OAT : Open Access Thread

[Murphy Siding]

MichaelSol: Thanks for the expanded explanation.

selector & ed : Ironically, I don't understand what your last two posts meant![%-)]

[edblysard]

Got it....Ed

QUOTE: Originally posted by selector

QUOTE: Originally posted by Murphy Siding

Ed: remember as a kid, watching "Lost in Space"? Remember the robot who was always saying "Danger! Will Robinson!"? Just close your eyes and imagine the robot's other quoteable line: "That does not compute!" You now know what Future Modal looks like. Dave: if you're too young to understand the joke, just substitute your favorite blonde joke instead.[:)]

Understood, Ed. It was this. Seemed clear to me. (last two statements)

[daveklepper]

Michael Sol has a point. Bill Goodman was Passenger Traffic Manager (V. P.) for the New Haven under several managements and a very wonderful and kind person. He used to say: We decided that LCL wasn't profitable and we got rid of it. Then we decided Railway Express wasn't profitable and we got rid of it. Then we decided branch lines weren't profitable and we are getting rid of them. Now we are also deciding that the commuter and local passenger business isn't profitable. Can we wonder what woud have happened if first we had found a way to make LCL profitable?

[MichaelSol]

QUOTE: Originally posted by MichaelSol It cannot be reasonably argued that the nation as a whole is in fact far, far better off economically under the Open Access model of the national highway transportation system than it would be if that system operated under a Closed Access model such as that currently represented by the national rail transportation system.

Originally, railroads represented an Open Access Model. Everyone use them, whether to ship LCL, a goat or a chicken perhaps, themselves, machinery, iron, coal, whatever.

Ironically, highways represented a closed access model; partly through simple lack of reliable through roads, but also because of the need for what was considered then specialized, expensive equipment beyond the reach of most.

Too, early on, roads and canals were treated much like railroads, private enterprises for which owners could charge tolls or user fees, but equipment was still a key constraint, which railroads nicely overcame by providing equipment rental. You simply paid a fee to use both the equipment and the service.

Certainly, the Model T and the "Good Roads" movement began to change all that. In that case, Open Access became a political and economic necessity. Ironically, even as railroads -- "common carrierrs" -- were single-handedly responsible for coming of the industrial age in America because of what amounted to an Open Access policy of sorts, genuine "Open Acess" began to shift to the highway transportation system because it permitted everyone equal access to the system if they had the proper equipment, or a ticket to use the proper equipment.

The rest is an easy history to read. Railroads became less and less "open" as highways became more and more "open." The Interstate Highway System is undoubtedly a major reason underlying the post-WWII economic boom of America.

The interesting part is that railroads became less and less important as they became more and more "Closed Access". Might be a chicken and egg effect there, but nonetheless, relatively speaking railroads have become less and less "successful" -- or important -- the more closed the systems have become, while the economic success for the American economy as a whole has been more closely associated with a virtually completely Open Acess type of transportation system.

Railroads have characterized themselves since the 1920s by what they don't want to carry: LCL, livestock, passengers, express, single carload, now it's 52-car grain trains, the list gets a little longer with each passing year, as railroads gradually isolate themselves from major portions of the American economy, provide less and less positive service to the American economy, even while their market-share pricing policies damage important components of the American economy.

Well, the long term trends seem obvious enough.

Best regards, Michael Sol

[selector]

QUOTE: Originally posted by Murphy Siding

Ed: remember as a kid, watching "Lost in Space"? Remember the robot who was always saying "Danger! Will Robinson!"? Just close your eyes and imagine the robot's other quoteable line: "That does not compute!" You now know what Future Modal looks like. Dave: if you're too young to understand the joke, just substitute your favorite blonde joke instead.[:)]

Understood, Ed. It was this. Seemed clear to me. (last two statements)

[Murphy Siding]

Michael Sol: Can you explain your last paragraph please, I'm not quite sure I understand.

