Montana fights back against BNSF

[greyhounds]

QUOTE: Originally posted by futuremodal

Greyhounds, what you don't seem to understand is that there is no connection between the higher rates paid by Montana shippers and the "average" carloads of grain from the various states. Since most grain shipments come in 100 car shipments,

Yes there is. The average I cited was the average cars per shipment. Now according to the Banks Study, in 2002 there were 30,111 carloads of wheat shipped from Montana in 2,114 seperate shipments - an average of 14.25 cars/per shipment. This is significantly below the average shipment sizes for wheat originating in Minnesota and Nebraska. If you ship in smaller quantities you're going to pay a higher per unit rate since economies of scale do exist in railroading. There is a relationship between average shipment size and the cost/rate per unit moved.

And if "Most" Montana wheat moves in 100 car blocks, as you claim, then the average shipment size would be much higher than 14.25 cars. Again, do the math.

QUOTE:
Therefore, if it is costing shippers more to ship a 100 car lot from Montana than it is from farther away e.g. the economies of scale are being maxed for both locales, there is no other conclusion but that rate discrimintation is taking place.

Well, if you cite some specific rates on 100 car lots we can go on with that.

If we look at Sol's numbers on 50 car lots we see that the BNSF charges $48,350 LESS to move such a shipment from Haver to Portland than it does from Minneapolis to Portland. Now charging $48,350 LESS is not charging more as you claim.

Why on Earth do you claim that $48,350 less is actually more?

[Anonymous]

I've been mulling over some basic solutions (those that don't require arguing over semantics) to the problem at hand... There is the UP Montana Sub running north from Monida to Silver Bow. I've always wondered why the M&S folks at UP haven't been trying to cajole more wheat being shipped out via the Montana Sub, over Monida and making a hard right at Pocatello for Points West. There is only one loadout facility a Silver Bow (I think) as it stands...it would require some construction of loadout facilities akin to the new elevator at Pompeys Pillar adjacent to I-94. Granted Monida is still technically a helper district (although the last helpers in Monida vanished many years ago with the ore trains)...a dupe program for unit grain trains could be established...you could even leave them entrained for the trip across the Nampa Sub (eliminating the need for a shove from the Glenns Ferry Helpers).

The only way the MRL could benefit would be to establish a 'hard' connection to the UP; either at Spokane or Silver Bow. That will probably never happen in my lifetime; BNSF held onto the Garrison-Helena segment of the ex-NP mainline at the creation of the MRL to protect the UP-Montana Western Interchange. Now, with the Montana Western gone, its strictly BNSF and UP at Silver Bow; probably until the rails start growing rust. I suppose if the folks at MRL were really ambitious they or the UP could rebuild the Milwaukee down through Deer Lodge to Silver Bow...who knows; stranger things have happened. Oh well, these are just some random thoughts. My ramblings and a buck will get you a burrito at Taco Hell. :)

[MichaelSol]

Well, this is absurd, what I quoted you on is exactly what I quoted you on, and not something different. This is exactly like the above: when you stated, "I refered to the average number of cars per shipment, not per state ," when in actual fact you said " In 2002 the average wheat shipment from Montana was only 14.24 cars. From Minnesota it was 50.64 cars, and from Nebraska it was 50.43 cars." which is exactly what you said.

If you only said that switch crews were part of the rate structure, there is nothing in my comments to disagree with the observation insofar as compensatory rates are concerned. However, since this whole thread has been about the discriminatory difference in rate structures, your vigorous assertion that somehow this overlooks the element of yard costs is patently absurd unless there is some reason that Montana wheat is handled differently than both long haul and short haul wheat. If not, then it is a constant across all shipping alternatives and does not -- get that -- does not explain anything about why Minneapolis [long haul] and Spokane [short haul] wheat is offered rates lower than Montana wheat by the same company usng the same equipment on the same tracks to the same destinations.

If you were offering nothing that illuminates that rate differential, and taking plenty of words to do it, what then was your point, and what is it now? If there is not an economic justification, then the alternative and probable explanation is what Futuremodal intially suggested: outright exploitation and discrimination against helpless shippers.

Best regards, Michael Sol

[csxengineer98]

with all this talk of prices per car load...... the 2 main activests have yet to tell me where the blackmail money (increesed proporty taxs) gained from BNSF is going to go....you 2 want to keep going around and round about cost per unit movement rates..and what not..but im still wanting the awnser to my question....
csx engineer

[tatans]

We here in Canada have some bizarre shipping methods "the Crow Rate" (a preferential system of shipping grain) and we solve our problems by letting the Provinces and Federal Government build a pile of grain cars---aahhhh socialism eh?

[MichaelSol]

QUOTE: Originally posted by greyhounds

Yes there is. The average I cited was the average cars per shipment. Now according to the Banks Study, in 2002 there were 30,111 carloads of wheat shipped from Montana in 2,114 seperate shipments - an average of 14.25 cars/per shipment. This is significantly below the average shipment sizes for wheat originating in Minnesota and Nebraska.
...
And if "Most" Montana wheat moves in 100 car blocks, as you claim, then the average shipment size would be much higher than 14.25 cars. Again, do the math.

If you actually "do the math" it shows that it is possible to have an average of 14.3 carloads per train, in the case of 282 unit trains of 100 cars, 1 unit train of 67 cars, and 1,831 single carloads are handled on mixed trains.

