edblysard The issue will also be which railroad gets to use whose tracks and at what time? Basically, who gets to go first and who waits? Let’s say business A and business B are side by side on a single main line, and both want a daily spot and pull between 10 am and 11am, business A want to ship on the UP, business B likes BNSF…who decides which carrier gets to use the main first?
The issue will also be which railroad gets to use whose tracks and at what time?
Basically, who gets to go first and who waits?
Let’s say business A and business B are side by side on a single main line, and both want a daily spot and pull between 10 am and 11am, business A want to ship on the UP, business B likes BNSF…who decides which carrier gets to use the main first?
Ed -
You are describing Open Access, not Reciprical Switching. In Reciprical Switching a single carrier does the switching for all industries on that carriers area of service. The actual switching carrier gets a switch charge for their efforts in receiving the car in interchange, spotting and pulling the industry and returning the car to interchange. The Other Carrier receives the line haul revenue from the shipment.
Open Access is also a dream for some shippers. I wonder if those shippers would like their competition to use their tools of production?
Never too old to have a happy childhood!
cx500I believe under the concept of reciprocal switching there is a fixed rate, probably much the same whether it is 1 mile or 25 miles. Say it is $500 a car.
Well you can create actual competition that will result in a fair rate by allowing one competing railroad to share the track with the track owner. Or you can just set a fair rate for both railroads to use where they do not compete by mutual access to the shipper. But then we are back to the government setting rates, which many have said will not be good.
In reading more about this, I conclude that reciprocal switching and other types of anti-monopoly schemes almost defy a clear and simple explanation. They all are forms of reregulation based on the premise that railroads are using monopoly power to the detriment of society.
The link I posted above makes an excellent point about largest objective being that REGULATION SERVES THE REGULATORS. I believe we are entering an era in American history where that painful lesson may finally be learned, although too late.
It takes 2+ hours to work either plant, so someone is going to get worked late, maybe not at all, who decides?
Let’s say the mainline was owned by KCS, and during the day, UP goofs up, derails and plows out 100 yards of ROW.
Who pays for the repair and the lost business to KCS, the other shippers on the line, so forth and so on….who pays the property tax on the ROW?
Dave, a crew start on most class 2 and 3 roads runs between $1800.00 to $2200.00, and you are correct, it cost a lot more than $500.00 to move a car any serious distance.
23 17 46 11
I would not be against reciprocal switching if the charge were reasonable. Remember that is costs a whale of a lot more than $500 just to move one railcar ten feet if there would not otherwise be a crew and power assigned to do the job with other business. I suggest that if the charge were reasonable there would not be a saving for the customer.
Bucyrus There have been a lot of analogies to explain reciprocal switching, and some very short definitions, but I am not sure I understand how this works in practice. Say a shipper is captive to one rail line (line A) between the shipper and a connection with another rail line (line B) ten miles away. Say the shipper feels his line A is overcharging him. What exactly does the shipper do to get a competitive price and service from line B for his shipping under the concept of reciprocal switching?
There have been a lot of analogies to explain reciprocal switching, and some very short definitions, but I am not sure I understand how this works in practice.
Say a shipper is captive to one rail line (line A) between the shipper and a connection with another rail line (line B) ten miles away. Say the shipper feels his line A is overcharging him.
What exactly does the shipper do to get a competitive price and service from line B for his shipping under the concept of reciprocal switching?
I believe under the concept of reciprocal switching there is a fixed rate, probably much the same whether it is 1 mile or 25 miles. Say it is $500 a car. Railroad A quotes a rate of $4,000 to move that car across the country. Railroad B offers him a rate of $3,000, plus the $500 reciprocal switching, so the shipper would save $500. This has nothing to do with the shipper "feeling" he is being overcharged; he has an actual better deal.
One option is to truck his goods over to a loading point on the competing railroad. That indeed happens quite often because the cost of the multiple truck hauls required is less than the reciprocal switching charge.
The argument claiming reciprocal switching is confiscating private property does have some weak points. While the railroads are in many senses private corporations, the fact remains that in other respects they have powers very close to a public utility. What other company can obtain permission to expropriate land, or be immune from the opposite? The local village may pass a bylaw to make Sunday train traffic on the mainline on Sunday against the law, or prevent the passage of dangerous goods, but the railroad can ignore it due to federal jurisdiction. Those powers are necessary; the flip side is that some limited oversight is also justified. Requiring reciprocal switching is a very limited interference, and as long as the charge is compensatory, it is encouraging true competition.
