NITL's suggestions to STB for rail policy oversight

[MichaelSol]

Ultimately, the coal trains out of Colstrip, Montana were never supposed to be there. The original plans were for 16 giant "Colstrip Generating Units" to produce electric power virtually at mine site, and send the electric power far and wide far more cheaply over new high voltage lines. Ultimately, only four "Colstrip" units were built. The bitterness and divisiveness of the controversy in the mid-1970s was so intense, that it ultimately convinced power company officials involved that power generating plant placement was so difficult in Montana that they would never attempt it again and that they would look for every way possible out of the power generation business.

The repercussions were huge, and included those daily coal trains through Miles City.

Best regards, Michael Sol

[oltmannd]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by oltmannd
[Utilities are free to build power plants wherever they want, no?

Oh my goodness gracious! You have never been involved in a power plant permitting process have you?

Best regards, Michael Sol

No, I haven't, but I don't think you missed my point.[:)]

...and I think this is a good place to let this just peter out.....

[MichaelSol]

QUOTE: Originally posted by oltmannd
[Utilities are free to build power plants wherever they want, no?

Oh my goodness gracious! You have never been involved in a power plant permitting process have you?

Best regards, Michael Sol

[oltmannd]

There are power plants that get all their coal by truck. There are power plants that get all their coal by wheelbarrow (motorized of a sort).

Utilities are free to build power plants wherever they want, no?

[Anonymous]

QUOTE: Originally posted by oltmannd

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by oltmannd

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by oltmannd

This just in! OA a smashing success in Europe!

http://www.iht.com/articles/2005/10/19/business/transcol20.php

NOT!

LSHMCOOMN!

Of all the crap that Don Phillips has put out there, this article was probably the worst (and given the fact that he was a Washington Post hack, that's saying alot!) This was commentary at best, with no references for comparison. It is fantasy, the way AAR wishes the real world was instead of facing the world as it really is.

Tell me oltmannd, where are his references? his statistics of comparison? None? Hmmm, not suprising at all.

He quotes one so-called "British Rail consultant" as saying things in Europe are a mess all due to OA, yet he reluctantly admits the varying governments' foot dragging has effectively delayed things. The entire (and disparate)European rail system was formerly government run railroads, with all the inherent inefficencies of government run railroading (aka: Amtrak). I guess you thing the Europeans should have sold the entire system to one of the US Class I's, since of course they are such great contributors to the societal welfare here in the US! Not!

God help the Iraqis if Hemphill and company turn that system into the closed access nightmare of captive shippers, bottleneck rate gouging, paper barriers to shortlines, et al! Then for sure they'd all want Saddam back!

If you had even bothered to read the "British Rail Operations" thread on this very forum, you would know that the predominance of passenger trains is the main reason freight cannot be transfered from road to rail. That is Europe's Achilles Heel when it comes to freight railroading, capacity is maxed with too many passenger trains. However, even with that inherent drawback, railroad freight marktet share in Britiain has increased 40% since OA was established (source: The "British Rail Operations" thread). Read the Italian OA thread I started, you will see yet another new business utilizing rail for intermodal movements, a business that would be on the roads right now if European railroads had remained nationalized or gone North American-style closed access.

The fact is this: Business opportunities are being explored and develped under OA in Europe, despite the fact that passenger services hog the mainlines, and it's something that would NEVER had happened under a closed access regime. Even you would have to admit to that.

Closed acces is an anachronism that should rightly go the way of the buggy whip.

Thanks for attacking Don Phillips and Mark Hemphill. That really helped your arguement...

So, the issue is HIGHWAY vs RAIL? The measure of success is how much traffic you divert from HIGHWAYS? I thought single rail line shippers were CAPTIVE and there was no such thing as HIGHWAY competition for them?

Truckload IM shipments around here are up 20% YOY. How'd that happen?

....and we all know how the European economy is booming....

Well, well, well. I like how you set that up: (1) Use an op-ed piece by Don Phillips which attacks the OA system in Europe (a system BTW that is still in its infancy and still being held up through France) without any facts to back up his allegations, then (2) use the logical ensuing critisism of said article by me as a way of trying to belittle the arguments set forth. "Why, you can't attack Don Phillips. How dare you. He is a GOD!" Well, your phony indignation don't fly here. Since Don Phillips and Mark Hemphill are basically mouth pieces for the current U.S. rail system, one cannot parse a critizism of the closed access rail system without occassionally mentioning by name the acknowledged proponents of the closed access system (especially when you brought one of them up). If you are offended by any critizism of Don or Mark, then you are a hopeless drone for their cause.

Regarding trucks vs rail, even you can comprehend the fact that certain commodities move best by rail, e.g. coal, grain, multiple containers, etc. Railroads own this traffic on surface corridors, it is impossible for trucks to provide any meaningful competition for these commodities, ergo to suggest that trucks are competition for unit grain trains or coal trains is asinine. So unless you are an idiot (and I will give you the benefit of the doubt that you are not), you know that any such shipper of grain, coal, et al who only has one Class I for rail access HAS NO OTHER TRANSPORTATION OPTION OTHER THAN RAIL to move those commodities. They are thus CAPTIVE SHIPPERS.

When you are talking about current truck traffic, it is a completely different scenario. Although truckers are not competitors for commodities that move best by rail, railroads ARE competitors for commodities that ostensibly move best by truck, at least in those corridors where the rails are in place. That is where the opportunity exists for railroads to draw traffic off the highways, either via TOFC/bi-modal or COFC/RailRunner. This is the big opportunity in Europe, and despite certain EU members intentionally stalling the full implementation of OA, there has been a significant shift of freight from European highways to the European railway system since OA was first implemented. No one, not Don Phillips, not Mark Hemphill, not Larry Kauffman, not even you, can deny the shift is due to OA, and that much more can and will happen when the reluctant nations are finally forced to grant OA rights to the myriad of freight companies.

And that more than anything is reason to give rightful critizism of those who disingenuously claim that OA "won't work". Representative democracy "didn't work" the first few decades it was tried, but we stuck with it and now we literaly rule the world. Representative democracy and open access are analogous. Give them a fair chance. They will work.

"Even you can understand" that calling people stupid adds little to a logical arguement.

You end nicely with an opinion that you are entitled to hold. However, I disagree.

That some things move best by a certain mode does not mean alternatives are not available.

You have not disuaded me of my opinion that if OA was better, it would be happening right here, right now. Mgt and stock holder love anything that make their stock and options increase in value. Are they ALL stupid, too?

That's interesting, in that I did not use the word "stupid", but you apparently read the word "stupid" into my critique of your post. Therein lies the problem with your POV, the alleged superiority of your position rests on the need to put words into my argument that are not there in order to devalue the argument. That leads me to believe that your mind was made up before this discussion began.

If a concept is promoted as being superior, but is not recognized by statute (and therefore cannot be implemented in a regulated market), does that devalue the concept? In your mind apparently it does. I'll say it again, there are no statutes for dealing with the OA concept in North America. That, combined with monopolist resistance and the lack of anti-trust legislation for railroads, is what is keeping OA out of NA.

Your statement "That some things move best by a certain mode does not mean alternatives are not available" is too simplistic. We could all have our coal hauled in by wheelbarrows if there was no other mode available, but if we are hauling coal in wheelbarrows while our competitors are having their coal delivered by 16,000 ton unit trains we're not going to last to long in the coal business. Trucks are no competition for 16,000 ton unit trains, so if you are a coal-burning utility (or a grain shipper, chemical shipper, et al) captive to one railroad you have no other realistic alternatives available. That's a plain cold hard fact, and you cannot dance around that issue without looking (dare I say it?) STUPID!

[oltmannd]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by oltmannd

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by oltmannd

This just in! OA a smashing success in Europe!

http://www.iht.com/articles/2005/10/19/business/transcol20.php

NOT!

LSHMCOOMN!

Of all the crap that Don Phillips has put out there, this article was probably the worst (and given the fact that he was a Washington Post hack, that's saying alot!) This was commentary at best, with no references for comparison. It is fantasy, the way AAR wishes the real world was instead of facing the world as it really is.

Tell me oltmannd, where are his references? his statistics of comparison? None? Hmmm, not suprising at all.

He quotes one so-called "British Rail consultant" as saying things in Europe are a mess all due to OA, yet he reluctantly admits the varying governments' foot dragging has effectively delayed things. The entire (and disparate)European rail system was formerly government run railroads, with all the inherent inefficencies of government run railroading (aka: Amtrak). I guess you thing the Europeans should have sold the entire system to one of the US Class I's, since of course they are such great contributors to the societal welfare here in the US! Not!

God help the Iraqis if Hemphill and company turn that system into the closed access nightmare of captive shippers, bottleneck rate gouging, paper barriers to shortlines, et al! Then for sure they'd all want Saddam back!

If you had even bothered to read the "British Rail Operations" thread on this very forum, you would know that the predominance of passenger trains is the main reason freight cannot be transfered from road to rail. That is Europe's Achilles Heel when it comes to freight railroading, capacity is maxed with too many passenger trains. However, even with that inherent drawback, railroad freight marktet share in Britiain has increased 40% since OA was established (source: The "British Rail Operations" thread). Read the Italian OA thread I started, you will see yet another new business utilizing rail for intermodal movements, a business that would be on the roads right now if European railroads had remained nationalized or gone North American-style closed access.

The fact is this: Business opportunities are being explored and develped under OA in Europe, despite the fact that passenger services hog the mainlines, and it's something that would NEVER had happened under a closed access regime. Even you would have to admit to that.

Closed acces is an anachronism that should rightly go the way of the buggy whip.

Thanks for attacking Don Phillips and Mark Hemphill. That really helped your arguement...

So, the issue is HIGHWAY vs RAIL? The measure of success is how much traffic you divert from HIGHWAYS? I thought single rail line shippers were CAPTIVE and there was no such thing as HIGHWAY competition for them?

Truckload IM shipments around here are up 20% YOY. How'd that happen?

....and we all know how the European economy is booming....

Well, well, well. I like how you set that up: (1) Use an op-ed piece by Don Phillips which attacks the OA system in Europe (a system BTW that is still in its infancy and still being held up through France) without any facts to back up his allegations, then (2) use the logical ensuing critisism of said article by me as a way of trying to belittle the arguments set forth. "Why, you can't attack Don Phillips. How dare you. He is a GOD!" Well, your phony indignation don't fly here. Since Don Phillips and Mark Hemphill are basically mouth pieces for the current U.S. rail system, one cannot parse a critizism of the closed access rail system without occassionally mentioning by name the acknowledged proponents of the closed access system (especially when you brought one of them up). If you are offended by any critizism of Don or Mark, then you are a hopeless drone for their cause.

Regarding trucks vs rail, even you can comprehend the fact that certain commodities move best by rail, e.g. coal, grain, multiple containers, etc. Railroads own this traffic on surface corridors, it is impossible for trucks to provide any meaningful competition for these commodities, ergo to suggest that trucks are competition for unit grain trains or coal trains is asinine. So unless you are an idiot (and I will give you the benefit of the doubt that you are not), you know that any such shipper of grain, coal, et al who only has one Class I for rail access HAS NO OTHER TRANSPORTATION OPTION OTHER THAN RAIL to move those commodities. They are thus CAPTIVE SHIPPERS.

When you are talking about current truck traffic, it is a completely different scenario. Although truckers are not competitors for commodities that move best by rail, railroads ARE competitors for commodities that ostensibly move best by truck, at least in those corridors where the rails are in place. That is where the opportunity exists for railroads to draw traffic off the highways, either via TOFC/bi-modal or COFC/RailRunner. This is the big opportunity in Europe, and despite certain EU members intentionally stalling the full implementation of OA, there has been a significant shift of freight from European highways to the European railway system since OA was first implemented. No one, not Don Phillips, not Mark Hemphill, not Larry Kauffman, not even you, can deny the shift is due to OA, and that much more can and will happen when the reluctant nations are finally forced to grant OA rights to the myriad of freight companies.

And that more than anything is reason to give rightful critizism of those who disingenuously claim that OA "won't work". Representative democracy "didn't work" the first few decades it was tried, but we stuck with it and now we literaly rule the world. Representative democracy and open access are analogous. Give them a fair chance. They will work.

"Even you can understand" that calling people stupid adds little to a logical arguement.

You end nicely with an opinion that you are entitled to hold. However, I disagree.

That some things move best by a certain mode does not mean alternatives are not available.

You have not disuaded me of my opinion that if OA was better, it would be happening right here, right now. Mgt and stock holder love anything that make their stock and options increase in value. Are they ALL stupid, too?

[oltmannd]

Staggers was about more than just rates. You get ROE by a combination of margin (more is better) and assets (less is better). Staggers allowed Conrail, in particular, to become profitable by letting them shed a lot of assets that were unproductive. The reduction is size of Conrail pre and post Staggers, was, well, staggering!

Conrail's traffic growth was essentually flat over thier history, except for intermodal where the growth was substantial.

[MichaelSol]

A prima facie case that the change from utility-type regulation to deregulated status improved the financial results of railroading is difficult to track and I remain skeptical that Staggers truly did much for American railroading compared to the benefits of simply being in a rapidly growing economy over the past 25 years. The comparison is difficult because we have lost track of what comparable performance for these kinds of companies might look like today had deregulation not occured. I am surprised I haven't seen any econometric studies on this.

WWII economic performance of American railroads is suggestive that even in a regulated environment high traffic levels could produce enviable rates of return, not withstanding the excess profits tax that made rates of return somewhat problematic during WWII. However, despite heavy investment expenditures to avoid the excess profits tax, Milwaukee Road in 1943, for instance, earned a 13.1% Return on Equity, under regulated pricing, onerous collective bargaining agreements, thousands of miles of branchlines, and an onerous tax. That's better than todays average of the top four Class I railroads.

Utilities can provide some comparison, and it is interesting since, despite their own deregulation, it has been not nearly as complete nor as extensive as railroad deregulation.

ROEquity RAILROADS
1981 -- 6.0
1982 -- 10.5
1983 -- 5.4
1983 -- 7.3
1984 -- 9.9
1985 -- 6.8
1986 -- 2.1

ROE Electric Utilities
1980 -- 10.7
1981 -- 12.4
1982 -- 13.2
1983 -- 14.3
1984 -- 14.9
1985 -- 14.4
1985 -- 14.4
1986 N/A

Today [corporations > $10B market cap]
Class I Railroads 11.46%
Electric Utilities 16.6%

Prior to their deregulation in the 1980s, but reflecting the 1980s economic boom, regulated utilities performed better than deregulated railroads, and, 20 years later, continue to perform better than railroads in their incompletely deregulated state, but also interestingly show nearly the same relative increase in the rate of return as railroads which may well be simply the impact of the economy, rather than anything specific to do with deregulation. That is, a proof that the economy, not deregulation, is responsible for railroad financial return imrpovements.

However, for those that assert that it's a good thing that railroads are no longer treated as utilites, utilities consistently did better than railroads after deregulation of railroads.

Best regards, Michael Sol

[MichaelSol]

I think this thread is suggestive of how people look at things differently, depending on their predisposition.

Ed suggests that the poor operating results of Class I railroads in the first five years after deregulation were plausibly due to transition costs. Very plausible argument. Don Phillps interprets similar results in a transition to an Open Acess system exactly the opposite: that it represents a failure of the underlying concept.

