NITL's suggestions to STB for rail policy oversight

[MichaelSol]

Ultimately, the coal trains out of Colstrip, Montana were never supposed to be there. The original plans were for 16 giant "Colstrip Generating Units" to produce electric power virtually at mine site, and send the electric power far and wide far more cheaply over new high voltage lines. Ultimately, only four "Colstrip" units were built. The bitterness and divisiveness of the controversy in the mid-1970s was so intense, that it ultimately convinced power company officials involved that power generating plant placement was so difficult in Montana that they would never attempt it again and that they would look for every way possible out of the power generation business.

The repercussions were huge, and included those daily coal trains through Miles City.

Best regards, Michael Sol

[oltmannd]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by oltmannd
[Utilities are free to build power plants wherever they want, no?

Oh my goodness gracious! You have never been involved in a power plant permitting process have you?

Best regards, Michael Sol

No, I haven't, but I don't think you missed my point.[:)]

...and I think this is a good place to let this just peter out.....

[MichaelSol]

QUOTE: Originally posted by oltmannd
[Utilities are free to build power plants wherever they want, no?

Oh my goodness gracious! You have never been involved in a power plant permitting process have you?

Best regards, Michael Sol

[oltmannd]

There are power plants that get all their coal by truck. There are power plants that get all their coal by wheelbarrow (motorized of a sort).

Utilities are free to build power plants wherever they want, no?

[Anonymous]

QUOTE: Originally posted by oltmannd

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by oltmannd

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by oltmannd

This just in! OA a smashing success in Europe!

http://www.iht.com/articles/2005/10/19/business/transcol20.php

NOT!

LSHMCOOMN!

Of all the crap that Don Phillips has put out there, this article was probably the worst (and given the fact that he was a Washington Post hack, that's saying alot!) This was commentary at best, with no references for comparison. It is fantasy, the way AAR wishes the real world was instead of facing the world as it really is.

Tell me oltmannd, where are his references? his statistics of comparison? None? Hmmm, not suprising at all.

He quotes one so-called "British Rail consultant" as saying things in Europe are a mess all due to OA, yet he reluctantly admits the varying governments' foot dragging has effectively delayed things. The entire (and disparate)European rail system was formerly government run railroads, with all the inherent inefficencies of government run railroading (aka: Amtrak). I guess you thing the Europeans should have sold the entire system to one of the US Class I's, since of course they are such great contributors to the societal welfare here in the US! Not!

God help the Iraqis if Hemphill and company turn that system into the closed access nightmare of captive shippers, bottleneck rate gouging, paper barriers to shortlines, et al! Then for sure they'd all want Saddam back!

If you had even bothered to read the "British Rail Operations" thread on this very forum, you would know that the predominance of passenger trains is the main reason freight cannot be transfered from road to rail. That is Europe's Achilles Heel when it comes to freight railroading, capacity is maxed with too many passenger trains. However, even with that inherent drawback, railroad freight marktet share in Britiain has increased 40% since OA was established (source: The "British Rail Operations" thread). Read the Italian OA thread I started, you will see yet another new business utilizing rail for intermodal movements, a business that would be on the roads right now if European railroads had remained nationalized or gone North American-style closed access.

The fact is this: Business opportunities are being explored and develped under OA in Europe, despite the fact that passenger services hog the mainlines, and it's something that would NEVER had happened under a closed access regime. Even you would have to admit to that.

Closed acces is an anachronism that should rightly go the way of the buggy whip.

Thanks for attacking Don Phillips and Mark Hemphill. That really helped your arguement...

So, the issue is HIGHWAY vs RAIL? The measure of success is how much traffic you divert from HIGHWAYS? I thought single rail line shippers were CAPTIVE and there was no such thing as HIGHWAY competition for them?

Truckload IM shipments around here are up 20% YOY. How'd that happen?

....and we all know how the European economy is booming....

Well, well, well. I like how you set that up: (1) Use an op-ed piece by Don Phillips which attacks the OA system in Europe (a system BTW that is still in its infancy and still being held up through France) without any facts to back up his allegations, then (2) use the logical ensuing critisism of said article by me as a way of trying to belittle the arguments set forth. "Why, you can't attack Don Phillips. How dare you. He is a GOD!" Well, your phony indignation don't fly here. Since Don Phillips and Mark Hemphill are basically mouth pieces for the current U.S. rail system, one cannot parse a critizism of the closed access rail system without occassionally mentioning by name the acknowledged proponents of the closed access system (especially when you brought one of them up). If you are offended by any critizism of Don or Mark, then you are a hopeless drone for their cause.

