Does Franken have a point, or is he living in the 1910's instead of the 2010's?
http://hometownsource.com/2013/02/25/sen-franken-continues-fight-to-protect-minnesota-farmers-business-from-rail-monopolies/
Here is the point he makes in his letter. Whether or not it is a problem I'll leave up to you. From my vantage point (northern New Jersey) I have little insight into the issue.
"Recent analysis indicates that 78% of the 28,000 “stations” in the continental United States where a major freight railroad picks up or delivers freight are served by a single railroad. Of the remaining 22% of rail stations that are nominally served by a second railroad, a significant number are served by a short line or regional rail carrier that is dominated by the major railroad serving the location. This lack of competition in our national freight rail transportation system and the resulting railroad monopoly power over a significant portion of annual railroad freight movement create significant problems for our state and national economies."
Well - Lets look at that. The 'competition' that those railroads have is out on the highway, paid for with our tax dollars! When he talks about the local economy, most of the shipped product is usually grain, and around here much of it is trucked to river ports like Winona, La Crosse, & Marquette. It is then loaded on barges and sent to the gulf for export shipment. But that is only small part of the total corn shipment - The rest goes via truck for livestock feed or to the ethanol plant. The 'haul' to the river trans-load ports is too short to compete and make money on. Now if you are 200+ miles from the trans-load, then rail transport works.
At least the railroad does get to haul the ethanol and DDG(I can just see the howling if there were non-stop tanker trucks of ethanol going through all of our towns).
The fact is that Franken is just another celebrity turned politician looking for something to get air time about. First we had wrestler Jesse Ventura,as Governor - Now Comic Al Franken as Senator. I liked them both better on TV - I could just turn off the TV and go to bed!
Jim
Modeling BNSF and Milwaukee Road in SW Wisconsin
jrbernier Well - Lets look at that. The 'competition' that those railroads have is out on the highway, paid for with our tax dollars! When he talks about the local economy, most of the shipped product is usually grain, and around here much of it is trucked to river ports like Winona, La Crosse, & Marquette. It is then loaded on barges and sent to the gulf for export shipment. But that is only small part of the total corn shipment - The rest goes via truck for livestock feed or to the ethanol plant. The 'haul' to the river trans-load ports is too short to compete and make money on. Now if you are 200+ miles from the trans-load, then rail transport works. At least the railroad does get to haul the ethanol and DDG(I can just see the howling if there were non-stop tanker trucks of ethanol going through all of our towns). The fact is that Franken is just another celebrity turned politician looking for something to get air time about. First we had wrestler Jesse Ventura,as Governor - Now Comic Al Franken as Senator. I liked them both better on TV - I could just turn off the TV and go to bed! Jim
I used to find Al Franken very amusing, but he began to lose me when he did an SNL comedy sketch (with partner Tom Davis) making fun of a victim of brain cancer.
Hilarious, Al, just hilarious.
The same “open access” nonsense, just packaged a little better.
I wonder if those farmers/ranchers in Minnesota would be upset if I brought some of our Longhorns up there and turned them loose in their back 40?
I mean, under this type of argument, it should be a great way to create competition, thus benefiting everyone, right?
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John WR Here is the point he makes in his letter. Whether or not it is a problem I'll leave up to you. From my vantage point (northern New Jersey) I have little insight into the issue. "Recent analysis indicates that 78% of the 28,000 “stations” in the continental United States where a major freight railroad picks up or delivers freight are served by a single railroad. Of the remaining 22% of rail stations that are nominally served by a second railroad, a significant number are served by a short line or regional rail carrier that is dominated by the major railroad serving the location. This lack of competition in our national freight rail transportation system and the resulting railroad monopoly power over a significant portion of annual railroad freight movement create significant problems for our state and national economies."
Maybe, I misunderstand the situation, but in these days and times, I am totally suspicious of anything a politician says. Generally, they have gerrymandered information (or 'facts' to suit THEIR argument.
You have to wonder if Sen. Franken (D) (nee: Stewart Smalley) is using the term 'station' to reference a total community (or in fact a 'building') ? Many stations that were shared, were generally, to service rail passenger operations (sharing a passenger station was a general convenience for a community, and the rail's connections. Each railroad would then have its seperate maintainence facility and (or yard).
Freight railroads did not generally share their brick and mortar freight facilities (if they did it was a more recent occasion, and was for the convenience of those railroads.) So the point is; by servicing a single line in a community, there might be several 'stations' (yards,ete.) as each line would want its own equipment, and freight handling operations.
The above circumstances could lead to a Community having a number of 'Stations' to service it. Politicians do have a terndency to co-opt accepted definitions, to make their point (pro or con) on any topic. So before going ahead with Sen. Franken's point. I would hope someone would question his sources, and definitions. Get him to define his 'political-speak' before you assign him credibility.
