Trains.com

July TRAINS takes on the captive shipper debate - Best Issue Ever?

17693 views
459 replies
1 rating 2 rating 3 rating 4 rating 5 rating
  • Member since
    October 2004
  • 3,190 posts
Posted by MichaelSol on Monday, June 12, 2006 11:40 AM
Note that both the US DOJ and the EU have been agressively litigating against Microsoft over a variety of anti-trust issues over the years.
  • Member since
    October 2004
  • 3,190 posts
Posted by MichaelSol on Monday, June 12, 2006 11:36 AM
QUOTE: Originally posted by greyhounds

QUOTE: Originally posted by n012944
[Thats quite a list. One question, did you list nylone and synthetic rubbers three times each to make the list seem longer?

Bert


Not to mention "Polyesters" twice within the last three lines.

Please remember, Sol once posted the per mile Maintence of Way expenditures for the Milwaukee Road and the Great Northern for each year from 1950 to 1970 - that "data dump" didn't mean anything either.

I much enjoyed the crap you tried to post about Gateway conditions, and the lengthy list of things you post that are simply, verifiably, wrong. Really steamed abut those MOW expenditures, huh? Just continues to burn away; imagine, someone having the audacity to post information about two railroads you know nothing about ....

In the instances cited above, the repeat is the generic trade name of a product derived from a different precursor, and having a different chemical formula, than the like-named products. Different chemical compounds with the same generic trade name. The first reference to polyesters, for instance, refers to polyesters derived from dimethyl terephthalate, the second reference to polyesters refers to polyesters derived from purified terephthalic acid. The same is true for nylon and synthetic rubber. It was shorthand, and while I would not expect you to have guessed anything like that, you certainly took the time to try and play your usual game of gotcha, and it was, once again, a waste of your time, mine and the forum's.
  • Member since
    May 2005
  • From: S.E. South Dakota
  • 13,569 posts
Posted by Murphy Siding on Monday, June 12, 2006 11:01 AM
QUOTE: Originally posted by bobwilcox

There is a second part of the deal that comes into play before the STB looks at profit margins. The traffic in question can not be impacted by the forces of competition from other products, markets, transportation carriers (ie. pipe, water or truck) or railroads.

Bob: Can you explain what this part means? Thanks

Thanks to Chris / CopCarSS for my avatar.

  • Member since
    May 2004
  • From: Valparaiso, In
  • 5,921 posts
Posted by MP173 on Monday, June 12, 2006 10:56 AM
I knew the Microsoft reference would set folks off!

That is about as close to captive customer base as one can find. Yet their revenue to asset ratio is not that high.

Bob, thanks for the clarification on the 180VC ruling. Is there anything else that you would share with me on this? Or perhaps a reference website for the Staggers rules?

ed
  • Member since
    December 2001
  • From: K.C.,MO.
  • 1,063 posts
Posted by rrandb on Monday, June 12, 2006 9:55 AM
While Micrsoft custmers could be considered "capive" technically they are not. You can buy an apple computer(more expensive) or use Linux for an operating system. Yea right. They have manipulated a free market into a virtual monopoly on the PC operating system market. Can buyers of their service negotiate by threating to go to another supplier. NO!!! Do they have a defacto monopoly. YES!!! Their answer is if someone even looks threatening you cru***hem or buy them.
  • Member since
    May 2004
  • From: Valparaiso, In
  • 5,921 posts
Posted by MP173 on Monday, June 12, 2006 8:54 AM
UP...very well stated.

Intellectual property, be it in the form of pharma, entertainment, or formula (Coca Cola) is a very interesting topic. Microsoft has probably benefitted more from IP than any other company I can think of.

I wonder...while a rail line cannot be considered "intellectual property", should it be considered property of value?

What is the difference between, say ... Pfizer's Lipitor and the BNSF mainline across Nebraska?

ed
  • Member since
    December 2001
  • From: Crozet, VA
  • 1,049 posts
Posted by bobwilcox on Monday, June 12, 2006 8:54 AM
QUOTE: Originally posted by MP173

I will probably surprise some people here.

If the law says 180% of VC, then it should be enforced.