Of course one obvious, though not realistic, solution would be for the government to buy the trackbeds and let all railroads freely use them, just as the government owns the road network and any trucker can use them. Then the issue of reciprocal switching would be moot. Just use the existing tax the railroads pay for diesel fuel "cover" the costs, just as the truckers claim!
John
Here is a detailed analysis of the whole range of options to introduce more competition to railroad shipping. I would say that the devil is in the details:
http://www.cato.org/sites/cato.org/files/serials/files/regulation/1997/4/reg20n2g.html
This quote strikes me as particularly brilliant:
“The justification most commonly given for such a pervasive new regulatory regime is "competition." But regulation is not competition. Regulation is governmentally administered prices and operations. Open access schemes that require regular regulatory attention would help revitalize the regulatory industry rather than the railroads. But they would do nothing for most consumers except add the cost of more regulation to their freight bill.”
Murphy Siding 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?
As they say, there lies the rub...
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...
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?
Thanks to Chris / CopCarSS for my avatar.
tree68 UlrichIf carrier ABC is providing lousy service then sit down with them and determine what needs to be done on both sides to improve service levels and/or manage expectations. Same for rates. Reciprocal switching is switching the railroad would be doing anyhow, if the shipper chose to use the serving railroad instead of a competitor, so that's not a factor in this discussion.
UlrichIf carrier ABC is providing lousy service then sit down with them and determine what needs to be done on both sides to improve service levels and/or manage expectations. Same for rates.
Reciprocal switching is switching the railroad would be doing anyhow, if the shipper chose to use the serving railroad instead of a competitor, so that's not a factor in this discussion.
The problem, as I understand it, is that it is perceived that the carrier can say "take it or leave it - if you want to ship X cars of y out of / in to your facility, you'll pay what we demand," and that the price they will demand is significantly more than what it would be if there were competition.
If that rate is extended to the long haul, and the shipper finds that a competing railroad will handle the long haul at a lower rate, why would they not want to use the lower cost shipper? That leaves them with the "last mile" from the interchange to the shipper's/receiver's location, which is where the reciprocal switching comes in.
Reciprocal switching is switching the railroad would be doing anyhow, if the shipper chose to use the serving railroad instead of a competitor, so that's not a factor in this discussion. Unless, of course, the serving railroad is trying to get rid of that business in the first place. Then having to switch the industry would be a problem because it perpetuates something they're trying to dump.
Government rate setting is what left the railroads in the condition they were in in the early 60's.
Ulrichpurchased and maintained at rates determined by the free market
All fine and good, except a "free market" requires competition to be free. Without that, you have a monopoly, as in state-owned industries. The essence of capitalism is the free market, which has multiple players for supply and demand, whether of widgets or wailwoads.
C&NW, CA&E, MILW, CGW and IC fan
Ulrich Government set rates? I don't think so.
Government set rates? I don't think so.
Just to be clear, I am not in favor of it. I am just predicting it.
Government set rates? I don't think so. A business takes the risk of investing its own capital and assets (many of which are purchased and maintained at rates determined by the free market) so that some bureaucrats somewhere can decide what a "fair" rate is? Bad idea, even in principle. And in practice you would have rampant corruption as businesses once again resort to bribing government officials in return for favorable rates. He who has the biggest bribe wins.
Reciprocal switching agreements are also a bad idea. Shippers, even with only one rail line available to them, usually have options. The best option is to work together with the rail carrier that owns the line into the plant to improve services. If carrier ABC is providing lousy service then sit down with them and determine what needs to be done on both sides to improve service levels and/or manage expectations. Same for rates. If the shippers deems that his rates are too high, sit down to identify cost saving opportunities that would allow the carrier to reduce prices. Other options are trucking or some other mode, building a branch to a competing railroad, or providing switching services in house via the shipper's own locomotive and employees.
Bucyrus Wouldn’t it be a lot easier and more efficient to just have the government set the rail rates out of fairness to all?
Wouldn’t it be a lot easier and more efficient to just have the government set the rail rates out of fairness to all?
And thus we get back to rate making before Staggers.
Yes, exactly.
Bucyrus This seems like a pretty clear definition: Reciprocal Switching: The term “reciprocal switching” is the movement of a railcar, in switch service between the interchange tracks of one railroad to a customer’s private or assigned siding on another railroad for the purpose of loading or unloading freight. The service precedes or follows a road haul and is bi-directional to include both the loaded and empty railcar. On the surface, it seems to be a way to impose a free market competition, but yet it is government imposed, so it cannot be called a free market solution. Wouldn’t it be a lot easier and more efficient to just have the government set the rail rates out of fairness to all?
