Justice Dept investigating BNSF's pricing policies

[Anonymous]

Saw on the TRAINS newswire that the JD is investigating BNSF's pricing policies for hauling coal out of the PRB. All I can say is it's about time.

Although if the JD really wants to get to the root of the problem of monopolistic pricing practices, it should start an investigation of the STB and why they haven't enforced the competitive caveats of the Staggers Act.

[edblysard]

Oooh.ooh...
That counts as a two for...

Double dings![:D]

[mudchicken]

Does that mean the clowns in the power companies get investigated too? Only fair!

[Anonymous]

Didn't I hear somewhere that the RR's have the right to Price there own Freight shipments?

[espeefoamer]

Does this mean the STB must let the DM&E build thier PRB extension to provide more competition?

[greyhounds]

QUOTE: Originally posted by espeefoamer

Does this mean the STB must let the DM&E build thier PRB extension to provide more competition?

No, it just means that our DOJ is responsive to political pressure from special interest. As it was and as it always shall be.

BTW, I am totally offended by your repeated referenced to cats. I B a "dog man", and I don't think that cats have any place on a railroad discussion board. You offend me with your signature "Cats rule, dogs drool". This should be banned because I have a right to not be offended by anything.

We are forced, I tell you FORCED, to "cat test" our retired racing Greyhounds before they are placed as pets. This is so some wimpy cat (Yetch, shudder, yutch) is not caught by a Grey in its new home.

When God made a Dog (think about the spelling), God made a Greyhound. When God made a cat we can only puzzel as to what He was thinking.

Please desist immediately or I shall be even more offended.

[Puckdropper]

greyhounds, I'm confused. Is that sarcasm or not?

Please denote anything questionable like that so to prevent confusion!

[greyhounds]

QUOTE: Originally posted by Puckdropper

greyhounds, I'm confused. Is that sarcasm or not?

Please denote anything questionable like that so to prevent confusion!

"Puckdropper"? Well, I guess you're out of work. It took a few years, but they did screw up hockey didn't they. Of course, before that, they wrecked the Indianapolis 500, which took some doing, but they did it.

Most of my previous post regarding God, cats or dogs is meant as "sarcasm". How would you suggest that I "denote" such.

But I do basically believe that "When God made a dog, He made a Greyhound" is true.
That's a dog as He intended a dog to be.

And I like cats just fine. Like dogs, they're a gift from God that enriches our lives.

[Anonymous]

I am glad someone is finally getting upset about BNSF pricing. The BNSF just charged us over $9,000.00 to move an FRA blue carded locomotive 17 miles because it did not have alignment control couplers. Ridiculous

[Anonymous]

I had a feeling this would get some interesting responses.

rgemd: You guys might have gotten a better deal from some house movers.

[daveklepper]

It is still a pretty well-run railroad that seems to please some shippers and it seems to be more responsive to the welfair and blood pressure of the Amtrak passengers on its tracks than you know who.

[bobwilcox]

QUOTE: Originally posted by BNSF railfan.

Didn't I hear somewhere that the RR's have the right to Price there own Freight shipments?

With Staggers for the first time, railroad pricing was subject to the the anti-trust laws. Other than the end of the ICC the biggest change was that railroads could not continue with various rate making cartels. It was illegal for competitors to agree on rates. However, there are other anti-trust provisions besides colusion so you can't tell just what interests the Justice Department.

[Anonymous]

No it's just to me that the Railroads have to do what ever that they can to servive in this stupid country without the worry of politicks always getting in the way.

[Mookie]

QUOTE: Originally posted by greyhounds

QUOTE: Originally posted by Puckdropper

greyhounds, I'm confused. Is that sarcasm or not?

Please denote anything questionable like that so to prevent confusion!

"Puckdropper"? Well, I guess you're out of work. It took a few years, but they did screw up hockey didn't they. Of course, before that, they wrecked the Indianapolis 500, which took some doing, but they did it.

Most of my previous post regarding God, cats or dogs is meant as "sarcasm". How would you suggest that I "denote" such.

But I do basically believe that "When God made a dog, He made a Greyhound" is true.
That's a dog as He intended a dog to be.

And I like cats just fine. Like dogs, they're a gift from God that enriches our lives.

Had me worried there for a minute. I have had all sorts of animals - mostly strays and abandons.

Prefer a cat now because of low maintenance.

Remember minor league hockey is still available.

Indy 500 - well after Fireball Roberts, it went downhill.