That is what bothered me about the Phillips article. While extolling the virtues of a deregulated Restricted Access system, he failed to acknowledge that at a key point in the deregulation process, he could have written nearly the same article about the results of the Staggers Act and described it in nearly the same terms as he describes the Open Access system progress in Europe.

The fact that he could have easily done so undermines entirely the credibility of his critique of Open Access.

Best regards, Michael Sol

[Anonymous]

QUOTE: Originally posted by oltmannd

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by oltmannd

This just in! OA a smashing success in Europe!

http://www.iht.com/articles/2005/10/19/business/transcol20.php

NOT!

LSHMCOOMN!

Of all the crap that Don Phillips has put out there, this article was probably the worst (and given the fact that he was a Washington Post hack, that's saying alot!) This was commentary at best, with no references for comparison. It is fantasy, the way AAR wishes the real world was instead of facing the world as it really is.

Tell me oltmannd, where are his references? his statistics of comparison? None? Hmmm, not suprising at all.

He quotes one so-called "British Rail consultant" as saying things in Europe are a mess all due to OA, yet he reluctantly admits the varying governments' foot dragging has effectively delayed things. The entire (and disparate)European rail system was formerly government run railroads, with all the inherent inefficencies of government run railroading (aka: Amtrak). I guess you thing the Europeans should have sold the entire system to one of the US Class I's, since of course they are such great contributors to the societal welfare here in the US! Not!

God help the Iraqis if Hemphill and company turn that system into the closed access nightmare of captive shippers, bottleneck rate gouging, paper barriers to shortlines, et al! Then for sure they'd all want Saddam back!

If you had even bothered to read the "British Rail Operations" thread on this very forum, you would know that the predominance of passenger trains is the main reason freight cannot be transfered from road to rail. That is Europe's Achilles Heel when it comes to freight railroading, capacity is maxed with too many passenger trains. However, even with that inherent drawback, railroad freight marktet share in Britiain has increased 40% since OA was established (source: The "British Rail Operations" thread). Read the Italian OA thread I started, you will see yet another new business utilizing rail for intermodal movements, a business that would be on the roads right now if European railroads had remained nationalized or gone North American-style closed access.

The fact is this: Business opportunities are being explored and develped under OA in Europe, despite the fact that passenger services hog the mainlines, and it's something that would NEVER had happened under a closed access regime. Even you would have to admit to that.

Closed acces is an anachronism that should rightly go the way of the buggy whip.

Thanks for attacking Don Phillips and Mark Hemphill. That really helped your arguement...

So, the issue is HIGHWAY vs RAIL? The measure of success is how much traffic you divert from HIGHWAYS? I thought single rail line shippers were CAPTIVE and there was no such thing as HIGHWAY competition for them?

Truckload IM shipments around here are up 20% YOY. How'd that happen?

....and we all know how the European economy is booming....

Well, well, well. I like how you set that up: (1) Use an op-ed piece by Don Phillips which attacks the OA system in Europe (a system BTW that is still in its infancy and still being held up through France) without any facts to back up his allegations, then (2) use the logical ensuing critisism of said article by me as a way of trying to belittle the arguments set forth. "Why, you can't attack Don Phillips. How dare you. He is a GOD!" Well, your phony indignation don't fly here. Since Don Phillips and Mark Hemphill are basically mouth pieces for the current U.S. rail system, one cannot parse a critizism of the closed access rail system without occassionally mentioning by name the acknowledged proponents of the closed access system (especially when you brought one of them up). If you are offended by any critizism of Don or Mark, then you are a hopeless drone for their cause.

Regarding trucks vs rail, even you can comprehend the fact that certain commodities move best by rail, e.g. coal, grain, multiple containers, etc. Railroads own this traffic on surface corridors, it is impossible for trucks to provide any meaningful competition for these commodities, ergo to suggest that trucks are competition for unit grain trains or coal trains is asinine. So unless you are an idiot (and I will give you the benefit of the doubt that you are not), you know that any such shipper of grain, coal, et al who only has one Class I for rail access HAS NO OTHER TRANSPORTATION OPTION OTHER THAN RAIL to move those commodities. They are thus CAPTIVE SHIPPERS.

When you are talking about current truck traffic, it is a completely different scenario. Although truckers are not competitors for commodities that move best by rail, railroads ARE competitors for commodities that ostensibly move best by truck, at least in those corridors where the rails are in place. That is where the opportunity exists for railroads to draw traffic off the highways, either via TOFC/bi-modal or COFC/RailRunner. This is the big opportunity in Europe, and despite certain EU members intentionally stalling the full implementation of OA, there has been a significant shift of freight from European highways to the European railway system since OA was first implemented. No one, not Don Phillips, not Mark Hemphill, not Larry Kauffman, not even you, can deny the shift is due to OA, and that much more can and will happen when the reluctant nations are finally forced to grant OA rights to the myriad of freight companies.

And that more than anything is reason to give rightful critizism of those who disingenuously claim that OA "won't work". Representative democracy "didn't work" the first few decades it was tried, but we stuck with it and now we literaly rule the world. Representative democracy and open access are analogous. Give them a fair chance. They will work.

[MP173]

Ok, so productivity gains had nothing to due with Staggers, but it did have quite a bit to do with the increased margins.

Probably just as important (and I missed it) was the changes in accounting which made it much more profitable to be a railroad.

And that, I do believe was a Staggers benefit.

ed

[oltmannd]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by oltmannd

This just in! OA a smashing success in Europe!

http://www.iht.com/articles/2005/10/19/business/transcol20.php

NOT!

LSHMCOOMN!

Of all the crap that Don Phillips has put out there, this article was probably the worst (and given the fact that he was a Washington Post hack, that's saying alot!) This was commentary at best, with no references for comparison. It is fantasy, the way AAR wishes the real world was instead of facing the world as it really is.

Tell me oltmannd, where are his references? his statistics of comparison? None? Hmmm, not suprising at all.

He quotes one so-called "British Rail consultant" as saying things in Europe are a mess all due to OA, yet he reluctantly admits the varying governments' foot dragging has effectively delayed things. The entire (and disparate)European rail system was formerly government run railroads, with all the inherent inefficencies of government run railroading (aka: Amtrak). I guess you thing the Europeans should have sold the entire system to one of the US Class I's, since of course they are such great contributors to the societal welfare here in the US! Not!

God help the Iraqis if Hemphill and company turn that system into the closed access nightmare of captive shippers, bottleneck rate gouging, paper barriers to shortlines, et al! Then for sure they'd all want Saddam back!

If you had even bothered to read the "British Rail Operations" thread on this very forum, you would know that the predominance of passenger trains is the main reason freight cannot be transfered from road to rail. That is Europe's Achilles Heel when it comes to freight railroading, capacity is maxed with too many passenger trains. However, even with that inherent drawback, railroad freight marktet share in Britiain has increased 40% since OA was established (source: The "British Rail Operations" thread). Read the Italian OA thread I started, you will see yet another new business utilizing rail for intermodal movements, a business that would be on the roads right now if European railroads had remained nationalized or gone North American-style closed access.

The fact is this: Business opportunities are being explored and develped under OA in Europe, despite the fact that passenger services hog the mainlines, and it's something that would NEVER had happened under a closed access regime. Even you would have to admit to that.

Closed acces is an anachronism that should rightly go the way of the buggy whip.

Thanks for attacking Don Phillips and Mark Hemphill. That really helped your arguement...

So, the issue is HIGHWAY vs RAIL? The measure of success is how much traffic you divert from HIGHWAYS? I thought single rail line shippers were CAPTIVE and there was no such thing as HIGHWAY competition for them?

Truckload IM shipments around here are up 20% YOY. How'd that happen?

....and we all know how the European economy is booming....

[bobwilcox]

QUOTE: Originally posted by piouslion

In short: it seems that the railroads had to do some 1. housekeeping 2. some personell adjustments 3. some real estate adjustments and 4 some real hard work. The thing that is most impressive about the 80's though is that the railroads fianlly decided to start being a business and not a public utility. How close am I?

Very few railroaders coming up through Traffic Departments were able to make the transition from a public utility to a business enviroment. This was equally true of traffic managers at rail shippers. At a personal level these were very hard adjustments for most people to make. I can think of a few people that literally went crazy. The hudge reductions of middle managers in the 1980s with buyouts speeded the process. Currently there are virtually no managers in railroad's sales and marketing departments or in customer's physical distribution departments that were working before Staggers.

[MichaelSol]

QUOTE: Originally posted by MP173
3. Productivity gains took most of the 80's to realize as crew sizes reduced from four to two over the 10 year period.

I agree that this was the big one from an expense reduction standpoint, but what on earth did that have to do with Staggers? Staggers did not address collective bargaining agreements.

MILW was the pioneer in renegotiating these agreements and I have discussed those negotiations with most of the key executives involved. None of them mentioned Staggers as having anything to do with the crew reduction agreements.

Best regards, Michael Sol

[Anonymous]

In short: it seems that the railroads had to do some 1. housekeeping 2. some personell adjustments 3. some real estate adjustments and 4 some real hard work. The thing that is most impressive about the 80's though is that the railroads fianlly decided to start being a business and not a public utility. How close am I?

[MP173]

Michael:

Regarding your excellent statistical commentary about ROI and ROE immediately post Staggers...I would venture to say it took awhile for the effects to kick in:

1. Lots of weeding out of branch lines and secondary routes, including spin offs to regionals and short lines. That entire process (although I dont have the data to prove it) probably took most of the 90's to do.
2. Mergers really took off during the 80's which should have (again no statistics) been an improvement to returns. (CSX merger, UP, NS, etc.)
3. Productivity gains took most of the 80's to realize as crew sizes reduced from four to two over the 10 year period.
4. No doubt there were write offs in the early to mid 80's based on the sale or abandonments of assets, plus the buy outs from the productivity gains.

Those are the only ones I can think of now.

Am I a mouthpiece for AAR or the rails? Hardly. Their returns are far too low to attract my capital, other than CN, which has been held for over 10 years (thru IC).

The deregulation of any industry is very painful in the early years. I personally experienced it in LTL trucking...talk about a bloodbath of carriers that went by the wayside.

The rails are just now starting to get some pricing power, which as we have discussed on the other thread...is painful for some to realize.

I am still not convinced we are in an economic boom. The loss of manufacturing scares the crap out of me...and Dave most of those jobs left the country because of lower wages in the manufacturing process not because of captive freight charges as I have proven earlier.

Time to call it a night.

ed

[Anonymous]

QUOTE: Originally posted by oltmannd

This just in! OA a smashing success in Europe!

http://www.iht.com/articles/2005/10/19/business/transcol20.php

NOT!

LSHMCOOMN!

Of all the crap that Don Phillips has put out there, this article was probably the worst (and given the fact that he was a Washington Post hack, that's saying alot!) This was commentary at best, with no references for comparison. It is fantasy, the way AAR wishes the real world was instead of facing the world as it really is.

Tell me oltmannd, where are his references? his statistics of comparison? None? Hmmm, not suprising at all.

He quotes one so-called "British Rail consultant" as saying things in Europe are a mess all due to OA, yet he reluctantly admits the varying governments' foot dragging has effectively delayed things. The entire (and disparate)European rail system was formerly government run railroads, with all the inherent inefficencies of government run railroading (aka: Amtrak). I guess you thing the Europeans should have sold the entire system to one of the US Class I's, since of course they are such great contributors to the societal welfare here in the US! Not!

God help the Iraqis if Hemphill and company turn that system into the closed access nightmare of captive shippers, bottleneck rate gouging, paper barriers to shortlines, et al! Then for sure they'd all want Saddam back!

If you had even bothered to read the "British Rail Operations" thread on this very forum, you would know that the predominance of passenger trains is the main reason freight cannot be transfered from road to rail. That is Europe's Achilles Heel when it comes to freight railroading, capacity is maxed with too many passenger trains. However, even with that inherent drawback, railroad freight marktet share in Britiain has increased 40% since OA was established (source: The "British Rail Operations" thread). Read the Italian OA thread I started, you will see yet another new business utilizing rail for intermodal movements, a business that would be on the roads right now if European railroads had remained nationalized or gone North American-style closed access.

The fact is this: Business opportunities are being explored and develped under OA in Europe, despite the fact that passenger services hog the mainlines, and it's something that would NEVER had happened under a closed access regime. Even you would have to admit to that.

Closed acces is an anachronism that should rightly go the way of the buggy whip.

[Anonymous]

QUOTE: Originally posted by oltmannd

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by oltmannd

No, again. You don't understand capital markets very well. It's not my area of expertise, but I'll try to explain anyway.

Any RR, right now, could operate as a "toll road" for all comers. All it would take is mgt will to make it happen. If it's such a great idea, capital mkts would fund the purchase of the RR to install mgt to make it happen. Stock would go for a premium and no board would refuse to sell under those conditions.

Hmmm, I don't understand capital markets? My econ degree says differently.

What you don't yet understand, though I've explained it to you twice, is that capital markets will not jump into an enterprise for which there is no legal parameters yet set up. OA can take on any number of forms, varying degrees of regulation, FRA and STB requirements, etc. As of yet, there is no such groundwork in place to define what OA in the USA would even look like. Even if one of the railroads decided to try out the OA concept, what guidance regarding government oversight would be needed? What you are suggesting is something better left to the venture capitalists, and even they would have to wait for a set of parameters before they would jump in.

The markets hate uncertainty, you should know that.

Marketers and train operators would fall under existing STB regs. ROW owners wouldn't need any more regulation than the owner of an office building. I don't see any real uncertainty or need for regulation. The REAL issue here is that OA would convert the RRs into the highly unprofitable airline service model. Isn't that obvious?

The "highly unprofitable airline service model" to which you refer is predicated on the hauling of passengers, and those airlines that are struggling the most are the ones with the worst pricing/service structures. Isn't that obvious?

[MichaelSol]

Inadvertently, Phillips misses the salient point underlying railroading in their respective contexts, that is, the overall performance of the economic systems of which railroads are, and always have been, a bellwether. Railroads usually do better when the economies they operate in do better, and worse when they don't.

But, that's not always even true. There's been one salient exception: US Railroads after deregulation.

Despite the credit given to the Stagggers Act, for those with a slightly longer memory, I still recall the "failure" of the Staggers Act .

At the end of five years of deregulation, even during an economic boom, economists and railroaders alike were looking at the following statistics with some dismay:

ROI/Railroads
1980 4.2%
1981 4.0%
1983 2.1%
1984 3.6%
1984 4.7%
1985 3.6%
1986 3.5%

Similarly, the Return on Equity
1980 6.0%
1981 10.5%
1982 5.4%
1983 7.3%
1984 9.9%
1985 6.8%
1986 2.1%

Twenty years later, the statistics finally look much better, but is that realistically the result of the Staggers Act? Railroads still underperform other US corporations by about the same amount that they did in 1978. So did railroads realistically improve ... or did the economy?

Is Phillips as surprised as he implies that European railroads are doing poorly in the matrix of national economies that are barely growing? He seems to be totally unaware of the general, and much discussed, economic malaise currently afflicting Europe.

Yet, our US rates of growth in the 1950s and 1960s were small ... and our railroads performing poorly.

Was that regulation? Or the economics of railroading reflecting the national economy?

Today US railroads are booming. Is that deregulation? Or the economics of railroading reflecting the national economy?