Yikes! Al Franken’s “Freight Rail Monopoly Problem” sounds like one of the darkest clouds on U.S. railroading’s horizon in a long time. Now we know why railroads run those green “save the planet commercials.” So long, deregulation.
Franken is not talking about open access. He is talking about government controlling prices to create his vision of competition.
I activated the link and thought Franken’s pitch to Obama worthy to quote here:
Dear Mr. President,
I am writing you about a matter of great importance to the economy of my state and the nation: the freight railroad monopoly power over customers that must use a freight railroad for transportation. There are several ongoing executive branch activities regarding our transportation system, and I respectfully request that you direct them to consider the railroad monopoly problem in their proceedings.
You mentioned in your Inaugural Address the importance of railroads, highways, and other infrastructure to the strength of our national economy. I agree. But to really serve our nation, that infrastructure must be available to all prospective users on a competitive basis, and unfortunately that is not currently happening. Recent analysis indicates that 78% of the 28,000 “stations” in the continental United States where a major freight railroad picks up or delivers freight are served by a single railroad. Of the remaining 22% of rail stations that are nominally served by a second railroad, a significant number are served by a short line or regional rail carrier that is dominated by the major railroad serving the location. This lack of competition in our national freight rail transportation system and the resulting railroad monopoly power over a significant portion of annual railroad freight movement create significant problems for our state and national economies.
The freight railroads are exempt from our nation’s antitrust laws for any issue that is jurisdictional to the Surface Transportation Board. This treatment of railroads is different from our treatment of interstate electric transmission lines, interstate natural gas pipelines, and telecommunications companies, all of which must comply with both federal economic regulation and the provisions of the nation’s antitrust laws. The Surface Transportation Board is charged with the responsibility of ensuring that the freight railroads do not exercise their market power to the detriment of their customers. This small and under-funded agency is attempting to apply federal law adopted in 1980 that presumes that the relationship between the railroad and its customers will be governed by market competition instead of by regulatory policy. This 1980 presumption does not match current reality, where there are very limited opportunities for rail dependent shippers to have access to more than one major railroad.
In March 2011, your Export Council wrote you a letter setting forth federal actions that could be taken to increase American exports that will create more American jobs. Addressing this freight rail monopoly power was listed as one of the five actions that could increase American exports.Those of us who are concerned about this problem need your help. There are several ongoing activities in the Executive Branch that provide opportunities either to produce information that will illuminate this problem or to produce policies to address this problem. They include:
• The Surface Transportation Board has several policy proceedings pending that address both the level of competition in the national freight rail system and the discredited and burdensome procedures by which rail customers without access to transportation competition can challenge their rail rates for being excessive. Other executive branch agencies who have identified the lack of rail competition as a problem should engage in these proceedings and advocate for increased competition in the national freight rail system and a less burdensome rate challenge process.
• The Department of Transportation has an ongoing effort to develop a national freight rail plan, and recently established a Freight Policy Council. The rail plan and the work of the Council must address the freight rail monopoly problem.
• The Department of Agriculture worked with the Department of Transportation to produce an excellent report in April 2010 on transportation issues in rural America. This report highlighted railroad monopoly problems in rural America that adversely affect agriculture input costs, the marketing of agricultural products, the price of electricity in rural America, and economic development in rural America. This study needs to be updated as a source of reliable information on this important issue.
• Finally, an Advisory Committee on Logistical Supply Chain Competitiveness was established recently in the Department of Commerce. This Committee needs to focus on the freight rail monopoly that exists in our domestic supply chain and its impact on the competitiveness of American industries and producers.
To help address this significant problem, I also request that you appoint a senior official to coordinate these ongoing efforts, to analyze the freight rail monopoly problem, and to suggest federal policies that can be adopted to ensure a competitive national freight rail transportation system. I believe strongly that efforts to grow our national economy and create jobs are hampered by the freight rail monopoly problem. I look forward to working with you to address this problem in the coming Congress. Please do not hesitate to contact me with any questions.
Sincerely,
Al FrankenUnited States Senator
Always amazes me that so-called free market types oppose competition in the market. A better analogy would be how would you like it if there were only one food store chain within 25 miles of your residence and they charged 25% more than the closest competitor?
C&NW, CA&E, MILW, CGW and IC fan
If the area could support a second store, they would compete with each other and prices would come down. If the demand cannot support a second store because the market is relatively small, the one store has to charge higher than average prices due to the smaller market. It is your choice whether to live there. If Franken forces your store to lower prices, the store owner might decide to close because the relatively small market will not support Franken’s idea of fair pricing. Then Franken will have to put in a store subsidized by everyone who does not live there.
