Montana fights back against BNSF

[MichaelSol]

The price quoted per bushel at the elevator is what the farmer receives. The buyer figues out how to ship it and pays the freight. However, as I mentioned, commodity markets are complex mechanisms and there are big contracts at fixed or negotiated contract prices moving under the surface of what are, in reality, spot market prices we read in the papers. Crops are often sold in the field at a negotiated price. If you watch the oil market; the spot market for that is above, below, and at the contract market price on a regular basis. People make and lose fortunes guessing the timing of commodity markets, the differential of the spot and contract market, and then of course add in "futures." Not a market for the timid or the uninformed.

There is no reason for price per bushel to equalize at Duluth, Portland or anywhere else. It's a market. At the moment its typically a quiet time in the wheat markets; not a lot is moving. Prices reflect less of a genuine market condition than, say, September. Too, Duluth shipping is seasonal, depending on ice on the Great Lakes. If the ships aren't moving and the locks aren't open, the market would be lower. Nothing is moving right now.

Best regards, Michael Sol

[MichaelSol]

QUOTE: Originally posted by MP173

Why is a 100 ton car of wheat worth $17150 in Portland but only $15050 in Duluth?

Depends on who'se buying. As historical Russian wheat production has come back after a century of mismanagement, it is filling historic European orders that used to go through Duluth and other Great Lakes ports. Pacific rim countries are still big buyers of American wheat.

There is a quality element as well; Japanese buyers like Montana wheat for certain processes. However, most of that is purchased in the field and never shows up on the published markets showing its "market" price. Portland is closer to those more active markets and easier for those markets to access from several perspectives.

As I mentioned, at the moment Duluth prices probably don't represent a functioning market since nothing is moving out of Duluth over the Great Lakes.

Best regards, Michael Sol

[StillGrande]

Just a thought that occured and I am now wondering...

Could Montana use the "tax" money from this new BNSF tax to purchase a dedicated fleet of grain cars and storage capacity for the cars (when not needed) for use only by Montana shippers, similar to dedicated Bethgons for coal? It would eliminate the loss of cars to Minnesota shippers during peak demand and keep the turn time to Montana elevators more predictable (and shorter than waiting for Minnesota to finish with them).

The state could easily come up with a plan to get the cars to needed sites on a regular basis to help even out the need. Heck, it could even charge less to Montana shippers to use them (might even generate outside income for the state, who knows).

Not a sermon, just a thought....

Fire away!

[daveklepper]

StillGrande should be commended for thinkiong "outside the box" and coming up with a new idea. I hope it will be considered seriously.

[CSSHEGEWISCH]

Somehow I can't envision the State of Montana going into the car leasing business. Since these would be in dedicated grain service, I'm sure that they would spend a good amount of time sitting empty earning no return after the crop has been moved. Also, how much would the farmers (or elevators) pay to lease the cars and what would BNSF charge to move them?

[martin.knoepfel]

In another thread, somebody mentioned you pay 15 % more for coal if you are a captive shipper. Perhaps, the same effect works with Montana grain farmers.

[MichaelSol]

QUOTE: Originally posted by CSSHEGEWISCH

Somehow I can't envision the State of Montana going into the car leasing business. Since these would be in dedicated grain service, I'm sure that they would spend a good amount of time sitting empty earning no return after the crop has been moved. Also, how much would the farmers (or elevators) pay to lease the cars and what would BNSF charge to move them?

Washington State farmers were encountering significant car supply problems and I believe the state did something just like this for a couple of the short lines. However, it is the rate, not the car supply, that has been the primary problem for Montana farmers. Best regards, Michael Sol

[bobwilcox]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by CSSHEGEWISCH

Somehow I can't envision the State of Montana going into the car leasing business. Since these would be in dedicated grain service, I'm sure that they would spend a good amount of time sitting empty earning no return after the crop has been moved. Also, how much would the farmers (or elevators) pay to lease the cars and what would BNSF charge to move them?