Regarding trucks vs rail, even you can comprehend the fact that certain commodities move best by rail, e.g. coal, grain, multiple containers, etc. Railroads own this traffic on surface corridors, it is impossible for trucks to provide any meaningful competition for these commodities, ergo to suggest that trucks are competition for unit grain trains or coal trains is asinine. So unless you are an idiot (and I will give you the benefit of the doubt that you are not), you know that any such shipper of grain, coal, et al who only has one Class I for rail access HAS NO OTHER TRANSPORTATION OPTION OTHER THAN RAIL to move those commodities. They are thus CAPTIVE SHIPPERS.

When you are talking about current truck traffic, it is a completely different scenario. Although truckers are not competitors for commodities that move best by rail, railroads ARE competitors for commodities that ostensibly move best by truck, at least in those corridors where the rails are in place. That is where the opportunity exists for railroads to draw traffic off the highways, either via TOFC/bi-modal or COFC/RailRunner. This is the big opportunity in Europe, and despite certain EU members intentionally stalling the full implementation of OA, there has been a significant shift of freight from European highways to the European railway system since OA was first implemented. No one, not Don Phillips, not Mark Hemphill, not Larry Kauffman, not even you, can deny the shift is due to OA, and that much more can and will happen when the reluctant nations are finally forced to grant OA rights to the myriad of freight companies.

And that more than anything is reason to give rightful critizism of those who disingenuously claim that OA "won't work". Representative democracy "didn't work" the first few decades it was tried, but we stuck with it and now we literaly rule the world. Representative democracy and open access are analogous. Give them a fair chance. They will work.

"Even you can understand" that calling people stupid adds little to a logical arguement.

You end nicely with an opinion that you are entitled to hold. However, I disagree.

That some things move best by a certain mode does not mean alternatives are not available.

You have not disuaded me of my opinion that if OA was better, it would be happening right here, right now. Mgt and stock holder love anything that make their stock and options increase in value. Are they ALL stupid, too?

That's interesting, in that I did not use the word "stupid", but you apparently read the word "stupid" into my critique of your post. Therein lies the problem with your POV, the alleged superiority of your position rests on the need to put words into my argument that are not there in order to devalue the argument. That leads me to believe that your mind was made up before this discussion began.

If a concept is promoted as being superior, but is not recognized by statute (and therefore cannot be implemented in a regulated market), does that devalue the concept? In your mind apparently it does. I'll say it again, there are no statutes for dealing with the OA concept in North America. That, combined with monopolist resistance and the lack of anti-trust legislation for railroads, is what is keeping OA out of NA.

Your statement "That some things move best by a certain mode does not mean alternatives are not available" is too simplistic. We could all have our coal hauled in by wheelbarrows if there was no other mode available, but if we are hauling coal in wheelbarrows while our competitors are having their coal delivered by 16,000 ton unit trains we're not going to last to long in the coal business. Trucks are no competition for 16,000 ton unit trains, so if you are a coal-burning utility (or a grain shipper, chemical shipper, et al) captive to one railroad you have no other realistic alternatives available. That's a plain cold hard fact, and you cannot dance around that issue without looking (dare I say it?) STUPID!

[oltmannd]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by oltmannd

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by oltmannd

This just in! OA a smashing success in Europe!

http://www.iht.com/articles/2005/10/19/business/transcol20.php

NOT!

LSHMCOOMN!

Of all the crap that Don Phillips has put out there, this article was probably the worst (and given the fact that he was a Washington Post hack, that's saying alot!) This was commentary at best, with no references for comparison. It is fantasy, the way AAR wishes the real world was instead of facing the world as it really is.

Tell me oltmannd, where are his references? his statistics of comparison? None? Hmmm, not suprising at all.

He quotes one so-called "British Rail consultant" as saying things in Europe are a mess all due to OA, yet he reluctantly admits the varying governments' foot dragging has effectively delayed things. The entire (and disparate)European rail system was formerly government run railroads, with all the inherent inefficencies of government run railroading (aka: Amtrak). I guess you thing the Europeans should have sold the entire system to one of the US Class I's, since of course they are such great contributors to the societal welfare here in the US! Not!

God help the Iraqis if Hemphill and company turn that system into the closed access nightmare of captive shippers, bottleneck rate gouging, paper barriers to shortlines, et al! Then for sure they'd all want Saddam back!

If you had even bothered to read the "British Rail Operations" thread on this very forum, you would know that the predominance of passenger trains is the main reason freight cannot be transfered from road to rail. That is Europe's Achilles Heel when it comes to freight railroading, capacity is maxed with too many passenger trains. However, even with that inherent drawback, railroad freight marktet share in Britiain has increased 40% since OA was established (source: The "British Rail Operations" thread). Read the Italian OA thread I started, you will see yet another new business utilizing rail for intermodal movements, a business that would be on the roads right now if European railroads had remained nationalized or gone North American-style closed access.

