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.
Thanks to Chris / CopCarSS for my avatar.
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...
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?
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!
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.
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?
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.
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
schlimm Falcon48Clear as mud? It's the clearest and least agenda-loaded explanation so far on this entire thread. Thanks!
Agenda-loaded? How do you take the agenda out of the topic? This is re-regulation if it comes to past. This is not just railroad operating business about how to switch cars and charge for it. It is in fact a tug of war between two competing agendas.
It is a tug of war between the railroads and shippers with the shippers enlisting the aid of government regulation.
I am not certain that Bucyrus is entirely correct when he stated "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."
It certainly was the case in the more distant past, but in the deregulated era I seem to recall some major outcries as shippers tried to force a railroad to quote a rate over only its portion of the haul when the shipper wished his traffic interchanged to another road (at a regular interchange point) for furtherance to a jointly served destination. Naturally the originating carrier wanted a much longer portion of the haul. Perhaps this was the "bottleneck" issue. And this is completely separate from reciprocal switching since it involves line hauls by both railroads.
CX500 - My take on the issue is pretty much exactly what you suggest.
Whilst I was mowing it occured to me that the term "reciprocal" doesn't really apply here. If this was a true reciprocal issue, as was mentioned earlier, then I would opine this wouldn't be a problem. One hand washes the other, if you will. Such agreements already exist.
It's the "mandatory" that is the sticking point, for sure, and for exactly the reason CX500 states.
Yes, "mandatory" is the word that defines this as re-regulation. I should also mention that the statement that cx500 ascribes to me above is not my statement. I was quoting it from the link I posted earler.
cx500 I am not certain that Bucyrus is entirely correct when he stated "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." It certainly was the case in the more distant past, but in the deregulated era I seem to recall some major outcries as shippers tried to force a railroad to quote a rate over only its portion of the haul when the shipper wished his traffic interchanged to another road (at a regular interchange point) for furtherance to a jointly served destination. Naturally the originating carrier wanted a much longer portion of the haul. Perhaps this was the "bottleneck" issue. And this is completely separate from reciprocal switching since it involves line hauls by both railroads.
"Mandatory interchange" means that railroads must interchange with each other to perform a complete interline movement from origin to destination. It does not mean that a railroad must interchange traffic with another railroad if the first railroad is capable of performing the entire origin-destination move itself (there are situations where the STB can affirmatively require this kind of interchange, but they don't fall under the "mandatory interchange" banner). It also does not mean tha railroads must interchange particular traffic movements with each other at every place they have a physical connection. And it does not mean that a shipper can demand that two railroads interchange the shippers traffic at a point of the shippers choosing, unless the railroads already hold themselves out to interchange the traffic at that location. Finally, "mandatory interchange" does not obligate the interlining railroads to quote any particular rate or form of rates over an interchange, as long as there is some rate or combination of rates available. There are, to be sure, other requirements that govern this subject, but not "mandatory interchange".
The "bottleneck issue" is primarily a rate issue maquerading as an interchange issue. The shippers in these cases may appear to want the ability to designate additional interchanges. But what they really want is to be able to require each connecting railroad to set its own rate for its portion of the move over a shipper designated interchange, and then to have the right to separately challenge each railroad's "piece" of the through rate.
Some explanation may be helpful here. A "through rate" is the total rate that apples to the movement from origin to destination. The "through rate" may be a "single factor" joint-through rate applicable over multiple connecting carriers, or some form of "combination" rate, where the connecting carriers set separate rates for their separate portions of the move). Under current regulatory principles, a shipper must (with some limited exceptions) challenge the entire through rate, and can't just challenge the rate for a part of the move. What the shippers are seeking to do is to allow challenges to a "part" of a through rate, and to designate an interchange which maximizes their chances for succesfully challenging the rate for one railroad's part of the move.
You are correct that this doesn't involve "reciprocal switching", as such. Although "mandatory interchange" would require a "line haul" and "switching"railroad to interchange traffic where necessary to complete an origin-destination move, it would not require that the arrangement be reciprocal switching (or, for that matter, that the interchange between the two carriers be in the origin or destination terminals, if the carriers can interchange somewhere else).
More mud to clear..
If this requirement would affect all the Class 1's, as well as a lot of smaller railroads, why isn't the AAR able to get everyone to put their heads together, to come up with a workable formula that fairly compensates the switching railroad? As I understand it, when a freight car comes in damaged, the receiving railroad repairs the car, and bills the reapir out based on an agreed price menu that all the railroads follow. I thought that was something overseen by ARR? Why not something similar for switching? Could you come up with a set of formulas, based on the major factors that would determine the accurate cost to move cars to the nearsest exchange point? For example, using a set of uniform formulas, ideally, a freight car hauled 22 miles by CSX to a NS interchange would be priced the same as a freight car hauled 22 miles by UP to a BNSF interchange. If all parties agreed to the formulas, and all parties knew up front what the switching costs would be, wouldn't that take away the controversy?