This seems like a pretty clear definition:
Reciprocal Switching: The term “reciprocal switching” is the movement of a railcar, in switch service between the interchange tracks of one railroad to a customer’s private or assigned siding on another railroad for the purpose of loading or unloading freight. The service precedes or follows a road haul and is bi-directional to include both the loaded and empty railcar.
On the surface, it seems to be a way to impose a free market competition, but yet it is government imposed, so it cannot be called a free market solution.
The same type of (anti) logic could be used in this case- The lumber yard I work for spent some big bucks to relocate to an area where a rail spur could be put in. Because of that investment, the transposition cost for goods is less than for the same goods coming on a semi truck. We have the location. We invested in the infrastructure. We have the pricing advantage as a consequence. Using the anti-logic, our competitor should be able to use our rail spur- right? Of course, they'll be required to compensate us for it's use. Since they'll never be able to use it enough to even wear the shine off the rails, I suppose you could say that them giving us $25 to help cover the cost of mowing ROW would cover it-right? No harm done,and we made $25!
Even if the city ordinance allows neighbors to charge the market rate, they may use the neighbor's mower because it's easier than driving across town and having to haul the mower around...
Before all the mergers, this wasn't a problem as such. While a customer might request a rather bizzare routing so as to favor certain railroads, a car (or cars) couldn't travel coast to coast on one railroad (they can't now, either, however the potential number of railroads has dropped considerably). In some cases, a car couldn't travel across the state on just one railroad. So "reciprocal switching" was a fact of every day life.
And everybody got their cut of the rate division.
Methinks that some portion of the problem is that Shipper A wants something shipped between a point on Railroad B and a point on Railroad C. B or C are both upset because the bulk of the long haul is occurring on their competitor's rails...
To me, reciprocal switching is more like being able to use someone else's property at a rate that may be less than the going rate.
For example, say your lawn mower broke. The rental place down the block charges $25 per day to rent a lawn mower (I have no idea as to rates for such things, just an example with made up numbers.) because that's the amount they have determined covers maintenance and eventual replacement of the equipment and a profit so they can stay in business. Now the city has an ordinance that says that neighbors must lend theirs to their next door neighbor at $10 per day. Maybe the city has determined that is a fair rate that covers wear and tear, maybe they just pulled the number out of their as--uh, air.
Pretty soon, the lawn mower rental place goes out of business because no one is renting them. Meanwhile, the people who still have a lawn mower finding that the cost of maintaining their own lawn mower is getting out of hand because not only do to they use it, but so do all their neighbors. They decide to get rid of it and instead borrow their neighbor's. It's cheaper than owning one. Eventually, their won't be any lawn mowers available since the business closed and no one wants the expense of owning a lawn mower.
So you say the lawn mower rental place should only charge $10 per day. So to stay in business they do just that. Now everyone has lower rates. The business finds out that they can't maintain or replace their equipment at a rate of $10 per day. The result is the same, they go out of business and no one wants to own their own lawn mower. Eventually the grass is knee high by the Fourth of July.
Something more railroady.
I have a railroad with Widget Industries 25 miles from the nearest interchange. The rate I've determined for Widget's business is higher than for it's competitor, Gilbert's Gizmos. That's because Gilbert's is located in the city with the interchange, and is open to reciprocal switching. AH HA! See, See, Widget Industries is getting skewered by my big bad railroad because it doesn't have access to anyone else.
What you don't see is that Gilbert's is located on an industrial lead in a terminal area and ships 10 cars daily. There are yard engines that provide service to it and other customers and they don't delay main line traffic. Widget Industries on the other hand is located on a main line, where they are the only customer and they do 2 cars per day. The difference in rate not only reflects the cost of handling each car, but also the cost incurred by switching the industries. It costs more to service Widget than Gilbert. Not only do you have added crew costs for the train that switches Widget (exclusive local or thru train), you also have delays to other trains. Some that may need to be recrewed. Maybe the delays to the thru trains is enough that some customers start using another railroad.
Railroad B comes along and offers Widget a cheaper rate. I say too bad, so sad. Until Mr. Politician comes along and enacts forced reciprocal switching. Now I have to switch Widget's for Railroad B. Yes, I'm "compensated" for doing it. But is it truly compensatory? At best it might cover the actual cost of moving 2 cars 25 miles from industry to interchange. It's probably not going to make up the costs of delaying other trains. It might not even cover replacement of ties and rail. If it were an isolated case, maybe I could live with this. Magnify this over the entire railroad and I'm going to have trouble staying in business. I might not go completely out, but I may end up abandoning lines. Sure I could lower rates but, the result will still be the same. It won't be profitable to service some areas and I'll still abandon them.
