QUOTE: Originally posted by daveklepper Open access might provide better service for some customers at the expense of far worse or none at all for others.
QUOTE: Originally posted by CSSHEGEWISCH I'm not going to hold my breath waiting for the funding for the various proposed Chicago improvements to come through. There's a big difference between federal and state financing. I also notice that futuremodal is using his pitch for public financing as a justification for that confiscation of private property known as open access.
QUOTE: Originally posted by CSSHEGEWISCH As I've pointed out earlier, public investment in infrastructure maintenance isn't going to happen in the current political climate, if ever. With that being the situation, maintenance of the right-of-way is always going to be part of the rate base.
QUOTE: Originally posted by CSSHEGEWISCH Also, shippers don't have a right to a lower rate if the existing rate is reasonable and compensatory.
QUOTE: Originally posted by M.W. Hemphill Economies of scale apply. The railroads are very aware of the cost to take a container through the canal on a small and inefficient ship, and land it on the East Coast (or bring it the other way around the world through the Suez Canal, which is also size-limited). There's a time penalty for the all-water move, too. So the railroads price against the water price, and the ships price against the rail price. Each has their own capacity constraint which prohibits unlimited pricing freedom. However, as enlarging the Panama Canal isn't currently in anyone's reality, and it's an all-or-nothing project (widening 10% of it is worthless), but the railroads can add to their capacity incrementally and reap the results at once, the railroads in this case have the power. I've read a number of articles written for the shipping-consumer audience that describe how this or that shipper realized economies by getting rid of that rotten railroad by relocating their distribution center to Charleston, etc., but these articles are suspiciously innocent of any numbers that would prove that this solution is anything other than a unique solution. What we do see in the steamship container business are (1) railroad container traffic growing like mad, (2) a rapid growth in railroad revenues and profit margins on containers, and (3) more and more enthusiasm on Wall Street for railroad investment, both in the stock, and for the railroad into its plant. What a turnaround from just 10 years ago!
QUOTE: Originally posted by daveklepper The irony today is the Bush wants democracy to succeed in Iraq while pushing a transportation policy the funds the very terrorism that prevents it.
QUOTE: Originally posted by ericsp QUOTE: Originally posted by futuremodal Hmmm. The Prince Plan called for seven or eight systems? And what do we have now? Seven systems! So much for Constitutional issues! The question of constitutionality does not involve the amount of class one railroads. Ther is nowhere in the Constitution that says, "There must be at least eight class one railroads operating in the United States of America". The constituionality question probably refers to the government forcing the companies to merge.
QUOTE: Originally posted by futuremodal Hmmm. The Prince Plan called for seven or eight systems? And what do we have now? Seven systems! So much for Constitutional issues!
"No soup for you!" - Yev Kassem (from Seinfeld)
Have fun with your trains
QUOTE: Originally posted by M.W. Hemphill Paul: Dead on. As to your second paragraph, that was the plan, all right: to apportion the weak roads among the strong roads. The map would then consist of balanced systems, each which had equal strength and weakness. The advantages touted for this were: 1. It would end the diseconomies inherent in the struggle for strategic advantage. 2. It would allow the ICC to set master rates that recognized inflationary pressures or productivity improvements that were fair to all. 3. It would allow the ICC to prescribe cross-subsidy of rail service without destroying carriers, thus avoiding the concentration of capital and preserving the desired outcome of rates based on mileage, not on volume (which is then termed a classic subsidy to small business, an unconstitutional restriction of the rights of property, a leveling of the playing field, a limit on the inherent rapaciousness of capitalism, or an inducement to economic activity, depending which personal social philosophy you subscribe to). 4. If it all worked out, all the ICC would have to do is look at the consolidated profit & loss statement for the industry, decide what a "fair return" should be, and set rates accordingly. Capital would get its return, shippers would all be satisfied that none was being cheated, and the country would have universal rail service. In short, the ICC was attempting to level out geography. Noble, if utopian, and fatally flawed by its failure to include coastwise shipping, river and lake shipping, and trucking. There were several formulas devised for this. The ICC engaged railroad economist William Z. Ripley to prepare one in 1921 (a provision of the Transporation Act of 1920, as you note). This plan was specifically repealed by the Transportation Act of 1940. Another was the Prince Plan, widely studied in the early 1930s, which unified all the railroads into either seven or eight systems (depending on which version you wanted). Plus, there were a number of independent plans submitted by various well-meaning concerned citizens. All of them ran into Constitutional issues and went nowhere.
QUOTE: Originally posted by M.W. Hemphill And I don't know what the ICC would have done about leaving Los Angeles with one weak railroad with most of the routes but little ability to invest in them, and one strong railroad with a single very poor route (the LA&SL) that no amount of investment would have improved. In the Central Corridor, the ICC would have had to either give D&RGW the old Central Pacific territory, or give up on any notion of two competitors in that territory with absolutely nothing to show for it in return. In the long run, there probably would still have been a BNSF merger, except in this case BNSF would be saddled with all SP's weaknesses instead of UP. They probably get down on their knees and light candles in Fort Worth every morning, giving thanks for that mercy, murmering as visions of UP congealment dance in their eyes, "There but for the grace of God go I." What few people understand, then or now, is that by 1970 SP was an albatross, a railroad with high operating costs that in most cases are still immune to being lowered, no legacy investment in the right places but a hell of a lot of it in the wrong places, and no pot of gold called the Powder River Basin to power its way out of its sinkhole. Had the SP had any inherent strength at all, we wouldn't even be having this discussion; investors would have eagerly put money into the property when we were all kids. Today it would be a strong railroad and we would be asking "Could the UP have survived without SP." Here's the bottom line: "what you see is what there is:" if a railroad is abandoned, or fails, 95-97% of the root causes are intrinsic: traffic, operating costs, strategic position, regulatory environment, tax structure. The first is a function of global economics; i.e., you can exploit but you can not rearrange to suit your fancy. The second is dependent upon the first; if you have traffic you can often (but not always) afford to lower your costs. Changing the third requires merger. The fourth and fifth are systemic. The only solution from root-cause weakness is to seek escape through merger, piecemeal sale, or abandonment. A railroad disappears because it was a weak property surrounded by strong properties, without enough profitable traffic, or both. The first modern railroader to which I can point that grasped this principal and acted with urgency was Ben Heineman at C&NW. He understood that since no white knight to save C&NW was in the offing, his only hope was to merge with and abandon his competitors as fast as possible, until as much of the profitable traffic that could be saved was all concentrated onto the lowest-cost plant. For a weak railroad such as a Milwaukee, Rock Island, SP, Katy, or Erie Lackawanna, by 1960 their only feasible salvation absent a complete reformation of U.S. transportation policy was merger with a strong road, with the full knowledge that large portions of the weak railroad were already in such poor shape that there would be no choice but to junk them the day after the merger. Leaders who understood that their true allegiance was to shareholders, not to a herald or a system map or a piece of track -- they got the plot. Those who didn't, they stood around carping about truckers, while their companies shuddered and died, and their shareholders cut their losses and fled.
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