The figures from the 1980s are a statistical suggestion that deregulation was not a significant factor in railroad performance, since in fact there was no improvement under deregulation, but rather a decline in overall economic performance and health after deregulation.

The US economy had begun to improve solidly 1982-1987. The railroads oddly enough did not reflect that improvement during that time. Historically, that is unusual.

Best regards, Michael Sol

[CSSHEGEWISCH]

Don Phillips has an excellent way of presenting the facts as they are, whether we like it or not. In addition, OA isn't working as well in Australia as some people would like to believe.

[edblysard]

There ya go again, screwing up a perfectly good fantasy with facts
Ed[:D]

[oltmannd]

This just in! OA a smashing success in Europe!

http://www.iht.com/articles/2005/10/19/business/transcol20.php

NOT!

[oltmannd]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by oltmannd

No, again. You don't understand capital markets very well. It's not my area of expertise, but I'll try to explain anyway.

Any RR, right now, could operate as a "toll road" for all comers. All it would take is mgt will to make it happen. If it's such a great idea, capital mkts would fund the purchase of the RR to install mgt to make it happen. Stock would go for a premium and no board would refuse to sell under those conditions.

Hmmm, I don't understand capital markets? My econ degree says differently.

What you don't yet understand, though I've explained it to you twice, is that capital markets will not jump into an enterprise for which there is no legal parameters yet set up. OA can take on any number of forms, varying degrees of regulation, FRA and STB requirements, etc. As of yet, there is no such groundwork in place to define what OA in the USA would even look like. Even if one of the railroads decided to try out the OA concept, what guidance regarding government oversight would be needed? What you are suggesting is something better left to the venture capitalists, and even they would have to wait for a set of parameters before they would jump in.

The markets hate uncertainty, you should know that.

Marketers and train operators would fall under existing STB regs. ROW owners wouldn't need any more regulation than the owner of an office building. I don't see any real uncertainty or need for regulation. The REAL issue here is that OA would convert the RRs into the highly unprofitable airline service model. Isn't that obvious?

[MichaelSol]

QUOTE: Originally posted by bobwilcox
The last time I was in China(2003) they were using differental pricing. The first time I was in China(1985) they had no concept of pricing as a way to control demand. It appears sometime during this 18 year gap they thought about differental pricing and decided they liked what the could acheive.

.... well, let us know when they discover the difference between elastic and inelastic demand.

Best regards, Michael Sol

[bobwilcox]

QUOTE: Originally posted by futuremodal
...networks do not experience anything close to differential pricing...

The last time I was in China(2003) they were using differental pricing. The first time I was in China(1985) they had no concept of pricing as a way to control demand. It appears sometime during this 18 year gap they thought about differental pricing and decided they liked what the could acheive.

[Anonymous]

FM: Business is dynamic and is ever changing. Open Access is not the real question. The real question is closer to one of control, ownership, and future profitability which are a dynamic part of the nations private economy. Governments in business tend to be somewhat static. Those states are not really compatable when interfering with each other.MY [2c] for what it's worth. PL

[Anonymous]

QUOTE: Originally posted by oltmannd

No, again. You don't understand capital markets very well. It's not my area of expertise, but I'll try to explain anyway.

Any RR, right now, could operate as a "toll road" for all comers. All it would take is mgt will to make it happen. If it's such a great idea, capital mkts would fund the purchase of the RR to install mgt to make it happen. Stock would go for a premium and no board would refuse to sell under those conditions.

Hmmm, I don't understand capital markets? My econ degree says differently.

What you don't yet understand, though I've explained it to you twice, is that capital markets will not jump into an enterprise for which there is no legal parameters yet set up. OA can take on any number of forms, varying degrees of regulation, FRA and STB requirements, etc. As of yet, there is no such groundwork in place to define what OA in the USA would even look like. Even if one of the railroads decided to try out the OA concept, what guidance regarding government oversight would be needed? What you are suggesting is something better left to the venture capitalists, and even they would have to wait for a set of parameters before they would jump in.

The markets hate uncertainty, you should know that.

QUOTE:

Did you read Don Phillips column in Dec Trains? The top three frt RR countries are US, Russia and China. None of these have open access. What does that say to you?

That's not entirely true, in that the Russian and Chinese networks are nothing like the North American rail networks. They are either government owned or formerly government owned, and as such the shippers on those networks do not experience anything close to differential pricing, bottleneck rate gouging, paper barriers to shortlines, et al. OA is about shippers having access to competitive rates, whereas government run railroads give shippers access to subsidized rates. If the other railroads of the world aren't OA, then they are nationalized, or at least engender some characteristic thereof. One thing is for sure: They ain't proprietary, closed access oligarchies like we have here in North America (although the Russian lines could certainly be headed that way, given the whole Yukos thing.)

[MichaelSol]

QUOTE: Originally posted by oltmannd
[Did you read Don Phillips column in Dec Trains? The top three frt RR countries are US, Russia and China. None of these have open access. What does that say to you?

Two of these represent Capitalism, and what "markets" would invest in?

Whew!

Best regards, Michael Sol

[oltmannd]

No, again. You don't understand capital markets very well. It's not my area of expertise, but I'll try to explain anyway.

Any RR, right now, could operate as a "toll road" for all comers. All it would take is mgt will to make it happen. If it's such a great idea, capital mkts would fund the purchase of the RR to install mgt to make it happen. Stock would go for a premium and no board would refuse to sell under those conditions.

Did you read Don Phillips column in Dec Trains? The top three frt RR countries are US, Russia and China. None of these have open access. What does that say to you?

[Anonymous]

QUOTE: Originally posted by oltmannd

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by oltmannd

Dave-

Are you just ignoring the idea that if OA was a win-win, the capital markets would fund it? Or, is this just an inconvenient fact?

I've put this out there twice, now.

Don,

Is the closed access system getting the funding from the capital markets? $35 billion from the public sector says no. OA also represents significant change, and that doesn't happen outside federal directive, aka energy market deregulation, et al.

Sometimes the federales need to give a "nudge" to make the right thing happen.

No, no, no. You're mixing apples and oranges. The $35B public sector money you say is out there now would not go away if capital markets funded OA. RRs are able to raise money from the capital markets. Big 4 US roads all have bond ratings above junk. Recent stock price says that market believes RR have future. If future is brighter with OA, they would fund it.

Well, if you want the apples and oranges comparison, try this out for size: Do you agree there is a big difference between capital expenditures for rolling stock or the occassional siding, and building whole new segments of ROW from scratch? When you say "if capital markets funded OA" you must be refering to building whole new rail lines from scratch. If you're talking about the current rail network being split up into infrastructure and transporting, that is simply a restructuring, not a capital expenditure, so the capital markets would not necessarily be accessed soley for a shift to OA. The potential increase in private funding for railroads under OA would come from the new entrants and innovators, both of which are effectively barred under closed access.

You are aware of the introduction of OA into the electricity and telecommunications markets. What in your opinion have the capital markets said about those versions of OA? Hasn't investment in telecommunications and energy increased substantially since those sectors were opened up? You are also aware that OA has been adopted by most other rail systems in the world. Have you noticed the increase in private sector investment in those rail systems?

It should also be noted that OA may well be banned under current STB and FRA rules, neither of which has a rule making template for potential OA operations in the US. Why would the capital markets fund something that is not even allowed right now?

[oltmannd]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by oltmannd

Dave-

Are you just ignoring the idea that if OA was a win-win, the capital markets would fund it? Or, is this just an inconvenient fact?

I've put this out there twice, now.

Don,

Is the closed access system getting the funding from the capital markets? $35 billion from the public sector says no. OA also represents significant change, and that doesn't happen outside federal directive, aka energy market deregulation, et al.

Sometimes the federales need to give a "nudge" to make the right thing happen.

No, no, no. You're mixing apples and oranges. The $35B public sector money you say is out there now would not go away if capital markets funded OA. RRs are able to raise money from the capital markets. Big 4 US roads all have bond ratings above junk. Recent stock price says that market believes RR have future. If future is brighter with OA, they would fund it.

[edblysard]

Guys, guys...
Come on now...
The level and quality of the insults is sinking...we expect better use of the English language here...
Certainly two well read gentlemen such as your selves can come up with much more appropriate and verbose taunts beyond the schoolboy play ground swill here.

LC, I remember something sent to me by a feline fanatic...

"Never argue with an idiot...
They drag you down to their level, then beat you to death with experience..."


Ed[:D]

[Anonymous]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by gabe

QUOTE: Originally posted by futuremodal

Still can't address the topic issue can you? You can only start a flame war, then get defensive when you get burned by it.

As a topic debater, you are impotent.

And I seriously doubt that you voted at all, let alone for Bush. The tone and content of your posts are more indicitive of a King County dumpster-diving captive pawn of the left.

Who is the flamer?

I can see your legal training has kicked in. Aren't lawyers taught to only see (and subsequently defend/prosecute) one side of the arguement? Reread the thread and then tell me when the flaming started, and by whom.

Funny, I don't need to use my legal training to figure out who's rotten around here FM. My nose can sniff you out like the skunk you are...LOL...

LC

[Anonymous]

QUOTE: Originally posted by futuremodal

LC is like cable TV : 57 channels and nothin's on......

Hmmm. Well FM, unlike you, at least I have more than one channel and one show. And from where I sit, there's more going on than you'll ever even comprehend from that pea brain of yours...

LC

[Murphy Siding]

OK Perhaps popcorn would be more appropriate?[xx(]

[Anonymous]

LC is like cable TV : 57 channels and nothin's on......

[Anonymous]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by Limitedclear

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by gabe

QUOTE: Originally posted by Limitedclear

QUOTE: Originally posted by gabe

QUOTE: Originally posted by futuremodal

Still can't address the topic issue can you? You can only start a flame war, then get defensive when you get burned by it.

As a topic debater, you are impotent.

And I seriously doubt that you voted at all, let alone for Bush. The tone and content of your posts are more indicitive of a King County dumpster-diving captive pawn of the left.

Who is the flamer?

Gabe -

FM is still the original self fulfilling prophecy on this site...lol...

LC

Some things don't change with time

Gabe, just for posterity's sake, also reread LC's various cheap shots over the years before you hitch your moral wagon to him.

Gabe is smart enough to see you are sinking in a morass of your own design and making FM. You have smoked your own for so long you really believe your own lies...

LC

The jury's still out on Gabe. Can't say the same for you. You are a lifer of a loser, you add nothing but scorn to this forum. The only difference between you and BTK is BTK got caught.

No, the difference between me and BTK is that I'm not a low life two bit hood who kills for his own twisted entertainment. Hmmmm. Speaking of twisted, I'm talking to you again FM, what a coincidence. I'd tell you to go and untangle yourself, but that would be pointless. Like a hopelessly tangled longline we should just cut you loose and let you float in the gulfstream....

Your worthless self aggrandizing prattle does nothing but take up space here...

LC

[Murphy Siding]

Dave: Maybe it's time you took a break from forums? Take a walk. Go to the library. Go sit by the railroad tracks. Life's too short to keep your blood pressure at an elevated level.

[Anonymous]

QUOTE: Originally posted by Limitedclear

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by gabe

QUOTE: Originally posted by Limitedclear

QUOTE: Originally posted by gabe

QUOTE: Originally posted by futuremodal

Still can't address the topic issue can you? You can only start a flame war, then get defensive when you get burned by it.

As a topic debater, you are impotent.

And I seriously doubt that you voted at all, let alone for Bush. The tone and content of your posts are more indicitive of a King County dumpster-diving captive pawn of the left.

Who is the flamer?

Gabe -

FM is still the original self fulfilling prophecy on this site...lol...

LC

Some things don't change with time

Gabe, just for posterity's sake, also reread LC's various cheap shots over the years before you hitch your moral wagon to him.

Gabe is smart enough to see you are sinking in a morass of your own design and making FM. You have smoked your own for so long you really believe your own lies...

LC

The jury's still out on Gabe. Can't say the same for you. You are a lifer of a loser, you add nothing but scorn to this forum. The only difference between you and BTK is BTK got caught.

[Anonymous]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by gabe

QUOTE: Originally posted by Limitedclear

QUOTE: Originally posted by gabe

QUOTE: Originally posted by futuremodal

Still can't address the topic issue can you? You can only start a flame war, then get defensive when you get burned by it.

As a topic debater, you are impotent.

And I seriously doubt that you voted at all, let alone for Bush. The tone and content of your posts are more indicitive of a King County dumpster-diving captive pawn of the left.

Who is the flamer?

Gabe -

FM is still the original self fulfilling prophecy on this site...lol...

LC

Some things don't change with time

Gabe, just for posterity's sake, also reread LC's various cheap shots over the years before you hitch your moral wagon to him.

Gabe is smart enough to see you are sinking in a morass of your own design and making FM. You have smoked your own for so long you really believe your own lies...

LC

[Anonymous]

QUOTE: Originally posted by CSSHEGEWISCH

It's interesting to note that FM is probably one of the world's worst salesmen. He has been proselytizing his economic beliefs on several threads for some time now but he doesn't appear to have won any converts. In fact, he appears to have antagonized more people along the way, myself included.
Based on what I have seen from these forums, he has some of the virtues and most of the vices of someone who believes that he has found the one truth that will reform the world.

Pedantic post, very pedantic. I'm curious as to why you think I am trying to sell something. All I've been doing lately is taking news items regarding railroading and bringing them to the attention of the forum. Whether the mass of closed minds you've joined yourself to takes these subjects to heart or not is irrelevent to me. All I enjoy is good debate on the subjects, and it's unfortunate that many on this forum seem to always choose the route of the insult rather than staying on topic. Luckily for the world, the fate of the globe does not depend on the opinions of the various forum members.

However, even you would have to agree that most of those with whom you sympathize have brought little else except insults to the discussion. If that is what you percieve as befitting of your side, then you have little substance with which to put out a post of such crocodile indignation. Or perhaps you think one-sided flame throwing is justified?

[Anonymous]

QUOTE: Originally posted by gabe

QUOTE: Originally posted by Limitedclear

QUOTE: Originally posted by gabe

QUOTE: Originally posted by futuremodal

Still can't address the topic issue can you? You can only start a flame war, then get defensive when you get burned by it.

As a topic debater, you are impotent.

And I seriously doubt that you voted at all, let alone for Bush. The tone and content of your posts are more indicitive of a King County dumpster-diving captive pawn of the left.

Who is the flamer?

Gabe -

FM is still the original self fulfilling prophecy on this site...lol...

LC

Some things don't change with time

Gabe, just for posterity's sake, also reread LC's various cheap shots over the years before you hitch your moral wagon to him.

[Anonymous]

QUOTE: Originally posted by gabe

QUOTE: Originally posted by futuremodal

Still can't address the topic issue can you? You can only start a flame war, then get defensive when you get burned by it.

As a topic debater, you are impotent.

And I seriously doubt that you voted at all, let alone for Bush. The tone and content of your posts are more indicitive of a King County dumpster-diving captive pawn of the left.

Who is the flamer?

I can see your legal training has kicked in. Aren't lawyers taught to only see (and subsequently defend/prosecute) one side of the arguement? Reread the thread and then tell me when the flaming started, and by whom.

[Anonymous]

QUOTE: Originally posted by oltmannd

Dave-

Are you just ignoring the idea that if OA was a win-win, the capital markets would fund it? Or, is this just an inconvenient fact?

I've put this out there twice, now.