Murphy Siding If this requirement would affect all the Class 1's, as well as a lot of smaller railroads, why isn't the AAR able to get everyone to put their heads together, to come up with a workable formula that fairly compensates the switching railroad? As I understand it, when a freight car comes in damaged, the receiving railroad repairs the car, and bills the reapir out based on an agreed price menu that all the railroads follow. I thought that was something overseen by ARR? Why not something similar for switching? Could you come up with a set of formulas, based on the major factors that would determine the accurate cost to move cars to the nearsest exchange point? For example, using a set of uniform formulas, ideally, a freight car hauled 22 miles by CSX to a NS interchange would be priced the same as a freight car hauled 22 miles by UP to a BNSF interchange. If all parties agreed to the formulas, and all parties knew up front what the switching costs would be, wouldn't that take away the controversy?
That would be price fixing and illegal.
This whole mandatory reciprocal switching thing is nothing but a movement (plot, ploy, scheme, endeavor, whatever) to transfer money from railroad corporations to other corporations. Since costs won't be transferred, we can all see where it will lead. Without the money the railroads will have to cut back on something, like maintenance. I, for one, do not want to go back to the 1970s with 25 MPH main lines and SD40s bottoming out on their springs at 25 MPH. (I did ride such a freight train.)
A financially healthy railroad network must use Ramsey Pricing. Such pricing charges customers based on their specific elasticity of demand. No other pricing system will work. Mandatory reciprocal switching will increase the elasticity for the NIT League members supporting this proposed mandate.
That will divert money to them. Which is what they want. Rail service and the nation will suffer as a result. Hopefully, the government will stay out of this. They certainly don't need to involve themselves in a pricing dispute between CSX and Dow Chemical.
Murphy Siding Could you come up with a set of formulas, based on the major factors that would determine the accurate cost to move cars to the nearsest exchange point? For example, using a set of uniform formulas, ideally, a freight car hauled 22 miles by CSX to a NS interchange would be priced the same as a freight car hauled 22 miles by UP to a BNSF interchange. If all parties agreed to the formulas, and all parties knew up front what the switching costs would be, wouldn't that take away the controversy?
Murphy Siding
The issue is who is "you". The NITL wants "you" to be the STB which last time I looked fully regulates reciprocal switching. Greyhounds is right, the NITL wants the government to take railroad earnings and transfer them to the shippers. That is what this is all about, pure and simple.
By way of background, the concept of reciprocal switching goes back a long time into the regulated era. At that time rates were set collectively by the carriers, subject to challenge by the shippers with the burden on the carriers to prove that they were reasonable.
In say the World War I era individual railroads were much smaller in geographic scope than today, and there were often dozens of routes for which the same rate applied. Competition was not by rates but by service, and the quality of service varied between routes.
Where there was/is reciprocal switching, it looks like the process was to pick a point, draw a circle of X miles and "open" all customers within that circle to reciprocal switching. Today that logic still seems to apply, but the names of the customers open to reciprocal switching are published in each carrier's switching tariff, since all this is still regulated by the STB.
I will give a couple of examples using Yakima Washington with which I am familiar and is a simple case. In the good old days, Yakima was served by both Northern Pacific and Union Pacific and UP's subsidiary Yakima Valley Transportation Company. There was an interchange track at Yakima. The most important product shipped from Yakima in the good old days was apples.
Both the NP and UP listed all of their customers at Yakima as open to reciprocal switching. The destination customers could be either open or closed. In general, customers wanted to route their fruit via the route that would provide the quickest service. Typically that was via the origin line haul road and the destination line haul road because reciprocal switching was often a source of delay. I suspect that "in the day" not much fruit was reciprocally switched at Yakima because buyers could buy from shippers on the NP or on the UP, that is source competition. Someone wanting a car to Cheyene WY would most likely buy from a shipper on the UP to avoid the delay incurred by reciprocal switching, but they could buy from someone on the NP and the same rate would apply.
Apples were/are grown at other stations, say Gleed on the NP. Gleed was not open to reciprocal switching so the apples had to leave Yakima on the NP, unless the customer wanted to pay a "combination rate" over Yakima. The combination would be the NP line haul rate from Gleed to Yakima plus the UP rate from Yakima to destination. That combination from Gleed would be significantly higher than either the NP or UP rate from Yakima, which were identical to each other.
Now consider Shields Bag which manufactured plastic bags from plastic pellets. Shields was located on the UP. Because they are open to reciprocal switching, Shields can have their plastic come to Yakima on either UP or NP. Producers on the NP thus have the opportunity to sell to Shields without any freight penalty due to an NP line haul. This exposes sellers on the UP to "fair" competition from sellers on the NP. This clearly works to Shield's advantage, to the UP's disadvantage, and to the NP's advantage since NP gains the opportunity to participate in the plastics traffic that would otherwise be closed to it.