In that case, 28,267 carloads are handled by unit trains, and 1,831 carloads handled by mixed trains.

That translates to 95% of tonnage handled by unit trains "averaging" 100 carloads, to the signifcant decimal place, and 5% of the tonnage handled on mixed trains. A statistical average can show 14.3 carloads per train, and still misrepresent the fact that 95% of the tonnage is handled on unit trains of 100 carloads.

Futuremodal is correct that "averages" are often deceptive analytical tools, and more often disguise statistical truths than they reveal them.

Greyhounds, the admonition to "do the math" is sometimes enlightening when you actually do it, instead of treating it merely as a cliche'.

Best regards, Michael Sol

[MP173]

The economic solution to this is simple...the Montana farmers can sell their ranches in Montana and move to Minneapolis where they can enjoy the "lower" rates and pay $967 more per carload!

Regarding my statement of water transportation from Spokane, obviously should keep my mouth shut and fingers off the keyboard when I dont know something.

I am not going to spend time doing research into this. I do find the debate very interesting because it is a classic example of textbook economics vs market economics.

Both movements of grain are simply based on market conditions.

As far as discussing "terminal costs" differences ... would Minneapolis terminal costs be lower than Montana's? What is the stem for both? What is the equipment utilization? Is there a large pool of covered hoppers available in Minneapolis based on it's location as a milling town? Or am I making another huge assumption that is wrong?

Finally, Michael, please explain how paying $967 per carload less is an economic penalty for the Montana farmers.

Then I will go away.

ed

[greyhounds]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by greyhounds

Yes there is. The average I cited was the average cars per shipment. Now according to the Banks Study, in 2002 there were 30,111 carloads of wheat shipped from Montana in 2,114 seperate shipments - an average of 14.25 cars/per shipment. This is significantly below the average shipment sizes for wheat originating in Minnesota and Nebraska.
...
And if "Most" Montana wheat moves in 100 car blocks, as you claim, then the average shipment size would be much higher than 14.25 cars. Again, do the math.

If you actually "do the math" it shows that it is possible to have an average of 14.3 carloads per train, in the case of 282 unit trains of 100 cars, 1 unit train of 67 cars, and 1,831 single carloads are handled on mixed trains.

In that case, 28,267 carloads are handled by unit trains, and 1,831 carloads handled by mixed trains.

That translates to 95% of tonnage handled by unit trains "averaging" 100 carloads, to the signifcant decimal place, and 5% of the tonnage handled on mixed trains. A statistical average can show 14.3 carloads per train, and still misrepresent the fact that 95% of the tonnage is handled on unit trains of 100 carloads.

Futuremodal is correct that "averages" are often deceptive analytical tools, and more often disguise statistical truths than they reveal them.

Greyhounds, the admonition to "do the math" is sometimes enlightening when you actually do it, instead of treating it merely as a cliche'.

Best regards, Michael Sol

Yes, if they're making single car shipments. Which is as much fantisyland as the rest of your arguments. In your example 1,831of 2,114 shipments were made in single car lots. That's 86.6%. Carry anything to an extream and you can produce an absurd result.

If Montana shippers are so stupid as to be moving that many single car shipments of a bulk commodity going to a common destination, then they deserve to pay through the nose. Loose car railroading is really inefficient.

I try to base my arguments in reality. Moving bulk, generic, export grain from Montana to the port in single car shipments is not reality.

[greyhounds]

QUOTE: Originally posted by MichaelSol

Well, this is absurd, what I quoted you on is exactly what I quoted you on, and not something different. This is exactly like the above: when you stated, "I refered to the average number of cars per shipment, not per state ," when in actual fact you said " In 2002 the average wheat shipment from Montana was only 14.24 cars. From Minnesota it was 50.64 cars, and from Nebraska it was 50.43 cars." which is exactly what you said.

If you only said that switch crews were part of the rate structure, there is nothing in my comments to disagree with the observation insofar as compensatory rates are concerned. However, since this whole thread has been about the discriminatory difference in rate structures, your vigorous assertion that somehow this overlooks the element of yard costs is patently absurd unless there is some reason that Montana wheat is handled differently than both long haul and short haul wheat. If not, then it is a constant across all shipping alternatives and does not -- get that -- does not explain anything about why Minneapolis [long haul] and Spokane [short haul] wheat is offered rates lower than Montana wheat by the same company usng the same equipment on the same tracks to the same destinations.

If you were offering nothing that illuminates that rate differential, and taking plenty of words to do it, what then was your point, and what is it now? If there is not an economic justification, then the alternative and probable explanation is what Futuremodal intially suggested: outright exploitation and discrimination against helpless shippers.

Best regards, Michael Sol

Well, that's not what you said and not what I replied to. But let's get beyond that.

Are you in agreement with me that the origin handling costs, and the destination handling cost, for similar shipments originating in Minnesota, Nebraska, and Montana are the same?

If you are, then your argument falls apart. So are you?

[bobwilcox]

Let me add a comment about costs in rate making. The cost comes into play at the final step in the process. First you determine what the customer will pay for your service. That requires a total phycical distribution system anaylsis in light of competition from other carriers, transportation modes, optional origins or option materials (such as chemicals) or protiens (such as animal feed).