Don,

Is the closed access system getting the funding from the capital markets? $35 billion from the public sector says no. OA also represents significant change, and that doesn't happen outside federal directive, aka energy market deregulation, et al.

Sometimes the federales need to give a "nudge" to make the right thing happen.

[edblysard]

Still got it wrong...

We are not the Fraternal Order of Ilk...

We are The Society for Ilk Conservation...SIC.

As for Mr. Thompson....Well, I have met him, and his predecessor...
I doubt the article was penned by him, he isn’t articulate enough to put that many sentences together in any order a person could understand, one of his hacks wrote it, I am certain.
The nicest thing to be said about Mr. Thompson is he would make a bad used car salesman.
The nicest thing to be said about his predecessor is....well, darn it, I was sure there was something....

Ed

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by edblysard

Oh my God,
You’re quoting Paul Thompson, President of the UTU, as an unbiased, reliable source of information?

Ha ha ha...I am a UTU dues payer, and I don’t believe a word he says!
Talk about using propaganda as a source reference ....

Ha ha ha haaaa....

Yet another valuable contribution from the Fraternal Order of the Ilks.

BTW, Mr. Thompson may have penned the article, but the sources he cites in the article are independent of UTU. The STB, UPS, Traffic World? Yeah, those are credible sources.

$35 billion in taxpayer money going to prop up U.S. railroad monopolists and Chinese manufacturing! I doubt any of that came in the form of user fees!

[PNWRMNM]

MP 173

For $50 you can purchase the STB's cost model for a PC. I have it, but the name escapes me. If you want the name let me know on list and I will give it to you.

It was fun to play with for 15 minutes or so.

Mac

[bobwilcox]

There are thousands of cars of rail traffic moving from origins served by more than one railroad at rev/lrvc ratios over 1.80. However, with the loss of excess capcity the old marginal pricing assumptions are losing relavance in the market place. Once again the regulatory scheme can not keep pace with changing market conditions.

[MP173]

I read the North Dakota site and found it interesting.

Having been involved in transportation pricing/costing in a previous career (LTL trucking) I always found the process of pricing and marketing very intriguing. It often came down to this...you may know what it costs to move freight, but the competitive nature of the business plus any value added will determine the price.

Dave or Michael, do you have any source I might find for outlining the determination of fixed and variable costing. Having been in the proceedure, I seriously doubt if any of the railroads would openly share their costing methodology. That proceedure usually is based on highly confidential information based on operations and costs, which generally are not public.

So, it would be interesting to see what the STB, or other authorities have determined to be the framework for such analysis.

To use vague information off of annual reports cannot be too accurate. However, that might be all that is available so I do understand that.

I still get back to the fact that without a navigatable river or other forms of transportation, the end rates will be higher....competition has a way of leveling prices, often to the detriment of the carrier. There will be tendancies of corporations and individuals to always maximize their returns, regardless of whether it is BNSF or a wheat farmer.

If I were a wheat farmer I would seriously be looking for alternatives, either in transporation or in career...something that would maximize my return.

Any word yet on that data regarding freight pricing, bushels per car, yields, revenues and values of property?

ed

[oltmannd]

QUOTE: Originally posted by PNWRMNM

Don,

Surely you don't believe that the American Capital Market is effecient do you? If so, you are running with the ilk!!

Mac

Oops! Forgot to disengage brain before posting....

[CSSHEGEWISCH]

It's interesting to note that FM is probably one of the world's worst salesmen. He has been proselytizing his economic beliefs on several threads for some time now but he doesn't appear to have won any converts. In fact, he appears to have antagonized more people along the way, myself included.
Based on what I have seen from these forums, he has some of the virtues and most of the vices of someone who believes that he has found the one truth that will reform the world.

[gabe]

QUOTE: Originally posted by Limitedclear

QUOTE: Originally posted by gabe

QUOTE: Originally posted by futuremodal

Still can't address the topic issue can you? You can only start a flame war, then get defensive when you get burned by it.

As a topic debater, you are impotent.

And I seriously doubt that you voted at all, let alone for Bush. The tone and content of your posts are more indicitive of a King County dumpster-diving captive pawn of the left.

Who is the flamer?

Gabe -

FM is still the original self fulfilling prophecy on this site...lol...

LC

Some things don't change with time

[Anonymous]

QUOTE: Originally posted by gabe

QUOTE: Originally posted by futuremodal

Still can't address the topic issue can you? You can only start a flame war, then get defensive when you get burned by it.

As a topic debater, you are impotent.

And I seriously doubt that you voted at all, let alone for Bush. The tone and content of your posts are more indicitive of a King County dumpster-diving captive pawn of the left.

Who is the flamer?

Gabe -

FM is still the original self fulfilling prophecy on this site...lol...

LC

[gabe]

QUOTE: Originally posted by futuremodal

Still can't address the topic issue can you? You can only start a flame war, then get defensive when you get burned by it.

As a topic debater, you are impotent.

And I seriously doubt that you voted at all, let alone for Bush. The tone and content of your posts are more indicitive of a King County dumpster-diving captive pawn of the left.

Who is the flamer?

[PNWRMNM]

Don,

Surely you don't believe that the American Capital Market is effecient do you? If so, you are running with the ilk!!

Mac

[oltmannd]

Dave-

Are you just ignoring the idea that if OA was a win-win, the capital markets would fund it? Or, is this just an inconvenient fact?

I've put this out there twice, now.

[bobwilcox]

Where is the burden to prove market and product competition? I thought that got put back onto the railroads in the FMC case.

[Anonymous]

QUOTE: Originally posted by edblysard

Oh my God,
You’re quoting Paul Thompson, President of the UTU, as an unbiased, reliable source of information?

Ha ha ha...I am a UTU dues payer, and I don’t believe a word he says!
Talk about using propaganda as a source reference ....

Ha ha ha haaaa....

Yet another valuable contribution from the Fraternal Order of the Ilks.

BTW, Mr. Thompson may have penned the article, but the sources he cites in the article are independent of UTU. The STB, UPS, Traffic World? Yeah, those are credible sources.

$35 billion in taxpayer money going to prop up U.S. railroad monopolists and Chinese manufacturing! I doubt any of that came in the form of user fees!

[edblysard]

Oh my God,
You’re quoting Paul Thompson, President of the UTU, as an unbiased, reliable source of information?

Ha ha ha...I am a UTU dues payer, and I don’t believe a word he says!
Talk about using propaganda as a source reference ....

Ha ha ha haaaa....

[MichaelSol]

Just a reminder that captive shippers are only part of a larger picture of disturbing trends in the rail industry.

PUBLIC NOT TO BE ***ED . . . . . . .
By Paul C. Thompson
UTU International President
....
Although railroads are reporting their highest profits in two generations, ... railroad CEOs are said to be reducing rail capacity rather than growing it.

Indeed, the more things change, the more they stay the same. Sadly, the status quo in the railroad industry is a scornful echo of 19th century railroad robber baron William Vanderbilt: "The public be ***ed."

Consider that U.S. Surface Transportation Board Chairman Roger Nober observed, "For railroad CEOs in the past, the principle question was how to get more business on their systems. Now the question is how to get the most valuable business on the railroad ..."

This is in spite of Congress providing railroads access to $35 billion in low-interest loans and loan guarantees to expand capacity, which is in the public interest.

Only a monopolist is capable of reducing capacity and increasing price and profit. The purpose of railroad regulation is to prevent railroads from ***ing the public in that manner.

Moreover, railroad safety and railroad service have been heading south faster than snowbirds in January.

The FRA reports train collisions up more than 5 percent since January, and fatalities up almost 2 percent.

"The rail industry's safety image has not been nearly as sparkling as its strong financial performance in the last two years," reports Traffic World magazine. "Several Union Pacific Railroad accidents .... prompted the FRA to place special oversight on the railroad."

United Parcel Service, one of the rail industry's biggest customers -- spending $750 million annually to ship via rail -- aimed a double-barrel shotgun at the railroads' service image and pulled the trigger, saying:

"Regrettably, the railroads have resisted making adequate capital investments, technological enhancements and innovative solutions in responding to new market conditions."

A UPS official told the U.S. Surface Transportation Board in October: "I'd ask you to consider what other mode of transportation in the United States moves slower than it did 30 years ago? Given today's emphasis on streamlined supply chains and speed to market, the railroad time in transit picture puts at risk our worldwide economic competitiveness."

Best regards, Michael Sol

[MichaelSol]

The Staggers Act and subsequent modifications and amendments set 180% of variable costs as the threshold below which rates were presumed to be fair, and above which the burden fell on the railroad to prove that the rate was justified by increased ancillary or fixed costs. "153 percent has been estimated to be the average break-even point .... a large amount of rail traffic moves at rates considerably below 153%." Railroad Reregulation is the C.U.R.E. Worse Than the Disease? CATO Institute, January 20, 1988, p. 10.

That is, by law, the 180% R/VC is the threshold at which the STB obtains jurisdiction to review "rate reasonableness" for those categories of freight still regulated by law. And that is part and parcel of the discussion: these rates are specifically regulated and it is illegal to charge an unreasonable or confiscatory rate. The problem is that the burden of bringing the complaint is on the shipper, and the cost of bringing and prosecuting the complaint is estimated to cost between $3 million and $5 million even under the "small shipper" provisions of the complaint procedure. McCarty Farms cost around $17 million. Of course, if there is no profit left after paying high shipping costs, where does the money come from to pursue a complaint? Which private lawyer out there has the resources of the BNSF Legal Department? Or to risk between $3 million and $20 million? Which farmer has that kind of money to invest in litigation? In the meantime, BNSF earns an estimated $80 million per year in profits in excess of 180% R/VC out of Montana shippers alone. Not only can the railroad afford to litigate into eternity, they have every financial incentive to fight complaints tooth and nail, which they do. Indeed, the fat profits made off the farmers funds the very litigation against those farmers.

As the result of so much rail traffic moving at below fully compensatory rates -- think "subsidizing imports from China" -- captive shippers are targeted to make up the difference and to provide the profit for the railroads. In this fashion, the railroads tax the wheat farmer to his economic limit, and beyond, so that the railroad can turn around and offer a great rate to and assist a manufacturer in China to put a factory worker in Illinois out of a job.

Agriculture shippers have been routinely taxed at R/VC rates of 260% to 290% [Montana and ND wheat shippers], and the rates charged to some have exceeded 300% of the variable cost of the service. William Hawks, Under Secretary of Agriculture, October 19, 2005, STB Ex Parte No. 658., p. 11.

Best regards, Michael Sol

[Anonymous]

QUOTE: Originally posted by MP173

180% above variable costs seems a bit ... thin to me. How was that number derived?

Railroading is a very capital extensive industry, with lots of fixed costs to absorb.

ed

According to this link (scroll down to the "UGPTI" heading)...

http://www.ndgda.org/Articles/42602dorganholdssenatehearing.htm

.....at 160% of variable costs, "the railroad is said to be covering its fixed and variable costs plus a reasonable profit" (Gene Griffin, Director of the Upper Great Plains Transportation Institute at NDSU in Fargo, North Dakota). So logically, at 180% of variable costs, railroads are more than covering their fixed costs as well. My understanding is that the 180% figure wherein a shipper can theoretically challenge the captive rate is derived by the STB.

If you read further through the link, there are some interesting revenue to variable costs ratios to consider:

1.85 for single cars
2.44 for 26-car units
2.71 for 52-car units
3.07 for 55-car units
3.11 for 110-car units

This is for North Dakota to the PNW, and I am not sure of the date of this testimoney, but I think it is around 2001.

[MP173]

180% above variable costs seems a bit ... thin to me. How was that number derived?

Railroading is a very capital extensive industry, with lots of fixed costs to absorb.

ed

[Anonymous]

QUOTE: Originally posted by jeaton

CURE defined any rate at or exceeding 180% of variable cost as being a captive rate and compared the average of those rates to rates below 180% which they defined as competitive rates.

Granted, 180% is an arbitrary dividing line, but you have to start somewhere for analysis, so 180% it is. Frankly, I would think CURE would use any rates just above the revenue adaquacy standard. Average revenue above 160% of variable cost could also be defined as captive rates. I personally think CURE is being generous to the railroad industry with the 180% standard as the definition of captive rate.

QUOTE:

As you have studied this closely, you will know that a rate applicable to a captive shipper that exceeds 180% of variable cost is not lawful.

That's not exactly true. Any rate to a captive shipper that exceeds 180% can be challenged by the shipper, but it is not illegal in the sense that the railroad will be charged with a crime. Although I think you're on to something, because it would be alot easier for captive shippers to get rate remittence if such was a crime than it is to go to the expense and trouble of filing a rate challenge. As things are currently, the costs of filing a challenge can exceed the rate being charged, with little likelyhood that the STB will do what it is supposed to do under the perpetually ignored Staggers caveats regarding competition.

QUOTE:
However, a rate at or over 180% of variable cost for a shipper with competitive options, i.e., service provided by two or more carriers is not unlawful. Further, CURE assumes that no captive shipper has any rate that falls below the 180% mark. Obviously, the exclusion of any such rates in the calculation skew the average "captive" rate higher.

As I mentioned above, if there is any skewing, it is to the benefit of the railroad. CURE is actually being very conservative in it's definition of captive rates. And if you can find a captive rate that is below the 160% mark, let alone the 180% mark, I would really like to see it.

QUOTE:

Also, as you know, rates tend be a function of distance. If by chance the universe of rates exceeding the 180% threshold happen to be for longer than average hauls, there is a further bias in the comparitive results presented.

In the Northern Tier grain transportation business, the old adage of rates being a function of distance doesn't hold. If you remember from the "Montana Farmers Fight Back" thread, Montana grains shippers are paying more than both the longer hauls out of Eastern North Dakota and the shorter hauls out of Eastern Washington.

QUOTE:

Frankly, I would prefer to see a less costly method for an administrative procedure for adjudicating the issue of captive rates. It would pull the whole issue out of "he said,he said" babble and resolve individual cases on the facts. Talk is cheap, the walk is going to cost some time and effort.

There are two ways to do this: Rate reregulation, or head to head rail competition for every rail shipper. Choose your poison.

QUOTE:

And by the way, the next time you call people who disagree with your view as a bunch of anti-American, cool-aid drinking, dumpster diving stupids, I might ask if the owners of this forum if they consider that kind of rant conducive to thoughtful exchange of ideas and opinions.

Whereas being called an ***, liar, ect. is okay? I never start the flame wars, but I do tend to respond in kind. If the owners of this forum want to take action, let them start with those who originate such tactics. I am perfectly fine with that. I would prefer that those who disagree with my opinions to respond with their own salient arguements, but of course they never do, as anyone who peruses these forums can attest.

[jeaton]

In this forum, I really don't have to do squat to back up taking CURE, the NIT League, the AAR or the STB to task for anything. But since you asked, CURE defined any rate at or exceeding 180% of variable cost as being a captive rate and compared the average of those rates to rates below 180% which they defined as competitive rates.

As you have studied this closely, you will know that a rate applicable to a captive shipper that exceeds 180% of variable cost is not lawful. However, a rate at or over 180% of variable cost for a shipper with competitive options, i.e., service provided by two or more carriers is not unlawful. Further, CURE assumes that no captive shipper has any rate that falls below the 180% mark. Obviously, the exclusion of any such rates in the calculation skew the average "captive" rate higher.