There is a second part of the deal that comes into play before the STB looks at profit margins. The traffic in question can not be impacted by the forces of competition from other products, markets, transportation carriers (ie. pipe, water or truck) or railroads.

There is a significant amounts of traffic moving at margins over 180 with meaningful levels of competition.
Bob
  • Member since
    May 2004
  • From: Valparaiso, In
  • 5,921 posts
Posted by MP173 on Monday, June 12, 2006 8:44 AM
I will probably surprise some people here.

If the law says 180% of VC, then it should be enforced.

But, lets not kid ourselves here...it is kinda like when Major League Baseball locks out the players...this is millionaires squabbling with millionaires, only in this case it is billionaires vs billionaires.

Michael and Dave, your example of petrochemical companies is not going to get too many folks concerned, take a look at XOM's earnings the past year. Big agriculture? ADM's stock is just off an all time high. High priced lobbying in Washington by the railroads? Oh my gosh, you dont think the oil patch and agricultural concerns dont have men and women in $2000 suits?


Perhaps it is time to revisit the entire Staggers premise. Maybe the 180%VC needs to be further explored. If there is a cap on the top end...should there not be floor on the lower end? Say, 120% of variables? Or perhaps 140%.

I love railroads. I am also glad I do not work for one. Also glad I dont have to work with the railroads. Surprizingly Tom Murray's piece (p20-21) didnt get more discussion. I think the two subjects (rates and service) go hand in hand, yet all that seems to be discussed is the rate aspect.

Probably the best situation that works today would be Ed's employer in Houston or the IHB/Belt Railway/EJE in Chicago, or the Conrail shared assets. But, I have a customer that complains about the switching charges the IHB assesses.

Railroads are an asset rich, cash poor industry. Consider the following comparison of 2005 revenue (not net income) to assets.

BNSF - $12,987million revenue $30,304 million assets
XOM - $307,680 million revenue $208335 million assets
KO - $23,104 million revenue $29,427 million assets
MSFT - $39,788 million revenue $48737 million assets

All four companies (BNSF, Exxon Mobil, Coca Cola, and Microsoft) can be considered well run companies. Yet the sales to asset ratios vary considerably. BNSF and Coke have the same asset level, yet Coke generates double the revenue. XOM is completely off the charts in this comparison.

Railroads must, if they are to survive (they did that in the 80's) and grow (yet to be seen in this decade) generate a rate of return on invested capital that enables them to invest in the future. Growth = intermodal today. Other freight grows at the rate of the GNP, for the most part. All indications are the rails are raising their intermodal rates, based on the leverage they have.

Finally consider this...XOM's free cash flow for 2005 of roughly $38 billion dollars exceeded the value of the BNSF's assets. They purchased over $18 billion dollars of their common stock over 50% more than BNSF's revenues.

Which billionaire are you going to side with? Personally, my money is on XOM...and has been for 10 years now.

ed
  • Member since
    April 2003
  • 305,205 posts
Posted by Anonymous on Monday, June 12, 2006 8:23 AM
QUOTE: Originally posted by n012944

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by TomDiehl

Originally posted by futuremodal

Originally posted by edblysard
No, seriously, I have invited him several times..come sit and watch, or grab a pair of gloves and boots and I can put him to work lining switches and pulling pins...
So far, he has chickened out every time.
Go figure.[:D]Ed


Bert is ignorant of the difference between the monopolistic tactics of the US railroad industry and the current operations of the oil & petrochemical industry. He claims there is no difference between the railroads' captive shipper rates and the oil industry's current fuel prices. What I pointed out to him was that there are no consumers that are captive to the oil industry, so to try to analogize the railroad industry with the oil industry is ridiculous.


I gave you an example of how oil companies have people captive, look it up.


There are no captive customers to oil companies. Get used to it, iggy.
  • Member since
    April 2003
  • 305,205 posts
Posted by Anonymous on Monday, June 12, 2006 8:09 AM
QUOTE: Originally posted by n012944

QUOTE: Originally posted by futuremodal


Bert is ignorant of the difference between the monopolistic tactics of the US railroad industry and the current operations of the oil & petrochemical industry. He claims there is no difference between the railroads' captive shipper rates and the oil industry's current fuel prices. What I pointed out to him was that there are no consumers that are captive to the oil industry, so to try to analogize the railroad industry with the oil industry is ridiculous.


