Edit post

Edit your reply below.

Post Body
Enter your post below.
[quote]QUOTE: Originally posted by n012944 [quote]QUOTE: Originally posted by futuremodal [quote]QUOTE: Originally posted by rrandb Some rates were artificialy low. Most were not. What is obvoius was the number of miles of track that disappeared when the railroads no longer had to provide service to customers that were unable to afford these services based on the actual cost of rail service. How do you get permission to adandon a line if its making too much money? You can not. Can you abandon a line because it doesn't make enough money to operate it. YES The remarks were about grainger lines that after de-regulation became dirt paths. Was this because the railroads were making too much money NO [/quote] "How do you get permission to abandon a line if it's making too much money?" The "too much money" statement aside (e.g how much is "too much"?), a line that was profitable pre-Staggers can end up in the scrap heap for any number of reasons. Mergers can make a profitable line redundant, and we all know what happened to the redundant lines post-Staggers, don't we? The seemingly sole purpose of mergers was to allow railroads to lop off assets to *reduce* costs, totally irrespective of whether those assets made money or not. The whole purpose of dereg seems to be to consolidate as much trackage as possible into the fewest corridors possible, to allow maximization of pricing power. Thus, it is probable that most of those lines being scrapped were profitable, but the proliferation of them repressed pricing maximization. Of course, the railroads turned around then and, instead of maximizing all profits on the few remaining lines, used captive rates to maximize profits on only captive US rail shippers, then cross subsidized the rates for non-captive shippers, including all overseas importers. Thus, minus imported oil and in spite of a relatively weak dollar, we still have a growing trade deficit, thanks in part to the market skewing activities of US railroads. Economic theory predicts such, and WHOOOMP there it is. The area of the country I reside in is full of abandoned ROW's that made money for their owners - The Milwaukee PCE, the ex-NP nee BN Palouse and Lewiston line, the SP&S from Spokane to Pasco, the 2nd and 4th subdivisions of the ex-Camas Prairie, the UP Yakima Valley line, et al. It's quixotic and bizzare, yet instead of returning some of those profits to the line in question for maintenance and/or upgrade, the Class I's siphoned off all those profits for other projects, possibly for the cross-subsidies given to the importers of Asian made products![V] [/quote] Oh, thats right we forgot about your and Sol's "conspriracy theory" that the world is out to make the northwest captive to two railroads. The reason all the railroads were abandoned was economics, you can say all the things you want, but the bottom line is that if the lines made money, which includes covering the maintance of the line, the lines would still be here and operating. Bert [/quote] Your ignorance of basic economic fundamentals is astonishing. Do you not yet understand the hows and whys of which monopoly activities skew the market away from your simplistic "if it makes money, it would still be here" mindset. Under a true competitive market environment, the participants make their money via volume, thus a competitive railroad environment would result in the saving of all lines with even minute profit potential. To scrap these lines would result in a smaller consumer base, thus would threaten such an entity with being squeezed out by those who are constantly expanding their customer base. Under monopoly environments, the few participants make their money via consolidating their business avenues into a few, which allows them to extract maximum profitability via maximized pricing power. Thus, lines that are either marginally profitable e.g. earning at least 180% R/VC for that line, or those normally profitable lines that have become redundant to newly merged lines, end up on the scrap heap. This is exactly what the railroads have quasi-engaged in post Staggers. However, because there are some areas in which more than one or two railroads are in play (such as the overseas import markets), the railroads have engaged in below cost pricing (under the STB's 180% R/VC formula) to win the market share of those areas, and they then must make up for it by charging their captive markets (e.g. domestic rail shippers)excessive rates (up to 400% R/VC). Thus, the railroad market is severely skewed, skewed in favor of imports to the detriment of US production, and it shows up via the US trade deficit, abandoned factories across the USA, and the lack of new heavy manufacturing and production in the USA. Yes, Bert, that's how it happens. Look outside your window, you can percieve it for yourself. No, it isn't a conspiracy, it is just the result of shortsighted legislation and subsequent lack of caveat enforcement.
Tags (Optional)
Tags are keywords that get attached to your post. They are used to categorize your submission and make it easier to search for. To add tags to your post type a tag into the box below and click the "Add Tag" button.
Add Tag