Controversial to some, well known forum members, no doubt.
But as the article correctly points out, The railroads have gained considerable power through strategic mergers, acquisitions, and abandonments, seldom targeted to benefit the "greater common good" (last part being my opinion).
The closer an entity comes to being a monopoly, the greater the need for regulation.....so perhaps the author has a valid point?
In the past railroads had to file tariffs and truckers would underbid them. These tariffs were proposed and hearings were held and compeditors would object and there was much delay in getting any approval. At one time, the ICC would protect truck rates and require higher rail rates. Now, it seems the pendulum has swung to where the railroads have gone to contract rates and I get the idea that these are confidential and very one sided (favor the RR). Some of these seems to remind me of the days of the "robber baron" days before the ICC was created. Back when the Goulds & the Vanderbilts were fighting. The trucking industry seems to be in a race to the bottom where the driver shortage is effecting their ability to grow and shippers have seen rate increases. This is part of the world of competition. How far can you squeeze a truck driver to get your load delivered. The independent drivers buy their trucks and have to make the payments so they, before the computerized logs would drive until they fell asleep and hope they could get anough cafeen to get those miles in to make their costs. The ICC came into being for a reason. Partily for protection of the monopolys. And partly to prevent the effcts that monopolies had on society. But the regulation became bureaucratic and strangled the industry that it was supposed to help and conrol. Now the pedulum has swung to the days before the ICC and the shippers are pushing for some relief from the onious policies some railroads have implemented. As the saying goes, those ho forget the past are doomed to relive it.
I worry that the economics of rail are not favorable to shippers that need one or two carloads a week. The cost of maintaining track and switching industries may be too high to compete with trucks and "public" highways.
Balt, I feel that you are being a little too extreme in your claim that every one wants 'FREE" shipping. Hopefully, you were being a little facicious. I'm sure you don't expect your fuel or food to be "FREE". I also suspect you appreciate alternative sources for your food and fuel. And that you might use GAS BUDDY to find the station with gasoline at a lower cost. That you shop sales for the lowest prices. Also that you appreciate companies that treat you with respect.
When a RR tries to force companies to recieve their cars when the RR dictates and applies charges to make them conform to the RR's "plan" and then does't deliver the cars per said plan and charges for the customers 'inflexabiliy" to return the car per the "plan", I think the RR may be asking for pushback which is I think justified.
Electroliner 1935Balt, I feel that you are being a little too extreme in your claim that every one wants 'FREE" shipping. Hopefully, you were being a little facicious. I'm sure you don't expect your fuel or food to be "FREE". I also suspect you appreciate alternative sources for your food and fuel. And that you might use GAS BUDDY to find the station with gasoline at a lower cost. That you shop sales for the lowest prices. Also that you appreciate companies that treat you with respect.
As a consumer - who gets your business for a Widget you need? - the supplier that says shipping will be $10.95 or the supplier that offers Free Shipping - and the price of the Widget is the same from both suppliers? How the suppliers can make their offers work in enhancing their bottom lines are up to them.
The payment of freight on shipments via railroads end up being a tri-party 'negotiation' between the shipper, the consignee and the carrier(s) - how the negotiations go depends upon which party has the leverage - in some cases it can be anyone of the parties; in more cases than not, the carrier(s) will be the ones with the leverage to set the $$$$$$$$$$. Part of that 'negotiation' between the shipper and consignee is who will actually pay the carrier (Prepaid or Collect).
Never too old to have a happy childhood!
I wonder whether shippers using BNSF's services are as angry as those using other Class I's services, with BNSF less concerned with short-term investor satisfaction? And less involved with what I term Asset Utilization Railroading?
I think it is fair to conclude that shippers want free shipping, but you can't always get what you want. Nevertheless, the interests of the customer and the merchant do collide 100%, which is Econ 101. What settles the dispute is competition. Railroads are not fully deregulated because competition is insufficient to balance the competing interests of shippers and railroad companies.
Insufficient competion makes rail different than trucking where competition is sufficient because competitors can freely get into the business. But rail is more like utility companies where would-be competitors cannot easily move into the business.
The author of the article says what shippers want is not re-regualtion, but better enforcement of existing regulations, which intentionally remain in place to provide necessary competition.