I gave you an example of how oil companies have people captive, look it up.


Oil prices are high in large part because of speculators in the commodity markets. Traders will say these markets are among the last examples of free market capitalism at work, while others compare them to high stakes gambling.

Captive customers are hardly unique to railroads. Many companies act as sole source suppliers for some products and price accordingly as a result of patents they hold. Drug companies get a lot of publicity for this, but it affects everything from silicon chips to advanced materials to industrial processes. The effect on overall free markets depends on where one stands on intellectual property rights. Rail shippers who also deal in products beyond basic commodities may be reluctant to spend or lobby on rail rate issues as they are concerned about loosing captive customers themselves from changes in intellectual property laws.

In defense of farmers, they sell through commodity markets and often have little pricing power. In an ironic twist, what they grow is considered a commodity while the seed they grow it from can and often is protected by patent laws.
  • Member since
    April 2003
  • 305,205 posts
Posted by Anonymous on Monday, June 12, 2006 7:46 AM
QUOTE: Originally posted by edblysard

Big brother, little brother?
Twins seperated at birth?


clones?
  • Member since
    March 2002
  • 9,265 posts
Posted by edblysard on Monday, June 12, 2006 4:43 AM
Big brother, little brother?
Twins seperated at birth?

23 17 46 11

  • Member since
    April 2003
  • 305,205 posts
Posted by Anonymous on Monday, June 12, 2006 3:26 AM
It certainly seems that Futuremodal and Mr. Sol both liberally quote and grasp for support that does not in fact support their propositions very well at all...

I find it interesting that the two of them seem to be combining forces, sort of like a couple of black holes...

  • Member since
    August 2003
  • From: Antioch, IL
  • 4,371 posts
Posted by greyhounds on Monday, June 12, 2006 12:20 AM
QUOTE: Originally posted by n012944

QUOTE: Originally posted by MichaelSol

Oh good grief, another pile on by the half-informed.

Chemical engineering was my original trade. "Petrochemical" is not a term of art, it is precisely defined as a type and class. I worked with a number of the following petrochemicals, and this would be a typical list of "petrochemicals."

ethylene
polyethylenes
ethylene oxide
ethylene glycols
polyesters
engine coolant
glycol ethers
ethoxylates
vinyl acetate
1,2-dichloroethane
trichloroethylene
tetrachloroethylene
vinyl chloride
polyvinyl chloride
ethylbenzene
styrene
polystyrenes
synthetic rubbers
higher olefins
detergent alcohols
propylene
cumene
acetone
bisphenol A
epoxy resins
polycarbonate
solvents
isopropyl alcohol
acrylonitrile
polypropylene
propylene oxide
propylene glycol
glycol ethers
acrylic acid
acrylic polymers
allyl chloride
epichlorohydrin
epoxy resins
butadiene
synthetic rubbers
benzene
ethylbenzene
styrene
polystyrenes
synthetic rubbers
cumene
acetone
bisphenol A
epoxy resins
polycarbonate
cyclohexane
adipic acid
nylons
caprolactam
nylons
nitrobenzene
aniline
methylene diphenyl diisocyanate (MDI)
polyurethanes
alkylbenzene
detergents
chlorobenzene
toluene
benzene
toluene diisocyanate (TDI)
polyurethanes
benzoic acid
caprolactam
nylon
mixed xylenes
ortho-xylene
phthalic anhydride
para-xylene
dimethyl terephthalate
polyesters
purified terephthalic acid
polyesters

Many, most, of these are called "specialty" chemcials. For a variety of reasons including purity concerns, most are not shipped by pipeline. I don't know of a specialty petrochemical that is.


Thats quite a list. One question, did you list nylone and synthetic rubbers three times each to make the list seem longer?

Bert


Not to mention "Polyesters" twice within the last three lines.

Please remember, Sol once posted the per mile Maintence of Way expenditures for the Milwaukee Road and the Great Northern for each year from 1950 to 1970 - that "data dump" didn't mean anything either.