Only when you have an idea what the customer will pay do you think about costs, margins and ultimatly if you are interested in handling the traffic. In the excess capacity enviroment before about 1995 you would willing to take anything over a 10% markup over your long run varible cost (LRVC) if you were sure the rate was as high as possible. If you were pricing today, on a corridor with limited capacity, you should be very reluctant with anything below a 50% markup. Looking at major commodity movements(>$1,000,000 per year) you will see markups that go higher.

[greyhounds]

QUOTE: Originally posted by bobwilcox

Let me add a comment about costs in rate making. The cost comes into play at the final step in the process. First you determine what the customer will pay for your service. That requires a total phycical distribution system anaylsis in light of competition from other carriers, transportation modes, optional origins or option materials (such as chemicals) or protiens (such as animal feed).

Only when you have an idea what the customer will pay do you think about costs, margins and ultimatly if you are interested in handling the traffic. In the excess capacity enviroment before about 1995 you would willing to take anything over a 10% markup over your long run varible cost (LRVC) if you were sure the rate was as high as possible. If you were pricing today, on a corridor with limited capacity, you should be very reluctant with anything below a 50% markup. Looking at major commodity movements(>$1,000,000 per year) you will see markups that go higher.

Exactly. Can you image a local crew stopping 1,831 times a year to pick up a single car shipment of grain, as Sol postulated. On the nothern Transcon they'd have the close to capacity main line tied up. Hot trains delayed. Ain't worth it. But to him, this rational decision "proves" the BNSF is out to "Get" the Montana farmers.

[bobwilcox]

QUOTE: Originally posted by greyhounds

QUOTE: Originally posted by bobwilcox

Let me add a comment about costs in rate making. The cost comes into play at the final step in the process. First you determine what the customer will pay for your service. That requires a total phycical distribution system anaylsis in light of competition from other carriers, transportation modes, optional origins or option materials (such as chemicals) or protiens (such as animal feed).

Only when you have an idea what the customer will pay do you think about costs, margins and ultimatly if you are interested in handling the traffic. In the excess capacity enviroment before about 1995 you would willing to take anything over a 10% markup over your long run varible cost (LRVC) if you were sure the rate was as high as possible. If you were pricing today, on a corridor with limited capacity, you should be very reluctant with anything below a 50% markup. Looking at major commodity movements(>$1,000,000 per year) you will see markups that go higher.

Exactly. Can you image a local crew stopping 1,831 times a year to pick up a single car shipment of grain, as Sol postulated. On the nothern Transcon they'd have the close to capacity main line tied up. Hot trains delayed. Ain't worth it. But to him, this rational decision "proves" the BNSF is out to "Get" the Montana farmers.

Remember the BNSF is the anti-christ and Armageddon is somewhere near Essex, MT.

[jeaton]

MP 173 That rate differential of $976 per car Minnesota vs. Montana to the PWC also leaves me a little confused. That should mean that the Montana farmer can get about 29 cents a bushel more at the elevator than his Minnesota counter part. That ought to be a decent up.

As near as I can tell, those saying that the Montana rate are discriminatory base their argument on the fact that the per mile revenue Montana to PWC is higher than Minnesota to PWC. That may be an indication that the Montana rates are too high, but I don't believe it is the evidence that can prove the case. If I am not mistaken, the evidence to prove the case has to show that the ratio of the rate to the long run variable cost exceeds a statuatory limit.

Michael Sol noted here what I had heard before that bringing a case to the STB is a very expensive project. Well, just how much is very expensive? He has also noted here that his study showed that Montana farmers and grain merchants suffered great financial damage. Isn't there enough there to proceed with the case? Or is it possible that there is not a case?

Jay

[bobwilcox]

QUOTE: Originally posted by jeaton

MP 173 That rate differential of $976 per car Minnesota vs. Montana to the PWC also leaves me a little confused. That should mean that the Montana farmer can get about 29 cents a bushel more at the elevator than his Minnesota counter part. That ought to be a decent up.

As near as I can tell, those saying that the Montana rate are discriminatory base their argument on the fact that the per mile revenue Montana to PWC is higher than Minnesota to PWC. That may be an indication that the Montana rates are too high, but I don't believe it is the evidence that can prove the case. If I am not mistaken, the evidence to prove the case has to show that the ratio of the rate to the long run variable cost exceeds a statuatory limit.

Michael Sol noted here what I had heard before that bringing a case to the STB is a very expensive project. Well, just how much is very expensive? He has also noted here that his study showed that Montana farmers and grain merchants suffered great financial damage. Isn't there enough there to proceed with the case? Or is it possible that there is not a case?

Jay

This has been an issue for the last 25 years but no one ever brings a case because they no they would lose. The main reason is the BNSF faces competition from other origins they do not serve in the US, Canada, Russia, etc. They know they can't get the job done in the courts so they go to their Congressmen.

[greyhounds]

QUOTE:

Remember the BNSF is the anti-christ and Armageddon is somewhere near Essex, MT.

I thought Armageddon was somewhere up by Sweet Grass on the border.

Seriously, do you remember when the Santa Fe advertised their passenger trains on their boxcars with large slanted script slogans like "Route of the Chief", or "Route of the El Capitan".