All true. And he also would like to see Open Access be implemented with caution to bring "The Market" to railroading.
EuclidI think it is fair to conclude that shippers want free shipping,
I'm not sure the shippers expect free shipping, but they'll certainly prefer to pay less than the carrier wants to charge. And the carrier would usually prefer to get more than the shipper is willing to pay.
Just like loyalty cards that offer a later discount - you're paying for it. Free shipping is usually going to be a function of the quantity pricing the seller got when they bought the item wholesale and any discounts they may get from carriers because of the shipper sends them to much business.
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
tree68 Euclid I think it is fair to conclude that shippers want free shipping, I'm not sure the shippers expect free shipping, but they'll certainly prefer to pay less than the carrier wants to charge. And the carrier would usually prefer to get more than the shipper is willing to pay. Just like loyalty cards that offer a later discount - you're paying for it. Free shipping is usually going to be a function of the quantity pricing the seller got when they bought the item wholesale and any discounts they may get from carriers because of the shipper sends them to much business.
Euclid I think it is fair to conclude that shippers want free shipping,
I don't think shippers expect free shipping, they just want it. In other words, they would prefer to pay less right down to the point of paying nothing. It is that way with any transaction. But I understand your point that benefits added and said to be free are being charged and paid for in other indirect ways. Although with railroads, shipping is their product, so they can't throw it in free as another part of a purchase.
charlie hebdoAll true. And he also would like to see Open Access be implemented with caution to bring "The Market" to railroading.
They can barely move the freight when they are the only game in town. Open access would be a circus.
The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.
zugmann charlie hebdo All true. And he also would like to see Open Access be implemented with caution to bring "The Market" to railroading. They can barely move the freight when they are the only game in town. Open access would be a circus.
charlie hebdo All true. And he also would like to see Open Access be implemented with caution to bring "The Market" to railroading.
Open access would be a circus like The Barnum & Bailey Circuis is TODAY.
Railroads are 'highways' of a very finite capacity. The roadways we drive that have 'open access' also have finite capacity, however that capacity is far, far in excess of the capacity that railroads have. On the roadways we driver at or above maximum authorized speed with nominally 100 or less feet between vehicles and all vehicles can get stopped within the range of vision (if everyone is paying attention to the driving). Vehicles on multi-lane roadways have unlimited crossover potential, on railroads the crossover potential is severly limited in comparison. Open Access highway systems are able to operate without specific traffic direction - railroads would be in gridlock without direction of train movements.
The railroad's physical plant of the 21st Century are in no way comparable to the physical plants they had in the middle of the 20th Century. Besides, railroad's physical plants are privately owned - and, for the most part, not owned by governmental organizations.
Given Zug's perspective, perhaps it's time to move into modern times by introducing competition.
“Open access” is the railroad equivalent of the boogeyman and is not the switching proposal Mike refers to in his commentary.
The switching proposal currently before the STB is more analogous to the Canadian interswitching I refer to in my earlier post below.
In Canada; the transport board created three zones that move outward from a physical interchange point much like a target. Any shipper located within one of these zones may request rates from the carrier with whom his or her serving carrier meets at the physical interchange. The actual switching is performed by the railroad that owns the tracks but; the switch charge is established by the transport board. When requesting rates from the second carrier; the shipper needn’t talk to their serving carrier if they don’t wish to and the rates quoted by the second carrier include the applicable zones 1, 2 or 3 interswitching charge.
The proposal before the STB uses a similar radius from either a current working interchange or from a point that could be used as an interchange. The railroad that physically serves the shipper would - as in Canada - be the one that actually performs the switching and delivers the cars to the interchange. Two major differences from the Canadian model are that in the US the shipper would have to prove they are captive to the serving railroad and the serving railroad may establish the applicable switch charge to move cars from the captive shipper site to the interchange. The switch charge the serving railroad proposes may then be challenged before the STB by either the shipper, the connecting railroad or both. I‘ll admit these two qualifiers add complexity that doesn’t exist in the Canadian model but, every journey begins with short steps.