The fact is this: Business opportunities are being explored and develped under OA in Europe, despite the fact that passenger services hog the mainlines, and it's something that would NEVER had happened under a closed access regime. Even you would have to admit to that.

Closed acces is an anachronism that should rightly go the way of the buggy whip.

Thanks for attacking Don Phillips and Mark Hemphill. That really helped your arguement...

So, the issue is HIGHWAY vs RAIL? The measure of success is how much traffic you divert from HIGHWAYS? I thought single rail line shippers were CAPTIVE and there was no such thing as HIGHWAY competition for them?

Truckload IM shipments around here are up 20% YOY. How'd that happen?

....and we all know how the European economy is booming....

Well, well, well. I like how you set that up: (1) Use an op-ed piece by Don Phillips which attacks the OA system in Europe (a system BTW that is still in its infancy and still being held up through France) without any facts to back up his allegations, then (2) use the logical ensuing critisism of said article by me as a way of trying to belittle the arguments set forth. "Why, you can't attack Don Phillips. How dare you. He is a GOD!" Well, your phony indignation don't fly here. Since Don Phillips and Mark Hemphill are basically mouth pieces for the current U.S. rail system, one cannot parse a critizism of the closed access rail system without occassionally mentioning by name the acknowledged proponents of the closed access system (especially when you brought one of them up). If you are offended by any critizism of Don or Mark, then you are a hopeless drone for their cause.

Regarding trucks vs rail, even you can comprehend the fact that certain commodities move best by rail, e.g. coal, grain, multiple containers, etc. Railroads own this traffic on surface corridors, it is impossible for trucks to provide any meaningful competition for these commodities, ergo to suggest that trucks are competition for unit grain trains or coal trains is asinine. So unless you are an idiot (and I will give you the benefit of the doubt that you are not), you know that any such shipper of grain, coal, et al who only has one Class I for rail access HAS NO OTHER TRANSPORTATION OPTION OTHER THAN RAIL to move those commodities. They are thus CAPTIVE SHIPPERS.

When you are talking about current truck traffic, it is a completely different scenario. Although truckers are not competitors for commodities that move best by rail, railroads ARE competitors for commodities that ostensibly move best by truck, at least in those corridors where the rails are in place. That is where the opportunity exists for railroads to draw traffic off the highways, either via TOFC/bi-modal or COFC/RailRunner. This is the big opportunity in Europe, and despite certain EU members intentionally stalling the full implementation of OA, there has been a significant shift of freight from European highways to the European railway system since OA was first implemented. No one, not Don Phillips, not Mark Hemphill, not Larry Kauffman, not even you, can deny the shift is due to OA, and that much more can and will happen when the reluctant nations are finally forced to grant OA rights to the myriad of freight companies.

And that more than anything is reason to give rightful critizism of those who disingenuously claim that OA "won't work". Representative democracy "didn't work" the first few decades it was tried, but we stuck with it and now we literaly rule the world. Representative democracy and open access are analogous. Give them a fair chance. They will work.

"Even you can understand" that calling people stupid adds little to a logical arguement.

You end nicely with an opinion that you are entitled to hold. However, I disagree.

That some things move best by a certain mode does not mean alternatives are not available.

You have not disuaded me of my opinion that if OA was better, it would be happening right here, right now. Mgt and stock holder love anything that make their stock and options increase in value. Are they ALL stupid, too?

[oltmannd]

Staggers was about more than just rates. You get ROE by a combination of margin (more is better) and assets (less is better). Staggers allowed Conrail, in particular, to become profitable by letting them shed a lot of assets that were unproductive. The reduction is size of Conrail pre and post Staggers, was, well, staggering!

Conrail's traffic growth was essentually flat over thier history, except for intermodal where the growth was substantial.

[MichaelSol]

A prima facie case that the change from utility-type regulation to deregulated status improved the financial results of railroading is difficult to track and I remain skeptical that Staggers truly did much for American railroading compared to the benefits of simply being in a rapidly growing economy over the past 25 years. The comparison is difficult because we have lost track of what comparable performance for these kinds of companies might look like today had deregulation not occured. I am surprised I haven't seen any econometric studies on this.

WWII economic performance of American railroads is suggestive that even in a regulated environment high traffic levels could produce enviable rates of return, not withstanding the excess profits tax that made rates of return somewhat problematic during WWII. However, despite heavy investment expenditures to avoid the excess profits tax, Milwaukee Road in 1943, for instance, earned a 13.1% Return on Equity, under regulated pricing, onerous collective bargaining agreements, thousands of miles of branchlines, and an onerous tax. That's better than todays average of the top four Class I railroads.