Well, how 'bout "Route of the Anti-Christ" on BNSF freight cars. The first thing you have to do in advertising is get people's attention. I think that would do it.

What do you think?

[Junctionfan]

QUOTE: Originally posted by Junctionfan

I say it might be better to use UP or build up Montana Rail link up with some investment. Don't think Rail America would mind that-trying to make them bigger-could be wrong though.

BNSF might respond better to direct and threatening competition rather than go about things through something more Canadian in style. Better to stick with what currently works in the U.S and that is get aggressively capitalist and blow the competition out of the water. If the State of Montana is truly unhappy with BNSF and if other states aren't that please either, the states could have a referendum to see if the majority of the citizens would support the financial sponsership of shortlines like Montana Rail link and form a network through the financial alliance of both the shortlines and the states and the operational alliance between the shortlines effected. Several shortlines connected to each other to form a large network to serve your needs is much more American and constitutional friendly than going forth with a non-constitutional bill that will go nowhere other than in the courts-very anti productive I'm afraid.

Just curious; Does anybody else feel this way?

[garr]

Maybe the Montana legislators who want to get into controlling rates should look at the airlines. Per Orbitz, the lowest airfare on 3/8:

Round trip airfare, Helena, MT to Seattle/Tacoma Int, 3/29 to 4/5, price is $296.00.

Round trip airfare, Minneapolis, MN to Seattle/Tacoma, 3/29 to 4/5, $207.00.

Seems to be nearly a third higher to fly the shorter distance. Now this is true rate discrimination! This is truly a higher rate, whereas the railroads are actually charging a lower rate for the shorter distance the grain is hauled.

Jay

[bobwilcox]

QUOTE: Originally posted by Junctionfan

QUOTE: Originally posted by Junctionfan

I say it might be better to use UP or build up Montana Rail link up with some investment. Don't think Rail America would mind that-trying to make them bigger-could be wrong though.

BNSF might respond better to direct and threatening competition rather than go about things through something more Canadian in style. Better to stick with what currently works in the U.S and that is get aggressively capitalist and blow the competition out of the water. If the State of Montana is truly unhappy with BNSF and if other states aren't that please either, the states could have a referendum to see if the majority of the citizens would support the financial sponsership of shortlines like Montana Rail link and form a network through the financial alliance of both the shortlines and the states and the operational alliance between the shortlines effected. Several shortlines connected to each other to form a large network to serve your needs is much more American and constitutional friendly than going forth with a non-constitutional bill that will go nowhere other than in the courts-very anti productive I'm afraid.

Just curious; Does anybody else feel this way?

MRL can not act independently of the BNSF on these types of issues.

[Anonymous]

The last paragraph of the news story pretty much sums up the way the railroad taxation bill will go. It will not pass the legislature just like it did not in N. Dakota.

The legal entanglements could last for years.

BNSF needs to take a look at the ethical and unfair business practices for charging high prices to grain shippers. There is very little competition in Montana but having a monopoly on shipping grain is no excuse to charge overtly high prices. It is difficult to apply the market economy in Montana when there is hardly any competition.

This is a good example of a business not being a good community member and is detrimental to BNSF. It is poor public relations on the part of BNSF to stand by their high rates. This type of issue needs to go directly to the CEO of BNSF and its board of directors.

[MichaelSol]

QUOTE: Sol: If you actually "do the math" it shows that it is possible to have an average of 14.3 carloads per train, in the case of 282 unit trains of 100 cars, 1 unit train of 67 cars, and 1,831 single carloads are handled on mixed trains. In that case, 28,267 carloads are handled by unit trains, and 1,831 carloads handled by mixed trains. That translates to 95% of tonnage handled by unit trains "averaging" 100 carloads, to the signifcant decimal place, and 5% of the tonnage handled on mixed trains. A statistical average can show 14.3 carloads per train, and still misrepresent the fact that 95% of the tonnage is handled on unit trains of 100 carloads.

QUOTE: Greyhounds: Yes, if they're making single car shipments. Which is as much fantisyland as the rest of your arguments. In your example 1,831of 2,114 shipments were made in single car lots. That's 86.6%. Carry anything to an extream and you can produce an absurd result.

Please, 86.6% of "shipments" shades the argument. 1,831 single carload movements also represents less than 5% of total tonnage which is probably more useful in terms of understanding small movements of grain, and probably representing primarily elevator cleanups and cleanouts (recalling there are different types of wheat grown in Montana and different seasons of wheat), and those processes are not "unit train" compatible. But, without understanding the industry, you go on to criticize even cleanouts:

QUOTE: Greyhounds:If Montana shippers are so stupid as to be moving that many single car shipments of a bulk commodity going to a common destination, then they deserve to pay through the nose. Loose car railroading is really inefficient.

Yes it is. That doesn't mean there are not completely legitimate reasons to do it.

Hopefully without being labeled "stupid" by someone who doesn't understand what you do to clean out an elevator.

But, it's not just that. BNSF is typically the car supplier. In the Fall, 2003, when a combination of increased equipment cycle times (slower trains), increased terminal dwell times, and failure to heed warnings about a bumper crop resulted in a grain car supply crisis, everything fell apart for the shippers, because of the railroad. The COT program collapsed. The company spotted a single car. Your elevator might have had 20 carloads ready to load, but you only had one hopper car sitting there because the railroad couldn't deliver any more. You loaded and shipped. Inefficient? Yes. Shipper's fault? No, the railroad was dictating single car and small car movements because that's how they were delivering equipment to the shippers. Of course that increases inefficiency, and creates a vicious cycle.

