OAT : Open Access Thread

[edblysard]

Actually, Murphy,
That’s what the Class 1s want...for short lines to gather up all the lose loads, (and do all the in plant and industry switching) and bring the cars to an interchange yard.
The Class 1s don’t want the expense of the hassle of running all the small, short locals.

Which is one of the very reasons my railroad exist in the first place, so the three class ones that serve Houston, BNSF, UP and TexMex, don’t have to try and run their own train into the limited space of the Houston Ship Channel, we do it for them, cheaper and faster than they can do it themselves..
Think Wisconsin Central...serves a small, limited area, but serves it well.

Get some investors interested, buy the track and the locomotive, hire and train your crews, and go for it...

Ed

[Anonymous]

(Hey, a reasonable response from Ed B without an insult! To quote Al Michaels, "Do you believe in miracles? Yes!"[swg]).

Murphy - I believe that infrastructure companies should be regulated to emulate the characteristic of a public utiltiy. This was one of the "either/or" questions brought up by TRAINS writers - Either the public regulates railroads like before and wait until they all go bankrupt, or allow the unregulated railroads their monopoly profits to ameliorate the cost of capital issue. I pointed out in a response (that never got printed) that one could theoretically regulate the infrastructure side to allow for access of competitors and preventing chicanery while still allowing the transporter side to set martket based rates and confidential agreements with prospective shippers. Regulation of only infrastructure would prevent the sort of monopolistic actions that are occuring now. However, regulation without ROW equalization among highways and waterways via access to fuel tax funds, property tax exemptions (to emulate the property tax exemptions of highways), and maintenance tax credits (since railroads probably need more fine tuning than highways to enable higher speed operations) probably would not work. BTW, for what it's worth, in reality regulated utilities make a higher ROI (a government mandated 10.5%) than the average stock market holding (which averages 8 to 9% ROI). So the complaints about regulation being a disincentive to investment is not really accurate.

As for who drives and who toots the horn, it is likely that an owner operator of short haul consist would utilize remote control packs to facilitate one man operation. You can toot the horn, I'll be in the office making sales[8D].

nanaimo73 - It is my belief that desires for new lines would have to go through the same processes as those for new highways. The whole Rochester thing with DM&E is a crock in my view, since the railroad ROW was there long before the lefties showed up. If Rochester wants a new railroad bypass then Rochester should pay for it. However, to answer the gist of your question, the need for new lines should be placated by access to fuel tax receipts paid by all modes (the Intermodal Trust Fund, the replacement for the Highway Trust Fund), as well as right of eminent domain, exemption from property taxes, and maintenance tax credits. Maybe apply the tax credits to new construction, maybe have access to federal loan guarantees for new construction.

CSSHEGEWISCH - I think your commens are all valid. Two I want to respond to: The Rio Grande was a victim of being a bridge carrier for that expedited freight. There's only so much time sensitive freight and fewer customers between Salt Lake and Denver. If D&RGW's connections had also committed to the short fast train concept, we'd have more historical data for analysis. As it is, D&RGW's short fast freights did make good money while they lasted, and customer response was very positive, which implies that if other railroads with longer hauls had taken on the concept they would have had a similar degree of customer appreciation (which usually results in more business).

Regarding absolute advantage vs comparative advantage, this is a basic tenet of economics as it refers to trade between nations. Although one nation may produce all that it can consume, nations that produce less can still benefit by focussing production on one or two things and (with the economies of scale) be able to offer these products to the bigger nation at lower cost, which in turn allows the bigger nation to redirect production away from what the smaller nation is producing and toward things that the other nations cannot produce as well. Thus both nations benefit exponentially more than if they did not trade.

To apply this to railroads of differing qualitiies, although the rail line with the better profile could carry all the sub-capacity traffic optimally, the rail line with the lesser profile could concentrate on maybe lighter axle loads and higher speeds to facilitate intermodal and passenger, which would allow the better rail line to focus on heavy haul unit trains and the like. If commodity flows favor one direction over the other (e.g. loads going west, empties going east), the two lines could agree to run loads over the good line one direction and send the empties back on the lesser, or use one as the line for empties both directions and one line for the loads. The lesser line could increase superelevation to improve transit times, while the other retains a minimized superelevation. This allows both lines to optimize capacity exponentially, rather than clogging the one and abandoning the other.