Utilities can provide some comparison, and it is interesting since, despite their own deregulation, it has been not nearly as complete nor as extensive as railroad deregulation.

ROEquity RAILROADS
1981 -- 6.0
1982 -- 10.5
1983 -- 5.4
1983 -- 7.3
1984 -- 9.9
1985 -- 6.8
1986 -- 2.1

ROE Electric Utilities
1980 -- 10.7
1981 -- 12.4
1982 -- 13.2
1983 -- 14.3
1984 -- 14.9
1985 -- 14.4
1985 -- 14.4
1986 N/A

Today [corporations > $10B market cap]
Class I Railroads 11.46%
Electric Utilities 16.6%

Prior to their deregulation in the 1980s, but reflecting the 1980s economic boom, regulated utilities performed better than deregulated railroads, and, 20 years later, continue to perform better than railroads in their incompletely deregulated state, but also interestingly show nearly the same relative increase in the rate of return as railroads which may well be simply the impact of the economy, rather than anything specific to do with deregulation. That is, a proof that the economy, not deregulation, is responsible for railroad financial return imrpovements.

However, for those that assert that it's a good thing that railroads are no longer treated as utilites, utilities consistently did better than railroads after deregulation of railroads.

Best regards, Michael Sol

[MichaelSol]

I think this thread is suggestive of how people look at things differently, depending on their predisposition.

Ed suggests that the poor operating results of Class I railroads in the first five years after deregulation were plausibly due to transition costs. Very plausible argument. Don Phillps interprets similar results in a transition to an Open Acess system exactly the opposite: that it represents a failure of the underlying concept.

That is what bothered me about the Phillips article. While extolling the virtues of a deregulated Restricted Access system, he failed to acknowledge that at a key point in the deregulation process, he could have written nearly the same article about the results of the Staggers Act and described it in nearly the same terms as he describes the Open Access system progress in Europe.

The fact that he could have easily done so undermines entirely the credibility of his critique of Open Access.

Best regards, Michael Sol

[Anonymous]

QUOTE: Originally posted by oltmannd

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by oltmannd

This just in! OA a smashing success in Europe!

http://www.iht.com/articles/2005/10/19/business/transcol20.php

NOT!

LSHMCOOMN!

Of all the crap that Don Phillips has put out there, this article was probably the worst (and given the fact that he was a Washington Post hack, that's saying alot!) This was commentary at best, with no references for comparison. It is fantasy, the way AAR wishes the real world was instead of facing the world as it really is.

Tell me oltmannd, where are his references? his statistics of comparison? None? Hmmm, not suprising at all.

He quotes one so-called "British Rail consultant" as saying things in Europe are a mess all due to OA, yet he reluctantly admits the varying governments' foot dragging has effectively delayed things. The entire (and disparate)European rail system was formerly government run railroads, with all the inherent inefficencies of government run railroading (aka: Amtrak). I guess you thing the Europeans should have sold the entire system to one of the US Class I's, since of course they are such great contributors to the societal welfare here in the US! Not!

God help the Iraqis if Hemphill and company turn that system into the closed access nightmare of captive shippers, bottleneck rate gouging, paper barriers to shortlines, et al! Then for sure they'd all want Saddam back!

If you had even bothered to read the "British Rail Operations" thread on this very forum, you would know that the predominance of passenger trains is the main reason freight cannot be transfered from road to rail. That is Europe's Achilles Heel when it comes to freight railroading, capacity is maxed with too many passenger trains. However, even with that inherent drawback, railroad freight marktet share in Britiain has increased 40% since OA was established (source: The "British Rail Operations" thread). Read the Italian OA thread I started, you will see yet another new business utilizing rail for intermodal movements, a business that would be on the roads right now if European railroads had remained nationalized or gone North American-style closed access.

The fact is this: Business opportunities are being explored and develped under OA in Europe, despite the fact that passenger services hog the mainlines, and it's something that would NEVER had happened under a closed access regime. Even you would have to admit to that.

Closed acces is an anachronism that should rightly go the way of the buggy whip.

Thanks for attacking Don Phillips and Mark Hemphill. That really helped your arguement...

So, the issue is HIGHWAY vs RAIL? The measure of success is how much traffic you divert from HIGHWAYS? I thought single rail line shippers were CAPTIVE and there was no such thing as HIGHWAY competition for them?

Truckload IM shipments around here are up 20% YOY. How'd that happen?