Also, as you know, rates tend be a function of distance. If by chance the universe of rates exceeding the 180% threshold happen to be for longer than average hauls, there is a further bias in the comparitive results presented.

Frankly, I would prefer to see a less costly method for an administrative procedure for adjudicating the issue of captive rates. It would pull the whole issue out of "he said,he said" babble and resolve individual cases on the facts. Talk is cheap, the walk is going to cost some time and effort.

And by the way, the next time you call people who disagree with your view as a bunch of anti-American, cool-aid drinking, dumpster diving stupids, I might ask if the owners of this forum if they consider that kind of rant conducive to thoughtful exchange of ideas and opinions.

[Anonymous]

QUOTE: Originally posted by jeaton

Mac

The methodology used by CURE is flawed. Trying to point that out to FM is useless, because his definition of truth is everything that agrees with his view. If you don't agree with his view then you are obviously just stupid and anything you say is wrong.

Jay

Jay,

If you're willing to debate without slipping into ilk territory, then can you please provide evidence that CURE's methodology is flawed? You can say what you want about my typo's and such, but if you are taking CURE to task, then you better be able to back it up.

CURE's numbers come from data given to the STB by the railroads. It is interesting to note that the STB will no longer allow groups like CURE, ARC, NITL, et al to access those numbers. Seems the railroads finally figured out the release of these numbers to the public has resulted in bad PR. And of course, when the railroads tell the STB to jump, the STB says "Sir, yes sir. How high?"

[jeaton]

Mac

The methodology used by CURE is flawed. Trying to point that out to FM is useless, because his definition of truth is everything that agrees with his view. If you don't agree with his view then you are obviously just stupid and anything you say is wrong.

Jay

[PNWRMNM]

FM

Been around this bend with you before. You are impervious to facts you do not like. I have wasted enough time with you on this.

The only reason l respond to any of your blather is to encourage others to not take you seriously. If your responses do not convince them nothing will.

Mac

[Anonymous]

Still can't address the topic issue can you? You can only start a flame war, then get defensive when you get burned by it.

As a topic debater, you are impotent.

And I seriously doubt that you voted at all, let alone for Bush. The tone and content of your posts are more indicitive of a King County dumpster-diving captive pawn of the left.

[PNWRMNM]

FM

There you go again making stuff up out of thin air. I am not a leftist. I proudly voted for George Bu***wice. My complaint is he has not been conservative enough.

Your theories are so incredible that I see no reason to take them seriously. The more you talk the more you reveal your ignorance. Go for it!

Mac

[Anonymous]

Mac,

Thank you for your latest post, which only solidifies the collective ill will that your types have for debate and conversation. The only asses on this thread are you and greyhounds, because you both go to great lengths to obfuscate the central theme of these threads, namely that there are captive rail shippers who pay rates that are twice that of non-captive shippers, that most captive shippers are U.S. producers, and that this domestic rail captivity contributes to the U.S. trade deficit in many ways.

When you say something as stupid as "You are the one who always hyperventilates about sources" it just shows your pig headed ignorance, because anyone who has read through this thread can detect the source baiting coming from you leftist types. That's a typical tactic of the Hate-America-Crowd when they lose an argument, take an aspect of your own short-comings and accuse your opposition of that very short-coming. Your ilk buddy accused me of not having sources, and when given sources chooses not to access them. Whether I made a typo or two is irrelevent, because the typing mistakes I made does not detract in anyway from the gist of the evidence presented. The fact that your side either is too lazy to access the sources, or is so intelletually lacking as to not be able to come up with even ONE counterargument on your own, is telling indeed.

[PNWRMNM]

FM

You are the one who always hyperventilates about sources. You either can not cite them or can not read them. Here you have made both mistakes and made an***of youself to boot.

I sincerly hope that the ilk herd is growing!!!!

Mac

[Anonymous]

QUOTE: Originally posted by PNWRMNM

FM

Better read the CURE propaganda again. The item you cite says nothing about intermodal.

Mac

Try this one:

http://www.railcure.org/pdfs/captivitychart.pdf

You know you could have found this yourself since it's on the issue papers link.......

http://www.railcure.org/issuepapers.htm

......under "The Cost of Captivity, by Industry" link.

Not that it does any good, since this is obviously just propaganda by those evil shipper groups. But since CURE is using numbers submitted to the STB by the Class I's themselves, perhaps you'll go so far as to lay the "propaganda" label on the railroads themselves. Or would that just blow your mind?

[CSSHEGEWISCH]

Methinks that FM is starting to take disagreement with his undisputed truths a bit too personally. This isn't religion; it's economics, self-interest and a fair amount of politics.

[PNWRMNM]

FM

Better read the CURE propaganda again. The item you cite says nothing about intermodal.

Mac

[Anonymous]

QUOTE: Originally posted by greyhounds

QUOTE: Originally posted by futuremodal

Ooops, I did make a mistake. It is "revenue per ton", not "revenue per ton mile". The print out copy was smeared on top. The actual caption reads:

"Calculations are based on 2002 Revenue-Per-Ton rates (as submitted to the Surface Transportation Board) and 2001 Railroad Revenue-to-Variable Cost ratios (RVCs), by individual rail carrier"

I'll go back and correct it. My apologies to your left foot.

My left foot declines your apology.

It knows full well you are still using made up, meaningless numbers to try to advance a political point. Nobody records how many actual tons are in an intermodal load. So nobody can produce an accurate "per ton" revenue figure. Every UPS load I ever saw was billed as having 20,000 pounds. They moved on the same rates as some guy shipping 44,000 pounds of aluminum ingots.

So we charged UPS "over twice" as much per ton as the aluminum guy? Well, no, we weren't charging per ton, we were charging "per vehicle used". We charged so much to move a trailer from here to there. And we didn't care if you put one can of dog food in it or 44,000 pounds of aluminum.

"Per ton" revenue figures on intermodal are as meaningless as your "per ton mile" figures. But you're going to use them because you don't have any actual experience to make you know better.

You can shove your left foot up your own orifice then. You keep charging that I am making up these numbers, yet anyone else on this forum can verify that they come from the CURE website. If I had presented these figures and claimed them as my own, then I would be a plagiarist, 'cept of course I cited the sources.

The chart presented on the CURE website entitled "The Cost of Captivity, by Industry" lists various commodities. It does not differentiate between "revenue per ton" and "revenue to variable cost ratios" among these commodities. I simply went down the list, found "Intermodal, captive rate" and "Intermodal, non-captive rate", and highlighted it as evidence that there is such a thing as a captive intermodal rail shipper. One can presume that "captive vs non-captive, intermodal" comparisons, if not presented on a revenue per ton basis, is subsequently presented on a revenue to variable cost ratio. Either way, it is presented to provide evidence that discriminatory rates can even affect intermodal. Since the site claims these figures are presented to the STB by the individual railroads themselves, one can only conclude that the railroads themselves acknowledge such a rate differentiation.

So you see, if I'm not making up these numbers, then CURE must be making up these numbers, and if CURE isn't making up these numbers, then the railroads themselves must be making up these numbers.

So basically, what you are doing is accusing your precious railroad dominatri of making up numbers soley for the purpose of inadvertently exposing themselves to public scrutiny. And since you choose not to read the material yourself, you are choosing to remain ignorant. So why don't you just stick your head where your left foot was inserted and give it some company?

[greyhounds]

QUOTE: Originally posted by futuremodal

Ooops, I did make a mistake. It is "revenue per ton", not "revenue per ton mile". The print out copy was smeared on top. The actual caption reads:

"Calculations are based on 2002 Revenue-Per-Ton rates (as submitted to the Surface Transportation Board) and 2001 Railroad Revenue-to-Variable Cost ratios (RVCs), by individual rail carrier"

I'll go back and correct it. My apologies to your left foot.

My left foot declines your apology.

It knows full well you are still using made up, meaningless numbers to try to advance a political point. Nobody records how many actual tons are in an intermodal load. So nobody can produce an accurate "per ton" revenue figure. Every UPS load I ever saw was billed as having 20,000 pounds. They moved on the same rates as some guy shipping 44,000 pounds of aluminum ingots.

So we charged UPS "over twice" as much per ton as the aluminum guy? Well, no, we weren't charging per ton, we were charging "per vehicle used". We charged so much to move a trailer from here to there. And we didn't care if you put one can of dog food in it or 44,000 pounds of aluminum.

"Per ton" revenue figures on intermodal are as meaningless as your "per ton mile" figures. But you're going to use them because you don't have any actual experience to make you know better.

[Anonymous]

Ooops, I did make a mistake. It is "revenue per ton", not "revenue per ton mile". The print out copy was smeared on top. The actual caption reads:

"Calculations are based on 2002 Revenue-Per-Ton rates (as submitted to the Surface Transportation Board) and 2001 Railroad Revenue-to-Variable Cost ratios (RVCs), by individual rail carrier"

I'll go back and correct it. My apologies to your left foot.

[gabe]

Good point and I am glad someone clarified that for me. I didn't want to say anything because all the people arguing this issue know so much more than me. However, I was really scratching my head when I saw the $54 per revenue ton per mile. Can you imagine how much a 132-car coal train from the Powder River Basin to Florida or something like that would generate?

Futuremodal, I am not saying you are wrong on those numbers, but if you are right can you prove it to me? I only ask because if that is the case, I think I could line up the investors to start laying track.

Gabe

QUOTE: Originally posted by greyhounds

QUOTE: Originally posted by futuremodal


greyhounds - You seem to have emotional problems as well as problems grasping rather simple concepts and ideas. For the record, the term "captive intermodal" was around long before I came on the scene. Now, the links have been provided, but you apparently choose not to access them, so I guess I am just as justified to suggest that you are making up alot of stories about your alleged business. Apply your own standards to yourself, and you can see why any skeptic would doubt the basis of your statements as well. At least I provide the links and the references, you do not. Case closed.

Gee, my ex-wife used to say things like that about me. She said them a lot, and a lot, and a lot.

Yes, you cite sources. Like this one from you:

QUOTE: Originally posted by futuremodal

From the following, you can clearly see that captive rates for domestic intermodal are over twice the rates for intermodal import rates:

Average revenue/ton mile for intermodal, captive vs non captive -
CSX - $54.11 captive, $26.18 non captive
NS - $45.42 captive, $20.85 non captive
BNSF - $115.70 captive, $48.88 non captive
UP - $91.42 captive, $40.60 non captive
source: Rail Price Advisory, First Quarter 2003, Vol 12, No. 1

Do you really believe that any rail carrier is getting $20.85 per ton mile? (and that's the lowest figure you "cite" from your "source") On a 15 ton load that would be over $300 per mile to move a trailer. That is insane. Any trucker or railroad that got 1/100th of that would be thrilled. But you just quote it like its reality.

People make this stuff up to further thier political goals and personal fantasies.

$20.85 per ton mile - my left foot.

[greyhounds]

QUOTE: Originally posted by futuremodal


greyhounds - You seem to have emotional problems as well as problems grasping rather simple concepts and ideas. For the record, the term "captive intermodal" was around long before I came on the scene. Now, the links have been provided, but you apparently choose not to access them, so I guess I am just as justified to suggest that you are making up alot of stories about your alleged business. Apply your own standards to yourself, and you can see why any skeptic would doubt the basis of your statements as well. At least I provide the links and the references, you do not. Case closed.

Gee, my ex-wife used to say things like that about me. She said them a lot, and a lot, and a lot.

Yes, you cite sources. Like this one from you:

QUOTE: Originally posted by futuremodal

From the following, you can clearly see that captive rates for domestic intermodal are over twice the rates for intermodal import rates:

Average revenue/ton mile for intermodal, captive vs non captive -
CSX - $54.11 captive, $26.18 non captive
NS - $45.42 captive, $20.85 non captive
BNSF - $115.70 captive, $48.88 non captive
UP - $91.42 captive, $40.60 non captive
source: Rail Price Advisory, First Quarter 2003, Vol 12, No. 1

Do you really believe that any rail carrier is getting $20.85 per ton mile? (and that's the lowest figure you "cite" from your "source") On a 15 ton load that would be over $300 per mile to move a trailer. That is insane. Any trucker or railroad that got 1/100th of that would be thrilled. But you just quote it like its reality.

People make this stuff up to further thier political goals and personal fantasies.

$20.85 per ton mile - my left foot.

[MP173]

Case closed.

Time to move on.

ed

[Anonymous]

Ed,

The difference between the path the trucking idustry took to get to today's "more business than they can handle" scene, and the path the current U.S. railroad industry is taking to be able to say the same, is that no trucking company has ever had nor will ever have the power to enforce monopolistic actions upon any customer, while that same monopolistic attitude absent from the trucking industry is paramount to the railroads reaching that goal. No one can argue against any business taking actions that maximize profits, but one can argue that giving legal exemptions to that business to facilitate that profit maximization is just plain wrong. I would add that railroads are in a special catagory by themselves for no other reason than it is nearly impossible for any other company to enter that market under the closed access system. Compared to the need to secure new ROW to build new tracks, any other capital investment is a cakewalk. However, if the tracks were already there and available to any qualified operator(s), then entry into the railroading market would take on a whole new perspective.

I'll just add this one thing: It is not necessary to tap the general fund of the U.S. Treasury to aid in constructing new rail capacity. There is still enough federally held land out there that could be doled out in land grants, which wouldn't cost taxpayer's a dime. There are also the options of tax credits and federal loan guarantees, neither of which takes present money out of the Treasury but which can affect future tax collections and spending options. Creative financing would be crucial to the construction of new rail capacity regardless of access issues.

greyhounds - You seem to have emotional problems as well as problems grasping rather simple concepts and ideas. For the record, the term "captive intermodal" was around long before I came on the scene. Now, the links have been provided, but you apparently choose not to access them, so I guess I am just as justified to suggest that you are making up alot of stories about your alleged business. Apply your own standards to yourself, and you can see why any skeptic would doubt the basis of your statements as well. At least I provide the links and the references, you do not. Case closed.

[greyhounds]

QUOTE: Originally posted by Murphy Siding

Gee Whiz greyhounds, it appears that you have become as stupid as I is![;)] When will we ever learn?

Yep - If you disagree with him it's because you're stupid.

The fact that I've got experience going head to head with truckers over frieight doesn't mean a thing to the guy.

FM, when Schlitz closed their Milwaukee brewery and started to supply Chicago out of Memphis we went head to head with a bunch of truckers for the beer movement. That's 500 miles. You ever compete with a trucker at 500 miles? They'll do that in 10 hours easy.

And it's a consumer product. It's temperature protected and if you dent a can you'll buy the six pack. We put that frreight on our railroad and made a buck doing it.

FM, have you ever done that? Have you ever gone head to head with a bunch of truckers and come home with the money in your pocket?

Ever put together a program to haul bananas out of Gulfport? I sure did. Ever found out you've got a load of imported Honduran tomatoes bound for Canada stuck at your Chicago ramp becuase of Customes? Ever worked a Stike and crossed the picket line in Chicago?

How about putting together a proposal for Montgomery Ward on freight from Mississippi to Chicago only to find out Mclean Trucking has matched it word for word and taken the freight? Then having the Monkey Ward traffic manager deny that he ever told them a word about your offer?

And, most important of all, have you ever taken an angry phone call from Caterpillar or UPS, or any other customer, or your sales staff, or a drayman. If they'd a had a phone gun they'd a shot me! I had 'em all. You calmly find out what the problem is and solve it.