The NITL wants their members in Gleed to be given the advantage of shippers in Yakima by regulatory fiat. They believe that the STB mandated "switch charge" would be less than the combination rate that would otherwise apply. If they did not believe they could get a lower rate out of the STB, they would not bother
Follow the money.
Mac McCulloch
PNWRMNM Murphy Siding Could you come up with a set of formulas, based on the major factors that would determine the accurate cost to move cars to the nearsest exchange point? For example, using a set of uniform formulas, ideally, a freight car hauled 22 miles by CSX to a NS interchange would be priced the same as a freight car hauled 22 miles by UP to a BNSF interchange. If all parties agreed to the formulas, and all parties knew up front what the switching costs would be, wouldn't that take away the controversy?Murphy Siding The issue is who is "you". The NITL wants "you" to be the STB which last time I looked fully regulates reciprocal switching.
The issue is who is "you". The NITL wants "you" to be the STB which last time I looked fully regulates reciprocal switching.
Murphy,
Why would a robbery victim help with the robber?
Yes, the STB fixing prices is still price fixing. Legal if the government does it, illegal if anyone other than the government does it.
Mac
PNWRMNM Murphy, Why would a robbery victim help with the robber? Yes, the STB fixing prices is still price fixing. Legal if the government does it, illegal if anyone other than the government does it. Mac
The shippers have been portraying the railroads as anti-competitive monopolies since the 1870's and they will continue to do so until the end of the United States, or the railroads, whichever comes first. The carriers can not buy the good will of the shippers unless the carriers work for free, and even then some of them would complain.
PNWRMNMThe shippers have been portraying the railroads as anti-competitive monopolies since the 1870's and they will continue to do so until the end of the United States, or the railroads, whichever comes first.
I think it all depends on the mood of the regulators at any given time as to whether they act on the portayal of the railroads as being anti-competitive.
In the short line world if you look at there rate sheets the first couple of miles to the rule 260 interchange is 1/3 of the rate or as much as 900.00 or even 1000.00 even if is a couple of miles. The short line has to pay for just starting up the locomotive and having a 2 or 3 man crew to haul a car to get up at 4:00 am. From my experience at a short line the problem with monopoly's was not the rate so much as it was service. Service as in returning phone calls and talking to a live person. Service as getting a rate in one phone call, Service as getting the car switched when it was supposed to not when they felt like it. Railroads don't have a monopoly there is always trucks and barges. But if it is in the public interest to transfer more freight to rail because of social and environmental reasons then Class One railroads have to care and play nice. However if there is a Golf Course deal to have lower then normal rates for a grain dealer like ADM when there is 3 other elevators in the same town and then provide lousy service to the mom and pop grain dealers then the STB should investigate.
Bonas In the short line world if you look at there rate sheets the first couple of miles to the rule 260 interchange is 1/3 of the rate or as much as 900.00 or even 1000.00 even if is a couple of miles. The short line has to pay for just starting up the locomotive and having a 2 or 3 man crew to haul a car to get up at 4:00 am. From my experience at a short line the problem with monopoly's was not the rate so much as it was service. Service as in returning phone calls and talking to a live person. Service as getting a rate in one phone call, Service as getting the car switched when it was supposed to not when they felt like it. Railroads don't have a monopoly there is always trucks and barges. But if it is in the public interest to transfer more freight to rail because of social and environmental reasons then Class One railroads have to care and play nice. However if there is a Golf Course deal to have lower then normal rates for a grain dealer like ADM when there is 3 other elevators in the same town and then provide lousy service to the mom and pop grain dealers then the STB should investigate.
There's no such thing as "The Public Interest".
What on Earth should the STB "Investigate"?
You sound like an ICC apologist.
Some definitions of "public interest:"
http://www.businessdictionary.com/definition/public-interest.html
http://legal-dictionary.thefreedictionary.com/Public+Interest
http://www.macmillandictionary.com/us/dictionary/american/public-interest
http://newsombudsmen.org/columns/how-should-we-define-in-the-public-interest
tp://dictionary.reference.com/browse/public+interest
Bonas said:
“But if it is in the public interest to transfer more freight to rail because of social and environmental reasons then Class One railroads have to care and play nice.”
There are people advocating taking the majority long haul truck transportation off the roads and putting it on rail specifically for the purpose of environmental sustainability in the public interest. I recall the Trains ran an article on that a few years ago. Railroads may favor that idea, but the same people have a lot of other ideas about doing things in the public interest. I wonder what the long haul trucking industry would think about being put out of business in the public interest.
If it is in the public interest, why doesn’t the public build their own railroad?