....and we all know how the European economy is booming....

Well, well, well. I like how you set that up: (1) Use an op-ed piece by Don Phillips which attacks the OA system in Europe (a system BTW that is still in its infancy and still being held up through France) without any facts to back up his allegations, then (2) use the logical ensuing critisism of said article by me as a way of trying to belittle the arguments set forth. "Why, you can't attack Don Phillips. How dare you. He is a GOD!" Well, your phony indignation don't fly here. Since Don Phillips and Mark Hemphill are basically mouth pieces for the current U.S. rail system, one cannot parse a critizism of the closed access rail system without occassionally mentioning by name the acknowledged proponents of the closed access system (especially when you brought one of them up). If you are offended by any critizism of Don or Mark, then you are a hopeless drone for their cause.

Regarding trucks vs rail, even you can comprehend the fact that certain commodities move best by rail, e.g. coal, grain, multiple containers, etc. Railroads own this traffic on surface corridors, it is impossible for trucks to provide any meaningful competition for these commodities, ergo to suggest that trucks are competition for unit grain trains or coal trains is asinine. So unless you are an idiot (and I will give you the benefit of the doubt that you are not), you know that any such shipper of grain, coal, et al who only has one Class I for rail access HAS NO OTHER TRANSPORTATION OPTION OTHER THAN RAIL to move those commodities. They are thus CAPTIVE SHIPPERS.

When you are talking about current truck traffic, it is a completely different scenario. Although truckers are not competitors for commodities that move best by rail, railroads ARE competitors for commodities that ostensibly move best by truck, at least in those corridors where the rails are in place. That is where the opportunity exists for railroads to draw traffic off the highways, either via TOFC/bi-modal or COFC/RailRunner. This is the big opportunity in Europe, and despite certain EU members intentionally stalling the full implementation of OA, there has been a significant shift of freight from European highways to the European railway system since OA was first implemented. No one, not Don Phillips, not Mark Hemphill, not Larry Kauffman, not even you, can deny the shift is due to OA, and that much more can and will happen when the reluctant nations are finally forced to grant OA rights to the myriad of freight companies.

And that more than anything is reason to give rightful critizism of those who disingenuously claim that OA "won't work". Representative democracy "didn't work" the first few decades it was tried, but we stuck with it and now we literaly rule the world. Representative democracy and open access are analogous. Give them a fair chance. They will work.

[MP173]

Ok, so productivity gains had nothing to due with Staggers, but it did have quite a bit to do with the increased margins.

Probably just as important (and I missed it) was the changes in accounting which made it much more profitable to be a railroad.

And that, I do believe was a Staggers benefit.

ed

[oltmannd]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by oltmannd

This just in! OA a smashing success in Europe!

http://www.iht.com/articles/2005/10/19/business/transcol20.php

NOT!

LSHMCOOMN!

Of all the crap that Don Phillips has put out there, this article was probably the worst (and given the fact that he was a Washington Post hack, that's saying alot!) This was commentary at best, with no references for comparison. It is fantasy, the way AAR wishes the real world was instead of facing the world as it really is.

Tell me oltmannd, where are his references? his statistics of comparison? None? Hmmm, not suprising at all.

He quotes one so-called "British Rail consultant" as saying things in Europe are a mess all due to OA, yet he reluctantly admits the varying governments' foot dragging has effectively delayed things. The entire (and disparate)European rail system was formerly government run railroads, with all the inherent inefficencies of government run railroading (aka: Amtrak). I guess you thing the Europeans should have sold the entire system to one of the US Class I's, since of course they are such great contributors to the societal welfare here in the US! Not!

God help the Iraqis if Hemphill and company turn that system into the closed access nightmare of captive shippers, bottleneck rate gouging, paper barriers to shortlines, et al! Then for sure they'd all want Saddam back!

If you had even bothered to read the "British Rail Operations" thread on this very forum, you would know that the predominance of passenger trains is the main reason freight cannot be transfered from road to rail. That is Europe's Achilles Heel when it comes to freight railroading, capacity is maxed with too many passenger trains. However, even with that inherent drawback, railroad freight marktet share in Britiain has increased 40% since OA was established (source: The "British Rail Operations" thread). Read the Italian OA thread I started, you will see yet another new business utilizing rail for intermodal movements, a business that would be on the roads right now if European railroads had remained nationalized or gone North American-style closed access.

The fact is this: Business opportunities are being explored and develped under OA in Europe, despite the fact that passenger services hog the mainlines, and it's something that would NEVER had happened under a closed access regime. Even you would have to admit to that.

Closed acces is an anachronism that should rightly go the way of the buggy whip.

