NITL's suggestions to STB for rail policy oversight

[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

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]

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

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

[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

[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]

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

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.

[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 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.

[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

[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

[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....

[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!

[bobwilcox]

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

[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.

[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

[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?

[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 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

[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.

[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....

[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

[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.

[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

[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!

[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.

[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 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 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?