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

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Posted by MichaelSol on Thursday, June 15, 2006 11:39 PM
QUOTE: Originally posted by greyhounds

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by jeaton
The right most column on the table verifies that the RVC's on the Montana rates are far greater than those from Nebraska. I assume that the Nebraska points were selected because they represent origins that are in competition with Montana farmers for export over the PNW. Interestingly, the column second to the right has the freight cost per bushel. For the Nebraska origins the freight cost per bushel ranges from a low of $1.08 to a high of $1.52. For the Montana rates the range is $.98 to $1.05. If I had a choice, I guess I'd go to Montana.

http://rscc.mt.gov/docs/White_Paper_Meeting_10_05.pdf

Montana pays $1.05 per bushel, for the total mileage of 884 miles. Nebraska pays $1.08 per bushel ... to ship 1491 miles.

The Nebraska "high" rate is for a shipment of 2,206 miles.

The average Montana rate is for a shipment of about 900 miles.


The "Nebraska Rate" of $1.08/ bushel is not a BNSF rate. It is a UP rate. Sol usualy leaves some relavent detail like this out. Check page 16 of the Whiateside Study.

Actually, Jay made the comparison, not me. I am sure you will make the correction.
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Posted by MichaelSol on Friday, June 16, 2006 12:06 AM
You're playing statistical games now. Why don't you just read the paper, instead of toying with the data.

Here's the data, in a standard, cost per 1,000 bushels per mile.

Billings .. $0.97
Conrad.. $1.21
Fort Benton..$1.10
Great Falls..$1.12
Havre.. $1.19
Moccasin..$0.88

Alliance..$0.90
Beatrice..$0.70
Crete..$0.70
Fremont..$0.69
Grand Island..$0.70
Lincoln..$0.70
North Platte..$0.72
Omaha..$0.69
Superior..$0.71

However, the Staggers Act is written in terms of R/VC.

Billings .. 376% R/VC
Conrad.. 321%
Fort Benton..393%
Great Falls..359%
Havre.. 388%
Moccasin..392%

Alliance..298%
Beatrice..217%
Crete..235%
Fremont..231%
Grand Island..218%
Lincoln..233%
North Platte..225%
Omaha..231%
Superior..238%

Cherry picking and misrepresenting the meaning of data is easy if you are looking to mislead. And of course, you are misrepresenting the fundamental meaning of "rate." Were you looking for "inverse pricing", where it actually cost less per carload, to ship 2000 miles, than it did to cost to ship a carload 900 miles? Well, yes, BNSF has done that too. It's not in the Whiteside study. Too bad since that seems to have become the "standard," mainly by not actually reading it of course.

However, we have a Staggers Act that was supposed to defined the parameters -- perfect or not -- of how we assess the data. When railroads advocated its passage, they advocated the use of those measures.
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Posted by TomDiehl on Friday, June 16, 2006 6:00 AM
QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by n012944

QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by n012944

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by rrandb

All I'm saying is if Idaho had wanted the truck/barge traffic there IDOT was that hard to work with. If they did roadblock the border it was not for the benift of BNSF. Idaho had asked for 120,000. A reason is at that weight 120,000 we did 8 mph uphill and 4 mph downhill. Granted it was winter and there was 5" of ice and cinders on the road. The point is the damage to the road at those weights is not that much different. Did the Feds do that maybe to help BNSF. I do not think so but it would fit the DC/railroad colusion theory.


It is a generally accepted fact that the rail industry had a major hand in convincing the federal government to cap each state's GVW limits for non-Interstate highways, with each state able to grandfather in their particular weight limit that was in place when the cap was enacted. The Interstate Highway cap has been 80,000 lbs since I can remember.

Most of the grain that was trucked from Montana to Lewiston went via non-Interstate Highways - US Highway 12, Montana Highway 200, etc.


Back to that old "its a railroad conspiracy theory' thing again. Give it a break.


Bert


http://www.aar.org
http://www.cabt.org

Since you seem to know absolutely nothing about the railroad industry, here's a primer. The AAR is the American Association of Rairoads, the lobbying arm of the rail industry. The AAR has a surogate group it uses called the Coalition Against Bigger Trucks, which is predicated soley on opposing increased GVW for trucks. It was CABT that was the major force in getting the federal cap on weight limits imposed.