Thanks for attacking Don Phillips and Mark Hemphill. That really helped your arguement...

So, the issue is HIGHWAY vs RAIL? The measure of success is how much traffic you divert from HIGHWAYS? I thought single rail line shippers were CAPTIVE and there was no such thing as HIGHWAY competition for them?

Truckload IM shipments around here are up 20% YOY. How'd that happen?

....and we all know how the European economy is booming....

[bobwilcox]

QUOTE: Originally posted by piouslion

In short: it seems that the railroads had to do some 1. housekeeping 2. some personell adjustments 3. some real estate adjustments and 4 some real hard work. The thing that is most impressive about the 80's though is that the railroads fianlly decided to start being a business and not a public utility. How close am I?

Very few railroaders coming up through Traffic Departments were able to make the transition from a public utility to a business enviroment. This was equally true of traffic managers at rail shippers. At a personal level these were very hard adjustments for most people to make. I can think of a few people that literally went crazy. The hudge reductions of middle managers in the 1980s with buyouts speeded the process. Currently there are virtually no managers in railroad's sales and marketing departments or in customer's physical distribution departments that were working before Staggers.

[MichaelSol]

QUOTE: Originally posted by MP173
3. Productivity gains took most of the 80's to realize as crew sizes reduced from four to two over the 10 year period.

I agree that this was the big one from an expense reduction standpoint, but what on earth did that have to do with Staggers? Staggers did not address collective bargaining agreements.

MILW was the pioneer in renegotiating these agreements and I have discussed those negotiations with most of the key executives involved. None of them mentioned Staggers as having anything to do with the crew reduction agreements.

Best regards, Michael Sol

[Anonymous]

In short: it seems that the railroads had to do some 1. housekeeping 2. some personell adjustments 3. some real estate adjustments and 4 some real hard work. The thing that is most impressive about the 80's though is that the railroads fianlly decided to start being a business and not a public utility. How close am I?

[MP173]

Michael:

Regarding your excellent statistical commentary about ROI and ROE immediately post Staggers...I would venture to say it took awhile for the effects to kick in:

1. Lots of weeding out of branch lines and secondary routes, including spin offs to regionals and short lines. That entire process (although I dont have the data to prove it) probably took most of the 90's to do.
2. Mergers really took off during the 80's which should have (again no statistics) been an improvement to returns. (CSX merger, UP, NS, etc.)
3. Productivity gains took most of the 80's to realize as crew sizes reduced from four to two over the 10 year period.
4. No doubt there were write offs in the early to mid 80's based on the sale or abandonments of assets, plus the buy outs from the productivity gains.

Those are the only ones I can think of now.

Am I a mouthpiece for AAR or the rails? Hardly. Their returns are far too low to attract my capital, other than CN, which has been held for over 10 years (thru IC).

The deregulation of any industry is very painful in the early years. I personally experienced it in LTL trucking...talk about a bloodbath of carriers that went by the wayside.

The rails are just now starting to get some pricing power, which as we have discussed on the other thread...is painful for some to realize.

I am still not convinced we are in an economic boom. The loss of manufacturing scares the crap out of me...and Dave most of those jobs left the country because of lower wages in the manufacturing process not because of captive freight charges as I have proven earlier.

Time to call it a night.

ed

[Anonymous]

QUOTE: Originally posted by oltmannd

This just in! OA a smashing success in Europe!

http://www.iht.com/articles/2005/10/19/business/transcol20.php

NOT!

LSHMCOOMN!

Of all the crap that Don Phillips has put out there, this article was probably the worst (and given the fact that he was a Washington Post hack, that's saying alot!) This was commentary at best, with no references for comparison. It is fantasy, the way AAR wishes the real world was instead of facing the world as it really is.

Tell me oltmannd, where are his references? his statistics of comparison? None? Hmmm, not suprising at all.

He quotes one so-called "British Rail consultant" as saying things in Europe are a mess all due to OA, yet he reluctantly admits the varying governments' foot dragging has effectively delayed things. The entire (and disparate)European rail system was formerly government run railroads, with all the inherent inefficencies of government run railroading (aka: Amtrak). I guess you thing the Europeans should have sold the entire system to one of the US Class I's, since of course they are such great contributors to the societal welfare here in the US! Not!

God help the Iraqis if Hemphill and company turn that system into the closed access nightmare of captive shippers, bottleneck rate gouging, paper barriers to shortlines, et al! Then for sure they'd all want Saddam back!