The Public did build there own railroad " The Union Pacific" and the Public did own Conrail. As a matter of fact almost every railroad has a charter from there respective state that requires them to perform in the public intrest. That Franchise is subject to regulation by the STB and the PUCOs of the chartering states. and dont get me started on land grants. Railroads are quisi public entittys which isa lot diffrent then the mom and pa store and bar on the corner.
Public interest theory is an economic theory first developed by A.C. Pigou that holds that regulation is supplied in response to the demand of the public for the correction of inefficient or inequitable market practices. Regulation is assumed initially to benefit society as a whole rather than particular vested interests. The regulatory body is considered to represent the interest of the society in which it operates rather than the private interests of the regulators.
BonasThe Public did build there own railroad " The Union Pacific"
If you keep telling the truth like that you are going to be in big trouble, Bonas.
John
John WR BonasThe Public did build there own railroad " The Union Pacific" If you keep telling the truth like that you are going to be in big trouble, Bonas. John
If he continues to say if often enough he will even believe it.
schlimm Public interest theory is an economic theory first developed by A.C. Pigou that holds that regulation is supplied in response to the demand of the public for the correction of inefficient or inequitable market practices. Regulation is assumed initially to benefit society as a whole rather than particular vested interests. The regulatory body is considered to represent the interest of the society in which it operates rather than the private interests of the regulators.
Well, the theory has failed miserably in practical application. Especially in terms of railroad transportation - or other transportation for that matter.
First, there is no "The Public". We're not a monolith. We are a diverse lot. Always have been, always will be. We have different benefits that we seek. To come up with a transportation regulation that would benefit us as a whole would be pretty dang difficult.
In terms of this thread it was claimed that a shift of freight to rail would be a "Public Benefit". But it certainly would not benefit those people driving Freightliners down I-80 tonight. At least some of them would be out of work. As would the people who build the trucking equipment, the people who maintain the trucking equipment, the people who work at truck stops, etc., etc., etc. What are we going to do? Sacrifice these people for the greater good of "The State"?
These trucking folks are also part of "The Public" . Are we to throw them out of the lifeboat because someone else thinks it's in the "Public Interest"?
Importantly, if a transportation consumer decides that using a truck is the best solution why should the government mess with that decision. The transportation consumer knows his/her cost/benefit situation far better than the government ever could.
We have 75 years or so of railroad regulation in "The Public Interest" to learn from. It was a disaster. I cannot think of one good thing that came out of it. Can you?
The regulators, I'm sure acting in what they perceived to be "The Public Interest" , for decades blocked changes in the railroad network that were made necessary by the advent of motor freight. They virtually destroyed the viability of the US rail network as a result. This was not in "The Public Interest". It was to the "Public Detriment".
Which gets back to my original point. There is no such thing as "The Public Interest". In trying to economically regulate toward a fantasy the government will only screw things up.
Just let the railroads, truckers, barges, etc. compete. Things will always work out better that way. I don't have the exact quote, so I'll paraphrase the great regulatory economist Alfred Kahn: "Competition, no matter how imperfect, will always produce a better result than regulation."
Edit:
I found a Kahn quote: "“Where competition is feasible, the government should get the hell out of the way.” Competition exists in transportation. It's certainly feasible.
greyhounds ........ These trucking folks are also part of "The Public" . Are we to throw them out of the lifeboat because someone else thinks it's in the "Public Interest"? Importantly, if a transportation consumer decides that using a truck is the best solution why should the government mess with that decision. The transportation consumer knows his/her cost/benefit situation far better than the government ever could. ...... Which gets back to my original point. There is no such thing as "The Public Interest". In trying to economically regulate toward a fantasy the government will only screw things up. .......
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In theory I tend to agree with you. But you are not entirely consistent. Yes, the trucking industry is part of "The Public". But the government has thrown them a huge lifeboat in the form of nearly free use of a vast road network. And that, combined with the past over-regulation of the railroads, has screwed things up as you suggest. Today's transportation consumer is now making his choice based on the screwed up set of alternatives, not the true cost/benefit situation. More regulation is not a good answer, but the fantasy is already with us. But we have lived with the fantasy so long now that most do not recognize the fact.
When the trucking industry asked for heavier load limits, did you hear even one member suggest how they would contribute to upgrading the bridges? The 48' and 53' trailers cannot make safe RH turns in older neighborhoods where the intersections were not designed for vehicles of that length. Again no explanation as to how the specific users will cover the expense of upgrading the intersections, preferably before going to the longer lengths. The upgrades are for the sole benefit of the truckers, yet nobody from the government or public has seriously considered making them solely responsible for covering the cost.
I will take the liberty of adding an addendum to your statement in the last paragraph: "Just let the railroads, truckers, barges, etc. compete" on a level playing field. Should that ever happen we will both be happy.
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