Regarding lighter axle loads and/or bi-modal, as older equipment needs to be replaced, companies will base their new equipment purchases on their trade lane demands. We all know that limiting axle loadings to 66,000 lbs would not necessarily imply only 264k cars, as the use of tri-axle bogies would allow a 396k car with those 66,000 lb axles. Load factor need not suffer with lighter axle loadings. And since trucks are the main feeders for railroads anyway, as new transporter companies enter the open access rail market they will be able to analyze the benefits of using bi-modal as a new entrant rather than as an existing operator, so acceptance of newer technologies would be apparent.

[Murphy Siding]

Ed:just curious-is the railroad you work for owned by the Class 1's you serve, or by another party?

FM:Thanks-I really wanted to be the one driving![8D] It would beat what I do now-sales!

[beaulieu]

One thing I brought up but nobody took up other than looking at the link I posted is what is happening in Europe. So far only the Netherlands, Germany, and Switzerland are very far down the Open Access road among Mainland European Countries, Britain is completely Open but is isolated by France which is just barely OA. One early trend is a noticeable increase in relatively high-speed Intermodal operating faster than trucks, typically 75 mph or 87 mph. speeds, with 100 mph. being looked at. The Swiss are planning for 160 kph. (100mph) Intermodal trains operating through the new Gotthard Tunnel when it opens. Another trend is that most large industrial companies conduct all their transportation through International Logistics companies which arrange for rail, truck, riverine, and air transportation as necessary. Some of the big companies in this field are Stinnes, Kuehn and Nagle, ABX, Vos, and an American Company Penske Logistics. Another trend in Europe is the revitalization of the "Freight Village" concept, typified in the US by Logistics Park Chicago on the site of the old Joliet****nal. Each city would have a Logistics Hub built around an Intermodal Center and if appropriate a port facility with lots of warehousing and
trasnsportation alternatives, and also with dedicated access to Freeways.

[owlsroost]

You could add Italy to the list - as well as local operators, SBB Cargo (the freight division of Swiss Federal Railways) has operations into and within Italy - basically I understand originally due to frustration with the poor service they were getting from FS (Italian state railways) when handling international traffic. See http://mct.sbb.ch/mct/en/cargo_ueberuns.htm

Tony

[edblysard]

Murphy,
We are a neutral switching terminal.

Member lines are, (as of today) TexMex, UP, and the BNSF.

The land our tracks are on is owned by the Harris County Navigation District, the tracks, buildings and locomotives are owned by the Port Authority of Houston.

The Houston Ship Channel is maintained by the Navigation District, they lease huge areas of the land on both sides of the channel to refineries, chemical plants and manufacturing facilities.

Management of the entire complex and all the ship traffic in and out of the channel falls to the Port Authority of Houston.

Due to the volume of plants, and their tremendous output, the PTRA, (Port Terminal Railroad Association) was formed to provide switching services.

When we were first formed in 1924, there were 18 different railroads serving Houston, and all of them trying to lay tracks or move trains in the confines of the ship channel area would be impossible.

So the City of Houston built its own railroad, on both side of the channel, to serve all of the plants there, (something like 150 companies refineries) and we provide all the switching and interchange services.

We gather up all the outbound traffic, and provide interchange with the member lines at three of our major yards, North Yard, Pasadena, and the public dock storage yards.

We also provide scale service, and interplant and intraplant switching services.

Unlike Dave’s version of open access, the member lines do not have track rights beyond the interchange yards.

We have exclusive right to all the traffic along both the north and south shores of the channel.

Simply put, we can provide the service faster, cheaper, and more personal than the member lines could.

Dave would argue that the shipper here are captive, and up to a point, he is correct, they have no choice but to deal with us.

On the other hand, they do have the option of shipping on any of the three member lines we interchange with.

We offer neutral service, and pay no preferences to any of the Class 1s we interchange with.

If Shell wants to ship BNSF, we put their cars on the first BNSF outbound.
Tomorrow, half of the cars may go to UP, the rest to TexMex, depending on the customers request.

We have our own MOW, locomotive fleet, and roster 274 T&E employees, until the new class of switchmen mark up...

We receive our operating budget from the Navigation District, the Port Authority of Houston, and our member lines.