You obfuscate to avoid the essentials. Railroads are similar to utilities; essentially monopoliies in many cases because of geography and years of mergers. Utilities were forced to permit open access to various suppliers of the electricity or natural gas, relying on the local company for distribution. Result? Utilities prosper and the consumer gets lower prices by allowing a free market. Why should the rails be immune, especially post-Staggers and after 40 years of consolidation?
So then what would be a practical solution to Franken’s “freight rail monopoly problem”? The fundamental objection to the status quo is that prices are too high. How do you fix that in a practical sense?
Most stations, and the customers located at those stations, have always only had single line service. Even at stations that may have had more than one railroad going through (station in this case would probably be better described as a town. city or an area of a city instead of a building or facility) the area a specific customer, unless open to reciprocal switching, would only be serviced by the railroad it was located on.
I would guess Franken is thinking more along the lines of rate regulation instead of open access. While he talks about the majority of customers being "captive," I also would guess the only ones he's really concerned about are a few major customers. The kind that can contribute large amounts of "free speech" to his campaign funds. Also the kind that CSX's CEO once observed have more monoply power in their respective industries than the railroads do.
Jeff
jeffhergertI would guess Franken is thinking more along the lines of rate regulation instead of open access. Jeff
Yes, that is my take on what Franken is proposing. He cites limited access as resulting in unfair pricing, but his remedy is not to open up access. His remedy is to control pricing.
samfp1943I would hope someone would question his sources, and definitions. Get him [Senator Franken] to define his 'political-speak' before you assign him credibility.
Sam,
Where do I "assign him credibility?" Another poster asked what is Senator Franken's point. I provided the quotation to illustrate in his own words that point. And I explicitly made no political comment about it. As far as I am concerned you are free to express your own position.
John
Maybe he wants any railroad to be able to operate any train on any other railroad line?
Modeling the "Fargo Area Rapid Transit" in O scale 3 rail.
Boyd wrote the following post at 03-01-2013 5:57 PM:
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Maybe so, but how do you convince private railroad company "A" to allow their competition to run trains on the tracks of company "A" and undercut the pricing of company "A" ?
BucyrusYes, that is my take on what Franken is proposing. He cites limited access as resulting in unfair pricing, but his remedy is not to open up access. His remedy is to control pricing.
The open access thing is already being hammered away at by others. STB is looking at bottleneck rates.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
Come on, we are all geezers here with long memories. The railroads were falling appart and shedding customers till the Staggers act passed and the were deregulated on pricing and service. Why go back?
Sen Franken does not offer any specific case of abuse, where as several have pointed out a truck can come to any loading dock.
Don't forget railroads and their customers have alway been kind of a team competing in the national and global market, much like an auto company and their closely tied vendors. If, say BNSF decides to screw over the grain elevators that are captive they would lose international sales to Canadian grain and CN/CP. The best run railroads always knew this and were always looking for a way to make a profit on lower rates. One of the reasons for the ICC was to stop such companys from under cutting existing rate structures. Staggers let them do it.
LensCapOn Come on, we are all geezers here with long memories. The railroads were falling appart and shedding customers till the Staggers act passed and the were deregulated on pricing and service. Why go back?
Because Franken likes to tax and regulate, and always looks for a pretext to do so.
On a 'constant dollar' basis - What were the grain rates in the pre-Staggers era and what are they today?
I suspect, today's 'monopoly' rates are signifigantly less than they were in the 'regulated' pre-Staggers era.
Never too old to have a happy childhood!
“…..that infrastructure must be available to all prospective users on a competitive basis, and unfortunately that is not currently happening”
Sounds like someone wants to allow others besides just the owners to use the “infrastructure”…
As for the “only store within 25 miles” argument…either move closer towards town, or pay higher rates for food, after all, you chose to live out there in the boondocks.
The store owner has higher transportation cost for his goods, which he must pass on to you, the end user of said goods…what’s the confusion/problem?
edblysard“…..that infrastructure must be available to all prospective users on a competitive basis, and unfortunately that is not currently happening”
Is my house "infrastructure"? If so, can they force me to take in borders for "cost - plus"?
This "Franken-business" is just as bad as Ryan's shots at Railroad Retirement! Where there is money, there will be politicians snooping around....
What RRs do is 'differential pricing", a staple of the airline industry, and Amtrak, for that matter. Eliminate differential pricing and you're most of the way there to price controls. Ask an middle aged Russian how that worked out for them...
“Yeah, but today was a good day, you only have to stand in line for 10 hours to get your low cost toilet paper, and next week the grocery store will have fresh horse meat, maybe.”
