Falcon48Clear as mud?
It's the clearest and least agenda-loaded explanation so far on this entire thread. Thanks!
C&NW, CA&E, MILW, CGW and IC fan
Maybe there needs to be a distinction made between reciprocal switching and mandatory reciprocal switching. Here is a quotation from one of the explanatory reference links I posted earlier. It suggests that (mandatory) reciprocal switching is a form of open access:
(Quote)
"Open Access" Proposals
Unhappy with the Board’s approach to rate reasonableness and competitive access, some shippers have sought to circumvent the Board’s rules by demanding what they call "open access". Open access proponents are not always clear what they mean by that term, but more regulation is always involved. They do not seek a requirement that railroads freely interchange traffic with each other; mandatory interchange of traffic has long been required in the rail industry. Instead, they want to dictate the terms on which railroads deal with each other—without having to demonstrate that there is any competitive need for this interference in the railroads’ business dealings.
Reciprocal Switching. This is not the first time that proposals have been put forward to micro-manage the railroads’ joint operations. Even as the Staggers Act was being considered by Congress, a legislative proposal was made to require railroads to offer a particular form of access—reciprocal switching—at every terminal area in the country. Under the proposal, a customer in a terminal area might require the railroad serving its facility to switch its freight to another carrier at below-market prices. Proponents argued that this mandate would promote rail-to-rail competition. Congress rejected that proposal, but it did give the Board the authority to impose reciprocal switching regulation on a case-by-case basis, if it found that the regulation was in the public interest.
Murphy Siding CSSHEGEWISCH Based on what's been presented on this thread, it appears to me that the term should be not so much as mandatory reciprocal switching as mandatory trackage rights. I don't see it that way. As I see it, PRR doesn't want to be able to switch ACME Industries on the NYC line. PRR wants NYC to switch ACME, and bring the cars to an interchange, where PRR can then get the long haul business.
CSSHEGEWISCH Based on what's been presented on this thread, it appears to me that the term should be not so much as mandatory reciprocal switching as mandatory trackage rights.
Based on what's been presented on this thread, it appears to me that the term should be not so much as mandatory reciprocal switching as mandatory trackage rights.
Mandatory reciprocal switch is a form of forced access, but it's not "forced trackage rights". The reason is that, in a reciprocal switching arrangement, the line haul carrier on whose behalf the switching is performed doesn't itself operate over the switching carrier's trackage. Rather, the switching carrier itself performs the service on behalf of the line haul carrier and is compensated for the service by a switching charge. The switching carrier usually isn't a party to the line haul rate and doesn't have any say in what the line haul rate will be. The line haul carrier (not the customer) pays the switching carrier its switching charge. The line haul carrier then may or may not pass the charge along to the customer. If it does not pass the charge along, it is said to have "absorbed" the switching charge (another arcane term). It it does pass the charge on to the customer, the switching charge is "non-absorbed". A switching charge may also be partially absorbed, in which case the line haul carrier will pass along to its customer only the portion of the switching charge it has not agree to absorb.
Clear as mud?
Railroads are not like highways, where anyone can operate on them. Any segment of railroad can only be controlled by a single carrier. On a segment of track the Carrier A owns, Carrier A will control the operation of that segment. If Carrier B has trackage rights, the can operate trains on the segment under the control of Carrier A, Carrier B retains the full revenue of the train. What Carrier B pays Carrier A for the trackage rights will be specified in the individual Trackage Rights agreement. Cars in Carrier B's trains remain in the Car Hire account of Carrier B.
If Carrier B has Reciprocal Switching rights to industries on the segment, they will give the cars to Carrier A, Carrier A will switch the industry and return the cars to Carrier B. Carrier A gets a 'agreed' switch charge for their efforts and Carrier B gets the road haul revenue. The cars are interchanged into Carrier A's account to perform the service and return to Carrier B's account when they are given back (there may be a side agreement in the Reciprocal Switch Agreement that has a alternate way of handling the car hire).
Carrier A owns, maintains and dispatches the line segment.
Never too old to have a happy childhood!
I do not find any clear explanation of reciprocal switching. In one form, it introduces competition by requiring a railroad company to allow competing lines to operate over its tracks to reach a captive customer. This is a form of open access.
In another form, a fair rate is simply mandated rather than letting it develop naturally through competition.
Who mandates the fair rate, and how do they determine what it fair?