Ed

[tree68]

Ed's comments and info on PTRA raise an interesting facet of OA and the operating companies. A significant portion of traffic still moves as single cars in manifest freights. The XYZ RR can offer destination service - in Ed's case, all cars headed for [name your destination] (a major destination for cars from this area) can be lumped into one train (assembled at one yard), and essentially run as a unit train between the two points. No enroute switching at all. Once there, a local switching company like PTRA might handle the deliveries to the appropriate industries. In keeping with other comments on routing - the operator would take the most appropriate route, based on the many factors that have been discussed.

Just one facet of the overall operation.

[CSSHEGEWISCH]

One issue which has been noticeably absent in all the discussions regarding open access on various threads is how the concept would be viewed by organized labor and how it would be sold to them. I would believe that the whole concept would be viewed (not unreasonably) as a giant union-busting tactic so labor relations issues and the applicability of the Railway Labor Act to new operators also need to be considered.

[daveklepper]

Guaranteed employment and promises of expanding business would be the way to playcate the unions, if at all possible.

[Anonymous]

QUOTE: Originally posted by CSSHEGEWISCH

One issue which has been noticeably absent in all the discussions regarding open access on various threads is how the concept would be viewed by organized labor and how it would be sold to them. I would believe that the whole concept would be viewed (not unreasonably) as a giant union-busting tactic so labor relations issues and the applicability of the Railway Labor Act to new operators also need to be considered.

You bring up an interesting observation, and frankly one that has no obvious answer. On the one hand, it is likely that some new OA operators would be non-union (like some short lines and regionals are now), and their lower labor costs my give them a cost advantage over a traditionally rail union operation. You may even see an operation employ a rival union like the Teamsters as train operators.

On the other hand, if indeed OA resulted in an increase in railroad market share and total increased rail employment, then a whole new pool of labor is available to buttress the numbers of the union. One of the big problems Big Labor is facing is the loss of their percentage of total labor employed in the U.S. as manufacturing jobs go overseas. If OA resulted in more manufacturing jobs staying or developing here, it definitely helps Labor's cause aside from railroading. All they have to do is make union membership something workers want to aspire to like they did in the old days, and the result would be non-union labor voting to form or join a union.

What we do know in the trucking industry is that despite non-union drivers, union drivers are still getting a good share of the trucking market. Of course, what's going to raise trucking wages now is simply the fact that truck drivers are in high demand, and trucking firms will have to pony up more money to attract and keep the good drivers. Could work the same with OA if it results in more demand for qualified train drivers than can initially be supplied.

The more demand there is for people of a certain craft, the more bargaining power the representative union has.

[Murphy Siding]

FM:How would OA result in more manufacturing jobs staying or developing here?

[Anonymous]

QUOTE: Originally posted by beaulieu

One thing I brought up but nobody took up other than looking at the link I posted is what is happening in Europe. So far only the Netherlands, Germany, and Switzerland are very far down the Open Access road among Mainland European Countries, Britain is completely Open but is isolated by France which is just barely OA. One early trend is a noticeable increase in relatively high-speed Intermodal operating faster than trucks, typically 75 mph or 87 mph. speeds, with 100 mph. being looked at. The Swiss are planning for 160 kph. (100mph) Intermodal trains operating through the new Gotthard Tunnel when it opens. Another trend is that most large industrial companies conduct all their transportation through International Logistics companies which arrange for rail, truck, riverine, and air transportation as necessary. Some of the big companies in this field are Stinnes, Kuehn and Nagle, ABX, Vos, and an American Company Penske Logistics. Another trend in Europe is the revitalization of the "Freight Village" concept, typified in the US by Logistics Park Chicago on the site of the old Joliet****nal. Each city would have a Logistics Hub built around an Intermodal Center and if appropriate a port facility with lots of warehousing and
trasnsportation alternatives, and also with dedicated access to Freeways.

The speed increase is something I have argued for in the U.S. rail system. It may be that under an OE system in the U.S. certain lines would have to gravitate to a higher speed system or be forever irrelavent. The lines with the best grades would probably stay as HAL lines, while the lines with more grades would be the ones to go higher speed with lighter axle loads and more superelevation. Sustained speeds in the low 100 mph range can be sufficient to overcome trucker's current speed advantage dock to dock.

[edblysard]

You guys wish list is getting bigger and bigger!

100 mph freight trains would only work if you can do away with every grade crossing, and then rebuild the entire rail infrastructure, nationwide.

Besides, 100 mph trains, wow, lots of cars arriving at the end point...so what do you plan to do with all those car?

