "regional".  Nationwide carriers such as Consolidated Freightways went under.  It was amazing to watch, formerly financially rock solid motor carriers such as Gordons, Preston, Carolina, etc. just shut down in bankruptcy.  Shippers were trying to find their freight in transit.  It was sitting somewhere.  But there was no one still working at the trucking company to answer the phone.  If the phone hadn't been cut off.

There never was a valid reason to economically regulate trucking.  (Or railroads for that matter, but that's another story.)  But that didn't stop the government.  The government types always seek more power.  The trucking industry sought regulation in the 1930's.  That ought to make anyone suspicious.  Anytime an industry wants economic regulation (government control of prices and services) there is something rotten going on.

Professor Grant touches on the reason (but doesn't develop it) in his awful article in Classic Trains.  The "Problem" was that anyone could easily start a trucking business.  There was little, if anything, that prevented someone from buying a truck and start hauling freight over the public roads.  If you were already in the business you hated that.  You didn't want more competition.  So the existing truckers sought regulation to keep new competitors out.  With regulation a trucker would have to have "Authority" granted by the government to haul freight on specified routes.  And price competition was not allowed.  This reduced competition and benefitted the existing truckers. 

It hurt the American People and the American Economy by increasing logistics costs.  Such regulation has a name. It's called "Predatory Regulation" and is designed to protect the producer from competition at the expense of the consumer.  That's what trucking regulation, and railroad regulation, really were.  Overall, we're much better off without such regulation and with more competition.

As an aside, Tyson Foods, the giant animal protein supplier (chicken, beef, pork), got its start in the 1930's.  Its founder, John Tyson, bought one truck and began hauling live chickens from Arkansas to Chicago.  To ensure he would have something to haul he started raising chickens.  And the result is Tyson Foods.  What a great American success story.  Free entry in to trucking allowed it to happen.  Regulation was set up to preclude such free entry.

Anyway, we got regulated (with an agricultural exemption) trucking.  Well, some not so wise men in Washington, DC literally went in to a room and structured an industry.  They knew nothing of trucking and came up with a "Regular Route" system that mimicked rail operations.  Truckers could only operate in certain defined areas on certain highway routes.  It denied a main advantage of trucking, flexibility.  So we got to bear the costs of a government planned inefficient trucking network until deregulation.

An integrated rail-truck system would have been more efficient.  But central government economic edicts don't go for efficient.  And such a thing was blocked by the government for 50 years.

I will email the editor of Classic Trains about Grant's article.  I expect several hours work on my part and little response.  But I'll do it. 

 

 



 

 

 

"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.
  • Member since
    August, 2005
  • From: At the Crossroads of the West
  • 9,604 posts
Posted by Deggesty on Friday, March 30, 2018 8:07 AM

MP173 mentioned the Campbell 66 (Humpin to Please) truck line. I well remember seeing their trucks--with a racing camel on the side--going through my home town in the late forties.

Johnny

  • Member since
    January, 2009
  • From: Maryland
  • 7,371 posts
Posted by ATLANTIC CENTRAL on Friday, March 30, 2018 7:28 PM

greyhounds

 

 
MP173
Lots of strong regional LTL carriers failed...American, Associated, Branch, CJ, Crouse, Holmes, Briggs, Campbell 66 (Humpin to Please), Commercial Truck Lines of Indiana, Commercial Lovelace, Smith, Transcon...I could go on. I still have old routing guides downstairs in the basement along with a few tariffs, etc.

 

Heck fire Ed, you could leave out the word "regional".  Nationwide carriers such as Consolidated Freightways went under.  It was amazing to watch, formerly financially rock solid motor carriers such as Gordons, Preston, Carolina, etc. just shut down in bankruptcy.  Shippers were trying to find their freight in transit.  It was sitting somewhere.  But there was no one still working at the trucking company to answer the phone.  If the phone hadn't been cut off.