Do you know that one of the "hottest" commodities shipped is (or was) telephone books. They held 'em till the last minute to get the number changes in, but they didn't get the yellow page ad revenue until the books were delivered. That make's 'em hot freight. So we got about 20 trailers of New Orleans phone books comming off the Kankakee ramp on Saturday for Monday delivery in New Orleans.

So the last thing I did before leaving on Friday was leave a message that there was a "hot pickup" in Kankakee the next day. I get into work Monday morning and take a phone call from a very irritated RR Donely traffic manger wanting to know why his loads were still sitting in Kankakee.

Now have you ever done anything, or dealt with anything, like the above. If you haven't, please quit making up stuff like "Captive Intermodal". It's garbage.

[MP173]

Dave:

Perhaps I came down a bit harsh last night, but frankly, I dont have a lot of time trying to find information on the internet. For example, sometime over the weekend, at your suggestion, I attempted to find the CURE website and gave up. Thus, the call for a reference where a less than astute websurfer can find the information quickly.

Along the same lines, the term captive intermodal was extremely puzzling to me. Your last definition makes sense, but I still maintain that it is not entirely captive as the option to ship via truck exists.

One of your early points was that we are subsidizing Asian imports with low cost intermodal and this is driving jobs from the US. I wont go back and find your exact phrasing but I came away with the impression that the captive rail situation drove the business to Asia. It would be interesting to analyze such "driven away by greedy railroad" case studies. If in fact the product is now coming in via containers from Asia...and the only factor, or even the major factor in the loss of the business was transportation, then the simple solution would have been for the US shipper to ship via intermodal. Perhaps not at the same low rate of overseas container,as pricing benefits do occur based on containerized moves, but still at a rate that would have made it competitive.

One cannot tell me that it costs less to ship a product from China via container to a port, then by boat, then by container to Chicago vs intermodal from Texas to Chicago. Thus, it is more, much more than simple transportation costs.

Regarding the land grant reparations issue, I dont know what the original wording of the contract between the government and the rails were. Plus, how would one now go back and determine a value of the land parcels? How did the railroads know what they were getting (in terms of value) when the land grants were received? You indicated "most" railroads were built thru land grants. What about the ones that were not? How would one reconcile those routes? For example, it is probable that portions of the major lines were land grant based and portions were not. Does that mean that certain portions of the route would be public and the other private? Quite a can of worms to sort thru.

Finally, I hope that I never stop learning. That is why I do spend so much time on this forum. It can be mind numbing talking about your favorite locomotive paint scheme and it can be challenging defending your position...and even enlightening when you realize that there are problems with your position and it needs to be modified. My whole point with the grad student (BTW...no MBA title, behind my name, just a BA, so I am a bit behind the level of all you MBA's) is that I will research and read data (and opinion), but dont make it painful to do so.

Another finally, then off to bed. I am trained in sales. I do very well at it. I am taught to maximize margins, I am paid to maximize margins. I do not sell on volume, but primarily how profitable the sale is. Railroads got into a lot of problems due to "volume" mentality. It was not until they were freed to actually market themselves (and gained productivity thru labor revisions) that the industry started on the road to financial stabilty. My point is that as a trained sales person, I understand the position of leverage (both on the giving and receiving end) and the absolute need to maximize margins on each and every sale.

Business (and life) is not fair. For years transportation companies subsidized manufacturing's returns based on a lack of leverage. Not only railroads, but also truckers. Today, two of my trucking company accounts just beamed when I asked how business is, both responded even with fuel prices at record levels, their business has never been better. They understand the leverage that they possess, as do the rails. The truckers always understood that no one held a gun to their heads and forced them to handle a load...it was always a choice. It meant a very difficult and lean period of time for a number of people. Isnt it ironic that now as railroads are finally on the verge of earning cost of capital, there is this huge explosion calling for reregulation of some kind?

Finally (for the third time), good luck on getting government built infrastructure built in the form of added rail capacity. Thanks to the current group of Rockafeller Republicans in DC we are up to our noses in government debt. Jus t a glimmer of hope tho, there are a few conservatives starting to get it right and make their point known.

good night.

ed

[Anonymous]

Ed - I make assumptions that others on this forum can put two and two together as well as I.

"Captive" is used to describe rail shippers with access to only one railroad. This "access" can be diseminated into two catagories by my estimation: Those rail shippers whose product can only move viably by rail directly from the plant and who only have one physical rail connection at their production facility (e.g. physically captive), and those rail shippers whose product can viably move short distances by truck without losing a competitive edge to their main competitors but whose particular region has only one decent Class I in service (e.g. regionally captive). Chemicals are the best example of the former, while intermodal or grain are good examples of the latter.

Thus, "captive intermodal" refers to intermodal terminals located in regions where there is short haul access to only one Class I. Billings Montana is a good example of a captive intermodal terminal, Nampa Idaho another. If you allow some grey area for the purpose of definition, then you can also say that a captive intermodal terminal is one in which there may be more than one Class I railroad in the area, but only one provides actual intermodal services from this terminal. I think Spokane Washington fits into this second category, both UP and BNSF serves Spokane but only BNSF provides intermodal services. This is probably due to the fact that the UP line is only a Canadian connection, serving primarily as a conduit for potash, grain, mixed freights.

However, for the sake of reference, I will contact CURE and ask them to define what a "captive rail shipper" is so that I won't be putting words and concepts into the lexicon that may not necessarily be part of their efforts. If they do email me back, I will give their definition verbetum.

I take a different opinion on the NITL's position than what you discerned. I believe they are in favor of going back to some form of rate regulation, they just don't want to frame it that way. Because let's face it, there are only two ways to force railroad rate reductions for captive shippers: Either re-regulate rate setting, or introduce head to head rail competition via open access. The NITL makes no mention of Rep. Mark Green's bill (H.R. 3318) to make railroads subject to anti-trust laws that apply to every other industry, and only by anti-trust action can the railroads' natural monopoly be broken up.

I also take a different view on how best to achieve an expansion of the rail system. Because most railroads that exist today were built with some form of public support, they were not built as an adjunct of a succesful business model being exonerated by higher revenues. To assume that if railroads finally are able to more than cover their ROI's they will start building more lines is naive, e.g. it lacks understanding of how monopolies function. Monopolies are natural price discriminators, and as such will take no action that might denigrate their ability to price discriminate. Easing rail congestion is not synonymous with increasing railroad ROI's, at least under the closed access system. Secondly, it is my view that transportation infrastructure development is best left in the hands of the public, as that is the realilty of most transportation systems today. It would be better for railroad ROW's to follow the example of highways and waterways, and allow user fees combined with local and state financing perogatives to pay for much of any new railroad expansion, and let de facto transportation companies do the actual hauling. But that is far beyond what the NITL envisions, too ambitious and far-fetched to be used in lobbying negotiations. It is much easier to lobby for rate regulation than it is to lobby for a complete overhaul of the U.S. rail system.

I am sorry you feel like you are being condescended to, that is not my intent. I would like to have lively conversations, but if is a fact that most participants on this forum too easily slip into sub-par sparring. BTW, it may very well be that being treated like a graduate student is insulting to you, that is your perogative, but for some of the others on this forum being treated like grad students is better than they deserve.

[MP173]

You know Dave, you could go a long way towards civility on this forum with just a bit of respect.

We dont all have time to go searching for all of these sources. I really got steamed at our Montana grain expert when he INTENTIONALLY mislead me into wasting about an hour of my time searching for information that he later admitted wasnt there and simply wanted to see, in the spirit of academia, if a good student would prove him wrong.

Well, lets get a couple of things straight...I am no student and my hourly rate is pretty ***ed high. If you want to provide sources, I will check them, if I have time. This internet is pretty big and vague references dont play well.

I enjoy these discussions and would like to think that i lend quite a bit to them, as do the others here...but we have passed the age of 20 and do not spend our entire lives researching, drinking beer and eating pizza.

I asked the same question...what is captive intermodal.? It took a lot of time and energy to get a somewhat vague answer, which I will now have to spend time looking up to verify.

Now, I found the NITL paper very interesting, not only on what they said, but what they didnt. I actually took 30 minutes to search for it and read it. These people sure dont seem to want to go back to regulation. If they do...then I obviously need a refresher course in English.

They are admitting that after 25 years of Staggers the ROI is finally reaching the point of equalization to the COC. That is quite a bit of running into the wind in my book. Huge potential future issue are looming on the horizon, namely how will the railroads be able to finance expansion that will be needed.

For the first time in quite awhile, railroads will be faced with having to invest in capacity. Productivity will no longer yield desired results.

Now, do me and the others on this forum a favor, if you want continued dialog...quit treating me and others as if we are graduate students.

ed

[Murphy Siding]

Gee Whiz greyhounds, it appears that you have become as stupid as I is![;)] When will we ever learn?

[Anonymous]

Ed,

There are exceptions to every rule, nothing is completely black and white. There's a difference between imports from Canada or Mexico, which also can be relegated to rail captivity, and imports from overseas, wherein importers have a wide choice of ocean carriers, U.S. ports, and subsequent rail connections to those ports. There are also consumption markets in the U.S. that are captive as well, so imports into those markets can be construed as captive imports if it fits your POV. And yes, when the collective rail industry has not kept up with capacity demands, the aggregate demand for intermodal transportation services can exceed aggregate supply of transportation options which will result in increased pricing power for carriers of imports. That is a temporary situation in theory as elasticity brings supply and demand back into equalibrium, akin to the longshoremen strike or the hurricane shutdowns of Gulf Ports, which also changed the demand/supply dynamic for imports on a temporary basis.

Of course, the overseas manufacturer does not bear the brunt of those smaller exceptions, rather it is the consumers in those areas that pay the added costs. With growing markets elsewhere in the world, those overseas manufacturers won't sweat U.S. supply constraints. Contrast that with the captive U.S. manufacturer, who is captive right from the get-go, no matter what market is being sold to.

The whole point of this exercise is to show that those manufacturers that locate overseas will free themselves from U.S. rail captivity. Those producers who cannot physically relocate their land sites (such as Montana farmers) do not have that option and will eventually close their operations unless rate relief or federal aid is provided. If it's the latter, then that aid becomes an indirect subsidy to the railroads. It becomes a big negative for the U.S. economy no matter what happens, outside of actual rate relief via access to competitive rail carriers for all U.S. rail shippers.

http://www.railcure.org

[Anonymous]

QUOTE: Originally posted by greyhounds

I didn't want to quote the entire post, but this is from Futuremodal:

"From the following, you can clearly see that captive rates for domestic intermodal are over twice the rates for intermodal import rates:

Average revenue/ton mile for intermodal, captive vs non captive -
CSX - $54.11 captive, $26.18 non captive
NS - $45.42 captive, $20.85 non captive
BNSF - $115.70 captive, $48.88 non captive
UP - $91.42 captive, $40.60 non captive
source: Rail Price Advisory, First Quarter 2003, Vol 12, No. 1"

Dave,

Breaking your buble - there is no such thing as "Captive Intermodal". It's on a freaking truck to start with. It can move to destination by that truck.. I think you're using made up numbers. And By God, there are people who will make stuff up to "prove" their point.

There's no "Captive" intermodal. All they gota do is get a driver and go with it. Please take a common sense pill.

Greyhounds, you're stuck on stupid. The term "captive" is accepted nomenclature in both the shippers and railroads' lexicon. We've explained this to you a hundred times before. Captive intermodal relates directly to those North American rail intermodal shippers who only have access to one Class I intermodal terminal within a short haul distance for trucks.

Not only are you stuck on stupid, you're apparently stuck on lazy as well. The source was provided, you chose not to access it to verify the numbers. I purposefully did not provde a link just to see if you had an actual initiative to research these things yourself. You don't.

For those who want a web link to those numbers, here is the one I used:

http://www.railcure.org/pdfs/captivevscompetitive.pdf

Now, if you have evidence to the contrary, I would suggest you provide them. And if you are making up numbers, I'm going to challenge the validity of any such statement you provide.

You remind me of an episode of the M*A*S*H* TV series, where Radar is attempting to contact a suit in Seoul to tell him they are being bombed and could Seoul please do something about it. The brass man in Seoul replies, "Our latest information informs me that we have no units in that area. You are not being bombed, young man."

[greyhounds]

I didn't want to quote the entire post, but this is from Futuremodal:

"From the following, you can clearly see that captive rates for domestic intermodal are over twice the rates for intermodal import rates:

Average revenue/ton mile for intermodal, captive vs non captive -
CSX - $54.11 captive, $26.18 non captive
NS - $45.42 captive, $20.85 non captive
BNSF - $115.70 captive, $48.88 non captive
UP - $91.42 captive, $40.60 non captive
source: Rail Price Advisory, First Quarter 2003, Vol 12, No. 1"

Dave,

Breaking your buble - there is no such thing as "Captive Intermodal". It's on a freaking truck to start with. It can move to destination by that truck.. I think you're using made up numbers. And By God, there are people who will make stuff up to "prove" their point.

There's no "Captive" intermodal. All they gota do is get a driver and go with it. Please take a common sense pill.

[MP173]

Just read the 46 page NITL report. Pretty interesting reading. Seriously, I would suggest many of you to read it.

A few points NITL made:
1. Railroad's ROI (return on investment) is currently only 70% of the cost of capital...about 7% ROI vs 10% coc.

2. That ratio (70%) has risen over the past 25 years of Staggers.

3. NS and possibly BNSF will pass the coc this year.

4. Car ownership is now over 50% of the entire fleet, dramitically higher than 25 years ago.

5. Though intermodal was long believed to be carried at rates just above incremental costs, recent anecdotal evidence suggest pricing has moved up significantly. (note: I pretty much quoted this from teh report)

6. Changes in teh trucking industry have increased rail's ability to exercize market power.

7. Lack of capacity has shifted marketing philosopy from incremental to full cost recovery...something not done in the past 50 years.

NITL was very positive in the effects of Staggers. They admit the capacity issue will be very real and very critical to the growth of the economy.

In direct opposition to what Dave has indicated, NITL says that rails now have pricing power on the imported intermodal movements and are experiencing healthy profits on such traffic. Thus, good news! The subsidies to Asia has come to a close.

NITL is very concerned over rail's movement from contract rates to published rates...and obviously so. They have lost control over confidentiality and over stability of rates. That will be a concern as published rates can easily be raised (or lowered) while contract rates are stabilized thru the duration of the contract.

Interesting report.

Dave...direct me to the CURE website please. I ended up at some band's website....dont think they ship their amps, drums, and guitars by rail!

ed

[Murphy Siding]

QUOTE: Originally posted by futuremodal


Murphy: Since you yourself don't bother to go to the sources I cite, then the joke"s on you. As such, I will offer to you a little taste of "murphyism": Murphy, shame on you, tsk tsk tsk, etc. etc. etc. [:D][V][:P][*^_^*]

Now that's funny [(-D]

[oltmannd]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by futuremodal

And in global terms, U.S. producers have acrued a net loss in rail rates compared to overseas producers since the passage of Staggers. That's the hard cold fact you have to contemplate.

Prove it with data.