Washington State farmers were encountering significant car supply problems and I believe the state did something just like this for a couple of the short lines. However, it is the rate, not the car supply, that has been the primary problem for Montana farmers. Best regards, Michael Sol

I would think farmers care about the cost to move their grain and would be happy to get "free" cars from the state with a lower rate from the BNSF reflecting the lower car cost.

[MichaelSol]

QUOTE: Originally posted by bobwilcox

I would think farmers care about the cost to move their grain and would be happy to get "free" cars from the state with a lower rate from the BNSF reflecting the lower car cost.

Who said the state would supply them for free?

Of course, BNSF's policy of not charging rates commensurate with the cost of the service is where this started, wasn't it?

And is the source of the problem to begin with....

Best regards, Michael Sol

[bobwilcox]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by bobwilcox

I would think farmers care about the cost to move their grain and would be happy to get "free" cars from the state with a lower rate from the BNSF reflecting the lower car cost.

Who said the state would supply them for free?

Of course, BNSF's policy of not charging rates commensurate with the cost of the service is where this started, wasn't it?

And is the source of the problem to begin with....

Best regards, Michael Sol

I don't think you want to find a solution to a supposed problem faced by Montana agri-business. You just want to talk on and on about rate policies the public decided on 75 years ago. The public then moved on to other issues.

[MichaelSol]

QUOTE: You just want to talk on and on about rate policies the public decided on 75 years ago. The public then moved on to other issues.

The "public" was pretty busy with the Great Depression 75 years ago. Not much going on with railroad rates then. Between the Transportation Act of 1920 and the Transportation Act of 1940, very little change occured. It definitely was not deregulation.

However, in the legislatures, where the "public" actually deals with such issues, things are pretty busy.

Currently in the Montana legislature there are bills to look at:

• developing a revolving fund (around $1 million) for rail/rail customer projects to enhance rail service to local shippers,
• proposals to purchase rail car fleets similar to what the State of Washington has found successful,
• efforts to curtail abandonments,
• encourage continued development of short lines to serve less dense lines,
• Build-outs to rail competition such as the CP and UP.
• Increased use of rail banking to preserve rail corridors.

There have been conversations about watching closely the efforts of ND in its rail case for possible additional avenues of relief.

The Montana Wheat and Barley Committee, the Montana Farmers Union and the Montana Farm Bureau are in discussions with full Montana Congressional delegation in the federal efforts to increase competition in the railroad industry during the 109th Congress which is just getting underway.

Idaho shippers are fed up as well, forming a group to push for two major items:

• Increased truck weight in Idaho – expanding the demonstration projects that have been ongoing in Idaho for a number of years allowing certain routes to utilize increased truck weights over the routes.
• For Federal Legislation to increase rail-to-rail competition in Idaho.

The State of Idaho faces similar lack of rail competition as the northern plain states, with the vast majority of southern Idaho having a single railroad – the UP. Plant closures continue in southern Idaho and the one of the major reasons that companies like FMC and J.R. Simplot have given for the closing is the lack of rail competition stating that lack of rail competition transportation does not allow them to remain competitive in the market place.

In North Dakota the 2005 ND Legislature is now hearing a proposed $900,000+ proposal to fund a rate case. BNSF opposed the bill on the grounds that that the ND legislature was wasting its time as the money being proposed would not be sufficient to fund the rate case!

According to Montana Transportation Consultant Terry Whiteside:

There are, however, different scenarios under which a rate case can be filed today –especially given that the legal impediment that caused the downfall in the McCarty Farms case that Montana brought 20 years ago has been removed by the federal regulators – namely product and geographic competition. Today, also there are small case remedies that did not even exist a number of years ago.

The ND legislature is continung to explore alternative ways to fund such cases in the future including excess profits tax, and other forms of increased taxation on the same railroad that charges excessive rates in the state.

The ND Governor, legislature, wheat producers and grain dealers are determined to support Federal legislation for increasing competition and also continue to find ways in the state to pull themselves up by their own bootstraps in combating the monopoly railroad situation.

Seems like a lot of the public is upset about something

Best regards, Michael Sol

[bobwilcox]

QUOTE: Originally posted by MichaelSol+

The "public" was pretty busy with the Great Depression 75 years ago. Not much going on with railroad rates then. Between the Transportation Act of 1920 and the Transportation Act of 1940, very little change occured.