Not as I understand it.
Feel free to correct me if I'm wrong.
Shipper A has cargo to go to destination B.
Shipper A's loading facility is on Railroad X. The unloading point (B) is (for sake of argument) served by both Railroad X and Railroad Y (or maybe by a switching RR like Houston Ed's).
Shipper A likes Railroad Y's terms better, but since they're on Railroad X, they are currently forced to go with Railroad X terms if they're going to ship by rail directly from their facility.
There are, of course, the options of shipping entirely by another means, or some form of hybrid like shipping to a point on RR Y by truck and thence by rail to point B.
MRS would allow Shipper A to specify that Railroad X turn the load(s) over to Railroad Y at the nearest interchange point for carriage to the unloading point (B).
Railroad X becomes a switching RR. Railroad Y never turns a wheel on Railroad X, so there's no trackage rights or anything of that sort.
What I see as somewhat ironic about this is that years ago, when many, if not most, Class 1's resembled the regionals of today, this type of thing would have been normal. In fact, a shipment of any considerable distance would cover several railroads, and shippers were known to demand some interesting routings so as to favor their favorite roads.
I recall reading about a coalition of smaller railroads the was formed to garner business that might otherwise have moved over pretty much one larger road. Hence the term "alphabet route."
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
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Options, albeit expensive ones do exist.
Ameren built a connection with Indiana Railroad at Newton, Il to give itself options rather than stick with CN (former IC) for deliveries of PRB coal. I believe Ameren is aggressive in such buildouts or buying out otherwise abandoned lines.
Ed
Murphy Siding tree68 Murphy Siding If railroad #2 wants to haul the widgets, maybe they should invest some of their own capital, and build a line to that widget manufacturer. What's that you say? There's not enough potential profit there to justify building a new line? Then maybe railroad #1 should be getting that business after all. If there was enough business to justify a new line, like say, into the Powder River Basin, wouldn't someone like CNW and/or UP find the investment money to do it? We're probably not talking business at the level of PRB. More like a grain elevator that has exactly two choices for shipping - rail or truck. And the nearest rail competition may be dozens or more miles away. So the scenario is this - it's a 25 mile haul from the shipper to the nearest interchange, then another 1500 miles to the destination in question. Traffic, as mentioned, isn't at PRB levels - more like cyclical/seasonal, and not just one or two cars on occasion. No railroad is going to spend the money to build out just to provide the competition (the ROI would be measured in decades), but there is, after all, existing infrastructure, perfectly capable of doing the job. The shipper would love to ship all the way on their serving railroad, but said railroad has them over a barrel and can pretty much charge what they want. RR #2 offers a significantly better rate from the interchange point to the destination. The glitch is that last 25 miles. Should the serving railroad be able to say "ship it all the way with us, at our inflated rate, or find another way to move your product"? Or should they be made to handle the traffic from origination to interchange at a reasonable rate? It seems like any government that could make railroads handle traffic at a *reasonable* rate, could also make you and I work for a *reasonable* wage. Who gets to decide what's reasonable?
tree68 Murphy Siding If railroad #2 wants to haul the widgets, maybe they should invest some of their own capital, and build a line to that widget manufacturer. What's that you say? There's not enough potential profit there to justify building a new line? Then maybe railroad #1 should be getting that business after all. If there was enough business to justify a new line, like say, into the Powder River Basin, wouldn't someone like CNW and/or UP find the investment money to do it? We're probably not talking business at the level of PRB. More like a grain elevator that has exactly two choices for shipping - rail or truck. And the nearest rail competition may be dozens or more miles away. So the scenario is this - it's a 25 mile haul from the shipper to the nearest interchange, then another 1500 miles to the destination in question. Traffic, as mentioned, isn't at PRB levels - more like cyclical/seasonal, and not just one or two cars on occasion. No railroad is going to spend the money to build out just to provide the competition (the ROI would be measured in decades), but there is, after all, existing infrastructure, perfectly capable of doing the job. The shipper would love to ship all the way on their serving railroad, but said railroad has them over a barrel and can pretty much charge what they want. RR #2 offers a significantly better rate from the interchange point to the destination. The glitch is that last 25 miles. Should the serving railroad be able to say "ship it all the way with us, at our inflated rate, or find another way to move your product"? Or should they be made to handle the traffic from origination to interchange at a reasonable rate?