Thanks

[MichaelSol]

QUOTE: Originally posted by up829
Concerning funding from some sort of Federal transportation tax, consider how the Transportation bill just passed and signed really works. The real 'policy' behind this is that states and large districts get back 92 cents for every dollar they put in.

How it "really works," eh?

These comparisons are so much baloney.

It is true that sparsely populated states receive more money (in terms of a higher percentage than their "contribution") to build and maintain the enormous Interstate and Federal Highway infrastructure so that people from New York can travel to Los Angeles or from Orlando to Seattle on nice wide highways and never meet a stoplight. If each state received 100% of its contrbution, only, people would quickly find out just how much states like Nevada, Wyoming, Montana and others can "really afford" in terms of maintaining the national transportation infrastructure.

In Washington State, a recent similar study showed how Adams County and others were "benefitting" by "subsidies" from King County (Seattle), and how King County was being "cheated" by comparison because it was not receiving back its full share of contribution of transportation dollars.

Finally, one irate observer pointed out: "how do you think King County gets its food, its wheat and apples? What do you think King County residents travel on when they go on vacation and travel for business? How do you think King County receives commerce and how it links to the nation? Which county in the State of Washington derives the most benefit from that highway system as a whole? King County benefits from all those roads and highways, that's why King County helps to pay for them."

That, of course, underscores the opposing philosophies of Open Access vs. Closed Access. Under the particular Open Access model represented by the national highway transportation system, every user pays a general fee through the National Highway Trust fund. The farmer at the end of the road gets access to a good system at a reasonable cost to him, because his access ultimately benefits everyone in terms of access and production and flexibility.

The Closed Access model, which is modern railroading, would look at that same farmer and say, "you really don't have much choice here, do you, so we are going to charge you far more than the market will bear, because there is no "market," there is no authentic competition, and we are the only connection. In other places, this would simply be called a "stick-up" but here we prefer to call it "capitalism" because we bought the right to hold you up, fair and square. Therefore, you will pay from 2-3 times more than a similar producer situated elsewhere, simply because he can get around us, and you can't."

It cannot be reasonably argued that the nation as a whole is in fact far, far better off economically under the Open Access model of the national highway transportation system than it would be if that system operated under a Closed Access model such as that currently represented by the national rail transportation system.

Best regards, Michael Sol

[CSSHEGEWISCH]

I''ve noticed that FM has not addressed one possibility in his open access universe. How would "hook and pull" operators fit in? This would be an arrangement in which a train operator would contract with a third party to provide motive power and crews for his trains. The Australians are quite familiar with this arrangement.

[Anonymous]

QUOTE: Originally posted by futuremodal

up829 - For some captive shippers, it is true that half the delivered cost of a product is the transportation. If they are ag shippers, a wood products plant, or a coal fired power plant, etc. then they can't just pack up and move closer to their market.

No business large or small is immune from making bad business decisions. When they do, the question becomes do we bail them out or let the market take care of them. Frequently when the government bails them out, they end up dead anyway. On the other hand every business attempts to lower costs, often by whatever means possible. How successful they are depends on who they are and how much political clout they have, etc. Maybe the grain elevator operators in Montana should start talking about building commodity pipelines to a few very large facilities located on multiple rail lines, including the Canadian railroads. Nafta and the recent eminent domain ruling should enable such a venture, Railroads hate pipelines.

All Open Access is doing is shifting costs from one group of shippers to another. Because multiple rail companies are involved, that means multiple top management teams, back office functions, a new organization of some sort to regulate usage and acccounting. and of course each will have to make a decent return to remain profitable, so total real rail transportation costs would go up not down. In addition, there's no guarantee that every shipper with a siding would receive favorable treatment from at least 2 railroads. Successful companies prioritize and focus their business on their most lucrative customers. Consider what airline de-regulation has done to service and fares between small non-hub cities.

Concerning funding from some sort of Federal transportation tax, consider how the Transportation bill just passed and signed really works. The real 'policy' behind this is that states and large districts get back 92 cents for every dollar they put in.

[edblysard]

Crandel,
No, not quite...
The "attack" isn’t on the person, but the methods he employees...