Suggest you find out about the Docket 28300 cases and the Southern Governors Case which were processed through the ICC during this period. These are the decisions at the root geographic preference issues under the ICC. Like I said the public looked at the issue and moved on. Do you seriously think ID, ND and MT do anything meanigful on the nations's transportation polcy?

[greyhounds]

Raise the wheat rates! Raise the wheat rates! Raise the wheat rates now! Right now!

Irritate Michael Sol! Irritate Michael Sol!

He simply makes an asertion, then repeats it, without supporting it, time and time and time again. He has no evidence that the rates are out of line, and he certainly has no evidence that "costs" should be THE (specific form of the article) controling factor in rates.

But he just keeps saying it. And saying it. And saying it. And saying it.

Well, saying it don't make it so. Ranting like an animal rights activist may get you on TV, but it don't make you right.

[MichaelSol]

QUOTE: Bobwilcox wrote: Suggest you find out about the Docket 28300 cases and the Southern Governors Case which were processed through the ICC during this period. These are the decisions at the root geographic preference issues under the ICC. Like I said the public looked at the issue and moved on.

Well, they must have come back.

Last I checked, ICC precedent was never controlling over Congress, ICC case law is no longer controlling administratively, and the ICC was abolished.

Congress -- i.e. the public -- deregulated railroads. The Southern Governor's case is no longer controlling precedent for anything. Deregulation was a fairly significant event, sorry you missed it, but it is one of several significant public policy changes that has happened in the railroad industry in the past 75 years.

Congress directed that the STB retain rate jurisdiction over captive shipping rates precisely to regulate unfair rates. Like its predecessor ICC, STB has difficulty effectively implementing the will of Congress.

Informed by the public it represents, Congress, it frequently has to remind agencies, sets the national rail policy, not the railroads, not the STB, not extinct ICC precedent.

Best regards, Michael Sol

[MichaelSol]

QUOTE: Originally posted by greyhounds

... he certainly has no evidence that "costs" should be THE (specific form of the article) controling factor in rates.

The STB estimated in the mid-90s that only 16 percent of traffic was still regulated. Rates are not regulated when competition keeps them at levels below the statutory threshold (where the ratio of the revenue to the regulatory variable cost of the move is less that 1.8), when a class of traffic has been specifically exempted, or when traffic moves under contract.

Costs are, in fact, "THE" controlling factor in whether a rate is regulated at all, and this is in fact defined by statute. It's not so much a matter of evidence as it is a matter of law. I am sure you knew that and merely overlooked it in the heat of what was obviously a very heated moment for you.

Best regards, Michael Sol

[MP173]

Been gone a couple of days and just returned.

I am extremely happy to see the Montana wheat thread still lives!

While driving thru the fallow land of Illinois I put considerable thought and some of my time into this issue. It is obvious to me as stated in my thread of yesterday that while transportation plays a role in the prices farmers receive for their wheat, the much larger issue is outside the rail transportation framework.

Since there has been no rebuttal nor answer to my discussion of Montana vs St. Paul wheat (Butte net revenue per carload of $14401, Havre of $12534, and St. Paul of $16082) and my statement that market forces are more an impact than transportation, then we must consider the purpose of this thread and the actions by the Montana farmers and legislatures.

For whatever reason (which is not or cannot be explained other than commodity pricing is complex) Montana farmers are unable to secure prices of those in Minnesota which is leading to poor roads, old combines, and all sorts of problems. We know the rail transportation plays a small part in the difference in carload revenue based on the stated railcar rates. We know the biggest factor is the rate per bushel received at each consolidation point.

So, I must ask the following....since wheat is pretty much a commodity who is controlling the prices on the commodity to affect such a wide swing in revenue?

It appears the Montana folks are going after the BNSF simply because they cant (or wont) go after Cargill, Bunge, et al.

When in doubt ... follow the money.

During my two day world tour, I was fortunate enough to stumble into a shuttle elevator in Illinois which loads unit grain trains.