He just throws crap out here and gets really mad when anyone points out that it is, in fact, crap.
"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.
  • Member since
    August 2004
  • From: The 17th hole at TPC
  • 2,283 posts
Posted by n012944 on Monday, June 12, 2006 12:07 AM
QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by TomDiehl

Originally posted by futuremodal

Originally posted by edblysard
No, seriously, I have invited him several times..come sit and watch, or grab a pair of gloves and boots and I can put him to work lining switches and pulling pins...
So far, he has chickened out every time.
Go figure.[:D]Ed


Bert is ignorant of the difference between the monopolistic tactics of the US railroad industry and the current operations of the oil & petrochemical industry. He claims there is no difference between the railroads' captive shipper rates and the oil industry's current fuel prices. What I pointed out to him was that there are no consumers that are captive to the oil industry, so to try to analogize the railroad industry with the oil industry is ridiculous.


I gave you an example of how oil companies have people captive, look it up.

An "expensive model collector"

  • Member since
    August 2004
  • From: The 17th hole at TPC
  • 2,283 posts
Posted by n012944 on Monday, June 12, 2006 12:02 AM
QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by edblysard





as for a Google search, really now, why would I care?


That comment was not directed at you.


Bert

An "expensive model collector"

  • Member since
    August 2004
  • From: The 17th hole at TPC
  • 2,283 posts
Posted by n012944 on Monday, June 12, 2006 12:00 AM
QUOTE: Originally posted by MichaelSol

Oh good grief, another pile on by the half-informed.

Chemical engineering was my original trade. "Petrochemical" is not a term of art, it is precisely defined as a type and class. I worked with a number of the following petrochemicals, and this would be a typical list of "petrochemicals."

ethylene
polyethylenes
ethylene oxide
ethylene glycols
polyesters
engine coolant
glycol ethers
ethoxylates
vinyl acetate
1,2-dichloroethane
trichloroethylene
tetrachloroethylene
vinyl chloride
polyvinyl chloride
ethylbenzene
styrene
polystyrenes
synthetic rubbers
higher olefins
detergent alcohols
propylene
cumene
acetone
bisphenol A
epoxy resins
polycarbonate
solvents
isopropyl alcohol
acrylonitrile
polypropylene
propylene oxide
propylene glycol
glycol ethers
acrylic acid
acrylic polymers
allyl chloride
epichlorohydrin
epoxy resins
butadiene
synthetic rubbers
benzene
ethylbenzene
styrene
polystyrenes
synthetic rubbers
cumene
acetone
bisphenol A
epoxy resins
polycarbonate
cyclohexane
adipic acid
nylons
caprolactam
nylons
nitrobenzene
aniline
methylene diphenyl diisocyanate (MDI)
polyurethanes
alkylbenzene
detergents
chlorobenzene
toluene
benzene
toluene diisocyanate (TDI)
polyurethanes
benzoic acid
caprolactam
nylon
mixed xylenes
ortho-xylene
phthalic anhydride
para-xylene
dimethyl terephthalate
polyesters
purified terephthalic acid
polyesters

Many, most, of these are called "specialty" chemcials. For a variety of reasons including purity concerns, most are not shipped by pipeline. I don't know of a specialty petrochemical that is.


Thats quite a list. One question, did you list nylone and synthetic rubbers three times each to make the list seem longer?

Bert

An "expensive model collector"

  • Member since
    February 2001
  • From: Poconos, PA
  • 3,948 posts
Posted by TomDiehl on Sunday, June 11, 2006 9:40 PM
QUOTE: Originally posted by MichaelSol

Well, TomDiehl, Edblysard, and BobWilcox all showed up -- nothing to contribute to the thread, just the usual. Always happens.


Since what we contribute doesn't fit your narrow agenda, I can see why you think that.