Next we will have to have a bill either forcing a railroad to keep lines open or force another railroad to take over a line when the original owners have decided to give up.
Jeff
schlimmIf the Caterpillar dealer is offering a better product at a much cheaper price, how would you feel about having to pay thousands more for an inferior expensive product because you are not allowed to buy the Cat, because the dealer is 25 miles away and the John Deere dealer is in your own town. (My apologies to both brands - I have no idea of how they compare in reality.) Your local corner store would love to prevent you from shopping at the supermarket but your automobile allows you freedom to drive the extra mile.
We recently bought a Cat Skid Steer machine. Nice machine, they came and delivered it.
This month we just bought a new John Deere Machine, they came and delivered it. This one replaces three older tractors.
We buy tractors band machines based on what we what, and what we can get for a price we are willing to pay.
ROAR
The Route of the Broadway Lion The Largest Subway Layout in North Dakota.
Here there be cats. LIONS with CAMERAS
cx500 If the Caterpillar dealer is offering a better product at a much cheaper price, how would you feel about having to pay thousands more for an inferior expensive product because you are not allowed to buy the Cat, because the dealer is 25 miles away and the John Deere dealer is in your own town. (My apologies to both brands - I have no idea of how they compare in reality.) Your local corner store would love to prevent you from shopping at the supermarket but your automobile allows you freedom to drive the extra mile. Forced reciprocal switching is not a seizure of private property. The originating railroad is compensated for the switching it does to deliver the load to the long-haul carrier. Then the long haul portion becomes subject to competitive rates, and it is up to the originating railroad to win that part of the business too. Obviously the railroads are reluctant to accept the concept, since a captive shipper can be charged a much higher rate and thus generate more profit for less effort. And it is only competitive pressure that keeps any industry efficient.
If the Caterpillar dealer is offering a better product at a much cheaper price, how would you feel about having to pay thousands more for an inferior expensive product because you are not allowed to buy the Cat, because the dealer is 25 miles away and the John Deere dealer is in your own town. (My apologies to both brands - I have no idea of how they compare in reality.) Your local corner store would love to prevent you from shopping at the supermarket but your automobile allows you freedom to drive the extra mile.
Forced reciprocal switching is not a seizure of private property. The originating railroad is compensated for the switching it does to deliver the load to the long-haul carrier. Then the long haul portion becomes subject to competitive rates, and it is up to the originating railroad to win that part of the business too.
Obviously the railroads are reluctant to accept the concept, since a captive shipper can be charged a much higher rate and thus generate more profit for less effort. And it is only competitive pressure that keeps any industry efficient.
That analogy really helps to clarify this issue for me. Thanks, John.
From memory I can't cite the details of the case, but a few years ago the location of a new auto plant was made contingent upon NS granting CSX (or perhaps the other way around) track rights between the plant site and CSX rails.
daveklepper I think forced reciprocal switching represents seizure of private property. Say i have Joohn Deere outlet in a midwest town, and 25 miles away there is a Caterpiller Tractor dieler. Should I be forced to Caterpiller tractor's on behalf of my competitor? If a busiiness doesn't like the service on the one railroad that serves him, he ought to have located where two railroads provided service, build his own branchline, or truck to the railroad he wishes to use. That is my opinion, anyway. Dave Klepper
I think forced reciprocal switching represents seizure of private property. Say i have Joohn Deere outlet in a midwest town, and 25 miles away there is a Caterpiller Tractor dieler. Should I be forced to Caterpiller tractor's on behalf of my competitor?
If a busiiness doesn't like the service on the one railroad that serves him, he ought to have located where two railroads provided service, build his own branchline, or truck to the railroad he wishes to use.
That is my opinion, anyway. Dave Klepper
You have it backwards. If the Caterpillar dealer is offering a better product at a much cheaper price, how would you feel about having to pay thousands more for an inferior expensive product because you are not allowed to buy the Cat, because the dealer is 25 miles away and the John Deere dealer is in your own town. (My apologies to both brands - I have no idea of how they compare in reality.) Your local corner store would love to prevent you from shopping at the supermarket but your automobile allows you freedom to drive the extra mile.
But is the railroad "giving" business to its competitor? As I understand it, the arrangement would be similar to that of a small regional railroad that handles the final delivery/pickup with the customer. The switching railroad would get paid for the switching service. I'm not fur it or agin it, I just don't see the reason for strong objection. I also don't see where it's that much different in principle from haulage or trackage agreements, except in that it's mandatory.
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