In closing - I’ll state this again; under the competitive switching proposal currently before the board the carrier that owns the track IS NOT being asked to allow another railroad to operate over their tracks. They WOULD be directed to provide a switch charge to move cars from the shipper to the interchange though.
I hope this clarifies things.
Juniata Man “Open access” is the railroad equivalent of the boogeyman and is not the switching proposal Mike refers to in his commentary. ...In closing - I’ll state this again; under the competitive switching proposal currently before the board the carrier that owns the track IS NOT being asked to allow another railroad to operate over their tracks. They WOULD be directed to provide a switch charge to move cars from the shipper to the interchange though. I hope this clarifies things.
“Open access” is the railroad equivalent of the boogeyman and is not the switching proposal Mike refers to in his commentary. ...In closing - I’ll state this again; under the competitive switching proposal currently before the board the carrier that owns the track IS NOT being asked to allow another railroad to operate over their tracks. They WOULD be directed to provide a switch charge to move cars from the shipper to the interchange though.
ie. The re-institution of reciprocal switching that was in effect in the pre-Staggers world of railroading.
Having worked in Baltimore Terminal during the pre-Staggers era when Reciprocal Switching was in effect between the PRR and later ConRail - my observations were that it caused 24-48 hours additional delay to shipments, at a minimum on my carrier and I expect probably the same amount of delay on PRR/ConRail side.
Be careful what you ask for!
BaltACD ie. The re-institution of reciprocal switching that was in effect in the pre-Staggers world of railroading. Having worked in Baltimore Terminal during the pre-Staggers era when Reciprocal Switching was in effect between the PRR and later ConRail - my observations were that it caused 24-48 hours additional delay to shipments, at a minimum on my carrier and I expect probably the same amount of delay on PRR/ConRail side. Be careful what you ask for!
by
Juniata Man “Open access” is the railroad equivalent of the boogeyman and is not the switching proposal Mike refers to in his commentary. The switching proposal currently before the STB is more analogous to the Canadian interswitching I refer to in my earlier post below. In Canada; the transport board created three zones that move outward from a physical interchange point much like a target. Any shipper located within one of these zones may request rates from the carrier with whom his or her serving carrier meets at the physical interchange. The actual switching is performed by the railroad that owns the tracks but; the switch charge is established by the transport board. When requesting rates from the second carrier; the shipper needn’t talk to their serving carrier if they don’t wish to and the rates quoted by the second carrier include the applicable zones 1, 2 or 3 interswitching charge. The proposal before the STB uses a similar radius from either a current working interchange or from a point that could be used as an interchange. The railroad that physically serves the shipper would - as in Canada - be the one that actually performs the switching and delivers the cars to the interchange. Two major differences from the Canadian model are that in the US the shipper would have to prove they are captive to the serving railroad and the serving railroad may establish the applicable switch charge to move cars from the captive shipper site to the interchange. The switch charge the serving railroad proposes may then be challenged before the STB by either the shipper, the connecting railroad or both. I‘ll admit these two qualifiers add complexity that doesn’t exist in the Canadian model but, every journey begins with short steps. In closing - I’ll state this again; under the competitive switching proposal currently before the board the carrier that owns the track IS NOT being asked to allow another railroad to operate over their tracks. They WOULD be directed to provide a switch charge to move cars from the shipper to the interchange though. I hope this clarifies things.
To clarify: The article's lawyer author only discussed access in terms of switching, etc. I and others introduced the related topic of Open Access, meaning regulated carriers operating under contract with fees on various lines, which would be owned and maintained by the government, as roads are now. This would provide the incentive to move away from only trainload railroading, which was an unintended and unfortunate consequence of Staggers. They could become competitive with trucking which now handles most freight. There are models to examine beyond Canada.
A common issue raised with open access is access to the rails, usually who is going to pay to buy the existing infrastructure from the current owners. I would suggest that, given the will, that could be worked out. The end effect would be a toll road system with control akin to air traffic control. This control already exists, although it is carrier specific.
The existing carriers would likely continue to exist, perhaps selecting niche markets (like coal or other bulk commodities), while others would move into other niches. This might be door-to-door service, a la UPS or FedEx, or other general merchandise.
You might even end up with "gypsies," any load, any road. Of course, they'd still have to meet operator qualification and equipment requirements.