WHAT A FACILITY!!!! I would encourage the Montana folks to build a few of these in return for lower freight rates.

The Merchandiser at the facility was gracious enough to not only discuss the operations but give me limited access (and also give me an opportunity for a sale of product to them). These facilities are not storage elevators but loading facilities. They receive grain from other storage elevators and then quickly load into a unit hopper train.

The loading time for the train is 9 hours for 110 cars. In return for the investment the grain company receives LOWER rates on their grain. These cars move in 10 day cycles to a destination over 1000 miles distant. This grain is now moving by rail instead of by barge.

Other such facilities, my host told me have been built specifically in Kansas, Nebraska, and Minnesota specifically for the movement of WHEAT UNIT TRAINS!

I couldnt believe my good luck to get a first hand observation and explanation of how these facilities operate and the resulting savings in freight.

So, I believe if I were the Montana Farmers Union I would take a look at the merchandising of their product thru innovative marketing and investing in facilities which have a rather immediate return on investment.

Ed

[MP173]

Oh, one more point for an answer please...

How long does it take to load a 110 car unit train using traditional methods? Are these 110 car trains usually in 55 car increments at different facilities?

How are the cars positioned for loading at the traditional elevators. At the shuttle elevator, there was a loop and the train kept moving under the facility. I assume gravity is the main force in loading the grain.

thanks in advance for the response.

ed

[arbfbe]

Currently there are shuttle elevators at Pompey's Pillar and either Dutton or Collins. Another is contemplated in Billings. I have not really kept up on these elevators but I believe there were about 5 planned for the state. All will be on BNSF tracks except the one at Billings. The freight rate discount offerred is said to be $300 per car in Montana.

The downside is they will drive most of the rest of the elevators out of business. Some of the remaining elevators are sizeable and will represent a large capital loss to the investors, especially some or the local co-ops who have built them.

Big Sandy is a good example of a massive investment made worthless by the whims of the BN/BNSF. When they cut the line between Havre and Great Falls that has made it nearly impossible for anyone to obtain fianincing for the construction of a flood elevator there. If the BNSF will not grant the same discount to the farmer owned elevator there the grain will be trucked to the nearest shuttle elevator which is, by the way, owned by one of the larger commodity companies and not the farmers. By the simple action of severing a thtough route BNSF has wiped out the co-ops investment and a competitor to the Cargil, Conagra, Pillsbury grain cartel. Does that seem fair? Is it a matter or the co-op just failed to keep up with the markets and technology? I am sure they would be willing to make the investment in a shuttle elevator in Big Sandy but who would be willing to lend them the money to invest on a stub end branchline? Their only connection would be the BNSF who would set the rate to the markets and who knows how fair and equitable these rates would be.

The ICC was***bersome and not always served the best interests of the shippers, the carriers nor the public. They did have a purpose and there is a reason the railroads wanted rid of them and the larger shippers were willing to go along with the carriers. For capitalism to work it REQUIRES truely competitive markets. Once the market starts to work the result is commonly market dominance. Market dominance usually stays around reaching ominous proportions until a new technology arrives to bring competition back into the picture.

Alan

It seems if the por*n filter is active. Let me change c*u*m*bersome to unwieldy to pass the test, OK?

[MichaelSol]

QUOTE: Originally posted by MP173

Since there has been no rebuttal nor answer to my discussion of Montana vs St. Paul wheat (Butte net revenue per carload of $14401, Havre of $12534, and St. Paul of $16082) and my statement that market forces are more an impact than transportation, then we must consider the purpose of this thread and the actions by the Montana farmers and legislatures.

For whatever reason (which is not or cannot be explained other than commodity pricing is complex) Montana farmers are unable to secure prices of those in Minnesota which is leading to poor roads, old combines, and all sorts of problems. We know the rail transportation plays a small part in the difference in carload revenue based on the stated railcar rates. We know the biggest factor is the rate per bushel received at each consolidation point.

Ed, I think this is a studied indifference to the data.