There never was a valid reason to economically regulate trucking.  (Or railroads for that matter, but that's another story.)  But that didn't stop the government.  The government types always seek more power.  The trucking industry sought regulation in the 1930's.  That ought to make anyone suspicious.  Anytime an industry wants economic regulation (government control of prices and services) there is something rotten going on.

Professor Grant touches on the reason (but doesn't develop it) in his awful article in Classic Trains.  The "Problem" was that anyone could easily start a trucking business.  There was little, if anything, that prevented someone from buying a truck and start hauling freight over the public roads.  If you were already in the business you hated that.  You didn't want more competition.  So the existing truckers sought regulation to keep new competitors out.  With regulation a trucker would have to have "Authority" granted by the government to haul freight on specified routes.  And price competition was not allowed.  This reduced competition and benefitted the existing truckers. 

It hurt the American People and the American Economy by increasing logistics costs.  Such regulation has a name. It's called "Predatory Regulation" and is designed to protect the producer from competition at the expense of the consumer.  That's what trucking regulation, and railroad regulation, really were.  Overall, we're much better off without such regulation and with more competition.

As an aside, Tyson Foods, the giant animal protein supplier (chicken, beef, pork), got its start in the 1930's.  Its founder, John Tyson, bought one truck and began hauling live chickens from Arkansas to Chicago.  To ensure he would have something to haul he started raising chickens.  And the result is Tyson Foods.  What a great American success story.  Free entry in to trucking allowed it to happen.  Regulation was set up to preclude such free entry.

Anyway, we got regulated (with an agricultural exemption) trucking.  Well, some not so wise men in Washington, DC literally went in to a room and structured an industry.  They knew nothing of trucking and came up with a "Regular Route" system that mimicked rail operations.  Truckers could only operate in certain defined areas on certain highway routes.  It denied a main advantage of trucking, flexibility.  So we got to bear the costs of a government planned inefficient trucking network until deregulation.

An integrated rail-truck system would have been more efficient.  But central government economic edicts don't go for efficient.  And such a thing was blocked by the government for 50 years.

I will email the editor of Classic Trains about Grant's article.  I expect several hours work on my part and little response.  But I'll do it. 

 

 



 

 

 

 

Well said. My Father was a terminal manager, and regional manager for Carolina in the 70's - here in Baltimore. Carolina was one of the Queens of the east coast, left in ruins.

Before that he worked a brief time for the Southern Railway in piggyback. But he saw it was going to be a struggle unless the government got out of the way. 

I grew up listening to what he had to say, and worked in the terminal for a summer. As it was all falling apart, he left the industry and we both started selling MATCO TOOLS, which he did for about six years before retiring. Our best customers were the truck shops, but we could watch that industry changing.

Sheldon

    

  • Member since
    February, 2014
  • From: Nescopeck and Topton, Penna.
  • 78 posts
Posted by Eddie Sand on Sunday, April 01, 2018 12:16 AM

I hold a BS in Business Logistics (Penn State - '71); the curriculum required 18 credit hours within that subject; I graduated with 24 of the 27 maximum offered. The course offered three options -- Industrial Logistics (geared to working for a shipper), Carrier Management (working for a carrier) and Transport Economics (geared toward an academic career). The Industrial Logistics option was touted as offering the greatest earnings potential. Several recent grads were doing quite well -- usually in the automotive industry where consolidation of component parts was critical. Carrier Management was popular among those who'd had exposure - (usually thorugh family) in trucking; several drove over the summer months, and one went to Canada to skirt age requirements. One of our number was heir- apparent to a successful family trucking line which, alas, turned out to be a sitting duck when deregulation hit home.

Interestingly, the Transport Econ courses, (all three of which I "aced") were taught by a gentleman whose family had been in engine service on the NYC at Elkhart and Michigan City; those courses featured extensive economic exposure, including a history of the development of rate regulation, which included a field trip to ICC headquaters in Washington.