Hate to bring this up, but even getting train speed on average up to 35 mph will overwhelm the entire rail industry...its just dosnt work that way.

Running a 100mph intermodal from LA to Chicago sounds great, but the number of trains would have to remain pretty much the same as they are right now...unless you plan on rebuilding the entire Chicago complex, and building a super port at thr LA end.

So, if you still have to run the same number of train between destinations, who cares if they run 100mph, or 24, as long as they run consistently.
Why speed the money for the speed between points, when the end points can only operate at a fixed amount.

After all, the capacity of yards is finite, and they can only switch out a set number of industries in a day...so where do the excess cars go?

Some storage facility/yard?

Where are you going to put it...

And if you can afford to build it, now some one has to go get them when the customer needs them, which would require another crew and train, which add to the mix, which gets in the way of the 100 mph train,.....

So, every city builds a Logistics Park?
Do you guys get the cost of that?
How many billions upon billions of dollars does your money tree grow?

Ed

[Murphy Siding]

Dang Ed. Here I was just dreaming how much faster I would get my lumber with 100 mph freight and you have to go and throw in logic![^]

[edblysard]

Look at it from this point.
Yards on the Houston Metroplex AEI map.

1: Casey(SIT)
2: Lloyd
3: Pierce
3: Settegast
4: Eureka
5: East Yard
6: Englewood
7: Englewood Ramp
8: Dallerup
9: Congress
10: Old South Yard
11: New South Yard
12: East Belt Yard
13: Basin
14: Booth
15: Dayton
16: Dayton Plastic(SIT)
17: Durham
18: Coady
19: Strang
20: Glass Track Yard
21: Hardy
22: Produce Terminal
23: Bayer(SIT)
24: Texas City
25: SP Coach Yards
The above are the Class1 yards, below are the PTRA yards.
26: North Yard
27: Old City Yard
28: Penn City Yard
29: American Yard
30: Pasadena
31: Manchester Terminal
32: Storage Yard(adjacent to the city docks)
33: Marshaling Yard.
These are just the major yards, I didn’t include the small, private yards owned by the petro chemical industries, some of which are as large and those mentioned, such as Deer Park Rail Service, which has 15 tracks each capable of holding 130 car cuts.
Now, throw in the main track, interchange tracks, team tracks, and yard to yard track.

10 separate main lines, one of which is double track (Hardy Street Toll Road).
All of this within Harris County, and almost all of it inside a few square miles on the east side..
Find me any single company which can maintain all of that at anything resembling a reasonable cost.
And this is just one county in the state, Texas is huge, and has more railroad track miles than any other state.

I wi***here was a way to publish a accurate map of the Metroplex, one look at this, and the idea of any one company even trying to operate the tracks and any one single company maintaining them all would vanish in a heartbeat.

This is such a huge complex that BNSF and UP gave up dispatching their own trains, and formed a joint dispatching center in Spring, Texas.

Three dispatchers just for the yard to yard movements, three that handle the inbound, and three that handle the outbound trains, on three shifts every 24 hours, 365 days a year.

Directional running is the only thing that keeps us fluid.

The dispatchers could care less whose train it is.
So you can find a BNSF dispatcher, hired and paid by BNSF, screaming at the BNSF corridor manager, about stabbing a UP train and screwing up their plans!

Sound like open access?
Not really, just common sense.

Now, multiply that by every major rail hub located in a US city….

I have found that the open access folks seemed to be comprised of smaller shippers and their lobbyist who, for want of a more simple explanation, are looking for cheaper rates and exclusive service.
They don’t want “Open Access”; they just want to be serviced in the same manner as huge volume shippers.
They liken railroad to public utilities, and expect fairness in business, which any sane person knows doesn’t exist.

So they create these convoluted economic theories, throw in a bunch of un-realistic expatiations, imagined operating procedures, and some magic checkbook to pay for it all.

They are, for the most part, armchair railroaders, who, from the comforts of their office chair see only one small portion of the railroad, and have created a hobby out of trying to figure out how to run it better than it runs right now, all without the benefit of ever having done any of the real the work themselves.

I have found that almost to a T, none of them have ever run a train, switched a car, pulled or spotted an industry, thrown a switch, or had to figure out how to cram 120 trains a day into a city with 33 yards.
They have no concept of the thousands of man hours each train they see represents.