Murphy Siding If railroad #2 wants to haul the widgets, maybe they should invest some of their own capital, and build a line to that widget manufacturer. What's that you say? There's not enough potential profit there to justify building a new line? Then maybe railroad #1 should be getting that business after all. If there was enough business to justify a new line, like say, into the Powder River Basin, wouldn't someone like CNW and/or UP find the investment money to do it?
If railroad #2 wants to haul the widgets, maybe they should invest some of their own capital, and build a line to that widget manufacturer. What's that you say? There's not enough potential profit there to justify building a new line? Then maybe railroad #1 should be getting that business after all. If there was enough business to justify a new line, like say, into the Powder River Basin, wouldn't someone like CNW and/or UP find the investment money to do it?
The same kind of pattern happens with coal and utilities. Railroad A may solely serve a utility. But that utility is in competition with utilities located on other rail lines to supply power to the power grid in its service territory. If Railroad A sets its rates too high for its solely served utility, the utility will lose business to other utilities located on other rail lines, and Railroad A will lose traffic. Again, railroads are well aware of this. The CNW, when it entered the Powder River, deliberately priced its traffic to increase its customers' competitiveness in sellling to the grid.
One final comment on reciprocal switching. I haven't read all of the posts, but I haven't seen anything in the ones I've read about the operational consequences of mandatory reciprocal switching. The fact is that the reciprocal "switching" carrier usually has very little ability to control the movement of the traffic going to or from it and the line haul carrier. This can (and often has) resulted in a deluge of incoming traffic or empties that swamps the switch carrier's local network. The line haul carrier has the ability to meter this traffic by various means - the switch carrier does not. But the line haul carrier usually has no incentive to meter traffic due to operational issues on the switch carrier.
Make no mistake about it the NITL is not "small shippers". These are the giant industrials, most of which have proprietary products (allowing them to charge what the market will bear). That is how you make serious money in anything...it's called many things including "value added".
Railroad's version of proprietary property is their ROW. It allows them to charge "what the market will bear". Recently, the past 10 years or so, railroads have begun to aggressively price their services, as they gained "pricing power." Take a look at railroad's annual reports and look at the average price per carload for various products and see how those prices compare to the ability to railroads to move at higher prices. Grain rates are fairly high, as are chemicals. Intermodal costs are lower, but moving higher as the trucking industry has capacity and pricing issues.
BTW, many of the NITL members are chemical companies. The movement of hazmat products at high rates is an issue with them. Railroads understand the risks involved with hazmats and have moved those prices up rather aggressively.
No business is "held hostage" to a single railroad. If the situation you describe occurs, the business has other options - move to another location served by multiple railroads, shift to trucks, start its own shortline, etc. Nobody is literally or figuratively holding a gun to the head(s) of management to keep them from seeking alternatives.
If a second railroad went out of business, most likely it was for lack of enough business to sustain the operational costs, resulting from having to lower its freight charges to compete with the other RR. Economic models have demonstrated time and again that "monopoly power" does not exist in the form most people think of it. If the remaining RR tries to leverage its position with excessive rate increases it risks losing that business altogether when the shipper either switches to another mode, or goes out of business due to the high costs of shipping.
Murphy Siding edblysard Bonas Shippers would move more freight by rail or shippers that are served by a lousy rail carrier as in the case of Guilford could have there freight moved by a another carrier that otherwise go by TRUCK In english please.... I think I can help. I speak a little bit bogas. Let me give it a whirl. Let's see: Shippers would move freight by being served by other shippers with lice, otherwise Guilford moves a truck. -Shakespeare.
edblysard Bonas Shippers would move more freight by rail or shippers that are served by a lousy rail carrier as in the case of Guilford could have there freight moved by a another carrier that otherwise go by TRUCK In english please....
Bonas Shippers would move more freight by rail or shippers that are served by a lousy rail carrier as in the case of Guilford could have there freight moved by a another carrier that otherwise go by TRUCK In english please....
Shippers would move more freight by rail or shippers that are served by a lousy rail carrier as in the case of Guilford could have there freight moved by a another carrier that otherwise go by TRUCK
In english please....
Please don't make me laugh like that while I'm eating....it could cause problems.