If you had even bothered to read the "British Rail Operations" thread on this very forum, you would know that the predominance of passenger trains is the main reason freight cannot be transfered from road to rail. That is Europe's Achilles Heel when it comes to freight railroading, capacity is maxed with too many passenger trains. However, even with that inherent drawback, railroad freight marktet share in Britiain has increased 40% since OA was established (source: The "British Rail Operations" thread). Read the Italian OA thread I started, you will see yet another new business utilizing rail for intermodal movements, a business that would be on the roads right now if European railroads had remained nationalized or gone North American-style closed access.

The fact is this: Business opportunities are being explored and develped under OA in Europe, despite the fact that passenger services hog the mainlines, and it's something that would NEVER had happened under a closed access regime. Even you would have to admit to that.

Closed acces is an anachronism that should rightly go the way of the buggy whip.

[Anonymous]

QUOTE: Originally posted by oltmannd

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by oltmannd

No, again. You don't understand capital markets very well. It's not my area of expertise, but I'll try to explain anyway.

Any RR, right now, could operate as a "toll road" for all comers. All it would take is mgt will to make it happen. If it's such a great idea, capital mkts would fund the purchase of the RR to install mgt to make it happen. Stock would go for a premium and no board would refuse to sell under those conditions.

Hmmm, I don't understand capital markets? My econ degree says differently.

What you don't yet understand, though I've explained it to you twice, is that capital markets will not jump into an enterprise for which there is no legal parameters yet set up. OA can take on any number of forms, varying degrees of regulation, FRA and STB requirements, etc. As of yet, there is no such groundwork in place to define what OA in the USA would even look like. Even if one of the railroads decided to try out the OA concept, what guidance regarding government oversight would be needed? What you are suggesting is something better left to the venture capitalists, and even they would have to wait for a set of parameters before they would jump in.

The markets hate uncertainty, you should know that.

Marketers and train operators would fall under existing STB regs. ROW owners wouldn't need any more regulation than the owner of an office building. I don't see any real uncertainty or need for regulation. The REAL issue here is that OA would convert the RRs into the highly unprofitable airline service model. Isn't that obvious?

The "highly unprofitable airline service model" to which you refer is predicated on the hauling of passengers, and those airlines that are struggling the most are the ones with the worst pricing/service structures. Isn't that obvious?

[MichaelSol]

Inadvertently, Phillips misses the salient point underlying railroading in their respective contexts, that is, the overall performance of the economic systems of which railroads are, and always have been, a bellwether. Railroads usually do better when the economies they operate in do better, and worse when they don't.

But, that's not always even true. There's been one salient exception: US Railroads after deregulation.

Despite the credit given to the Stagggers Act, for those with a slightly longer memory, I still recall the "failure" of the Staggers Act .

At the end of five years of deregulation, even during an economic boom, economists and railroaders alike were looking at the following statistics with some dismay:

ROI/Railroads
1980 4.2%
1981 4.0%
1983 2.1%
1984 3.6%
1984 4.7%
1985 3.6%
1986 3.5%

Similarly, the Return on Equity
1980 6.0%
1981 10.5%
1982 5.4%
1983 7.3%
1984 9.9%
1985 6.8%
1986 2.1%

Twenty years later, the statistics finally look much better, but is that realistically the result of the Staggers Act? Railroads still underperform other US corporations by about the same amount that they did in 1978. So did railroads realistically improve ... or did the economy?

Is Phillips as surprised as he implies that European railroads are doing poorly in the matrix of national economies that are barely growing? He seems to be totally unaware of the general, and much discussed, economic malaise currently afflicting Europe.

Yet, our US rates of growth in the 1950s and 1960s were small ... and our railroads performing poorly.

Was that regulation? Or the economics of railroading reflecting the national economy?

Today US railroads are booming. Is that deregulation? Or the economics of railroading reflecting the national economy?

The figures from the 1980s are a statistical suggestion that deregulation was not a significant factor in railroad performance, since in fact there was no improvement under deregulation, but rather a decline in overall economic performance and health after deregulation.

The US economy had begun to improve solidly 1982-1987. The railroads oddly enough did not reflect that improvement during that time. Historically, that is unusual.

Best regards, Michael Sol

[CSSHEGEWISCH]

Don Phillips has an excellent way of presenting the facts as they are, whether we like it or not. In addition, OA isn't working as well in Australia as some people would like to believe.

[edblysard]

There ya go again, screwing up a perfectly good fantasy with facts
Ed[:D]

[oltmannd]

This just in! OA a smashing success in Europe!

http://www.iht.com/articles/2005/10/19/business/transcol20.php

NOT!

[oltmannd]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by oltmannd

No, again. You don't understand capital markets very well. It's not my area of expertise, but I'll try to explain anyway.