What did the railroad do? Imposed a surcharge on captive shippers and none on non-captive shippers.

QUOTE: Greyhounds: Exactly. Can you image a local crew stopping 1,831 times a year to pick up a single car shipment of grain, as Sol postulated. On the nothern Transcon they'd have the close to capacity main line tied up. Hot trains delayed. Ain't worth it. But to him, this rational decision "proves" the BNSF is out to "Get" the Montana farmers.

Well, this confirms what I have been thinking about your various remarks, which seem to be generated by a self confidence in your own "logic" without any practical or operating experience in the areas upon which you freely comment.

The single carload figure, although presented as a hypothetical to show that reliance on "averages" as an analytical tool is typically misplaced, actually works out as follows:

1) Montana has something on the order of 2,135 miles of BNSF trackage;

2) Montana originates just under 400,000 carloads of freight from those 2,135 miles of track.

3) 1,831 carloads of wheat represents less than one-half of one percent of all freight originated.

4) It represents five carloads a day, spread across between 18-27 through Hi-Line freights per day plus others through other parts of Montana, say 35 trains total typically.

5) Five single carloads of wheat also would be one hopper car for every 427 miles of BNSF Montana line.

6) It is part of a normal yard crew or patrol's job to assemble fertilizer, potash, wheat, furniture, lumber products and whatever else the local economy produces, and put them into blocks (probably larger than one single hopper car) and available for the next appropriate through freight.

7) A single hopper car of wheat would probably be part of 10 or 20 mixed cars for a normal set out in Great Falls for the next train. This is pretty standard stuff for railroads to [still] do.

8) You are saying that adding five carloads of freight a day in a state that originates nearly 1,100 per day will grind BNSF or their Montana yard crews to a standstill.

Let me get this straight, as another one of those statements you make which is just bizarre: you are suggesting to me and this Thread that five cars of wheat spread across 2,135 miles of Montana line on a normal day presents insurmountable problems for yard crews and patrols and is going to tie up the entire Burlington Northern Santa Fe Main line in Montana.

QUOTE: Greyhounds: I try to base my arguments in reality.

PICKING UP FIVE HOPPER CARS A DAY SPREAD ACROSS 2,135 MILES OF LINE IS GOING TO SHUT DOWN THE BNSF!!?? HOT TRAINS DELAYED!!!???

QUOTE: Greyhounds: Can you image a local crew stopping 1,831 times a year to pick up a single car shipment of grain, as Sol postulated?

Even if all such single carload lots originated in Great Falls alone, and none in the rest of Montana, the yard crew there would have to pick up a single hopper car nearly once every five hours each day. I can see how this would pu***hem right up to the wall with work. I can well imagine the mainline shutting down with that crisis!

You have got to be kidding on this one ... I can understand that you might not be well versed in statistics and think "averages" are reality, but you're not really serious on this, are you?

Good day. Michael Sol

[daveklepper]

To find out whether BNSF is overcharging one would really have to look deeply into all operating expenses and find information that any railroad would not want its competitors to analyze. Snow removal might be one issue. Not that the snow occurs during the wheat movements, but it does affect the total operating cost of the lines involved.

[Junctionfan]

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by Junctionfan

QUOTE: Originally posted by Junctionfan

I say it might be better to use UP or build up Montana Rail link up with some investment. Don't think Rail America would mind that-trying to make them bigger-could be wrong though.

BNSF might respond better to direct and threatening competition rather than go about things through something more Canadian in style. Better to stick with what currently works in the U.S and that is get aggressively capitalist and blow the competition out of the water. If the State of Montana is truly unhappy with BNSF and if other states aren't that please either, the states could have a referendum to see if the majority of the citizens would support the financial sponsership of shortlines like Montana Rail link and form a network through the financial alliance of both the shortlines and the states and the operational alliance between the shortlines effected. Several shortlines connected to each other to form a large network to serve your needs is much more American and constitutional friendly than going forth with a non-constitutional bill that will go nowhere other than in the courts-very anti productive I'm afraid.

Just curious; Does anybody else feel this way?

MRL can not act independently of the BNSF on these types of issues.

Why? Does MRL have their own track or is it mostly running rights on BNSF?

[spbed]

H'mm to me when I owned my own business I charged what I wanted & if my customer felt it was "to high" they could always find another company who maybe cheaper. In this case if the farmers feel the BNSF rates are outlandi***hen they to also have the option to find a cheaper method. That is what makes America so great that there is always a better mousetrap out their & all you have to is find it. Do you really think if the BNSF thought it was going to lose business to trucks or barges that they would not reduce the rates instead of losing millions of dollars in business? Do the farmers have any idea of the BNSF fixed costs that they can claim they are being overcharged? I sought of doubt that they have that info at their fingertips so how can the farmers claim they are being "overcharged". [:o)]

QUOTE: Originally posted by LRSMITH

The last paragraph of the news story pretty much sums up the way the railroad taxation bill will go. It will not pass the legislature just like it did not in N. Dakota.