Taking the most recent crop year, 2004, October 1 at a point in time when markets are real "markets." Prices were as follows for HRS wheat:

Portland $4.85, Havre $3.79, St. Paul $4.10, Duluth, $4.30

Montana famers are asking for the same shipping rate enjoyed by farmers from Washington state (a shorter haul) and from Minnesota (a longer haul). The elevator rate is defined in large part by a combination of market plus transportation costs. In this instance, if Montana farmers enjoyed the same rate as shippers from St. Paul and from Spokane, to Portland, their transportation costs would be reduced by 32 cents per bushel, and the railroad would still enjoy a substantial profitability, 31%, well in excess of the general 13% profit it makes on its transportation business as a whole.

Somehow, it is interesting that farmers who want to pay a 31% profit to a company can be portrayed as slackers and ungrateful, while the company that skims them represents some ideal of American business.

However, in the event that Montana farmers were permitted to contribute three times the normal profit margin of the BNSF to its revenues, Montana grain would be more competitive in cost at the elevator and the cost of Montana wheat would become more comparable with Washington state and Midwest wheat at least from the standpoint of not paying an extra penalty for shipping. but rather a completely reasonable shipping rate.

In that case, the grain prices received would be:

Portland, $4.85, Havre, $4.11, St. Paul, $4.10, and Duluth, $4.30.

I am not sure why this is so hard for you to see, but yes, Montana farmers would be receiving as much or more at the elevator than Midwestern farmers (partly because it is generally considered a superior wheat). Simply if they could only pay the same rate as elevators in Spokane, Washington and St. Paul, Miinnesota, elevators on the same line, on the same railroad, carrying the same commodity.

In 2004, Montana produced 173,165,000 bushels of wheat, most of which (about 97%) goes for export through Seattle, Tacoma, Kalama, or Portland. Havre perhaps representing a mid-way point in Montana, and therefore an average of costs of shipping, the 32 cents per bushel penalty for shipping from Montana, last year the total economic penalty for Montana farmers was $55 million and which they would have received as part of the market price of their wheat but for their misfortune in being located in Montana, and "served" -- there are other words for this -- by the BNSF Railway Co.

That would build a few of those fancy elevators you visited recently.

Best regards, Michael Sol

[bobwilcox]

QUOTE: Originally posted by arbfbe


The downside is they will drive most of the rest of the elevators out of business. Some of the remaining elevators are sizeable and will represent a large capital loss to the investors, especially some or the local co-ops who have built them.

Alan-In IA and IL many of the new elevators are owned by Co-op's. Since, as a co-op, they have access to below market financing why don't the build thier own facility on a main line as Co-op do in other states?

[MP173]

"Studied indifference to data"?


The data that I was "indifferent" to was your own data. I simply used "current" data as of "today". I do not understand how I can be indifferent to reality.

Now, you have never, as far as I can tell quoted the published Spokane to PNW wheat rate, so I took it upon myself to find that rate.

The carload rate for wheat is $1477, based on 26 -109 cars (tariff authority 4022, item 43590, book 3, section c, page 4).

Michael, the term "rate" is $1477. That is the "rate" quoted in the tariff publication. The rate is "per carload".

You have referred to "rate" in terms of dollars per mile. That is incorrect in this application, however, I will go along with your reasoning.

Please review the following pricing data:

The following is quoted to PNW:
Havre $3181 per carload 890 miles $3.57 per mile
St. Paul $4148 per carload 1793 miles $2.31 per mile
Spokane $1477 per carload 325.6 miles $4.53 per mile

Also, compare the above to the following which you stated:
St. Paul to Duluth $841 per car 157 miles $5.36 per mile

Thus we have the following matrix:
157 miles @ $5.36 per mile
325.6 @ $4.53 per mile
890 @ $3.57 per mile
1793 @ $2.31 per mile

Anyone who has experience in transportation rate making or in fixed and variable costing methodology understands the trend above. Michael, I would assume you also understand it.

I plotted these mileages and "per mile rates" and found the $3.57 rate almost directly where it would be expected to fall.

These are all your numbers, except for the Spokane rate which you have not provided.

