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"Open Access" and regulation of railroad freight rates.
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[quote user="greyhounds"][quote user="futuremodal"] <P>Bad conclusion, Ken. There is nothing implicit about a second rail carrier "increasing costs" to serve the plant. There would be a shift of revenues from the one rail carrier to the new rail carrier, assuming they both use the same trackage. Loss of revenue does not equate to increasing costs.</P> <P>[/quote]</P> <P>No, the cost will go up. You're going to use a minimum of two trains and two crews to do the work now done by one. </P> <P>[/quote]</P> <P>No, you're not. You are making an incredibly faulty assumption that the free market is zero sum gain. You are forgetting that the market will work things out. </P> <P>Your scenario is unrealistic to begin with. Where do you have one crew working one customer limited to a full work week or less on one line, and no one else? Very rarely if ever. Most likely the current crew is two or three shifts operating a local, picking up and dropping off for various customers. Right there you have a two or three way split.</P> <P>No additional crews overall = no cost increase.</P> <P>Taking your example for analysis, the most likely scenario for small carload aggregation would be the franchise model. One operator is given a franchise to work that one shift per day, 5 or less days per week local. After a certain time, if the shippers don't like what they are getting in the way of service, they can yank the franchise from the underperformer and give it to a second operator. If the shippers are satisfied with the current operator, he keeps the contract for another term.</P> <P>No addtional crews = no cost increase.</P> <P>Then there is that supreme example of free marketeering - the increase in business with access to input price competition. Often there is production that is skewed (usually at a higher cost to the producer) for the benefit of truck haul. The new intramodal competition may cause that producer to go back to more basic production that favors rail haul. Perhaps there is an idle production facility (probably shut down due to captive rail rates) that restarts production with that market guarantee of intramodal competition. Perhaps there is a company siting for a new production facility that locates on the line in question rather than locating overseas or over the border because of that implicit competitive rate guarantee. Etc, etc, etc. </P> <P>New business = new revenue for rail industry.</P> <P>You see, Ken, you gotta pull your head out of the zero sum box and start to see how new intramodal rail competition increases economic activity that benefits the rail industry.</P> <P>[quote][quote]</P> <P>You are assuming that competing rail companies will not be able to maximize labor and capital productivity. Faulty assumption. Again, look at all the currrent multiple use, trackage rights, et al agreements - these are not increasing costs, they are actually lowering costs.</P> <P>[/quote]</P> <P>Trackage rights are not the same as OA. They're basicallly a 'bridge' where one railroad sells excess capacity to another railroad. A railroad operating on TR generally can not serve customers on the line. There are exceptions such as Reno/Sparks and Salt Lake City.</P> <P>[/quote]</P> <P>Well, those "exceptions" speak volumes, don't they? I.E. > IT WORKS!</P> <P>[quote]</P> <P>The inherent inefficiencies of an open access system come into play when two or more rail carriers try to serve the same customer. </P> <P>[/quote]</P> <P>Here's where you are stuck in a rut. Remember, highways are open access, waterways are open access, European railroads are mostly open access (and moving to eventual system wide open access), Aussie railroada are open access.......EVERYONE BUT NA RAILROADS! Obviously, those aforementioned open access systems are very efficient from a market standpoint, yet they share the same basic infrastructural principle as NA railroads - you can fit basically one ROW unit per corriodor. So why are these OA systems so doggone efficient? Because the "natural monopoly" portion is separate from the transporter portion. The aggregation principle you cling to is not written in stone as being the sole determinant of one service provider being more efficient than two service providers, because it is superceded by the (1) franchise model of OA, (2) the crew split scenario, and (3) the new business potential of competitive markets. All three such efficiencies cannot exist in the monopoly fiefdom. Therefore, it is just plain ignorant to bestow the efficiency crown to the monopoly.</P> <P>[quote]</P> <P>[quote user="futuremodal"]</P> <P>You're stuck on faulty. Why would a 3rd party need three crews? You really aren't thinking this through.</P> <P>[/quote]</P> <P>I never said the 3rd party would need three crews. You misunderstood. The 3rd party would BE the thrird crew. Instead of the one crew now handeling things, you'd have: 1) the 3rd party crew doing the swtiching, 2) Railroad "A's" crew picking up some of the loads, and 3) Railroad "B's" crew picking up part of the loads. Productivity would plumet under open access. Under the "3rd Party Scenario" you'd have a seperate switch crew, and each of the two road crews would handle fewer cars than they now do. Reducing productivity is a really bad idea.</P> <P>Railroad crews are trained (no pun intended) professionals. They don't come cheap. (Nor should they.) Use them wisely and well. Replacing one crew with three is not such a use. </P> <P>[/quote]</P> <P>Well, only a true "professional" would simply aquiesce to such a non-sensical performance. Almost as farcical as OJ's glove not fitting - yes, the glove would fit him in any other situation, except when putting on the glove would bring a guilty sentence. I could really see some of the current crop of rail managers pulling an OJ to *prove* that intramodal competition "just won't work". Which is why the task of dragging the NA railroad industry into the 21st century will probably fall to non-railroaders.</P> <P>[quote]</P> <P>[quote user="futuremodal"]</P> <P>Answer us this - why do you automatically assume intramodal rail competition would increase costs, but intermodal competition would not?</P> <P>[/quote]</P> <P>I never addressed that. You are assuming an assumption on my part. Here's what I know:</P> <P>Open access will increase the total cost of rail transport and also the average cost of rail transport.</P> <P>[/quote]</P> <P>But you can't back that up with real world stats, can you? Has the Aussie OA system caused their costs to increase? No. Has the German, Dutch, or Italiam IA system caused their costs to increase? No. But OA in those countries has brought new business to their respective rail industries. Why do you think that is bad? </P> <P>The only way OA would increase costs if, again, one pulls an OJ. The British did just that with their version, breaking up one company into 100+ companies. No wonder NA railroad hacks point to the British experience as being the poster child for an OA Armeggedon.</P>
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