The legal entanglements could last for years.

BNSF needs to take a look at the ethical and unfair business practices for charging high prices to grain shippers. There is very little competition in Montana but having a monopoly on shipping grain is no excuse to charge overtly high prices. It is difficult to apply the market economy in Montana when there is hardly any competition.

This is a good example of a business not being a good community member and is detrimental to BNSF. It is poor public relations on the part of BNSF to stand by their high rates. This type of issue needs to go directly to the CEO of BNSF and its board of directors.

[bobwilcox]

QUOTE: Originally posted by Junctionfan

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by Junctionfan

QUOTE: Originally posted by Junctionfan

I say it might be better to use UP or build up Montana Rail link up with some investment. Don't think Rail America would mind that-trying to make them bigger-could be wrong though.

BNSF might respond better to direct and threatening competition rather than go about things through something more Canadian in style. Better to stick with what currently works in the U.S and that is get aggressively capitalist and blow the competition out of the water. If the State of Montana is truly unhappy with BNSF and if other states aren't that please either, the states could have a referendum to see if the majority of the citizens would support the financial sponsership of shortlines like Montana Rail link and form a network through the financial alliance of both the shortlines and the states and the operational alliance between the shortlines effected. Several shortlines connected to each other to form a large network to serve your needs is much more American and constitutional friendly than going forth with a non-constitutional bill that will go nowhere other than in the courts-very anti productive I'm afraid.

Just curious; Does anybody else feel this way?

MRL can not act independently of the BNSF on these types of issues.

Why? Does MRL have their own track or is it mostly running rights on BNSF?

This was one of the items the BN and Denny Washington negotiated when the MRL was set up. It may be that the MRL just leases their track from the BNSF.

[greyhounds]

QUOTE: Originally posted by MichaelSol

QUOTE: Sol: If you actually "do the math" it shows that it is possible to have an average of 14.3 carloads per train, in the case of 282 unit trains of 100 cars, 1 unit train of 67 cars, and 1,831 single carloads are handled on mixed trains. In that case, 28,267 carloads are handled by unit trains, and 1,831 carloads handled by mixed trains. That translates to 95% of tonnage handled by unit trains "averaging" 100 carloads, to the signifcant decimal place, and 5% of the tonnage handled on mixed trains. A statistical average can show 14.3 carloads per train, and still misrepresent the fact that 95% of the tonnage is handled on unit trains of 100 carloads.

QUOTE: Greyhounds: Yes, if they're making single car shipments. Which is as much fantisyland as the rest of your arguments. In your example 1,831of 2,114 shipments were made in single car lots. That's 86.6%. Carry anything to an extream and you can produce an absurd result.

Please, 86.6% of "shipments" shades the argument. 1,831 single carload movements also represents less than 5% of total tonnage which is probably more useful in terms of understanding small movements of grain, and probably representing primarily elevator cleanups and cleanouts (recalling there are different types of wheat grown in Montana and different seasons of wheat), and those processes are not "unit train" compatible. But, without understanding the industry, you go on to criticize even cleanouts:

QUOTE: Greyhounds:If Montana shippers are so stupid as to be moving that many single car shipments of a bulk commodity going to a common destination, then they deserve to pay through the nose. Loose car railroading is really inefficient.

Yes it is. That doesn't mean there are not completely legitimate reasons to do it.

Hopefully without being labeled "stupid" by someone who doesn't understand what you do to clean out an elevator.

But, it's not just that. BNSF is typically the car supplier. In the Fall, 2003, when a combination of increased equipment cycle times (slower trains), increased terminal dwell times, and failure to heed warnings about a bumper crop resulted in a grain car supply crisis, everything fell apart for the shippers, because of the railroad. The COT program collapsed. The company spotted a single car. Your elevator might have had 20 carloads ready to load, but you only had one hopper car sitting there because the railroad couldn't deliver any more. You loaded and shipped. Inefficient? Yes. Shipper's fault? No, the railroad was dictating single car and small car movements because that's how they were delivering equipment to the shippers. Of course that increases inefficiency, and creates a vicious cycle.

What did the railroad do? Imposed a surcharge on captive shippers and none on non-captive shippers.

QUOTE: Greyhounds: Exactly. Can you image a local crew stopping 1,831 times a year to pick up a single car shipment of grain, as Sol postulated. On the nothern Transcon they'd have the close to capacity main line tied up. Hot trains delayed. Ain't worth it. But to him, this rational decision "proves" the BNSF is out to "Get" the Montana farmers.

Well, this confirms what I have been thinking about your various remarks, which seem to be generated by a self confidence in your own "logic" without any practical or operating experience in the areas upon which you freely comment.

The single carload figure, although presented as a hypothetical to show that reliance on "averages" as an analytical tool is typically misplaced, actually works out as follows:

1) Montana has something on the order of 2,135 miles of BNSF trackage;

2) Montana originates just under 400,000 carloads of freight from those 2,135 miles of track.

3) 1,831 carloads of wheat represents less than one-half of one percent of all freight originated.

4) It represents five carloads a day, spread across between 18-27 through Hi-Line freights per day plus others through other parts of Montana, say 35 trains total typically.

5) Five single carloads of wheat also would be one hopper car for every 427 miles of BNSF Montana line.