Now, whether it is a conspiracy or not is up to your imagination.[D)]

Even in this weeks newspapers, there's an article that states the usual knee-jerk opposition to trucks and highways from the rail industry:

http://www.helenair.com/articles/2006/06/14/montana/a08061406_02.txt

Kitzenberg leading caravan for four-lane U.S. Highway 2

Quote of note: "The lone opposition he’s encountered to the “four-for-two” idea has come from BNSF Railway, which Kitzenberg (says) wants to keep its shipping monopoly across the Hi-Line. 'If you’ve got a monopoly and are making money, why would you want competition?' the legislator asked.”


Digging a bit further into the AAR link that YOU provided leads us to:

http://www.aar.org/GetFile.asp?File_ID=281

Most interesting is the third paragraph under "Issue Overview."

You should really read your own links before you post them. The noted paragraph blows your supposed "conspiricy" out of the water. [:o)]



Dave,

I really love how you seem to make a habit of acting all smug in your responses, and then have them thrown in your face. Did you read the link? The trucking industy opposed the weight increase. Let me say that again, the TRUCKING industy. Now I know you will put your usual spin on it, the railroads bribed them with all there money. But at the end of the day it shows that YOU are the one that knows nothing about the railroad industry.


Bert


Hmmmmm. Quothe Bert "The trucking industy opposed the weight increase. Let me say that again, the TRUCKING industy."

Question for Bert: Who was it then that proposed the GVW increase? C'mon, it is an easy answer, no spin required.

Here's a hint: You are batting 1.000 in eschewing internal polar opposition.


He's quoting something from a link YOU originally provided in a vain attempt to prove a conspiricy. The only "spinning" here seems to be yours.
Smile, it makes people wonder what you're up to. Chief of Sanitation; Clowntown
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Posted by Anonymous on Friday, June 16, 2006 8:29 AM
QUOTE: Originally posted by jeaton

Furniture at retail has a 100% markup.


High markups are necessary for low volume goods.
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Posted by MP173 on Friday, June 16, 2006 8:50 AM
I think we are at the point of splitting hairs. The farmer doesnt pay dollars per bushel mile to move wheat, he pays dollars per bushel. That is the economic reality. Nebraska is paying more per bushel to move their wheat to PNW. Slice it, dice it, blend it, chop it, it is still more.

I have a difficult time in analyzing V180% in stand alone terms. Simply because I do not have a clue as to how it compares to the rest of the income statement (costs) and balance sheet (capital structure). V180% may be just fine, but then again, if fixed costs are high (they are) for railroads, it may not be.

It seems to have been an arbitrary number negotiated. Perhaps it is (or was) the "magic number" such as Dave's "10% above cost".

The reality of running a business (or in my case a sales territory) is that there are no set rules in place. By closing your mind to considerations you often close the door on opportunity.

Rails require enormous assets to operate. It is very critical that those assets generate the highest margins possible AND the highest usage (asset turnover) possible. There will be (as in all industries) business that is low margin but makes healthy contributions to the overall costs. It sure seems that is the case in railroads (and airlines and many other industries).

Had the low margin business not been in the mix (and I agree, it would be great if that business could see higher margins) the overall costs to even the captive shippers would have been higher, due to less coverage of fixed costs.

Complex issues, no doubt. I dont pretend to understand nor know all the answers.

ed

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Posted by edblysard on Friday, June 16, 2006 9:24 AM
So, you are saying that because Nebraska is farther from the destination, they should pay an even higher price than they already do?

Or that because Montana is closer, they should get a even bigger break on the price, for the same basic service, (hauling rail cars)?

Looks like Montana is already getting a better price, for even less distance, which should mean they have a faster turnaround, therefore should be able to ship even more product at the lesser rate, faster....which means they should be making more profit than the Nebraska farmers.

Oh, I get it...the guys in Nebraska are willing to pay more, in a effort to encourage the service provider to provide better, more consistent service, and the Montana guys are not willing to pony up the bucks for the same thing, and then feel justified to whine and complain about the lack of a service they are not willing to pay for.