They look out the office window at the slow freight dragging by, and imagine the myth of the Nickel Plate High Speed, or the TransCon, blasting by at 70 mph, never grasping that those were and are special purpose trains, not the ordinary.

They also like to point to Europe as an example of how trains should be run, but always seem to ignore the fact that almost all European railroads are heavily and directly subsidized by their governments, and run shorter, light trains, at a volume that wouldn’t fill up my North Yard in a week!

How I would love to hand the Swiss a dedicated Tri Level Auto Rack train!

Or, watch the Italians figure out what the heck to do with the 120 car BNSF Grain Shuttle, and how they would react to finding out they have 24 hours or less to turn it around!
Oh, and by the way, there are 4 more trains just like it, less than a hour apart from each other, and they are all headed your way in the next eight hours!

How efficient can a bunch of railroads be if they can’t even settle on a standard gauge track, or motive power specs?

So, I jump in on these threads, to see how the office railroaders are doing on figuring out how the real world railroad is screwing up, all while they are sitting in a office or home whose furnishings, carpet, printer paper, computer and TV got there by rail, under lighting whose primary power source got to the local power plant by rail, after driving to work in a car that got to the local dealer by rail, wearing underwear, shirts, slacks and shoes that got to their local Wal-Mart by rail, or just finishing lunch, which most likely, had most of its ingredients, packaging, wrapping and delivery container shipped by…you guessed it, monopolistic closed access rail!

Man, I hate it when we screw it up so bad!

Ed

[Anonymous]

Murphy,

Ed wasn't using logic, rather just throwing in the old way of thinking. First of all, who said anything about 100 mph freights using standard railcars? If you want to go dock to dock ASAP to beat over the road trucks, you use bi-modal ideally, with TOFC and COFC your plan B. You're not going to be using boxcars, lumber cars, hoppers, etc. because what those cars haul tends not to be time sensitive anyway, and whatever time advantage you gained by flying 100 mph would be lost in the pallet shuffle to the short haul truck anyway. And I would never send one of my trains into a rusting yard, rather they'd head straight for the intermodal transfer sidings, because (get this) THEY'RE ALL IN TRAILER AND/OR CONTAINER FORM!

Why you'd need to do away with every grade crossing wasn't explained. Hmmmm, didn't the original Hiawathas and Zephyrs hit triple digits over many a grade crossing? Just make sure people are aware that 100 mph freights will be using the line. Of course, you can't stop every idiot from trying to drive in front of a train, but then again life is full of risk.

Logistics parks? Here in the States we call 'em intermodal facilities, and they already exist in most cities large and small, with more on the way. They're either already paid for or in the funding loop as we speak. Amazing, and they do it all without the fabled money tree!

If one could actually run 100 mph trains between LA and Chicago, then you would only need a third of the equipment you have now to do the same job, because your turn around time just decreased by a third. It's called euipment utilization, and if you get more loads per year out of your equipment, you also get more revenue per year out of that equipment. As I said before, warehousing in transit is very inefficient compared to actual warehousing, and all you're doing is providing warehousing au gratis to the shipper while charging only for the actual transportation.

Is that what today's railroads have become? A bunch of mini-warehouses on steel wheels? Sadly, it seems that way. What a waste!

[Murphy Siding]

FM: My brain is wired for logic. I therefore have trouble understanding things I find that don't seem to make sense,from MY logical perspective. It does tend to make me very cynical at times. Hence, I started this thread to question things.

From my perspective, Ed is being extremely logical. It's very enlightening to have someone in the industry willing to join a discussion.

As I've said all along, though,all the theory and logic in the world will be worthless if it runs counter to reality.

Ed did give me a major chuckle. We get siding from eastern Canada. With all the modern technology, my wholesale supplier can get on the net and find out exactly which yard or siding his car is stuck in.[}:)]. How would OA improve that?

[edblysard]

Old way of thinking...

Yup, I hate it when people use their head to store their brain, instead of their butt ...

All of this is just wishful fantasy anyway, you couldn’t generate the funding for all of these miracle devices and wonder land sidings anyway...unless you join ole comrade Dave and help bring back the former Soviet Union, only do it here in America.

"Tanks?"
"Yes, Comrade, we have thousands of tanks for sale...only used in one war…."

“Toilet paper?"