Any RR, right now, could operate as a "toll road" for all comers. All it would take is mgt will to make it happen. If it's such a great idea, capital mkts would fund the purchase of the RR to install mgt to make it happen. Stock would go for a premium and no board would refuse to sell under those conditions.

Hmmm, I don't understand capital markets? My econ degree says differently.

What you don't yet understand, though I've explained it to you twice, is that capital markets will not jump into an enterprise for which there is no legal parameters yet set up. OA can take on any number of forms, varying degrees of regulation, FRA and STB requirements, etc. As of yet, there is no such groundwork in place to define what OA in the USA would even look like. Even if one of the railroads decided to try out the OA concept, what guidance regarding government oversight would be needed? What you are suggesting is something better left to the venture capitalists, and even they would have to wait for a set of parameters before they would jump in.

The markets hate uncertainty, you should know that.

Marketers and train operators would fall under existing STB regs. ROW owners wouldn't need any more regulation than the owner of an office building. I don't see any real uncertainty or need for regulation. The REAL issue here is that OA would convert the RRs into the highly unprofitable airline service model. Isn't that obvious?

[MichaelSol]

QUOTE: Originally posted by bobwilcox
The last time I was in China(2003) they were using differental pricing. The first time I was in China(1985) they had no concept of pricing as a way to control demand. It appears sometime during this 18 year gap they thought about differental pricing and decided they liked what the could acheive.

.... well, let us know when they discover the difference between elastic and inelastic demand.

Best regards, Michael Sol

[bobwilcox]

QUOTE: Originally posted by futuremodal
...networks do not experience anything close to differential pricing...

The last time I was in China(2003) they were using differental pricing. The first time I was in China(1985) they had no concept of pricing as a way to control demand. It appears sometime during this 18 year gap they thought about differental pricing and decided they liked what the could acheive.

[Anonymous]

FM: Business is dynamic and is ever changing. Open Access is not the real question. The real question is closer to one of control, ownership, and future profitability which are a dynamic part of the nations private economy. Governments in business tend to be somewhat static. Those states are not really compatable when interfering with each other.MY [2c] for what it's worth. PL

[Anonymous]

QUOTE: Originally posted by oltmannd

No, again. You don't understand capital markets very well. It's not my area of expertise, but I'll try to explain anyway.

Any RR, right now, could operate as a "toll road" for all comers. All it would take is mgt will to make it happen. If it's such a great idea, capital mkts would fund the purchase of the RR to install mgt to make it happen. Stock would go for a premium and no board would refuse to sell under those conditions.

Hmmm, I don't understand capital markets? My econ degree says differently.

What you don't yet understand, though I've explained it to you twice, is that capital markets will not jump into an enterprise for which there is no legal parameters yet set up. OA can take on any number of forms, varying degrees of regulation, FRA and STB requirements, etc. As of yet, there is no such groundwork in place to define what OA in the USA would even look like. Even if one of the railroads decided to try out the OA concept, what guidance regarding government oversight would be needed? What you are suggesting is something better left to the venture capitalists, and even they would have to wait for a set of parameters before they would jump in.

The markets hate uncertainty, you should know that.

QUOTE:

Did you read Don Phillips column in Dec Trains? The top three frt RR countries are US, Russia and China. None of these have open access. What does that say to you?

That's not entirely true, in that the Russian and Chinese networks are nothing like the North American rail networks. They are either government owned or formerly government owned, and as such the shippers on those networks do not experience anything close to differential pricing, bottleneck rate gouging, paper barriers to shortlines, et al. OA is about shippers having access to competitive rates, whereas government run railroads give shippers access to subsidized rates. If the other railroads of the world aren't OA, then they are nationalized, or at least engender some characteristic thereof. One thing is for sure: They ain't proprietary, closed access oligarchies like we have here in North America (although the Russian lines could certainly be headed that way, given the whole Yukos thing.)

[MichaelSol]

QUOTE: Originally posted by oltmannd
[Did you read Don Phillips column in Dec Trains? The top three frt RR countries are US, Russia and China. None of these have open access. What does that say to you?

Two of these represent Capitalism, and what "markets" would invest in?

Whew!

Best regards, Michael Sol

[oltmannd]

No, again. You don't understand capital markets very well. It's not my area of expertise, but I'll try to explain anyway.

Any RR, right now, could operate as a "toll road" for all comers. All it would take is mgt will to make it happen. If it's such a great idea, capital mkts would fund the purchase of the RR to install mgt to make it happen. Stock would go for a premium and no board would refuse to sell under those conditions.

Did you read Don Phillips column in Dec Trains? The top three frt RR countries are US, Russia and China. None of these have open access. What does that say to you?