Ok - back to subject at hand...

Mookie

[gabe]

I wonder what it is about BNSF's pricing policies that they are investigating. I am a bit confused. If BNSF gets to set its own prices . . . Are they conspiring with UP? That might be something the Feds can hang their hat on. Anyone have any insight on that?

Greyhounds, I thought your comments were choice. Especially when you stood by your comments; you are a real "the puck stops here kind of guy."

Gabe

[Anonymous]

Having just read the article, it says the Justice Department is investigating the practice of Burlington Northern Santa Fe AND Union Pacific, not just BNSF, to see if posting public tariffs for coal movements on the Internet is a violation of antitrust law.

Giving DOJ the benefit of the doubt for a second: So should we assume that it's OK for a gas station or a grocery store to advertise a price on their goods, or a plumber to advertise his rate for unclogging a drain, but not a railroad to name a price for their coal? The federal government would prefer that rates be negotiated secretly? That the public good is advanced by hiding information under rocks? It prefers people to lie in the course of negotiations than to tell the truth? It would prefer the court docket to be loaded up with plaintiffs's suits about rate discrimination? It wants to create an environment that encourages people to file suits alleging, for example, that one man got a better deal because his wife is the admissions officer at a fancy kindergarten and the railroad man's kid was trying to get in?

Supposing this holds up, will it then be illegal for airlines to publish rates on the Internet? Will taxis be prohibited from painting their rates on doors? Wasn't that last one pushed by DOJ to protect the public?

Truly, I'm baffled by this one.

OS

[daveklepper]

Like the Justice Department forcing the power companies to sell the street railways to National City Lines (GM-Firestone-Texaco). Anti-trust!

[jchnhtfd]

OS -- if you're baffled, what do you think I am? But seems to me you have it -- as usual -- right on the nail. That being said, it does have a suspiciously politically inspired look to it...

[Anonymous]

Jamie,

Given Bush's relationship with corporate America, I doubt this is a politically motivated investigation so much as it is probably a reluctant action due to overwhelming complaints from the captive shipper sector of our economy.

When you look at this from the macro-economic viewpoint, you begin to understand the notion that what's good for the railroads isn't necessarily good for the economy on the whole. The U.S. is in heated competition with the rest of the world for manufacturing retainment, and when the means of transportation in the U.S. is more costly than that for other nations, it can be a major contributor to manufacturers relocating overseas. We are all aware that it costs more for captive shippers to get their goods to port than it does in other countries. We are also constrained by our energy costs, and when the price of delivered coal goes up, the cost of energy also goes up, and that's one more factor in whether a company relocates or stays put.

No one wants to see the railroads go broke, but neither do we want to see all our manufacturing jobs leave. Since rail shippers represent a far larger portion of the GDP than do the railroads themselves, it makes sense for the feds to take action to prevent or reduce pricing factors for the costs of inputs and the transportation of U.S. goods to port.

[gabe]

QUOTE: Originally posted by futuremodal

Jamie,

Given Bush's relationship with corporate America, I doubt this is a politically motivated investigation so much as it is probably a reluctant action due to overwhelming complaints from the captive shipper sector of our economy.

When you look at this from the macro-economic viewpoint, you begin to understand the notion that what's good for the railroads isn't necessarily good for the economy on the whole. The U.S. is in heated competition with the rest of the world for manufacturing retainment, and when the means of transportation in the U.S. is more costly than that for other nations, it can be a major contributor to manufacturers relocating overseas. We are all aware that it costs more for captive shippers to get their goods to port than it does in other countries. We are also constrained by our energy costs, and when the price of delivered coal goes up, the cost of energy also goes up, and that's one more factor in whether a company relocates or stays put.

No one wants to see the railroads go broke, but neither do we want to see all our manufacturing jobs leave. Since rail shippers represent a far larger portion of the GDP than do the railroads themselves, it makes sense for the feds to take action to prevent or reduce pricing factors for the costs of inputs and the transportation of U.S. goods to port.

Dave,

If this were about shippers on a branch line serving less-than trainload customers, I might be more convinced; but, don't you think the relationship between Powder River Basin Coal and manufacturing is a bit attenuated to support your "its about keeping manufacturing jobs" argument?

I am not sure this administration—or the last three—want to keep such industry in the United States. It seems to me that the economic strategy is to intentionally export as many of these jobs as we can in order to keep inflation in check and transform the American economy into primarily a—non-union—service/technology based economy. I am not saying that is a good or a bad thing; it is just my observation.