Benny
I assume that Resiprocal switching means that the class one main line acts as a class 3 switching railroad to take the cars to the nearest "Rule 260" interchange. Here where I stand in Albany the D&H/NS- Erie route is twice as long as the direct New York Central route to Buffalo. I dont see many perishables on the D&H. Every hour that a reefer or reefer container is burning gas to keep the produce cold costs $$$$
It just shows how subjective the whole debate about monopolies is. A monopoly can be seen wherever one believes it exists. Whether the sighting is validated depends on what the regulator has to win or lose by validating it. A large part of what they have to win is the advancement of the regulating community which happens with any new regulation. Regulators feed at the public trough. They are very hungry these days and have lost their fear of the producers.
Bucyrus Bonas is talking about busting monopolies, which is the aim of reciprocal switching. Bonas says that if you get rid of the monopolies in railroading, the rates will drop to what is fair, and thus more people will ship by rail.
Bonas is talking about busting monopolies, which is the aim of reciprocal switching. Bonas says that if you get rid of the monopolies in railroading, the rates will drop to what is fair, and thus more people will ship by rail.
But does the railroad want that business? Remember a while back I mentioned how a certain railroad wasn't interested in business with the potential volume of 50 cars per week. Business that could be handled by an existing yard job.
I think when we talk about customers being at the mercy of the big bad railroads, we tend to think about the smaller customers. I think we lose sight that the ones behind forced reciprocal switching, open access and/or rate regulation are the large customers. Those that (IIRC) CSX's Ward said had more monopoly power in their respective industries than the railroads did. Those customers are finally paying for the full value of rail transportation, instead of "give away" rates to get their business, and they don't like it.
The aim of forced reciprocal switching isn't to bust "monopolies." (Railroads already offer reciprocal switching in many places. It's forced or mandatory reciprocal switching they are fighting.) It has a 30 mile limit from the nearest interchange. That's not going to bust any "monopoly" for some company 31 miles from the nearest interchange. (You don't suppose that the biggest backers of this just happen to have all their operations within 30 miles of a second railroad?) The aim is to benefit certain companies at the expense of someone else. Mostly the railroads, but possibly also a competing company within their industry. One who's facility is 31 miles from the nearest interchange.
Jeff
Deggesty Bucyrus Bonas is talking about busting monopolies, which is the aim of reciprocal switching. Bonas says that if you get rid of the monopolies in railroading, the rates will drop to what is fair, and thus more people will ship by rail. Isn't that dreaming?
It depends on whether the monopoly is real or imagined.
Johnny
Bonas http://www.railwayage.com/index.php/blogs/frank-n-wilner/shippers-ask-stb-to-deliver-a-free-lunch.html What about the fact that monopoly's tend to provide lousy service as the case of the black phones of AT&T My old rotary AT&T phone worked great, in 40 years never had a single issue with it. Shippers would move more freight by rail or shippers that are served by a lousy rail carrier as in the case of Guilford could have there freight moved by a another carrier that otherwise go by TRUCK In english please....
http://www.railwayage.com/index.php/blogs/frank-n-wilner/shippers-ask-stb-to-deliver-a-free-lunch.html
What about the fact that monopoly's tend to provide lousy service as the case of the black phones of AT&T
My old rotary AT&T phone worked great, in 40 years never had a single issue with it.
23 17 46 11
Bonas capitalism is all about free choice right?
capitalism is all about free choice right?
edblysard What if it had been a gin train!
What if it had been a gin train!
You would have had to beat the old time Boomer railroaders away from it with a stick!
Oh yeah, thems easy money!
Guess I should have run it through spell check, huh?
edblysard Well durn, you “pulled the plug” before I could set the hook…look at who and where I work and you can see where I was going with it…. In the instance of the PTRA, the concept works, quite well in fact, to the point we are spending a lot of capital on new long receiving tacks for unit train, one of them will hold two 125 car coke, coal or grin trains nose to tail.
Well durn, you “pulled the plug” before I could set the hook…look at who and where I work and you can see where I was going with it….
In the instance of the PTRA, the concept works, quite well in fact, to the point we are spending a lot of capital on new long receiving tacks for unit train, one of them will hold two 125 car coke, coal or grin trains nose to tail.
Do you smile when the grin trains come in?
Quite interesting, Ed.
Open access is a pie in the sky idea, as was pointed out, what company would voluntarily allow the competition to use their “plant” for do business?
http://www.ptra.com/
go to customers, then tariff to see how much some of this can cost.
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