Although premises discrediting the person can exist in valid arguments, when the person being criticized is the sole source for a piece of evidence used in one of his arguments.

Your profile includes a great quote attributed to Caesar...

Yes, people do believe what they want to...regardless of all the evidence presented to the contrary.

Ever have an argument with a flat earther?

I am not attacking Dave, for all I know, he may be a really fun guy in person, maybe a serious party animal, but rather, the attack is aimed at the methods used, the lack of creditable of his statements.
Twice in the last few postings, he has taken what others said, and edited or altered what was written to fit his construct.

Mr. Hemphill did not say open access would result in lower fares, and Murphy did not use the word detrimental in his joke, yet Dave altered Murphy’s statement, and intentionally and incorrectly interpreted what Mark had written, in an attempt to discredit both posters, while at the same time making it appear they, in a manner, agreed with him.

The fallacy of the argument isn’t in the person, or the man, but in the method used to further his argument.

Perhaps you should have applied Modus ponens…

The fact that the part of the argument is valid cannot assure us that all of the statements in the argument are true.

Then again, I may have a case of HUA also...

Besides, the ilk are having a blast reading this stuff!
Ed

[selector]

Ah, the ad hominem....

[edblysard]

Oh yeah, I remember it...
And the robot is smarter than we know!

Ed

[Murphy Siding]

Ed: remember as a kid, watching "Lost in Space"? Remember the robot who was always saying "Danger! Will Robinson!"? Just close your eyes and imagine the robot's other quoteable line: "That does not compute!" You now know what Future Modal looks like. Dave: have a nice day ! .[:)]

[edblysard]

Daves response....

"And yes, if a man says something detrimental about OA in a forest and no one hears him, he is still wrong."

What Murphy wrote....

"BAD, updated joke: If a man says something about OA in a forest and no one hears him, is he still wrong?"

Anyone else notice that Dave altered what was written?

Hummm....makes one wonder what else he alters or misquotes to support his views...and how much of others words he edits or alters to make it appear they too support his concepts....

Me and the rest of the ilk have a side book going, ( the ilk have $20.00 that says almost all of it, I say around 50%)anybody willing to place a bet?

Ed

[Anonymous]

Murphy - Pull for the shore, 'cause you keep drifting out to sea.

The nationwide reduction in rail rates will be most apparent in those areas currently held captive; the Montana grain shipper, the Idaho coal fired power plant, the Utah coal mine, and Peoria-esque widget factories all over the country. The import sector as represented by intermodal will see little if any rate reductions, because that segment is already served by multiple railroads. However, some coastal areas which might make excellent container ports, but are not currently because of constrainment from offering competitive rail rates due to rail captivity (Astoria, Coos Bay, Bellingham, Everett) would finally be able to offer competitive port rates under OA.

Greyhounds - If you don't comprehend how the relative size of certain segments of the economy affects how those segments process new cash infusions, then.....[banghead]

The fact that the Milwaukee is gone from the PNW has no bearing on whether those ports could handle three or a dozen railroads all at once. Milwaukee's retrenchment had nothing to do with Seattle and Tacoma not being able to handle Milwaukee's traffic, and from what I understand the Milwaukee was the preferred railroad for Seattle and Tacoma.

You also seem to have forgotten that the whole multi-user discussion was regarding the allegation made by Bitzan that multiple user rail lines would have higher capital costs (Bitzan's claim: Up to 40% higher) on a ton for ton basis than single user lines. I say show me the real world evidence of this claim, because the U.S. has plenty of areas where two or more carriers are using a single line. You brought up Chicago-Denver, but (correct me if I'm wrong) I don't think any of the rail corridors between these two points are multi-user since both UP and BNSF have their own lines between Chicago and Denver. What I did bring up is the question of whether BNSF's Portland to Puget Sound line has higher maintenance of way costs on a ton for ton basis than any of BNSF's single user lines. I seriously doubt that is the case, but will grant that foreign users of a single carrier's track will be more apt to publicly/financially complain about deferred maintenance than the home crews.