A new model for manpower might be created - independent contractors qualified on certain territories who would work for whoever needed them. This would especially fit in with the "gypsies."
At some point, all signalling, etc would become standard, just as the highways are now. They're headed in that direction already. PTC would become the rail version of GPS in cars and trucks, allowing engineers to wander into new territory.
Odds of this happening are pretty much nil. I'm not holding my breath.
Juniata Man BaltACD ie. The re-institution of reciprocal switching that was in effect in the pre-Staggers world of railroading. Having worked in Baltimore Terminal during the pre-Staggers era when Reciprocal Switching was in effect between the PRR and later ConRail - my observations were that it caused 24-48 hours additional delay to shipments, at a minimum on my carrier and I expect probably the same amount of delay on PRR/ConRail side. Be careful what you ask for! You hit the nail on the head! Essentially what shippers are asking for is reciprocal switching albeit mandated rather than voluntary as in the past. And I’ll agree this could result in 24 - 48 hours additional transit time but; if what your current carrier is offering is a premium pricing of a sub-par service product; why not roll the dice?
That is 24-48 hours of delay on EACH carrier involved so you are looking at 48-96 hours in total - If 'reciprocal switching' is involved on both ends of the shipment you are then looking at something between 96-192 hours. The more carriers involved with 'open access' the more the delay.
charlie hebdo To clarify: The article's lawyer author only discussed access in terms of switching, etc. I and others introduced the related topic of Open Access, meaning regulated carriers operating under contract with fees on various lines, which would be owned and maintained by the government, as roads are now. This would provide the incentive to move away from only trainload railroading, which was an unintended and unfortunate consequence of Staggers. They could become competitive with trucking which now handles most freight. There are models to examine beyond Canada.
Ah; ok! You’re talking about something more analogous to the European model whereby the infrastructure is owned by one entity and then operating companies pay a fee to use the infrastructure.
I‘ve talked with European colleagues about the way they do business over there and it sounds more like the way we do business with truckers over here. In other words; business is put out to bid with the various operating companies and the best offer gets the business.
Since the railroads in Europe were previously nationalized; it was probably more doable for them to transition to their current model. Given that railroads in this country are privately held; I believe achieving something along the lines of what exists in Europe would be a long uphill struggle.
BaltACD That is 24-48 hours of delay on EACH carrier involved so you are looking at 48-96 hours in total - If 'reciprocal switching' is involved on both ends of the shipment you are then looking at something between 96-192 hours. The more carriers involved with 'open access' the more the delay.
When the switching proposal was being crafted; we believed it more likely to be used to alleviate a captive situation at origin. I will agree though; if you used competitive switching at both origin AND destination you likely could be adding 24-48 hours at both ends. Again; a shipper looking to use competitive switching would have to consider all factors before pulling the trigger.
I forgot to mention earlier but; will note here that the switching proposal excludes short line railroads. The process could only be used to address captive locations served by a Class 1.
charlie hebdoTo clarify: The article's lawyer author only discussed access in terms of switching, etc. I and others introduced the related topic of Open Access, meaning regulated carriers operating under contract with fees on various lines, which would be owned and maintained by the government, as roads are now. This would provide the incentive to move away from only trainload railroading, which was an unintended and unfortunate consequence of Staggers. They could become competitive with trucking which now handles most freight. There are models to examine beyond Canada.
Unfortunately, open access may actually further disincentivize carload freight by increasing the effects of opportunity cost and economies of scale.
Railroads today tend to send out a local to switch carload industries A, B and C, etc. on a given subdivision. If railroad 1 gets the contract to serve A and C and industry B wants railroad 2, railroad 2 may decide that there are more profitable opportunities than to send a crew and two locomotives halfway down the line to pick up a few cars, and railroad 1 might decide that just A and C aren't worth it either, since they've lost the benefit of scale that came from also serving B. They might be happy with just serving A and C if they were willing to pay higher prices to justify it, but then you've lost the pricing benefits of competition.
Neither Australia nor Europe have extensive private carload operations, and part of this is due to historical and operational factors. Much of it, though, is that it's hard to make a profit off of. Unfortunately, carload freight is declining globally.