"That line over there is the line for putting your name on the list of people who wi***o buy toilet paper, if we ever get any"


(psssst...there is a really good reason it’s called the former Soviet Union)


I think Dave might be a founding member of the WWPS club…

The World Wide Problem Solvers club.

You know, that group of people who have solutions for any problem, and, if there isn’t a problem, they can create one for you right quick…

They are pretty easy to spot, because they start almost every sentence with, “All you have to do is get….”

Now, of course, Comrade Dave will come back with some insult as to how I employee “the old way of thinking” or tell you I have sold my soul to the monopolistic robber baron railroad….that’s his MO when someone doesn’t agree with his skewed viewpoint of railroads reason for existing.

He will insult you, imply he is a free thinking, progressive person, who hasn’t sold his soul to anyone…but just ask him who he works for!.

Not what he does for a living, but the name of the company he works for.
He won’t tell you, of course.

He will tell you he is a free lance consultant, but cant, or wont, name the company.

And note he refuses to tell you who he is…or provide any bona fides as to what qualifies him to manage any railroad.

By the way, to be really clear on that point...

I am not qualified to manage a railroad..

I am qualified to switch cars, pull and spot industries, run a train as a conductor, and manage a yard.

Re read everything he has written, and take note of the things he doesn’t address…of course, if the railroads were really progressive in their thinking, we would all be shipping everything in the wonderful stack and a half containers he designed….

Now, I have no problem with anyone tossing out any idea that can make railroading more efficient, both from the transportation standpoint, and the financial aspect too, but the idea to scrap the entire way we do business, and to cease using the resources on hand?
Replace or supplant the entire fleet of existing railcars?
Build wonder sidings?
In who's back yard?
Come on, get real...

I would love to hear how we can take the existing, on hand resources we have now, and use them better, but this stuff is pretty much un attainable in the real world.

So, you guys keep egging him on, please…I like reading fiction!

Ed

[TH&B]

Try not to get too mad at each other hear, each of your arguements are good and interesting. Ed is a practical hands on "train operatter" in todays railroad, he seems to know how run trains in the real world as it exists with all its flaws and advantages. FM has theoretical ideas, they seem like good ideas, but they may go against all convention. They are just ideas that seem so pure and simple but nobody has started aplying yet in USA so we don't know where the snags are yet.

OA is an interesting concept. But how on earth could you now set it up in the USA. In Europe the railroads where owned and operated by the government who decided to change to OA, and not without problems. But in USA private companies run the railroads. You can't just confiscate it all, especialy if you can't absolutely gaurentee OA will work. Many unforseen problems could easily creap in making the railroads worse off.

The "old way" is the way. It is the way our 150 year old system has ivolved to and of course will ivolve further. How on earth could you change to OAT ?

Maybe it could be tried in one coridor or one region in the USA as a test, but you can't confiscate somebodies railway if it is already being used without compensation at least.

[CSSHEGEWISCH]

FM's world of Open Access looks great in a theoretical sense, but the real world has a way of exposing unforeseen shortcomings. A good comparison would be the writing of the Constitution of the United States with the French Constitution of the Year 8 (the period of the French Revolution). The American writers wrote a Constitution that was based on new ideas tempered by real world experience. The French writers based that particular Constitution on the concept of Reason, which they firmly believed was perfect and could not be contradicted by the actions of rational people.

Open Access, in the United States at least, appears to be an attempt by so-called captive shippers to get a lower rate, whether it is reasonable or not.

[tree68]

Recall that many early improved roads were toll roads. Pay the toll or fight the muck, etc of an unimproved pathway. Eventually the governments got involved and the tollways disappeared as better roads were built at taxpayer expense.

It would seem that the biggest obstacles to OA are political, not economic. As has been pointed out many times, OA of a form exists today in the myriad trackage rights and run-through agreements that exist. Many of those are probably not the first choice of the track owner, but were inherited when they took over another railroad (which may have inherited the rights when they took over another RR). It comes down to "protecting turf."

On the economics side, and from an operations standpoint, OA involves appropriate compensation for use, regardless of who owns the track. Applying it on a national basis involves finding a formula that arrives at a level of compensation which is agreeable to the players. Much has been made of nationalizing the physical plant, and things might end up that way, but that's not the only option.

Ed's points on terminals are valid. It's no different than the gridlock that develops around the mall at Christmas time. That pressure, though, might make the terminal operators rethink their operations and upgrade their throughput.