Just another blank profile member. [:o)]
Smile, it makes people wonder what you're up to. Chief of Sanitation; Clowntown
  • Member since
    October 2004
  • 3,190 posts
Posted by MichaelSol on Sunday, June 11, 2006 9:06 PM
Well, TomDiehl, Edblysard, and BobWilcox all showed up -- nothing to contribute to the thread, just the usual. Always happens.
  • Member since
    October 2004
  • 3,190 posts
Posted by MichaelSol on Sunday, June 11, 2006 9:03 PM
QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by MichaelSol

I don't know of a specialty petrochemical that is.



You mentioned ehtylene and propylene on your list of petrochemicals. As every one knows in the "trade" it moves via pipeline in massive quanaties.

I had expected that someone "in the trade" would know these were not "specialty chemicals".

I had a feeling these were just words on a page to you.

I stand by exactly what I stated in my post. The fact that you don't know the difference between specialty chemicals and other traffic suggests exactly your level of expertise on these matters.
  • Member since
    March 2002
  • 9,265 posts
Posted by edblysard on Sunday, June 11, 2006 9:01 PM
Tom,
I think Dave believes he has taken the condecending remark to a higher art form...
Oh well, some peoples "art" is other folks wallpaper...
You and Bert were, of course, correct, it is his last line of defense.

Ed

23 17 46 11

  • Member since
    February 2001
  • From: Poconos, PA
  • 3,948 posts
Posted by TomDiehl on Sunday, June 11, 2006 8:57 PM
QUOTE: Originally posted by bobwilcox
Michael why not fill out your profile and give us more information about your past as a railroader, farmer, attorney, teacher, etc?


Yeah, THAT'LL happen.
Smile, it makes people wonder what you're up to. Chief of Sanitation; Clowntown
  • Member since
    February 2001
  • From: Poconos, PA
  • 3,948 posts
Posted by TomDiehl on Sunday, June 11, 2006 8:55 PM
QUOTE: Originally posted by futuremodal

"...manned by folks like Ed..." is an insult?!

Hmmmmm, is comparing someone to Ed an insult?

Okay, I apologize to anyone that I compared to Ed.[|(]

And who says I don't acknowledge my own mistakes?[:-,]


I noticed you didn't mention the "sorryassed operation" remark. An operation you admit you've never witnessed.

And condecending remarks are a form of insult.
Smile, it makes people wonder what you're up to. Chief of Sanitation; Clowntown
  • Member since
    March 2002
  • 9,265 posts
Posted by edblysard on Sunday, June 11, 2006 7:54 PM
Oh,
There you are, Dave.
Now, where does the ticket go, and in whos name?
It has always been a open invite...we'll leave the light on...just follow the banjo music...(really, I make banjos and guitars!)
We gotta pretty good jug band on friday nights!

Ed

23 17 46 11

  • Member since
    April 2003
  • 305,205 posts
Posted by Anonymous on Sunday, June 11, 2006 7:41 PM
"...manned by folks like Ed..." is an insult?!

Hmmmmm, is comparing someone to Ed an insult?

Okay, I apologize to anyone that I compared to Ed.[|(]

And who says I don't acknowledge my own mistakes?[:-,]
  • Member since
    February 2001
  • From: Poconos, PA
  • 3,948 posts
Posted by TomDiehl on Sunday, June 11, 2006 7:40 PM
QUOTE: Originally posted by edblysard

Guess Dave doesn’t want that ticket after all....[8D]


You might have had him until you got to the part about lining switches and pulling pins.
Smile, it makes people wonder what you're up to. Chief of Sanitation; Clowntown
  • Member since
    March 2002
  • 9,265 posts
Posted by edblysard on Sunday, June 11, 2006 7:29 PM
Guess Dave doesn’t want that ticket after all....[8D]

23 17 46 11

  • Member since
    December 2001
  • From: Crozet, VA
  • 1,049 posts
Posted by bobwilcox on Sunday, June 11, 2006 6:27 PM
QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by MichaelSol

I don't know of a specialty petrochemical that is.



You mentioned ehtylene and propylene on your list of petrochemicals. As every one knows in the "trade" it moves via pipeline in massive quanaties. If chemical enginering was your trade where did you ply your trade? What are your degress in chemical enginering? Who granted the degrees?

Ethylene and propylene are not classified as specialty chemicals. Now, go back and read the post.