The overriding emphasis of the regulatory history course was that regulaton arose mostly in response to political pressures, evolved to a point where the necessity for rates sufficient to cover the rail industry's high fixed costs (and a rate stucture designed to let high-value shipments cover most of the overhead) were recognized, but that rigid structure was imposed only a few years before the development of intercity trucking upset that balance. "Umbrella rate making" -- the forced maintenance of artificially high rail rates to protect developing competition -- was readily acknowledged and discussed.  

Other courses included industrial traffic management (how to read a tariff and calculate freight charges), and one in urban mass transit. The Carrier Management and Industrial Logistics options both featured a "capstone" course based on case studies, but I found the material for the first option so dry, and so prone to degeneration into endless examination of alternatives (and likely, into office politics in a corporate setting) -- that it strongly influenced me to seek a career in carrier management, and an unsuccessful foray into graduate study eventually forced me to mail out resumes and knock on doors a year later.

And the single most fascinating course I took during those years discussed emerging transportation technology -- in particular at the time, the use of simulation (queueing) models to justify further infrastructural improvements; our case studies involved the barge sytems developed by the Army Corps of Engineers and the Prince Edward Island ferries -- but I was quick to note the adaptablilty for rail operations and, as the home p/c culture took root a few year later, worked up a couple of "dispatcher's algorithms" on my own as a hobby.

To summarize, I found my instructors to be far better-versed in the basics of the subject than has sometimes been alluded here; where things did "come up short" was in an understanding of current technology, particularly in the rail industry (the replacement of LCL breakbulks by TOFC, for example, had hardly been noticed by my instructors), and the general lack of preparation among all Business Majors for the rigors and subtle-but-very-strong regimentation of Corporate Life. Some of this has since been addressed via mandatory "core" courses in organizational behavior, for example.

19 and copy from 'NP' at Nescopeck, Penna.
  • Member since
    November, 2005
  • 4,191 posts
Posted by wanswheel on Monday, April 02, 2018 5:04 AM

 

Excerpt from “Competing Modes of Transportation and the ICC” by Allen Schrag, University of Pennsylvania Law Review, July 1946  http://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=9208&context=penn_law_review    The Barker Motor Freight case established the doctrinal rule on the permissible scope of coordinated rail-motor service where railroad "control" or "affiliation" has been shown to exist. The applicant, a motor carrier controlled by the Pennsylvania Railroad, proposed to purchase the property and "grandfather clause" certificate of an existing motor carrier. Cognizant of the valuable service which a motor carrier can perform for a railroad under such circumstances, particularly in transporting less-than-carload freight from a key point to between-points on the rail line, but fearful of the competitive consequences if a carrier controlled by a wealthy railroad with an efficient traffic-soliciting force were permitted to enter the motor-carrier field and expand its service operations over the acquired motor-carrier routes, the ICC adopted a compromise solution. It agreed to approve the acquisition provided the applicant restricted its new operations to service "auxiliary or supplementary" to that performed by the Pennsylvania Railroad (in its rail operations) rather than service in competition with rail and motor carriers, and to stations on the railroad's lines.

 

Excerpt from United States v. Rock Island Motor Transit Co., U.S. Supreme Court (1951)  https://supreme.justia.com/cases/federal/us/340/419/case.html  The [Interstate Commerce] Commission's view is evidenced in Pennsylvania Truck Lines, Inc… "While we have no doubt that the railroad could, with the resources at its command, expand and improve the partnership service and that, so far as numbers are concerned, there is now an ample supply of independent operators in the territory for the furnishing of competitive service, we are not convinced that the way to maintain for the future healthful competition between rail and truck service is to give the railroads free opportunity to go into the kind of truck service which is strictly competitive with, rather than auxiliary to, their rail operations. The language of section 213, above quoted, is evidence that Congress was not convinced that this should be done. Truck service would not, in our judgment, have developed to the extraordinary extent to which it has developed if it had been under railroad control. Improvement in the particular service now furnished by the partnership might flow from control by the railroad, but the question involved is broader than that, and concerns the future of truck service generally. The financial and soliciting resources of the railroads could easily be so used in this field that the development of independent service would be greatly hampered and restricted, and with ultimate disadvantage to the public."

https://archive.org/stream/transportationna1942unitrich#page/152/mode/2up

  • Member since
    August, 2003
  • From: Antioch, IL
  • 3,666 posts
Posted by greyhounds on Tuesday, April 03, 2018 1:16 AM

OK, here's the email I sent to the editor of Classic Trains.  We'll see if he responds.