And remember, despite the promise of economic growth, there are only so many car loadings in a year. There might be a period like UP's meltdown, but after a while the flow would be restored and things would even out. While there might be a boom in new operators, after a while things would shake out and only the best would remain.

[Murphy Siding]

Tree68: I would be of the belief that the biggest obstacles to OA IS economic. Step #1 would be to have Uncle Sam buy all the railroad operations from their present owners. Even IF they wanted to sell, that in itself would be some big big bucks. Uncle Sam then would have to sell all the parts-provided there were intersted buyers.Read the post about British Rail Operations, they talk about massive amounts of operating and infrastructure money that had to provided in the first 10 years of OA. It doesn't seem to be ending soon. From an economic standpoint, how in the world could we justify this expense? How would we justify fixing something that's not broken? If, it all boils down to lowering rates for captive shippers, would it be more cost effective to subsidize ( [:O] ) their transport needs? I know, that seems awful but I live in a farm state, and subsidies are not a stranger.

[tree68]

I don't necessarily think that the government has to buy all the tracks, at least not at the outset. If the owning company receives fair compensation for use (and everyone receives comparable compensation) then the track issue is not a major one.

When I use the term political, the government is way down the list. I'm thinking of all of the interactions that will have to take place amongst the parties involved. There's a lot of he said/she said.

[Murphy Siding]

tree68: I see your point.

[Anonymous]

FYI - I finally received a copy of the Bitzan rail compeition study thanks to a generous donor of lost & lonely causes! I'll post some of my responses as I get the time to read through it.

[jeaton]

An article in this morning's Washington underscores the fact that in today's political climate discussions of open access are just acedemic. Yesterday, the FCC announced that telephone companies owning infrastructure will no longer be required to lease their high speed Internet lines to competitors. This follows a recent Supreme Court ruling that freed cable TV companies from having to share their lines with ISP's. The article does not explain the rationale of the Supreme Court decision, and I have not looked up the case. It interesting to me that a court that many consider to be somewhat on the right of the political spectrum would make a decision that reduced competition. Apparantly the FCC saw similar circumstances with phone companies and decided to act rather than rather than pushing the decision into the courts.

I guess that leaves me and the rest of Delavan's DSL users at the mercy of the dreaded duopoly of SBC and Charter Communications. Darn!

Jay Eaton

[Anonymous]

QUOTE: Originally posted by jeaton

An article in this morning's Washington underscores the fact that in today's political climate discussions of open access are just acedemic. Yesterday, the FCC announced that telephone companies owning infrastructure will no longer be required to lease their high speed Internet lines to competitors. This follows a recent Supreme Court ruling that freed cable TV companies from having to share their lines with ISP's. The article does not explain the rationale of the Supreme Court decision, and I have not looked up the case. It interesting to me that a court that many consider to be somewhat on the right of the political spectrum would make a decision that reduced competition. Apparantly the FCC saw similar circumstances with phone companies and decided to act rather than rather than pushing the decision into the courts.

I guess that leaves me and the rest of Delavan's DSL users at the mercy of the dreaded duopoly of SBC and Charter Communications. Darn!

Jay Eaton

Conversely, the power company I am working for is developing their broadband by powerline project by contracting it out to an independent entity, who in turn offer the bandwidth to any ISP. It is interesting that the power company sees it's main profitability related to the concept in allowing a third party to do all the work, and the third party sees it's optimal profitability in leasing to multiple ISP's.

What I wonder is, since power companies must lease space on powerlines to other power companies, will the FERC also direct power companies to lease bandwidth to other power companies for their broadband market?

[Murphy Siding]

Hmmmmmm..... So FM does work for a power company. Very interesting.

[Anonymous]

QUOTE: Originally posted by Murphy Siding

Hmmmmmm..... So FM does work for a powere company. Very interesting.

It's just temporary, and it has nothing to do with transportation or transmission, so obviously there is no bias on my part. No, really!