[Murphy Siding]

So, why would there be any "nationwide reduction in U.S. rail rates due to OA"? I thought your whole premise for OA was for those "captive" shippers with no other options? There are already competitive rates on container intermodal traffic. OA won't do a single thing for those rates. IF you're thinking that OA would lower rates due to an infussion of public (tax ) dollars for infrastructure,you're not being realistic. ( Darn-did I say realistic yet again? ) Did you say reregulation?? What bookie would put odds on that?

[greyhounds]

QUOTE: Originally posted by futuremodal

Greyhounds,

You don't like the PRB example? How about the I-5 between Portland and Puget Sound? Is there enough diversity of commodities to satisfiy you there? Don't both BNSF and UP haul whole trainloads up and down that line? Yes, you know they do. Case closed.

Let's go back to the railroad vs rail shippers example. You say that even though rail shippers are a larger segment of the GDP than the railroads, shifting resource allocation responsibility from the smaller GDP segment to the larger GDP segment won't benefit society? Do you know anything about dollar turnover? Do you not know that the larger the GDP segment, the greater the exponential growth in the economy with added dollar turnover? Think this through - if the rail shipper GDP segment experiences growth, won't that translate into more demand for rail services? Sometimes you have to give a little to get more in return. Investment is more than just cash into a market fund, sometimes non-cash actions can result in greater financial returns than cash related actions.

You ain't the judge Dave, and you can't close the case.

There's no question that major ports such as Seattle/Tacoma/Portland can support two competing railroads. (They evidently couldn't support three railroads, because the Milwaukee is long gone.)

But again, you're picking an atypical example. Pacific port business is booming. They're hitting capacity problems out of there. But Chicago-Denver ain't on fire. And you have no evidence or reason that splitting up the traffic on that lane, or similar lanes, would benifit anyone.

As for your claim that diverting money from the railroads to the shippers would produce an overall benifit - No it won't. I did pass my ecnomics classes. I know about velocity. You have no evidence or reason, as in zero, zip, nada, that a dollar diverted to a shipper will be of more benifit to the overall well being than if it would have gone to a railroad.

The government can't do that. They can't possibly know enough, or react quickly enough, to decide who should get how much.

It ain't broke. The system works. It doesn't work perfectly But perfection is not an option. There is a good, efficient rail freight transporation system in North America. It could be better, but then you and I could be better.


Ken

[Anonymous]

up829 - For some captive shippers, it is true that half the delivered cost of a product is the transportation. If they are ag shippers, a wood products plant, or a coal fired power plant, etc. then they can't just pack up and move closer to their market.

Murphy - Didn't you just confirm that importers are NOT captive to any rail shipper? That's the whole gist of my disagreement with Mark (aside from his theoretical construct), importers already get competitive rail rates, so any nationwide reduction in U.S. rail rates due to OA or reregulation would not make it any more condusive to import, the import rail rates are already as low as they probably will go. However, if the U.S. rail rates are lowered via introduced competition, it will provide one major incentive for U.S. firms to stay stateside rather than pulling out.

We're assuming of course that current active U.S. producers who are still here are here because the overseas siren song hits a bad chord or two for their particular situation. What we should be concerned about is if that siren song is then rewritten to their liking, and they are currently captive rail shippers, what ever is holding them back here may no longer exist, and off they go into the wild red yonder.

And yes, if a man says something detrimental about OA in a forest and no one hears him, he is still wrong.

[Murphy Siding]

Future Modal: I'm used to being told I don't know what I'm talking about-after all, I've been married for 16 years![:)]. Now, I'm not clarevoiant ( I know-probably spelled wrong, turns out I'm not perfect either.) . Since I can't see the words between the lines on the MWH post,I have to simply read what is there for all to see.
Let me try a different approach. No big theory here-only real world reality,no source, no footnote. A supplier of metal stair parts explained an odd situation to me. The painted, metal parts are produced in China-the source of more and more manufactured goods. The parts ride a container ship to a west coast port,then an intermodal train to the midwest. At that point, the stair supply company weeds out the "bad" parts that aren't good enough to sell to John Q Public.The weeded out parts are almost 50% of the entire shipment. The reason they can sell them, and still turn a profit is, as MWH points out,rail rates are so *low*. The kicker is that the "bad" parts are sold to a scrap dealer, who sells the scrap to China! MWH's post doesn't acknowledge that OE would lead to lower rates. It simply says that, reletively speaking, rail rates are too *low*.