In North America, at least, reciprocal switching probably serves the small carload customer best.
To combat trucking, quick intermodal trains make the most sense.
Juniata Man The switch charge the serving railroad proposes may then be challenged before the STB by either the shipper, the connecting railroad or both. I‘ll admit these two qualifiers add complexity that doesn’t exist in the Canadian model but, every journey begins with short steps.
Yes, Like CN vs CP on their dispute over their interchange point in the Chicago. CP wants it to remain at Munger and CP wants to change it to Clearing. I think its resolution was not sucessful inmediation and the STB is now tasked with having to rule.
It's no surprise that rails oppose introducing free market capitalism to what is largely a monopoly. That always happens to the detriment of the larger public interest.
charlie hebdo It's no surprise that rails oppose introducing free market capitalism to what is largely a monopoly. That always happens to the detriment of the larger public interest.
The problem is how to prevent it from being a monopoly while letting it be free market capitalism.
In free market capitalism, a major goal of companies is to obtain a monopoly or collude with each other to control pricing. This is a natural feature. Maintaining competition is a proper role of regulation maybe the major one. Competition is desirable because it promotes efficiencies and lowest prices, unlike managed economies.
How about we do as Mr. McBride says captive shippers want? That is: "Where based on provisions of the 1980 Staggers Rail Act, railroads possess market dominance as determined by a formal regulatory review, rates not exceed a regulatory determined maximum reasonable rate—and that access to the regulatory process be simplified so as to reduce what are now transaction costs in the millions of dollars that deny all but the largest shippers access to regulatory relief."
charlie hebdo Given Zug's perspective, perhaps it's time to move into modern times by introducing competition.
Thanks to Chris / CopCarSS for my avatar.
You don't believe in a free market?
Murphy SidingI'm not sure how changing to a system where the lowest bidder moves freight on the same existing tracks changes anything for the better.
I would think that if two companies are operating on the same tracks, and one offers the same service for a lower price:
1. The lower priced company will get more business.
2. The higher priced company will make an effort to become more efficient so they can offer lower prices.
Of course, the danger is that one company will cut safety standards, or will offer services they can't deliver, or... That is why a certain amount of regulation is desirable.
That why hebdo's comment hits the nail on the head:
charlie hebdoMaintaining competition is a proper role of regulation maybe the major one. Competition is desirable because it promotes efficiencies and lowest prices, unlike managed economies.
York1 John
I asked my doctor if I gave up delicious food and all alcohol, would I live longer? He said, "No, but it will seem longer."
In the ICC days, most railroads tariffs would be the same cost for a car of XXX between say Chicago and Cincinnati, no mater which railroad had the shortest route. If the longer route wanted the business, they would and did match the rate so NYC, B&O, CSX or PRR did. With the mergers and failures, regulation may be necessary again. Now its, "We don't care, you need to ship it, take our price or find another way". Now its, "We don't care, you need to ship it, take our price or find another way".
Passenger fares were also the same. PRR, B&O, NYC fares between Chicago and New York would be the same and you could even add additional milage (side trips) such as PRR would allow you to go to Washington DC on the Chicago - NYC fare. Back in '68, I took a trip from Chicago to San Francisco going via the CZ, to San Francisco, SP side trip SF to Modesto (Yosemite) SP to Seattle, Empire Builder back to Chicago. Same fare as a round trip between Chicago to San Francisco (whether you went via C&NW/UP/SP or Santa Fe. This was what competition did. You want the business, you match the competition.
Yes, competitive fares were wonderful. On one occasion, I went from Tuscaloosa to Washingto--through Birmingham, Montogomery, and Jacksonville. My custom was to give my itinerary to the ticket agent in Tuscaloosa, he would send it to Atlanta, and after he had the information concerning the fare I would buy my ticket. After this trip I received a partial refund--because, apparently, the fare construction was changed to include the competitive fare between Montgomery and Washingotn instead of constructing it to read from Birmngham to Jacksonville and then north.
Also, Pullman space charges were the same between Chicago and the West Coast, no matter what route and no matter whether you were on board for two nights or three nights.
Johnny
Our community is FREE to join. To participate you must either login or register for an account.