[Anonymous]

Having studied John Bitzan's "Railroad Costs and Competition" study and his associated works in that area (thank you Michael Sol), here's his opinion in a nutshell. It should be noted that this is not an open access study per se, but rather a more specific analysis of railroad costs and societal benefits resulting from other railroads being allowed to use the lines of a home railroad (e.g. no corporate separation of infrastructure from transporter operations):

1. Railroads are "natural monopolies", meaning he thinks they function best when they have monopoly power.
2. Introducing multiple rail users over a single railroad's line will result in higher costs to the industry (more on this later!)
3. Introducing competition to rail shippers will result in societal benefits providing the reduction in prices for those shippers is relatively high (for BNSF shippers the prices would have to fall by 19 to 27% to justify introducing competition, easily achievable since captive rates are often 100% higher than competitive rates - Table 6, page 223).
4. Before you OE opponents cry "victory!", Bitzan also is a proponent of reregulation of rates as the "prefered" way to fix the differential rate and service problems.

On point #1, from what I've found most other economists agree to a certain degree, however the "natural monopoly" lies soley in the lay of the infrastructure, and is not germaine to transporter opertations. Thus, if infrastructure is separated from transporter operations, the "need" for regulation would lie soley with the operations of the infrastructure itself, not with the transporters.

On point #2, Bitzen references an obscure and highly suspect economic theory that in certain situations of homogenous input factors, monopolists costs are actually lower than competitive costs. For railroads, his only justification for this notion is as follows - "The estimated cost increases from multiple-firm operation are due only to a decreased ability to realise density economies resulting from a single firm's output being split between two hypothetical firms." (footnote #21, page 218). In other words, he thinks that for the same relative amount of tonnage over a line, you would have twice as many trains hauling the same tonnage under a duopoly as under a monopoly. Most economists reject this notion, because it assumes that (A) under competition marginal and actual costs would remain unaffected by competitive pressures, and (B) a split in traffic would result in twice as many trains rather than the more logical assuption of an equal number of trains being split between the two duopolists. For (A), we all know that competition results in downward pressures on input costs as rationalization and innovation are implemented under competitive pressures, while under monopolists there is no incentive to reduce costs since the risk of change outweighs the potential benefits of lower costs. For (B), we know that certain train types will gravitate toward the operating theories employed by the different companies. Some will be better at carload movements than others, some will be better at unit train operations than others, and shippers will prefer one over the other until the other can provide a better price package. Some big shippers who ship multiple consists at a time will run one whole consist with one rail transporter and a second consist with the other, e.g. playing one against the other to exert downward pressure on prices.

If Bitzan had wanted to provide support for his notion, he should have provided some real world examples of how multi-carrier usage of a single carrier's line results in costs of up to 40% higher. What about the PRB joint use line? What about the I-5 corridor between Portland and Puget Sound? Is there any evidence at all that the costs of maintaining those lines is higher than the cost of maintaining single user lines for the same relative amount of traffic?

The only aspect of a cost "reduction" for single user vs multi-user is the idea of deferred maintenance, e.g. deferred maintenance is easier to get away with under single user control than when you have "visitors" using the line. Take the recent PRB derailments. If these had been BNSF only lines, the costs would be handled internally, whereas under multi-user use, there is now the possibility of BNSF being sued by UP for economic losses sustained by UP. I guess in that vein there is a higher cost of multi-user vs single user, but deferred maintenance is hardly a cost cut of virtue, and if railroad accounting was more transparent to the public (as it theorectically should be under Sarbanes-Oxley) then it would be harder to hide such actions from the shareholders, so from that perspective the "advantage" of single user is muted.

Since point #3 is based on the fallacy of point #2, logic would dictate that even smaller price decreases for shippers would result in societal benefits. However, given the fact that captive shipping rates are often 100% higher than corresponding rates in more competitive rail markets, it would be quite easy to achieve a net societal gain with competition even under Bitzen's pro-monopoly assumptions.

On point #4, both pro-OE and anti-OE groups oppose a return to rate regulation, as OE proponents cleary prefer market based prices induced by head to head competition to foster a larger gain in pertentage market share, while OE opponents clearly prefer the financial safety of monopolist pricing to aid in achieving cost of capital recovery.

It should be noted that neither Bitzan nor any of his contenporaries make any reference to the concept of ROW cost equalization (via tax exemptions, tax incentives, user fee redistribution, etc) as the way of allowing commodity flows to gravitate toward the most optimal modes and intermodal combinations. I feel that some form of ROW cost equalization is necessary to make private sector OE work. Nor does he or his collegues attempt to analyse scenarios of separated infrastruture companies hosting independent rail transporters, and whether he thinks the costs borne by an independent infrastructure owner would be higher than those borne by a vertically integrated monopolist operator.

As usual, I am interested in your perspectives on this!