I will again repeat what I have from nearly my first thread....I do not understand commondity pricing, nor am I familiar with Montana, Minnesota, nor the Pacific Northwest. I do not have an axe to grind with farmers....as I stated earlier, I own a farm and my in-laws are farmers.

I am simply looking at the numbers.

The biggest problem in trying to make a living in commodities is the general nature of commondities...there is very little value to add. However, your statement that Montana wheat is suppier tells me they should be receiving a premium for their product.

Your statement that 97% of Montana wheat goes to the export market brings up yet another factor...the importing countries (or companies) have found a method of keeping the wheat prices low. This obviously is the case, when one compares the Montana (export) prices of $5.18 per bushe for Butte and $4.81 for Havre as compared to $5.78 for Minnesota. I am using the current prices you quoted. I see no point in revisiting 2003.

This has been an interesting exercize in economics and I have enjoyed it.

ed

[arbfbe]

bobwilcox

Time will tell on that plan. I have not heard of any co-op built elevators yet but I don't get as much news about farm economics in Missoula as I would in Billings or Great Falls. Still, these co-ops are going to have to walk away from a lot of infrastructure that has not yet reached the end of it's economic life. Perhaps the technology has made their elevators obsolete but I am pretty shure they could undergo an upgrade to bring them up to specs if they were not on trackage the BNSF has slated for abandonment.

A competing railroad would offer some relief but the MILW is gone and the UP is bottled up at Silver Bow far from the center of the grain belt in Montana. The MRL is only at the fringe of grain country and only has the BNSF as a connection and any joint rate will protect BNSF's high line volumes. Ag interests are strong in the Montana Legislature, they try to do what they can every two years when they are in session

Alan.

[daveklepper]

The time the Montana farmers could have used their clout was prevention of the Milwaukee Road Western Extension abandonment. Note that it is not clear at all that this abandonment really improved the CMStP&P financial performance. Indeed it is very, very clear that the lines that were kept were precisely those that had the most competition, from the Q, the C&NW, and the RI. The Montana and N. & S, Dekotaq famers could have raised money along with industries and created a shipper-owned line, which could have interchanged with the C&NW, then the UP in the Twin Cities. The BNSF would then have competition today.

Why do I bring this up NOW. First, it suggests that Montana and its farmers should not go it alone, but seek cooperation from the Dekotas and from industries that are also affected. Possible remedies could include state-owned new trackage, state-owned freigfht-cars specifically restricted to Montana (and possibly Dakota) use. The later, even without new tracks, gives the BNSF the option of using the cars and thus having some revenue, or just loosing business period.

But there is another reason why I am bring this up now. It reflects on the Amtrak situation. The bean counters said the Milwaukee Pacific extension had to go, and today Mineta's been counters say Amtrak has to go, particularly the long distance trains. And similarly, the bean counters were wrong about the relative merits of the Pacific extenion and the pure midwest trackage of the Milwaukee, and Mineta is wrong about the relative financial performance of the NE Corridor (which still needs massive amounts of repair spelled ca***o put in first-class shape) and that of the long distance trains (which still rely on some forced charity from the freight railroads). And it the long distance trains go and there is any kind of airline strike, including the traffic controllers, or some disaster like 11.09.01, the USA will be in far worse shape than the Montana farmers.

[wallyworld]

I used to live in Montana. When I arrived I was in awe of the abundance of nature's bounty all around me in big sky country. A native hearing this from me simply stated that you can't eat the scenery. There were few jobs and few industries. Montana is a beautiful economic backwater that generates a paltry amount of rail shipments. The shippers are few and far between. The economy of scale is at work here in traffic rates as well as distance. The legislation is a wet dream. Some economic development should be this state's focus rather than tilting at legal windmills.

[gabe]

QUOTE: Originally posted by daveklepper

The time the Montana farmers could have used their clout was prevention of the Milwaukee Road Western Extension abandonment. Note that it is not clear at all that this abandonment really improved the CMStP&P financial performance. Indeed it is very, very clear that the lines that were kept were precisely those that had the most competition, from the Q, the C&NW, and the RI. The Montana and N. & S, Dekotaq famers could have raised money along with industries and created a shipper-owned line, which could have interchanged with the C&NW, then the UP in the Twin Cities. The BNSF would then have competition today.