BAD, updated joke: If a man says something about OA in a forest and no one hears him, is he still wrong?[;)]

[Anonymous]

Open access has worked in Europe because freight trains are short and light, so most trains are unit trains. A simple cut of cars in North America would be a whole train in Europe. So, what happens to yard operations under OA? Just think about it - three companies switching next to each other. And because each has 1/3 of the original traffic, yard delays could actually increase.

On the other hand, track upgrades other than capacity increases would never be profitable under OA. Railroads are not the same as roads.

cheers.

fgr

[tree68]

QUOTE: Originally posted by CSSHEGEWISCH

One recurring item that I see in arguments for open access is that OA proponents seem to want to take maintenance of way expenses out of the equation for determining rates. Somebody other than the shippers will cover the cost of keeping up the tracks.

I see the maintenance costs as a key component of the track-use fees (tolls). That would be one reason for premiums for certain services, like higher speeds. Not including maintenance would be a recipe for disaster as maintenance would become beholden to outside forces - subsidies, etc., which can change on a whim.

Including maintenance in the tolls would be an incentive for continuing maintenance and even upgrades. The track operator would (in theory anyhow) want to provide the best possible ROW so they could extract maximim tolls.

The toll for a given stretch of track should include:
1. Fixed costs (taxes, mostly)
2. Operational costs (ie, dispatching)
3. Maintenance costs (on a pro-rata basis, or by a formula agreed to by all)
4. Profit margin. Before you poo-poo profit, remember that capital improvements will probably come from that, too.
5. Any factors I've overlooked, which will depend on how fine you want to get.

OA does not necessarily mean free - it means that anyone who meets the requirements and pays the fees can use the track, which I suggest would still be owned by private entities. If we are going to get into free, we do need to talk full government possession and control, whereby John Q Taxpayer is covering the costs.

One implication here is that some lines might not be able to recover the cost of their existance (ie, the tolls paid are less than the fixed and maintenance costs), and may well cease to exist, unless some arrangement is made to cover those costs, like the local taxpayers buy the line and subsidize it. Unless the owning entity can be forced to maintain the line to standards (which won't be popular), little- or unused lines will drop off the system faster than they do now.

[CSSHEGEWISCH]

Incredibly lower labor costs are a much bigger reason for manufacturing and some service jobs moving to Asia than domestic transportation costs. Even the skilled labor is appreciably cheaper, compare what an IT professional is being paid in Bangalore, India to what he would be paid in Palo Alto, California and you can see why even software design is moving offshore, and transportation costs are even less of a factor in that situation.

One recurring item that I see in arguments for open access is that OA proponents seem to want to take maintenance of way expenses out of the equation for determining rates. Somebody other than the shippers will cover the cost of keeping up the tracks.

[Anonymous]

If shipping costs were really 50% of a products price, the company would be crazy not to re-locate to Chicago and avoid those costs entirely. I think that's what Mark is saying, but what you're missing is that all else is NOT equal. For examle farm land in Montana is dirt cheap compared to Iowa, real estate taxes are also much lower, as are corporate income taxes., fuel taxes etc. Other costs, such as shipping are more expense, but I think you're way over-stating what part of total costs shipping actually represents. As others have said, labor costs and environmental laws are big factors, that's why so many plants that produce for the domestic market have moved to Mexico. I know of one comapny that trucks unfinished product from southern California to Mexico for painting, then back so they can avoid the CARB & EPA regs.

