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Murphy - I don't think you know what you're talking about. What Mark said was, "High rail rates encourages manufacturing to be located very close to the point of consumption. Low rail rates encourages manufacturing to be located in low-cost places." So we have a manufacturing plant located in Peoria making $50 dollar widgets, and it costs them $60 per widget to ship to Chicago via a single rail connection (e.g. they are captive), thus their widgets cost $110 in Chicago vs the $100 dollar Chinese widget. The Chinese widget costs $2 to make and $98 dollars to ship to Chicago via OA containerships and virtual OA rail connections stateside, e.g. they've got BNSF, UP, CP, and CN from the West, and KCS, BNSF, UP, NS, CSX, and CN from the East coast. Since captive rates are generally twice as high as competitive rail rates, we can safely assume that if the Peoria factory had competitive rail access, they could ship to Chicago for 1/2 $60 = $30. Now they can market widgets in Chicago for $80 vs the $100 Chinese widget, and the Cninese can't cut any more costs because they are already using competitive shipping modes. So what you are saying is that since now that your shipping costs to Chicago are half what you are paying now, this has inspired you to take your factory to China? Tell me why the Peoria company would suddenly bolt for China if their stateside rail rates were cut in half? If you were running this company, is that what you'd do?
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