Also, even assuming the truth of your premise concerning Bush and corporate America, corporate America is not one entity. It is many small entities in competition with one another.

Until I see an argument explaining how BNSF or UP's pricing is unfair, I am going to have difficulty seeing how this is anything less than an attempt of lobbyists from corporation Y to get the government to take money out of the hands of corporation X and give it to Y.

Gabe

[slotracer]

BNSF has been the leader in the effort to convert to public pricing.....no contract rates negotiated, open rates visable to anyone and everyone regardless of volume of business on a move, other business your company has to offer or other factors. It is a supermarket type rate arrangement....this is your price take it or leave it.
That may sound all well and good but what it is, is a leagal way to signal price. The railroads are not interested in competing with each other and now that they are heavy on volume, are not interested in competing with truck barge etc. This situation spreads this tendency toward non compettive pricing. In a way it is a legal form of collusion. With 2 major carriesr on each side of the mississippi you have a duopoly situation, and they are not interested in going after the other's business like most of the rest of teh corperate world is used to. Along with this price situation, they (to one degree or another) have been dishing out terrible service additional demurrage much of which they create through bunching of cars and innnacurate billing, forcing you to truck constantly when they run you out of product and instead of improving to meet increased demand, they keep abandonning lines and scrapping cars and engines, offering buyouts and down staffing to the point that they clog up when volume increases.
If we had not allowed things to merge down to 2 majors each side of teh Missisppi the market competition would address this issue. Railroads made great improvements through modernization, some consolidation and competition in the eighties and nineties. Now they have huge control and are fat and lazy, they charge what they please and the services they provide are deteriorating horribly, but why should thye change anything, they've got you.....sort of.....

BN is not alone although they are king (CSXT is second) on the tarriff pricing push, which by the way, will kill sales and marketing jobs in a decade or so.

UP has yet to adopt widespread tarriff pricing, but their service is so bad and has been for 18 months it is sad. Yet they, the ones with horrible service think nothing of sticking it up a shippers pa-toot for 40, 50 and up to 100% rate increases with no relief from the deplorable service. Tell me where else that occurs but in a monopoly.

Shippers will change things gradually, any legislation that may or may not happen could create additional change. Our company alone has pulled somewhere between 1.75 and 2 million a year from UP, all of which went to BN but it won't stop there, I have projects going to pull nearly everything from them, some going to barge, other is changes in where we get material or what material we use. Some of that will truck from sources close ad local to the plant.

Believe me, we are not the only ones doing so, I know of lots of tonage people have, are or are looking at changing to avoid UP #1 or get it off teh railraods entirely. The sad thing for railroads is that they have so enraged teh shipping community that the volume won't come back very fast once they get hungry for traffic again, they have burned many people with outrageous rate increases whil providing really poor service.

[Anonymous]

QUOTE: Originally posted by gabe

QUOTE: Originally posted by futuremodal

Jamie,

Given Bush's relationship with corporate America, I doubt this is a politically motivated investigation so much as it is probably a reluctant action due to overwhelming complaints from the captive shipper sector of our economy.

When you look at this from the macro-economic viewpoint, you begin to understand the notion that what's good for the railroads isn't necessarily good for the economy on the whole. The U.S. is in heated competition with the rest of the world for manufacturing retainment, and when the means of transportation in the U.S. is more costly than that for other nations, it can be a major contributor to manufacturers relocating overseas. We are all aware that it costs more for captive shippers to get their goods to port than it does in other countries. We are also constrained by our energy costs, and when the price of delivered coal goes up, the cost of energy also goes up, and that's one more factor in whether a company relocates or stays put.

No one wants to see the railroads go broke, but neither do we want to see all our manufacturing jobs leave. Since rail shippers represent a far larger portion of the GDP than do the railroads themselves, it makes sense for the feds to take action to prevent or reduce pricing factors for the costs of inputs and the transportation of U.S. goods to port.

Dave,

If this were about shippers on a branch line serving less-than trainload customers, I might be more convinced; but, don't you think the relationship between Powder River Basin Coal and manufacturing is a bit attenuated to support your "its about keeping manufacturing jobs" argument?

I am not sure this administration#8212;or the last three#8212;want to keep such industry in the United States. It seems to me that the economic strategy is to intentionally export as many of these jobs as we can in order to keep inflation in check and transform the American economy into primarily a#8212;non-union#8212;service/technology based economy. I am not saying that is a good or a bad thing; it is just my observation.