6) It is part of a normal yard crew or patrol's job to assemble fertilizer, potash, wheat, furniture, lumber products and whatever else the local economy produces, and put them into blocks (probably larger than one single hopper car) and available for the next appropriate through freight.

7) A single hopper car of wheat would probably be part of 10 or 20 mixed cars for a normal set out in Great Falls for the next train. This is pretty standard stuff for railroads to [still] do.

8) You are saying that adding five carloads of freight a day in a state that originates nearly 1,100 per day will grind BNSF or their Montana yard crews to a standstill.

Let me get this straight, as another one of those statements you make which is just bizarre: you are suggesting to me and this Thread that five cars of wheat spread across 2,135 miles of Montana line on a normal day presents insurmountable problems for yard crews and patrols and is going to tie up the entire Burlington Northern Santa Fe Main line in Montana.

QUOTE: Greyhounds: I try to base my arguments in reality.

PICKING UP FIVE HOPPER CARS A DAY SPREAD ACROSS 2,135 MILES OF LINE IS GOING TO SHUT DOWN THE BNSF!!?? HOT TRAINS DELAYED!!!???

QUOTE: Greyhounds: Can you image a local crew stopping 1,831 times a year to pick up a single car shipment of grain, as Sol postulated?

Even if all such single carload lots originated in Great Falls alone, and none in the rest of Montana, the yard crew there would have to pick up a single hopper car nearly once every five hours each day. I can well imagine the mainline shutting down with that crisis!

You have got to be kidding on this one ... I can understand that you might not be well versed in statistics and think "averages" are reality, but you're not really serious on this, are you?

Good day. Michael Sol

Well, you keep jumping around here, but let's get back to the main issue.

You have presented absolutely no evidence that the BNSF rates on wheat from Montana are unreasonable or unlawful.

Your own numbers on freight rates flat out show that the BNSF charges sigficantly less to move wheat from Montana to Portland than it does from Minneapolis to Portland, yet you claim they charge more.

How is less more?

[MichaelSol]

QUOTE: Greyhounds: Your own numbers on freight rates flat out show that the BNSF charges sigficantly less to move wheat from Montana to Portland than it does from Minneapolis to Portland, yet you claim they charge more.. How is less more?

I touched on that briefly earlier. If the gas station owner charged you $3.45 a gallon for gas, and someone else $2.41 per gallon, and told you that because you didn't drive as far as the other fellow, you actually didn't use as much gas and therefore didn't spend as much money as he did. You were actually getting a bargain and should be grateful for the fact that you were charged a 65% premium over the other guy.

I am beginning to think you would buy that argument from the gas station owner and you would gladly pay a 65% premium on your gas. Especially after you went to the Trains.com forum and a bunch of cranky old *******s told you how lucky you were to be paying more per gallon of gas. "You don't drive as far, so what's your beef?"

Yeah.

Well, the farmers feel the same way.

However, if you wanted to educate yourself prior to offering these opinions, as I also mentioned above, you might wonder why the BNSF doesn't offer your facile argument as a defense within the industry. Do a Google search. You won't find that defense offered by knowledgeable industry participants. Steve Bobb would have been run out of town "on a rail" if he had offered that explanation to a room full of sophisticated users who understand how this works far better than you do.

Do you really think you are that bright that you thought of this completely obvious explanation that just simply explains everything and that the Montana farmers truly are getting a bargain?

Do you think you understand this and that BNSF and the Ag industry don't understand this?

Since you like to offer opinions without bothering to have any idea what you are talking about, here's your homework: go read the case history on the McCarty Farms case, beginning with the initial ICC determination that BNSF discriminated against Montana shippers by differential, inverse, and discriminatory rate pricing. There, you can see all of the evidence "that the BNSF rates on wheat from Montana are unreasonable or unlawful," as well as the legal analysis and the judgments of administrative agency as well as various levels of the Federal court system.

Then return to the Thread with your analysis of how the ICC was also so blind as to not see how simple all this really is, and how they managed to also find that "less is more" and why.

I look forward to your summary.

Ultimately McCarty Farms failed because of a change in the burden of proof (which is now on the aggrieved shipper) and because the burden required the construction of a hypothetical railroad to show that the costs of service do not justify the rate charged; that burden increasingly separates the burden of proof from reality (your favorite word) and places it into a battle of university professors and other experts as to the validity of the constructed models. The more the dispute revolves around hypothetical model construction, the greater the advantage of the railroad. However, in the early rounds of the case, real evidence was actually presented, and real opinions offered, all against the railroad.

Be prepared for some work. The case history covers about 15 years, as BNSF tried to bankrupt McCarty Farms through the litigation process, and so there is quite a bit to read, but I know you will read it as carefully as you have read prior posts on this Thread, and will report back as accurately about what you have found as you have about other information you have read on this Thread.

It may be that you will then understand differential rates and their negative impact on the industry. Or, you might come back and think the ICC, the USDA, the entire Ag Industry and the Federal Courts are just as dumb as FutureModal and Michael Sol are, and you outthought 'em all .....

Best regards, Michael Sol

[StillGrande]

This is a classic argument of local route discrimination. The argument has been made virtually since shipping began that because I am closer I should pay less. The courts, when deciding these cases (and there have been cases) looks at a number of factors, including competition at the different. The Supreme Court has ruled that the existence of a competitor at one of the end points is enough justification for the railroad to charge the longer distance shipper a lower rate than the shorter distance hauler.