As for China, a lot of manufacturing is moving there in part because it has low costs, but a major factor often overlooked is the huge market for goods and services that exists there. Why for example would GM export mini-vans to China, when they can build them there and sell them for the equivalent of US$5000? It doesn't mattrer what rate UP gives GM for shipping from Detroit to L.A., there's no way GM can sell a US made minivan in China for $5000.

[Anonymous]

Murphy - I don't think you know what you're talking about. What Mark said was,

"High rail rates encourages manufacturing to be located very close to the point of consumption. Low rail rates encourages manufacturing to be located in low-cost places."

So we have a manufacturing plant located in Peoria making $50 dollar widgets, and it costs them $60 per widget to ship to Chicago via a single rail connection (e.g. they are captive), thus their widgets cost $110 in Chicago vs the $100 dollar Chinese widget. The Chinese widget costs $2 to make and $98 dollars to ship to Chicago via OA containerships and virtual OA rail connections stateside, e.g. they've got BNSF, UP, CP, and CN from the West, and KCS, BNSF, UP, NS, CSX, and CN from the East coast. Since captive rates are generally twice as high as competitive rail rates, we can safely assume that if the Peoria factory had competitive rail access, they could ship to Chicago for 1/2 $60 = $30. Now they can market widgets in Chicago for $80 vs the $100 Chinese widget, and the Cninese can't cut any more costs because they are already using competitive shipping modes. So what you are saying is that since now that your shipping costs to Chicago are half what you are paying now, this has inspired you to take your factory to China?

Tell me why the Peoria company would suddenly bolt for China if their stateside rail rates were cut in half? If you were running this company, is that what you'd do?

[Murphy Siding]

You don't seem to have a lot of correct theories about manufacturing. So many things come from China, because of lower costs of manufacturing. Lower, because of cheap labor,lower overhead costs and lax environmental standards. What a widget costs in Peoria is equal to 1) the cost to produce the widget, plus 2) the cost to get the widget to Peoria. ( A + B = C ).
$2 Chinese widgets plus $98 freight from China = $100 cost in Peoria. If widgets were made in LA for $50, and the freight to Peoria was $49, the cost in Peoria would be $99 and Peoria would have a new widget supplier. This is how it works in my industry.
MWH's "theory" makes perfect sense to me, because I work with it every day.

[Anonymous]

Murphy

The statement that higher rail rates would keep more U.S. producers stateside while lower rail rates would lead to an exodus of U.S. producers is not par for the course. It makes no sense. It flies in the face of conventional wisdom and practical experience.

In general transportation costs rise as mileage increases. All things being equal, it would be cheaper to locate a production facility closer to the consumption center (the point that Mark got right) than thousands of miles away from the consumption center (we're assuming inputs are not tied to a certain locale).

For Marks statement to have merit, the consumption centers in the U.S. would have to be captive to one railroad, then it would make sense to locate as close as possible to the consumption center since the farther away you are the higher the transport costs become. However, it is equally true that even with two or more railroads serving a consumption center (with or without OA) it is still best to locate as close as possible to the consumption center, because you are still faced with the increased transportation costs the farther away you get. To say that lowering rail rates would cause firms to pull up roots is just plain wrong.

In reality, the opposite is true. Given that most captive rail shippers in the U.S. are U.S. producers, those producers will have higher transportation costs than those producers who have access to two or more railroads (and thus lower transportation costs), regardless of location. Since many current captive producers planned their plant sites prior to the onset of differential pricing, in their analysis' they got burned by an unforseen cost increase due to Staggers and the megamergers. Since there is no guarantee that more mergers won't come about, or the likelyhood that differential pricing will ever disappear, U.S. producers who are looking for new plant sites will be unlikely to locate anywhere in the U.S. even in places where there are currently two or more Class I's, and will likely keep taking substantial glances at China, et al, for their new plant. Apparently, when you add in the lower labor costs, less regulation, more government aid than they'd get in the U.S., the advantage swings to overseas siting when Stateside transportation costs (from plant to port) are higher than the corresponding plant to port transport costs overseas. If the U.S. side had lower rail rates hard wired by long term guarantee of rail competition rather than rail consolidation, then the advantage might swing back to siting back in the USA.