Man, just when I thought I could leave this topic to itself . . . I never could resist a good Milwaukee Road conversation.

The reason the Milwaukee Road's Pacific extension had to go was not because it wasn't sustainable in and of itself or was not able to draw traffic. Rather, surging traffic is one of the things that led to its extinction.

Most of those who point to the contention that the Milwaukee Road's Pacific extension made money were right in a manner of speaking. The line had traffic, and not a lot of money was put into maintaining it . . . that was the problem.

Due to efforts to court a more attractive share price for the doomed CNW merger, the Milwaukee Road deferred maintenance on its pacific extension. After the BN merger, traffic increased on the pacific extension. The combination of increased traffic and deferred maintenance really beat up the line.

The reason the Pacific extension had to go was not due to a lack of traffic but due to the fact that the rehabilitation necessary to allow the line to compete with BN or continue to accomodate its current traffic (after its maintenance had been deferred for so long) was more than anyone had. Furthermore, as Mark was fond of noting, the Milwaukee Road line was the inferior line, who is going to invest that much money on the inferior line?

Gabe

P.S. I seem to recall that a federal railroad spending act was passed in 1982. Perhaps if this act were passed in 1977 AND Montana and Dakota grain industries ponied up, AND some financing could be obtained, the extension could have survived. But, I doubt it.

[daveklepper]

I knew all that. But my analysis still holds. I agree with economic development and perhsaps state-owned track and/or state-owned railcars should be part of that. And then when things get properous, the stuff can be sold to private operators possibly with some restrictions to insure no "corporate raiding" practices.

And my analogy with Amtrak bears consideration, also.

[gabe]

Right,

But are you considering the GINORMOUS amount of money it would have taken to bring the pacific extension to a point where it would have been able to accomodate the traffic it was recieving, much less increased traffic? I don't take issue with anything you say outside of that point.

Gabe

[greyhounds]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by greyhounds

... he certainly has no evidence that "costs" should be THE (specific form of the article) controling factor in rates.

The STB estimated in the mid-90s that only 16 percent of traffic was still regulated. Rates are not regulated when competition keeps them at levels below the statutory threshold (where the ratio of the revenue to the regulatory variable cost of the move is less that 1.8), when a class of traffic has been specifically exempted, or when traffic moves under contract.

Costs are, in fact, "THE" controlling factor in whether a rate is regulated at all, and this is in fact defined by statute. It's not so much a matter of evidence as it is a matter of law. I am sure you knew that and merely overlooked it in the heat of what was obviously a very heated moment for you.

Best regards, Michael Sol

Yes, but once again you have made a response to something I didn't say. There are factors besides the "costs" that govern the rates. That's what I said.

And you still haven't presented one shred of evidence that the BNSF wheat rates out of Montana are unreasonable, illegal, immoral or fatening.

[bobwilcox]

QUOTE: Greyhounds
And you still haven't presented one shred of evidence that the BNSF wheat rates out of Montana are unreasonable, illegal, immoral or fatening.

He can't do it because the BNSF and MT wheat growers face intense competition from other wheat growers and carriers all over the world. With competition the margin cap is not even an issue. I know several shippers that pay rates way over the regulatory threashold but do not go down STB road because they have competitive options. The cost of litigation with these firms is not an issue. They have probably bought small Middle Eastern countries out of petty cash.

[daveklepper]

The enormouse amount of money could have been spent over a period of time, while hanndling the traffic. The emergency repairs could have been done first, then replace the oldest ties and jointed rail, etc, such as the UP has done with former SP and Rock Island trackage. But that is past history. What I am saying now is that the economic development track is the right one and not legal battles, and the economic development track should include rail improvements that can bring lower rates on BNSF and/or competition. New cars need not preclude state-owned track, and both are possible.

Think about the analogy with Amtrak, the cuts in maintenance on equipment before David Gunn took hold to improve a quick bottom line..