 

Mr. McGonigal;

 

This communication is to express my extreme disagreement with the article “Railroads, Motor Carriers, Superhighways” by H. Robert Grant.

 

First, let me state some of my credentials.  I hold a Master of Science in Transportation degree from Northwestern University.  I also have a MBA from Loyola-Chicago.  I worked in intermodal marketing for the ICG Railroad and RoadRailer.  I also worked in market research for Navistar, which was then the largest North American manufacturer of medium and heavy duty highway trucks.  I’m now retired.

 

My thesis at Northwestern was “The Transportation of LCL/LTL Freight by Railroad”.  I got the idea for the thesis topic while interning on a LCL/LTL freight dock at 1601 S. Western Ave. in Chicago for a freight forwarder, Merchant Shippers, in 1975.  I watched a constant flow of smaller freight shipments arrive, move across the dock for sorting, and be loaded in to TOFC trailers and boxcars for rail transport.  Despite what Professor Grant says, Larry Provo’s C&NW actively solicited and sought this business.  (It’s easy to take a quote out of context.) 

 

One day I watched a highway trailer loaded with small clocks manufactured by Westclox of Peru, IL arrive at the freight dock.  I then watched the driver unload each clock by hand to sort them by destination.  My thought was:  “There’s got to be a better way to do this.”  From that thought my thesis developed. 

 

My thesis advisor at NU was Dr. Joseph Swanson.  He’s still aliive and living in Wisconsin.  While discussing my proposed thesis with Dr. Swanson he told me that I had to document why this freight was diverted from rail to truck.  That led to a deep dive on my part in to the excellent Northwestern Transportation Library.  This documented research on my part revealed an amazing story of government interference with railroad efforts to integrate with motor carrier service. 

 

So, I know of what I write.  After all, my documented thesis got me that MS.

 

H. Robert Grant apparently doesn’t understand the subject.   Either that or he’s got such a left wing slant on things that he can’t accept the fact that government regulation screwed things up to a fare-thee-well for 50 years.   I really believe history should be kept factually accurate, so I’m writing this communication.  There’s whole lot wrong with Grant’s writing.  But I’m going to focus on some specifics.  I’ll be glad to discuss any and all issues with you, Grant, or anyone else.

 

Professor Grant falsely states that the government regulators, the ICC, “Encouraged” rail carriers to go into the trucking business, literally giving the railroads a “Green Light” to do so.  Horse feathers!  My response to that untrue claim is “facta, non verba”.  The ICC may have said encouraging things about railroad integration with motor freight, but their actions, rulings, and decisions sure didn’t go that way.

 

As Professor Grant correctly states, the railroads (at least some of them) initially saw motor freight as simply being more efficient than traditional rail operations for certain services.  They naturally sought to use it to its best advantage.   One of those “Best Advantages” was with LCL for pickup and delivery.   The railroads didn’t want out of the LCL business, but they sure were interested in making it more efficient.  (LCL made an important contribution to rail revenues.)  The initial holdup was waiting for a highway truck that could carry a decent load of freight (5 tons) to be developed.  That happened in WWI for the US Army.  So, in the early 1920’s, an important time that Grant largely ignores, the New York Central began offering intermodal container services focused on its LCL traffic.  Think of it!  In the 1920’s they were offering dedicated container services using friction bearing flatcars and steam locomotives!  The New York Central cited the container efficiencies with reducing its cost of handling LCL by 75%.   So powerful were the economics of containerization that other railroads, such as the Pennsylvania, adopted similar systems.   Integrated rail/truck freight systems were growing and expanding beyond the New York Central’s pioneer operation.  The rail customers were getting better service at lower rates.  The railroads made more money at the lower charges because of the intermodal efficiencies. 