On average, the four largest U.S. railroads—the BNSF, CSX, Norfolk Southern, and Union Pacific—charged captives rates averaging 237% above their variable costs, while competitive rates average 108% of variable costs. (Revenue adaquacy is determined to be rates that run about 180% above variable costs).

source: STB - 2001 Revenue Shortfall Allocation Methodology Study

From the following, you can clearly see that captive rates for domestic intermodal are over twice the rates for intermodal import rates:

Average revenue/ton mile for intermodal, captive vs non captive -
CSX - $54.11 captive, $26.18 non captive
NS - $45.42 captive, $20.85 non captive
BNSF - $115.70 captive, $48.88 non captive
UP - $91.42 captive, $40.60 non captive
source: Rail Price Advisory, First Quarter 2003, Vol 12, No. 1


"If railroads don't work with their customers to find a solution, continued economic pressure could end up pushing captive shippers out of the country. It's no secret that manufacturing costs are lower overseas, and for captive shippers, it sometimes is cheaper to ship internationally than it is to move product domestically."

Testimony of Roger Nober, as quoted in Logistics Management, November 1 2003.


Now, if you think you have data that shows the opposite, provide it.

"Prove it with data" - source: Bob Wilcox, TRAINS forum, October 29, 2003

What in the world is "captive intermodal"? Lanes where either the orgn or dest city only have one ramp? That's just silly. It's like me being "captive" to Kroger because I'd have to drive 10 miles to get to a Publix!

No doubt those "variable costs" quoted are aggregate for the whole RR - which are meaningless when you're talking specific service in specific lanes. The STB does not have access to that level of detail.

What do you think about capital markets funding OA. If it's a win-win, they'll show up with the $$ to do it.

[MP173]

Ok, fair enough. I have not read every post of yours over the years, so I am not aware of your career. Thanks for filling me in.

I asked a simple definition to define captive vs non captive intermodal traffic. I seriously doubt if noncaptive intermodal traffic exists, based on the basics of intermodal. Perhaps I will try and find this.

You list no companies which have moved their operations due to high transportation costs. I seriously doubt if transportation costs from Asia can be less than intercity costs here, but I will keep an open mind to it. I think other factors are in play here, mainly the differential in labor rates. I too worry about that going forward, for my son's future. But my concern is the differences in labor costs as I feel that is the major factor.

Of course my statement of lower rates for captive shippers/forced traffic to railroads was ridiculous...it was meant to be and I even admitted it.

Perhaps you should look at your own energy industry for lessons on captivity. Last time I heard, profits for Exxon Mobile, etc were record high. Disclaimer here...I am both an owner of Exxon Mobile stock and an owner of producing oil wells, so my attitude towards these captive record profits is a bit different from most folks.

I stand by my previous statements of the NITL and other large corporations not wanting to invest in the transportation infrastructure and simply consume other's capital.

Remove anti-trust immunity...sure go ahead, there goes the joint line rates and switching agreements and many other economic factors.

My source which you questioned was the STB, thru Richard Saunder's book.

ed

[Anonymous]

Ed: As to what I do, and what I've done in the past, I have anwered that before. I have been involved in various acpects of transportation as it relates to grocery and retail pertroleum distribution. I have worked for the USDA as an ag interviewer, and am now working for an energy company. That being said, it is completely irrelevant to the topic at hand, because the subject matter is one being played out by the players involved, and I am just relaying some of that information and providing my own comments and opinions on the matter(s). My concern lies from the perspective of being an average American, concerned about the ability of U.S. companies to compete on the global stage. You do not have to be employed by or own stock in such companies to know that you may still feel the effects of their downfall, should that occur.

If you want information on companies that have shut down or left the country, or who have had some other negative effects due to rail captivity, I would suggest you contact the NITL, CURE, or any other such shipper organizations. Since you don't believe me, maybe you'll believe it if it comes straight from those effected. Of course, I get my info from them, so you'll just be getting redundant information.

None of your sources you cite would even bother to take the time to differentiate between captive and non captive shippers, and there's the rub. They are part of the pro-rail lobby, and as such to diseminate such information would be counterproductive to their own lobbying efforts. And BTW, I also have taken the time to get their POV as well, unlike you.

And for a "definition of the definition of 'average revenue per ton/mile intermodal, captive v noncaptive' ", I gave the source (the Rail Price Advisory). Feel free to look it up. You can access that information from the source's I provided. Go to the CURE website.

Your statement "If railroads were forced to lower rates for captive shippers, then under you reasoning would they be forced to provide all of their traffic to railroads?" is non sensical to me, and as such I take it to be some attempt at analogy for the purpose of illistrating your counterargument. Under regulation, rates were more equalized between captive and non captive shippers, but no one was "forced" to provide all their traffic to the railroads in return. Perhaps you are suggesting some kind of tit for tat actions should some form of rail reregulation occur. It's a non sequitur, because if they are rail shippers, they're going to ship by rail anyway if such rates come down. They will only ship by truck for the same reason they are forced to do so now - trucking is the mode of last resort, and is only used for those shipments the railroads either can't or won't handle as part of the logical supply chain.

Of course, if your memory served you better, you would recall that I am for a market based reduction in rail rates via the introduction of competitive rail services to all rail shippers. How that will happen is still being played out, but the logical approach is to eliminate the anti-trust exemption railroads have enjoyed, then shippers will be allowed to use the courts to empower a solution to that anachronistic problem of the "natural monopoly" of railroading in North America. So you see, there is no need for your Orwellian "controlled economy" scenario to accompli***his feat, since anti-trust is an apt adjunct of the free market system.

Bob: I do not know Terry Whiteside personally, but I have had email correspondences with his office in the past. He is one of the leading voices for addressing the nationally counterproductive railroad rate discrimination. Last I heard he was working out of Billings MT. Why do you bring him up?

Murphy: Since you yourself don't bother to go to the sources I cite, then the joke"s on you. As such, I will offer to you a little taste of "murphyism": Murphy, shame on you, tsk tsk tsk, etc. etc. etc. [:D][V][:P][*^_^*]

[MP173]

Murphy:

You know as a fellow salesman, all of the factors involved in pricing.

Dave: please define for me the definition of "average revenue per ton/mile intermodal, captive v noncaptive."

I am having a difficult time visualizing what that might be. Why? By definition, wouldnt intermodal be "noncaptive"? Choices exist.

Another thing...I am not making a serious mistake, as you state. I am simply quoting from a book, which comes from a very reliable source.

I notice that you do not even address the subject of shippers investing their own capital to reduce their transportation costs. We both know why that wont happen. The return on investment threshold will not allow it to happen. It wont even make it to the board room for consideration.

I am not sure where you are going with this. Are you wanting regulation?

Please give me examples of specific companies or industries which have left the US due to transporation costs only. If railroads were forced to lower rates for captive shippers, then under you reasoning would they be forced to provide all of their traffic to railroads? Heck no...that is rediculous. Yet, that is your reasoning. Why? Because the railroads must be required to lower their rates in order to insure that jobs will remain. Therefore, under the same scenario, the shipper would be required to tender all traffic to railroads to insure jobs would be secure. Not a pleasant thought, that of controlled economy is it?

Or controlled life, something that has failed.

One of the smartest things I have seen was at the Gilman, Il. A new soybean processing plant went into business about 10 years ago. It was located so that both the IC (now CN) and the TPW would have access to the plant. Smart move.
If transportion costs are going to be a critical component of your cost structure, dont box yourself in. Always have options.

ed

[bobwilcox]

Dave-Do you know Terry Whiteside?

[Murphy Siding]

QUOTE: Originally posted by MP173

I

Now, for a simple question. Dave, have you ever sold for a living or been involved in the developement and or marketing of a product or service...anything? Not a trick question, nor am I demeaning you. Just trying to get an idea of your mindset. Actually, it would be interesting to know how many of you do actually sell or market. I know some of you are involved in that function, some in the railroad industry.


ed

ed: This question has come up before. Dave's non-answer tells us the real answer is no. This leads me to view most of his posts as based on *theory*,proven and unproven. While I respect that he puts a little (or a lot ) of thought into some of these theory-based posts, I'll be the first to admit that I must laugh out loud at times.[(-D] To be fair, I'm sure Dave can say the same about some of my posts.[:)]

[Junctionfan]

Hi FM,

Been finnishing off my mid-terms; non stop exams lately..........

Back to the topic,

I always believed including now that at least for Canada, it would be advisable to hammer out a deal with CN and CP with the shippers and trucking companies, to maximise rail use as much as possible to reduce highway maintainence and upgrade costs, reduce healthcare costs from accumulative air pollution and accidents and welfare plus unemployment subsidies related to increase car accidents, reduce insurance premium rates (hopefully), and a few other indirect but important costs that is a result of increased highway use.

As CN and CP can't just up and double track and increase overall operation capacity at a whim, the government (me) would help out so also increased commuter and VIA Rail service could come into play without screwing up those railroads current or future operations.

It is a little costly but in theory (need to actually look at the facts and figures before proposing such a potentially contraversial plan), it should save Canadian taxpayers tons of money plus it should make CN and CP more money.

[Anonymous]

Junctionfan - Haven't seen you around for awhile.

To answer your question, if the government did as you suggest and subsidize parts of the railroads' cost structure without getting some kind of competitive concession from the railroads, what incentive would they have to lower rates? They would just take the added profits and (pardon me as I am *suffering* from a cold) forward those profits to their (insert fake cough oration "Red!", insert fake sneezing oration "Chinese!") stockholders.[V]

[Junctionfan]

Just an innocent question out of pure curiosity,

If the railroads could get some kind of subsidy for fuel costs and for capacity increases and some kind of assistance aquiring land to increase yard/ terminal (crew change) space, would that decrease the railroad's need to increase fees of customers? What kind of a case would the government make that would convince the taxpayer that this is what the country needs to you figure? Is it a direction that might be required or at the very least, something to be seriously considered?

(O.k that is more than one question..........[:-^])

[Anonymous]

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by futuremodal

And in global terms, U.S. producers have acrued a net loss in rail rates compared to overseas producers since the passage of Staggers. That's the hard cold fact you have to contemplate.

Prove it with data.

On average, the four largest U.S. railroads—the BNSF, CSX, Norfolk Southern, and Union Pacific—charged captives rates averaging 237% above their variable costs, while competitive rates average 108% of variable costs. (Revenue adaquacy is determined to be rates that run about 180% above variable costs).

source: STB - 2001 Revenue Shortfall Allocation Methodology Study

From the following, you can clearly see that captive rates for domestic intermodal are over twice the rates for intermodal import rates:

Average revenue/ton for intermodal, captive vs non captive -
CSX - $54.11 captive, $26.18 non captive
NS - $45.42 captive, $20.85 non captive
BNSF - $115.70 captive, $48.88 non captive
UP - $91.42 captive, $40.60 non captive
source: Rail Price Advisory, First Quarter 2003, Vol 12, No. 1


"If railroads don't work with their customers to find a solution, continued economic pressure could end up pushing captive shippers out of the country. It's no secret that manufacturing costs are lower overseas, and for captive shippers, it sometimes is cheaper to ship internationally than it is to move product domestically."

Testimony of Roger Nober, as quoted in Logistics Management, November 1 2003.


Now, if you think you have data that shows the opposite, provide it.

"Prove it with data" - source: Bob Wilcox, TRAINS forum, October 29, 2003

[bobwilcox]

QUOTE: Originally posted by futuremodal

And in global terms, U.S. producers have acrued a net loss in rail rates compared to overseas producers since the passage of Staggers. That's the hard cold fact you have to contemplate.

Prove it with data.

[Anonymous]

Ed,

You're making a huge mistake in taking "general" inflation-adjusted rail rates and assuming that 45% reduction applies to both captive shippers and non-captive shippers. I have no doubt the rates for importers have fallen in real terms more than 45%. What you need to find out is not the "real" rates for captive shippers (which I doubt have gone down 45%), but the COMPARATIVE rates of captive shippers to non-captive shippers. Say that hypothetically the inflation adjusted rates for captive shippers have actually gone down 25%. The railroads say "See, your rates are going down, you have nothing to complain about." The captive shipper replies "So what if my rates have gone down 25%, the rates for my competitors have gone down twice that much. It does me no good to get a rate reduction if the rates of my competitors have gone down twice as much, because now they have increased their advantage over me, and as such I am in a worse place than before when I was paying higher real rates."

In other words, you're focussing on the wrong numbers. The real numbers to be concerned about is that captive shippers (e.g. domestic producers) are paying rates as high as 235%* of the railroad's variable costs, while non-captive shippers (e.g. Chinese importers) are paying rates that are about 106% of the railroad's variable costs.

*(I'm going by memory here, so the 235% number may vary)

If you are a shipper, it does you absolutely no good to get a token discount if your competitor is getting a huge discount. Compared to your competitor, you have actually accrued a net loss in relative terms. And in global terms, U.S. producers have acrued a net loss in rail rates compared to overseas producers since the passage of Staggers. That's the hard cold fact you have to contemplate.

[MP173]

I have stayed out of this discussion, not because it doesnt interest me (as an "economic railfan" it is quite fascinating), but because I didnt think I had anything to add.

I had a serious case of "cant go back to sleep" at 430am this morning and decided to get up and read. I finished Main Lines by Richard Saunders...second time I have read it. Very good book. I highly recommend it.

Well, on page 353 Saunders points out that between 1984 and 1999 rail rates had fallen 45.3%, adjusted for inflation. The book was published in 2002. It would be interesting to know what has happened since then. No doubt the rates have increased.

Now, for a simple question. Dave, have you ever sold for a living or been involved in the developement and or marketing of a product or service...anything? Not a trick question, nor am I demeaning you. Just trying to get an idea of your mindset. Actually, it would be interesting to know how many of you do actually sell or market. I know some of you are involved in that function, some in the railroad industry.

Before this current position (15 years), I sold transportation service. I understand the mentality of shippers, particularly large shippers. They do not like to negotiate, they basically offer their business at a price they want to pay. That price usually drops each year. That is their mentality. To them transportation is a commodity. Their success as managers is based on delivery (service) and cost, with cost being the most important factor in determining their worth.

The absolute best method of negotiating a favorable outcome is to have a position of strength...no big earthshaking news there folks! Railroads are not going to give up any position of strength at this point in the game. Margins are low, based on comparisons to other industries, but are improving. Productivity is at the highest level in history.

Shippers always have options. What they dont have are cheap options. Coal prices too high...build nuclear. Chemical plant only have access to one rail line? Relocate adjacent to a junction of two lines, with access to both. Grain rates too high to support a prairie lifestyle? Build a bakery or ethanol plant near the grain and add value to the commodity.

But, those investments all require large amounts of capital...and it so much easier to utilize the railroad's capital, particularly if it is being rewarded below the Return on Invested Capital. It is all a game between players with LOTS of cash and invested capital.

Dave, I dont think this economy is losing jobs because the railroads rates dropped 45.3% in real dollars. There are far more factors involved than to make a blanket statement.

And if you really think that running trains on another carrier's lines is all that easy, then let me turn you to a wonderful internet column called Latta Laments, which is about the life of a CP dispatcher in Southern Indiana (south of Terre Haute). To the north his trains must travel the CSX, UP, and IHB lines to reach the Bensenville terminal. To the south CSX controls the Louisville access. Granted these were written in 1998/1999, but the lessons are very clear. Running trains on other people's lines are very difficult.