Also, even assuming the truth of your premise concerning Bush and corporate America, corporate America is not one entity. It is many small entities in competition with one another.

Until I see an argument explaining how BNSF or UP's pricing is unfair, I am going to have difficulty seeing how this is anything less than an attempt of lobbyists from corporation Y to get the government to take money out of the hands of corporation X and give it to Y.

Gabe

Gabe, my comments regarding the Bush Administration's relationship with corporate America need to be taken in the context of how this administration relates to the business community. Bu***ends to be hands off when it comes to issues of business vs business (e.g. his handling of the Microsoft issue). Therefore, in order for his JD to conduct an investigation, there has to be enough of an outcry from the one side that not doing something about it would be seen as being in bed with the railroad industry (to the detriment of all other businesses).

I am making an assumption that the JD action in this case is not just due to the complaints of coal shippers and utilities, but is also due to the complaints of other captive shippers and their associated lobbyists and Congressional representatives, e.g. the abuses of monopolistic powers has come to a head.

You may be right that the Clinton Administration did not want to keep heavy industry in the U.S. since he did everything he could to chase them out of the country or shut them down via the environmental angle. Bush obviously has closer ties to such industries, and it is doubtful that he is not concerned with the retention of such industries.

To see where BNSF's and UP's public pricing is unfair, you have to have an understanding of how a market with two major players can evolve into a duopoly. When BNSf and UP were conducting business with confidential contracts, neither one could tell if they were ahead of the other or behind, thus the shippers could still extract a sliver of competitive actions between the two. However, when they both publish rates, all one has to do is to check the publicly available pricing of the other and set their own rates accordingly, and now you have no more competition, you instead have a duopoly. You can't make an argument that other businesses do the same so why can't a duopolistic railroad situation, because those other markets have free entry of new competitors. If a community with only one grocery store suddenly had that store raise it's prices 100%, you can bet that it wouldn't be long before someone else decides to open their stores to garner the business away from the original. An elastic market place is no place for monopolistic practices, which is why stores tend not to abuse a situation of being the only store in a community. Only in an inelastic market can a business extract monopolistic pricing, which is what the railroad duopoly has out West. The competitive caveats in Staggers was supposed to prevent this, but the STB has been lax in enforcing these caveats, which is why the JD should be investigating the STB along with BNSF and UP.

In other words, it's not a situation where corporation Y is trying to take money from corporation X. Rather, its more like a situation where corporations Alpha and Omega (a Biblical reference to denote that in this situation they are all that there is in this market realm thanks to government regulators) are teaming up to extract every possible ounce of blood from Corporation's a, b, c, ....x, y, and z.

[edblysard]

Ding

[Anonymous]

QUOTE: Originally posted by edblysard

Ding

What, only one ding this time?

[Anonymous]

Ding, ding, ding...

Pardon me boy....

Is that the Open Access choo choo...

FOFLMAO...

LC

[Anonymous]

Another analogy as to why allowing duopolists to public post prices is that it is akin to the problem of insider trading. On the surface, there may seem to be nothing wrong with a company officer informing key stockholders of an impending transaction that will impact the stock price. Yet we all know that such actions desecrate the sanctity of the market. The same effect occurs when two supposed competitors are allowed to see each others pricing, since the low one will just adjust to match the high one. This destroys the confidentiality of private contracts. There is some irony here, because one of the biggest complaints of railroads prior to Staggers was that they should be allowed to solicit confidential contracts rather than having to post rates publicly. Now that the Class I field has been whittled down to two in the West, it makes more sense for them to publicize their rates to make sure they're not shortselling their captive market services relative to the other player.

[edblysard]

Ah,
Now we have the conspiracy theory along with the duo-monopolistic catch words..
thats a two dinger for sure!

[Anonymous]

I wonder if the Justice Department is now getting unsolicited idiocy from the kool-aid drinkers. "Hello, Justice Department? You're all a bunch of conspiracists! Ding, ding!"

[edblysard]

I am sure they get about the same volume from the tea sips as we get here on the forum, most likely from the same source...
Ed

[bobwilcox]

QUOTE: Originally posted by edblysard

I am sure they get about the same volume from the tea sips as we get here on the forum, most likely from the same source...
Ed

During my time at the SP we did not have tea sippers or kool aid drinkers we had FODAS-Forces of Darkness and Superstition. The lived somewhere near Houston.