 

Then the government regulators, the ICC, got involved.  In 1931 those fools ordered the railroads to increase their rates on container traffic to non competitive levels.  This killed the developing integrated intermodal system.  (“In the Matter of Container Service” decided in 1931.)

 

Why would they do such a fool thing?  Well, they were a bunch of government lawyers and bureaucrats who had little or no grasp of economics.  What had been previously established was a railroad “Rate Structure” that dominated the commerce of the United States.  This structure was based on “Ramsey Pricing”, a system which basically set the rail price based on the effect the transport charge would have relative to the value of the commodity.  i.e., a transport charge of $2.00/hundred weight could well double the delivered cost for a low value commodity such as wheat while a similar charge would have minimal effect on something such as clocks.  Since both the wheat and the clocks needed to be moved, the solution was to charge less to haul the wheat and more to haul the clocks.  (No, they didn’t intentionally lose money hauling commodities such as wheat, but the railroads sure charged more to move high value commodities than they did low value commodities.)  This rate structure was adopted, approved and enforced by the ICC.  Changing it would disrupt established commercial patterns.  But such change was inevitable with the advent of motor freight.

 

The development of motor freight was going to blow a gaping hole in this “Rate Structure”.  If nothing else, the clock manufacturer could buy his/her own truck and pay only the cost of such a transport operation.  This avoided the extra mark up on that high value commodity.  (No, the ICC never did regulate manufacturers hauling their own product in their own trucks.  They basically couldn’t do that.)  

 

This process has a name in the study of economics; it’s called “Creative Destruction.”    It’s basically when a new technology or process develops (i.e., trucks) that creates a new economic order while destroying the old order.  (Think of what happened to typewriter manufacturers when word processing software was developed.)  Creative destruction does cause pain.  A lot of typewriter people were displaced.  But it is absolutely necessary if the economy is to avoid stagnation and decline. 

 

To compete with the new motor freight operations the railroads priced their container services as “Freight, All Kinds”.  (FAK)  This led to protests and the fools at the ICC sought to block the inevitable change.  They did so by ordering the rail container rates increased to non competitive levels.  H. Robert Grant falsely claims that the government gave a “Green Light” to rail/highway services.  The government did nothing of the sort.  It blocked intermodal service by ordering an increase in rates.  To flat out ignore this significant development, as Grant does, is to greatly distort history.  I don’t think you should publish such distortions.

 

There were numerous other restrictions on rail/truck integration imposed by the regulators.  Grant just ignores them and blames the railroads for being late to the party.  They were not late; they were blocked by government regulators.  To say otherwise, as Grant does, is to distort history.

 

Other examples abound.  For example, the restriction that railroad trucking services be “Auxiliary and Supplementary” to rail service.  This was a killer.  If the Seaboard received an interstate shipment from a coastwise ship company at Jacksonville, it couldn’t move the freight via truck to Ocala since the movement was not “Auxiliary and Supplementary” to rail service.  But it had to move the freight because of its common carrier obligations.  This would have necessitated two duplicate systems for freight movement and precluded the adoption of trucking by the railroad.

 

Another restriction involved government established “Key Points” which limited the range of rail trucking.  If the Illinois Central had a shipment to move from Chicago to Rantoul, IL the railroad was restricted from moving it by truck.  There was a “Key Point” at Kankakee and the railroad couldn’t use a truck beyond Kankakee for the move.  This is far from the “Green Light” Grant falsely claims.

 

I could go on and on about this.  But I think I’ve made my point.  I’m particularly incensed about Grant’s false claim that economic regulation of trucking was needed to “Stabilize” rates.  “Stabilize” is another word for fixing prices.  And neither you nor he will find an economist who will support the trucking regulation of the time. 

 

That’s enough for now.  I’ll be glad to discuss any of this with anyone.

 

Ken Strawbridge

 

Antioch, IL

 


    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.

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