You also cannot just look at the product. Shippers Montana are at a natural disadvantage to shippers further east in that they have fewer options for shipping driving down the price of shipping. If the rate is too high in Michigan, nothing stops the shipper from selling east and going by sea, with a short haul east to the port.

In addition, you can argue any difference in rates is discriminatory to someone. Forcing the railroad to an arbitrary "fair" rate for Montana shippers may then give them an additional market advantage over shippers in other states. Is the same good then a different price based on a new factor. It has generally been the view of the government that they are not in the business to balance commercial activities or to equalize advantages due to location or other natural advantages (access to multiple modes or providers of transport). Arguing that it is not fair because there is only one is not a winning argument. Arguing that the rate is so high that it is an unfair tax on the shipper may be more successful, but then it is up to the shipper to prove (and I suspect why it has been an ongoing argument for 25 years).

You also can't force a new railroad to build into the area just to benefit the shippers. If it were to their advantage and to the new railroad service providers advantage, they would get the competition. But who is to say that the arrival of the new provider will guarantee the new provider the service. The original provider simply lower the rate and the massive investment in a new line will be wasted.

If a government entity wants to provide rail service as a utility rather than a business, there is nothing stopping it from investing in a department of rail transportation (or providing a grant or contract) to a maintain service at a rate they feel is proper. If they can generate the traffic to keep the private rail service provider interested in interchange, then they should do so.

Trying to regulate rail rates was not good for the rail industry before. Besides, what if the railroad says "egad (can't you just see them say egad?), we have actually been undercharging Michigan".

[MP173]

Michael:

You are missing an important point here....the rate is not a mileage rate, it is a carload rate.

The Montana rate is less than the Minneapolis rate. You have conveniently translated the carload rate into a rate per mile.

Your earlier arguments indicated the BNSF had discriminated againsted the Montana farmers, leading to an inability for those farmers to invest in infrastructure that would lead to lower rates. Yet, we have repeatedly pointed out the CARLOAD RATE IS NEARLY $1000 LESS FOR MONTANA WHEAT, which should lead to an increase return for them.

Your logic doesnt fly.

Perhaps the $1000 per car the Montana farmers received should have been invested in their own railcar fleet which would have reduced costs and provided availability for shipping.

It certainly seems as if I am picking on the Montana farmer...I am not. I own a farm (dont farm it personally) and understand the difficulties in that industry. There has always been an "us against the world" mentality by a certain segment of farmers. Lets face it. The Montana farmers are in a tough location and in a difficult industry. Sort of like railroading. When things go well, it can be sweet, when not...it gets tough.

I dont understand the Montana situation and I certainly dont understand all the issues of rail transportation. I spent an hour last night on BNSF's tariff site and couldnt even find the rates you quoted. The rates I found were higher for Minnesota ($4345) and Montana ranged from $3058 to higher, sometimes much higher.

I did notice that BNSF placed a surcharge per car in place, except for Montana wheat...so perhaps you are making progress.

Good luck,

ed

[Anonymous]

The filing fee for STB disputes is $65,000. Add in all the other legal fees and other costs, not to mention the threat of retaliation by BNSF for which you must come up with a rainly day fund, and you'll accumulate 10 times that filing fee. Then, with all that, the likelyhood that the STB will actually take the time to hear your case is still quite remote.

Anyone still want to question why the multitude of victims are loath to take such legal actions against the Class I's?

There is a proposal to reduce the filing fee from the $65,000 to a more logical $150. The STB is vehemiently opposed to this, for they fear they will subsequently be flooded with cases to ajudicate, which of course they will. Take note of this one seemingly small item, for it alone is the one thing that will cause the Class I's and the STB to start sweating bullets.

BTW - no matter what your stand is on this issue, making references to the Anti-Christ and such only makes such posters look like complete imbeciles. You are an embarassment to the entire railfan community.

[csxengineer98]

QUOTE: Originally posted by futuremodal

The filing fee for STB disputes is $65,000. Add in all the other legal fees and other costs, not to mention the threat of retaliation by BNSF for which you must come up with a rainly day fund, and you'll accumulate 10 times that filing fee. Then, with all that, the likelyhood that the STB will actually take the time to hear your case is still quite remote.

Anyone still want to question why the multitude of victims are loath to take such legal actions against the Class I's?

There is a proposal to reduce the filing fee from the $65,000 to a more logical $150. The STB is vehemiently opposed to this, for they fear they will subsequently be flooded with cases to ajudicate, which of course they will. Take note of this one seemingly small item, for it alone is the one thing that will cause the Class I's and the STB to start sweating bullets.

BTW - no matter what your stand is on this issue, making references to the Anti-Christ and such only makes such posters look like complete imbeciles. You are an embarassment to the entire railfan community.

oh come on now..... you mean to tell me that with all the blood sucking lawyers out thier..that thier isnt 1 out thier that wants to make a name for himself..and collect a nice legal free for "punitive"damages....come on.... if they had a chance in hell...a class action lawer would have jumped at this a long time ago....but since it dont seem to have happend.... they are just going to blackmail the carrier by trying to get the goverment to "punish" the carrier....
csx engineer