My nephew lived in the USSR for a year as a student exchange partner.
He traded a roll of lifesavers for three cans of what he said looked like corned beef hash, and his old jeans with holes in them fetched him an offer of $50.00 American, which he refused because he was not sure if the person making the offer was KGB or not, and they had been warned that trading for anything involving non Soviet money was a big time crime.
He had me send him toothpaste because it was not available there, I sent a two 5packs of Crest, he received two tubes once it cleared “customs”, go figure.
One of the young ladies in his group managed to get a good sized box of lipstick, the stuff you get at the 99 cent store(the stuff marketed to pre-teen little girls) in with her books and such, he said she lived like a small queen, she could trade the lipsticks for just about anything she wanted, cab rides, food, all kinds of stuff, because there simply isn’t anything like that over there, cheap 99 cent lipstick has a value beyond anything we could imagine.
According to him, the average Soviet Citizen was the most down trodden, disenfranchised hopeless people he ever saw…today was going to be just like yesterday, which was exactly how tomorrow will be…they had no hope for any change for the better.
Oddly, they loved Russia, or whatever their motherland was, but despised and feared the Soviet Union.
As to Franken, I don’t see any laws prohibiting any other railroad from building tracks into the areas he discusses, of course, there probably isn’t enough business to justify that, but they could if they wanted to.
I would love to see him try and force, say, Safeway, or Federated Markets, A&P, maybe Wal-Mart and such to build stores out there just because it would bolster “competition”.
Last I read, cost for grain shipping was 20% lower than pre Staggers, even more for unit train rates, and that was in real dollars, not the “adjusted for inflation” stuff, but dollar for dollar figures.
The bottom line is the farmers out there are using Franken to try and get lower rates, which translates to lower cost for them, therefore higher profits, which is what any business, be it farming, or railroading is looking for, it’s why they are in business.
oltmannd John WR Here is the point he makes in his letter. Whether or not it is a problem I'll leave up to you. From my vantage point (northern New Jersey) I have little insight into the issue. "Recent analysis indicates that 78% of the 28,000 “stations” in the continental United States where a major freight railroad picks up or delivers freight are served by a single railroad. Of the remaining 22% of rail stations that are nominally served by a second railroad, a significant number are served by a short line or regional rail carrier that is dominated by the major railroad serving the location. This lack of competition in our national freight rail transportation system and the resulting railroad monopoly power over a significant portion of annual railroad freight movement create significant problems for our state and national economies." What RRs do is 'differential pricing", a staple of the airline industry, and Amtrak, for that matter. Eliminate differential pricing and you're most of the way there to price controls. Ask an middle aged Russian how that worked out for them...
You don't have to cite a Russian, Don. Ask somebody who lived through Nixon's price and wage controls during the early 70's. I worked a summer job as an apprentice butcher in a supermarket while in college back then. When price controls were put on beef, the first step was to change the name of beef cuts. No more Tbones. Only Porterhouse steaks, because the control price was ten cents a pound more. As beef costs continued to rise, it got to the point there was no beef available from suppliers. Suppliers couldn't cover their costs, so supply dried up. One week, we got some tough cow meat normally ground into hamburger to sell, but that was it. It's been forty years now, so the lesson is lost on many. People who don't have experience listen to vile fools like Franken. My richest education in economics occurred behind the meat case at that supermarket, not in college economics classes.
edblysard The bottom line is the farmers out there are using Franken to try and get lower rates, which translates to lower cost for them, therefore higher profits, which is what any business, be it farming, or railroading is looking for, it’s why they are in business.
So the farmers complain, Franken in an effort to try to get a vote or 2 (probably one at the most) sends a letter to the President that will be quickly tossed in the trashcan (which he very well expects). And the sun will rise again tomorrow.
Nothing more than a sideshow. Move along.
It's been fun. But it isn't much fun anymore. Signing off for now.
The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.t fun any
oltmanndWhat RRs do is 'differential pricing", a staple of the airline industry, and Amtrak, for that matter. Eliminate differential pricing and you're most of the way there to price controls. Ask an middle aged Russian how that worked out for them.
Don,
And what Al Franken is doing is representing his constituents. That is a staple of American politics. Eliminate that and you eliminate American democracy. Ask anyone at all including yourself.
The farmers’ interest in this is constant, and they may wish to use Franken as the current player to push their interest. But Franken and his fellow travelers are also using the farmers. I suspect that it is Franken who initiated this, not the farmers. One may choose to think it is merely a side show, but I doubt that freight railroad management people are so blasé.
Bucyrus,
Did you hear Al Franken's speech? It was really eloquent. "You shall not crucify mankind on a cross of gold."
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