Remember, importers already have long distances to transport, but also have competitive choices in getting to the U.S. ports, so the key is what they face when they shift from ship to U.S. surface transportation in getting to that large consumer market. Since most if not all U.S. ports have access to two or more railroads in linking to those large consumer areas, the importers don't have to consign themselves to one railroad and it's captive rates. In essence, the importers transportation market Stateside is already OA in spirit.

Compare that to the captive U.S. producers, who pay twice as much in getting from plant/elevator/etc to a U.S. port as importers pay in getting from port to market, even though the Stateside distances may be roughly similar. If Mark or myself infers that once an import gets to shore they are starting from square one along with U.S. captive producers in terms of surface transportation costs, then the difference between captive rail rates and competitive rail rates makes all the difference. Then the only way U.S. producers could get the edge back is by offering them competitive rail rates regardless of their current locale. In other words, if U.S. producers had comprehensive access to competitive rail rates they'd be more inclinded to stay Stateside, because then they'd have the advantage.

However, for the sake of explanation, why do you think that Mark's statement is correct?

[edblysard]

He doesn’t,
And he didn’t…

[Murphy Siding]

FM: 2 points-

#1) Do you have any source for that theory? [?] I guess I'd feel that MWH was a pretty good source, just on general principles. I sometimes find myself wondering if you have sources for your theories.

#2) I keep reading MWH's post, but I don't see anything that said he acknowledged that OE would lead to lower rates.

[Anonymous]

QUOTE: Originally posted by Mark_W._Hemphill

Jay: Look at it the other way around: Rail rates (as well as logistics cost as a whole) have a great deal to do with moving manufacturing offshore, because they are so *low.* High rail rates encourages manufacturing to be located very close to the point of consumption. Low rail rates encourages manufacturing to be located in low-cost places, even those at a great distance from the point of consumption. Those who want even lower rail rates than we already have would encourage the offshoring of even more things that are still manufactured in the U.S. of A.

Mark,

Do you have a source for that theory, because it seems out of kilter with the basic rail transportation picture in the U.S. Don't forget, back here in the States we have a two-pronged rail system, one with captive shippers and one with at least duopoly-style competition. Most new rail dependent manufacturing dedicated to staying in the U.S. are opting for locations with competitive rail rates rather than locations that are captive to one rail system, all other things being equal. That's not suprising, given that captive rail rates can be double the rates of competitive rail rates. It's just that so many plants still operating in the U.S. were sited at a time when differential pricing was either not yet in existence or in it's tenative infancy. Most captive shippers now rue the day they chose their particular locations, but there's not much they can do about it given the investments already in place.

Most captive shippers are U.S. producers for the export and domestic market. Hardly any importers are subject to rail captivity, and most of the big consumer markets in the U.S. are located in areas where at least two Class I's are competing. I think you are putting the cart before the horse in saying lower rail rates leads to manufacturing flight. It is differential pricing/captive rail rates that are the topical reason manufacturers/producers are leaving or shutting down. Since all overseas importers are free of rail captivity, whatever incentive for locating overseas would not be bolstered in any way by the U.S. rail system converting to OA.

To state it again for posterity - overseas importers are already free of U.S. rail captivity. One cannot make them more free of captivity via OA. Rather OA provides a way for currently captive U.S. producers to better compete with imports in the domestic market as well as bolster U.S. exporters in the global market.

At least you acknowledge that OA would lead to lower rates.

Stay cool!

[edblysard]

Don’t let the word Judge fool you when referring to Harris County Judge Eckels...its is an elected position.
Judge Eckels is a politician first, and a county commissioner and judge second.
One of the reasons the Bayport terminal is having such a hard time is the NIMBYs in Clear Lake and Kemah, (home to Landry’s Kemah Boardwalk restaurant and entertainment complex).
Clear Lake is an up scale, yacht club community, they don’t want trains, or big ships anywhere near their little piece of heaven.
The Bayport has been tied up in several court hearings; don’t hold your breath...

Ed