I dont have answers to economic issues that face the industry or the nation. It is plenty to manage my own economic interests. After reading Saunders excellent history of the last 30+ years, it is very obvious that regulation nearly nationalized a complete industry and that the freedom to actually market a business and run it has allowed the rail industry to at least get back on it's feet.

ed

[Anonymous]

Well, it comes down to what really defines "deregulation", so you guys are just going to love my next post.....[;)]

[Anonymous]

QUOTE: Originally posted by oltmannd

If OA is the solution, let the capital markets fund it - one way or another. No need to get the gov't involved.

If it is an overall better way, then there will be money enough to go around to all the stakeholders, no?

Makes sense. Give the RRs the full value of their property in a buy out if you think OA will work. Let FM put his money where his mouth is...

Of course, no customer really WANTS to run a railroad. AND no investor wants to invest in the uncertainty of a totally new business model where the existing one works fine...So, it won't ever happen...

LC

[oltmannd]

If OA is the solution, let the capital markets fund it - one way or another. No need to get the gov't involved.

If it is an overall better way, then there will be money enough to go around to all the stakeholders, no?

[Anonymous]

QUOTE: Originally posted by CSSHEGEWISCH

I'm sure that I'm not the only one with this point of view but I find it a little hard to swallow that the industrial decline of the United States can be reversed by open access and the elimination of differential pricing.

OA wouldn't reverse an industrial decline by itself, but it would go a long way toward ameliorating the global competitiveness of U.S. industries and producers. We would also need some regulatory relief so that U.S. industries can have new capital investments fast tracked to match market evolutions rather than having to wait a decade for environmental lawsuits et al can be rebuffed. It would be quite simple for regulators to allow template designs for new capital investments to be utilized rather than having to write a new EIS every single time they want to expand a facility or build a new one.

[CSSHEGEWISCH]

I'm sure that I'm not the only one with this point of view but I find it a little hard to swallow that the industrial decline of the United States can be reversed by open access and the elimination of differential pricing.

[oltmannd]

Since when does differential or yield pricing = a subsidy?

Ain't no such thing as a captive shipper - not in the last 50 years, anyway.

There are shippers that only have access to one RR (which is true for the vast majority of carload shippers). But, everyplace has access to highways, some places waterways, too. And capital markets will see to it that other viable alternatives will be funded if the return is there.

Farm, energy and steel subsidies do not effect how much stuff is produced. RRs are just one way of moving stuff from producer to consumer. If stuff is procuded in a different location, then it still has to be transported and the RR will move it when they are the best value for the move.

[Anonymous]

QUOTE: Originally posted by futuremodal

oltmannd,

Try this: Take the three valid points you made, and parse them between the rates RR's charge for imported goods and those charged for exported goods (leaving out domestic goods for the moment). What we have is the RR's charging much higher rates to captive U.S. shippers, and using those profits to effectively subsidize the importation of goods from overseas.

What is happening is just as you laid out, except that instead of the "industry moving out", we the taxpayers are keeping these domestic industries alive via subsidies, et al. Look at farm subsidies, and ask yourself the following: If the roles were reversed and we had the RR's charging domestic producers the cutthroat rates while charging importers the captive rates, would we even need to subsidize our farmers? The farm bill is nothing more than an indirect subsidy of the railroads, in that it keeps those farmers alive enough to keep producing the crops that the railroads need to haul (at exorbinate rates) to pay for the upkeep of the import corridors. Same goes for the new energy bill, as it aids in the development of coal which is probably the leading lifeline for the railroads.

Now try this hypothesis: Take away the farm subsidies, take away the energy industry subsidies, take away the steel tariffs, take away the pension bailouts, et al, and what do you think will happen to the railroads? How will they be able to raise import rates in the face of open competition at nearly every import facility, now that the bulk of their revenue sources have dried up?

Our domestic producers have enough trouble competing with protectionism of other countries, obscene environmental regulations, overzealous SEC oversight, etc. The one thing that can be done is to give them a break on the domestic transportation side.

If the skewed transportation market wasn't that much of an impact on the future prospects of domestic producers, they probably wouldn't have bothered to form a coalition to address these inequities in the first place. Yes, transportation rate gouging is a big issue!

Typical. A new low. Since we can't screw anybody else, lets screw the railroads...

Nice FM, real nice...glad to see you brought your real position to light...

LC

[Anonymous]

oltmannd,

Try this: Take the three valid points you made, and parse them between the rates RR's charge for imported goods and those charged for exported goods (leaving out domestic goods for the moment). What we have is the RR's charging much higher rates to captive U.S. shippers, and using those profits to effectively subsidize the importation of goods from overseas.

What is happening is just as you laid out, except that instead of the "industry moving out", we the taxpayers are keeping these domestic industries alive via subsidies, et al. Look at farm subsidies, and ask yourself the following: If the roles were reversed and we had the RR's charging domestic producers the cutthroat rates while charging importers the captive rates, would we even need to subsidize our farmers? The farm bill is nothing more than an indirect subsidy of the railroads, in that it keeps those farmers alive enough to keep producing the crops that the railroads need to haul (at exorbinate rates) to pay for the upkeep of the import corridors. Same goes for the new energy bill, as it aids in the development of coal which is probably the leading lifeline for the railroads.

Now try this hypothesis: Take away the farm subsidies, take away the energy industry subsidies, take away the steel tariffs, take away the pension bailouts, et al, and what do you think will happen to the railroads? How will they be able to raise import rates in the face of open competition at nearly every import facility, now that the bulk of their revenue sources have dried up?

Our domestic producers have enough trouble competing with protectionism of other countries, obscene environmental regulations, overzealous SEC oversight, etc. The one thing that can be done is to give them a break on the domestic transportation side.

If the skewed transportation market wasn't that much of an impact on the future prospects of domestic producers, they probably wouldn't have bothered to form a coalition to address these inequities in the first place. Yes, transportation rate gouging is a big issue!

[Anonymous]

QUOTE: Originally posted by futuremodal

They are also people like Con-Agra, Columbia Grain, GM, Ford, GE, Catapillar, Weyerhouser, LP, Arch Coal, Peabody, Potlatch, Golden Northwest, Seneca, Simplot, Westmorland, Maytag, Nucor, U.S. Steel, et al, et al, et al, who though they may have facilities overseas still have the meat of their production here in the U.S. at least for the time being.

As a nation we need to decide if we want to continue to be an industrialized nation, or if we should just throw in the towell and become a service oriented economy, a glorified banana republic. If it is the former, we need to address the blatant inequalities (export and domestic vs imports) when it comes to surface transportation of bulk commodities. If it is the former, let's all collectively hold our breath waiting for the next dot.com boom to provide us with empoyment and a tax base.

FOFLMAO...

You mean Caterpillar?? Weyerhauser??

Doesn't the market have some say? Or perhaps we should just install bristling barriers of customs tariffs and rules like Europe?

Newsflash. The economy is doing as well as it is now for ONE reason. China and the rise of Asia. If they stop buying T-Bills with the money we spend on their stuff the Depression resulting will make the 1930s look like a summer's day at the beach...

LC

[oltmannd]

QUOTE: Originally posted by futuremodal

They are also people like Con-Agra, Columbia Grain, GM, Ford, GE, Catapillar, Weyerhouser, LP, Arch Coal, Peabody, Potlatch, Golden Northwest, Seneca, Simplot, Westmorland, Maytag, Nucor, U.S. Steel, et al, et al, et al, who though they may have facilities overseas still have the meat of their production here in the U.S. at least for the time being.

As a nation we need to decide if we want to continue to be an industrialized nation, or if we should just throw in the towell and become a service oriented economy, a glorified banana republic. If it is the former, we need to address the blatant inequalities (export and domestic vs imports) when it comes to surface transportation of bulk commodities. If it is the former, let's all collectively hold our breath waiting for the next dot.com boom to provide us with empoyment and a tax base.

In an industrializing global economy, a country doesn't get to "decide" to be industrial or not. Economics do that - unless you prefer the North Korean economic model.....

If you beleive the status quo is untennable in the long run, then there exists only possible outcome, but three paths to get there:

1. If RR pricing is pretadory, then the industry can't compete and will move out and the RR will have no traffic and go belly up.

2. If industry extorts low rates from the RR, then the RR will go belly up and the industry will move out.

3. If RR pricing is fair, but still too high to sustain the industry, then the industry will move out and the RR will go belly up.

The only winning situation is if RRs can sustain profits, on the whole, that are high enough to generate enough capital to keep going AND those rates are low enough to allow industry to be competitive. It's not a sure thing that right now there is an intesection between those two contraints. To do ANYTHING that would reduce RR profits at this point would GUARANTEE no intersection.

The choice is between RRs having a chance or no chance at all.

[bobwilcox]

QUOTE: Originally posted by futuremodal

They are also people like Con-Agra, Columbia Grain, GM, Ford, GE, Catapillar, Weyerhouser, LP, Arch Coal, Peabody, Potlatch, Golden Northwest, Seneca, Simplot, Westmorland, Maytag, Nucor, U.S. Steel, et al, et al, et al, who though they may have facilities overseas still have the meat of their production here in the U.S. at least for the time being.

As a nation we need to decide if we want to continue to be an industrialized nation, or if we should just throw in the towell and become a service oriented economy, a glorified banana republic. If it is the former, we need to address the blatant inequalities (export and domestic vs imports) when it comes to surface transportation of bulk commodities. If it is the former, let's all collectively hold our breath waiting for the next dot.com boom to provide us with empoyment and a tax base.

I live in a county with no manufacturing since Con Agra closed their plant and source the products from Mexico. The unemployment rate is 1.3% and the median family income is $65,000 per year. We can stand a lot more of this.

[CSSHEGEWISCH]

As mentioned in other postings, transportation costs are a very small part of the trade imbalance. More important factors are the much lower costs of production overseas, the perceived lack of quality of American products (Japanese v. American autos) and the willingness of financiers to invest heavily in overseas development.

Shippers will always gripe about rates and/or service.

[Anonymous]

They are also people like Con-Agra, Columbia Grain, GM, Ford, GE, Catapillar, Weyerhouser, LP, Arch Coal, Peabody, Potlatch, Golden Northwest, Seneca, Simplot, Westmorland, Maytag, Nucor, U.S. Steel, et al, et al, et al, who though they may have facilities overseas still have the meat of their production here in the U.S. at least for the time being.

As a nation we need to decide if we want to continue to be an industrialized nation, or if we should just throw in the towell and become a service oriented economy, a glorified banana republic. If it is the former, we need to address the blatant inequalities (export and domestic vs imports) when it comes to surface transportation of bulk commodities. If it is the former, let's all collectively hold our breath waiting for the next dot.com boom to provide us with empoyment and a tax base.

[bobwilcox]

QUOTE: Originally posted by futuremodal
They charge captive shipper rates to our domestic producers while charging overseas importers cut throat rates

These are people like Dow Chemical, DuPont, Exxon, Shell and BP who have chemical plants all over the world. When Dow, throught the NIT League, talks about competing with foreign producers they are talking about competing withthemselves.

[Anonymous]

QUOTE: Originally posted by futuremodal

http://www.logisticstoday.com/displayStory.asp?nID=7515

Seems the National Industrial Transportation League's solution to the captive shipper/differential pricing problem is to revert to a form of rate regulation via certain caveats in the Stagger's Act. I told you this would happen, abuses by the Class I's (percieved or otherwise) will always lead to retroactive actions.

Ahhh. The NIT wits are at it again...

How can we line our pockets at everyone else's expense?? Perhaps we can scream we are "captive", yeeeeah, suuuuure....

Why don't we just ship their stuff for FREE??!! I doubt they'd be happy even with that...

Guess what, the shippers luckily don't get to decide what their rates are. What a concept, huh, FM?

At any rate, given the current congestion, EVERYONES rates are going up and going up A LOT. The demand outweighs the supply and unless railroads are allowed to make money by raising rates there won't be any additional capacity to move more, so those precious shippers will have a choice. Pay higher rates or truck it...if they can find a trucker that they haven't already run out of business through their predatory price cutting demands...

What goes around comes around...re-regulation won't expand capacity. It deserves no consideration in national transportation policy...

LC

[jeaton]

q1. No but the effect is trivial.
q2. If you are speaking of US shippers only the answer, by definition, is yes. If you are speaking of world wide shippers the answer is no, unless China has opted for open access.

By the way, I and at least 80% of US taxpayers know source of money for government assistance.

[Anonymous]

QUOTE: Originally posted by jeaton

futurmodal

I have yet to hear anyone beside you argue that monopoly rail rates are the cause of the exodus of manufacturing from the United States.

Would you go so far as to suggest that captive rail rates have no effect on relative trade imbalance? Or will you admit that most captive rail shippers are indeed domestic producers?

Whether such results in an exodus of manufacturing, or if it simply results in a greater share of domestic production needing some form of government assistance (e.g. we the taxpayers) to stay afloat, the effect is reasonably inductive.

[jeaton]

futurmodal

I have yet to hear anyone beside you argue that monopoly rail rates are the cause of the exodus of manufacturing from the United States.

What manufacturing that remains here is either fairly well positioned for rail carload service or has TOFC/COFC service and motor carrier service to meet transportation needs. Given that the businesses that provide rail intermodal and direct truck services are in rather vigorous competition, I find it highly unlikely that the rates for this service provide anything close to excessive margins.

Low wage rates, which in this county would not pay for food, no health care costs, no worker safety provisions and no requirements limiting the discharge of anything that causes environmental degradation makes it the cheap place to manufacture goods. In fact, even Mexico is losing business to China.

[BaltACD]

NITL wants their cake and wants to eat it and the carriers share also.

[Anonymous]

There is a slight difference here between "going back" to rate regulation pre-Staggers and re-regulating under the auspices of Staggers. What the NITL is saying is that there are competition caveats pertaining to Staggers that simply have not been enforced, so why not start to enforce them, especially now that the idea of overcapacity is a thing of the past?

It goes to the heart of the fight for survival our brick and mortar industries face under the threat of global competition. Here we are with a trade deficit, farmers struggling, the steel industry still struggling, the U.S. aluminum industry close to extinction, U.S. car manufacturers facing the possibility of bankruptcy, etc, ect, ect, and what do our U.S. railroads do?!? They charge captive shipper rates to our domestic producers while charging overseas importers cut throat rates, practically subsidizing the importation of Chinese goods on the backs of our domestic goods. Shouldn't it be the other way around, if indeed U.S. railroads are American owned?

[CSSHEGEWISCH]

The "captive shipper" issue seems to be a smokescreen for reverting to the bad old days of rate regulation, despite what the NITL says upfront. All modes practice differential pricing to some extent, so full re-regulation of rates over ALL modes would be the only answer to that issue.
The NITL is trying to get cheap rates for its members no matter what they call it.

[jeaton]

QUOTE: Originally posted by oltmannd

What the NITL says is not necessarily what the STB does, is it?

The US Congress my not fall in line either.

[oltmannd]

What the NITL says is not necessarily what the STB does, is it?

[PNWRMNM]

If NITL is really concerned about service and expanding rail capacity, which they should be, they can not argue for lower rates at the same time. The industry is not yet revenue adequate. Only NS was last year and that is the first year in the past several for them.

Mac

[kenneo]

Dave

A real irony here. Had not the railroads sent 90% of its clerical forces and all but 2 crew memeber on trains, think how much higher the transportation bill would really be.

But $$ is only part of the equation. Another major piece is service --- RELIABLE service. This is, of course, a function of attitude. Since what is percieved is 90% of reality, well.