Do you have any numbers, or just words like "massive." How much goes by pipeline, how much by rail?

What's your educational background in chemistry and actual experience?



Ethylene 99% pipeline, 1% truck, water of rail. Souce: Coversations with ExxonMobil, Shell and BP developing new PE plants.

Background : See my profile.

Michael why not fill out your profile and give us more information about your past as a railroader, farmer, attorney, teacher, etc?
Bob
  • Member since
    February 2001
  • From: Poconos, PA
  • 3,948 posts
Posted by TomDiehl on Sunday, June 11, 2006 6:07 PM
QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by edblysard
No, seriously, I have invited him several times..come sit and watch, or grab a pair of gloves and boots and I can put him to work lining switches and pulling pins...
So far, he has chickened out every time.
Go figure.[:D]Ed


Oh, now it's an open invitation, is it? And for what? To watch a sorryass operation manned by folks like Ed? On my own dime?! No offer of paying my appearance fee, no per diem?

And you call that "chickening out"?. I call it a waste of my valuable time and resources.

And I would have thought someone down there in oil country would have a better grasp on which petro products go by which mode to which consumer market a majority of the time.


So, ignoring Dave's insults on this post, we can easily conclude 1) he's not a railfan, and 2) he's allergic to doing anything resembling real work. You could wonder what his knowledge is of railroads would be based on, like anybody with a blank profile.

It also makes you wonder what his "star" appeal would be. "On my own dime?! No offer of paying my appearance fee, no per diem?"


So Tom, apparently turning down an *invitation* from Ed is considered an "insult" down there in banjo country, yet being accused of "chickening out" over the understandable disregard I have for the faux invitation is NOT an insult?

Whatever. Now I guess the reference to "banjo country" will be considered an insult by your type.

Oh no! Now referencing "your type" will be considered an insult! Oh no!

I'll say this, and if you guys want to pu***he "insult" angle, by all means go ahead, you all have lost whatever credibiltiy you might have had at this point.

Bert is ignorant of the difference between the monopolistic tactics of the US railroad industry and the current operations of the oil & petrochemical industry. He claims there is no difference between the railroads' captive shipper rates and the oil industry's current fuel prices. What I pointed out to him was that there are no consumers that are captive to the oil industry, so to try to analogize the railroad industry with the oil industry is ridiculous.

Bert then proceeded to accuse anyone who disagreed with him of name calling and Google name searches to ostensibly scrape up some dirt on him. Well, fine. Bert, you are ignorant. There, now I have given credibility to your otherwise asinine "name calling" acusation. My bad.

As for a Google search, really now, why would I care?

Now, Tom. Do you really want to go into the comparison of how petrochemicals get to the primary consumption markets, or are you fine with thinking that all petrochemicals can get to the end user by pipeline? Just let me know and we'll go from there. No name calling, no Google searches, just a discussion.


Since Dave's reading ability STILL hasn't improved, it appears he needs a bit of guidance.

Let's see, insults from Dave:

1) "sorryass operation"
2) "manned by folks like Ed"

And again, you're still totally clueless of what Bert and I both noticed. Let me drop you a bit of a hint, since you're throwing insults, look in a mirror.
Smile, it makes people wonder what you're up to. Chief of Sanitation; Clowntown
  • Member since
    October 2004
  • 3,190 posts
Posted by MichaelSol on Sunday, June 11, 2006 3:08 PM
QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by MichaelSol

I don't know of a specialty petrochemical that is.



You mentioned ehtylene and propylene on your list of petrochemicals. As every one knows in the "trade" it moves via pipeline in massive quanaties. If chemical enginering was your trade where did you ply your trade? What are your degress in chemical enginering? Who granted the degrees?

Ethylene and propylene are not classified as specialty chemicals. Now, go back and read the post.

Do you have any numbers, or just words like "massive." How much goes by pipeline, how much by rail?

What's your educational background in chemistry and actual experience?

Join our Community!

Our community is FREE to join. To participate you must either login or register for an account.

Search the Community

Newsletter Sign-Up

By signing up you may also receive occasional reader surveys and special offers from Trains magazine.Please view our privacy policy