Ok, so I forgot about the nationwide railroad conspiracy....

Let’s see, Montana is closer, already pays less that their competition for the same basic service, and the problem is?


QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by jeaton
The right most column on the table verifies that the RVC's on the Montana rates are far greater than those from Nebraska. I assume that the Nebraska points were selected because they represent origins that are in competition with Montana farmers for export over the PNW. Interestingly, the column second to the right has the freight cost per bushel. For the Nebraska origins the freight cost per bushel ranges from a low of $1.08 to a high of $1.52. For the Montana rates the range is $.98 to $1.05. If I had a choice, I guess I'd go to Montana.

http://rscc.mt.gov/docs/White_Paper_Meeting_10_05.pdf

Montana pays $1.05 per bushel, for the total mileage of 884 miles. Nebraska pays $1.08 per bushel ... to ship 1491 miles.

The Nebraska "high" rate is for a shipment of 2,206 miles.

The average Montana rate is for a shipment of about 900 miles.

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Posted by TomDiehl on Friday, June 16, 2006 9:37 AM
QUOTE: Originally posted by edblysard

So, you are saying that because Nebraska is farther from the destination, they should pay an even higher price than they already do?

Or that because Montana is closer, they should get a even bigger break on the price, for the same basic service, (hauling rail cars)?

Looks like Montana is already getting a better price, for even less distance, which should mean they have a faster turnaround, therefore should be able to ship even more product at the lesser rate, faster....which means they should be making more profit than the Nebraska farmers.

Oh, I get it...the guys in Nebraska are willing to pay more, in a effort to encourage the service provider to provide better, more consistent service, and the Montana guys are not willing to pony up the bucks for the same thing, and then feel justified to whine and complain about the lack of a service they are not willing to pay for.

Ok, so I forgot about the nationwide railroad conspiracy....

Let’s see, Montana is closer, already pays less that their competition for the same basic service, and the problem is?


QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by jeaton
The right most column on the table verifies that the RVC's on the Montana rates are far greater than those from Nebraska. I assume that the Nebraska points were selected because they represent origins that are in competition with Montana farmers for export over the PNW. Interestingly, the column second to the right has the freight cost per bushel. For the Nebraska origins the freight cost per bushel ranges from a low of $1.08 to a high of $1.52. For the Montana rates the range is $.98 to $1.05. If I had a choice, I guess I'd go to Montana.

http://rscc.mt.gov/docs/White_Paper_Meeting_10_05.pdf

Montana pays $1.05 per bushel, for the total mileage of 884 miles. Nebraska pays $1.08 per bushel ... to ship 1491 miles.

The Nebraska "high" rate is for a shipment of 2,206 miles.

The average Montana rate is for a shipment of about 900 miles.



The one thing I wondered about was "The Nebraska "high" rate is for a shipment of 2,206 miles."

If you go 2206 miles from Nebraska, you'll be well into the Atlantic or Pacific Ocean, depending if you head east or west. The 1491 miles sounds a bit more believable.
Smile, it makes people wonder what you're up to. Chief of Sanitation; Clowntown
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Posted by edblysard on Friday, June 16, 2006 9:47 AM
QUOTE: Originally posted by MichaelSol

You're playing statistical games now. Why don't you just read the paper, instead of toying with the data.




Is this the kettle calling the pot black, or what!

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Posted by n012944 on Friday, June 16, 2006 10:21 AM
QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by n012944

QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by n012944

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by rrandb

All I'm saying is if Idaho had wanted the truck/barge traffic there IDOT was that hard to work with. If they did roadblock the border it was not for the benift of BNSF. Idaho had asked for 120,000. A reason is at that weight 120,000 we did 8 mph uphill and 4 mph downhill. Granted it was winter and there was 5" of ice and cinders on the road. The point is the damage to the road at those weights is not that much different. Did the Feds do that maybe to help BNSF. I do not think so but it would fit the DC/railroad colusion theory.


It is a generally accepted fact that the rail industry had a major hand in convincing the federal government to cap each state's GVW limits for non-Interstate highways, with each state able to grandfather in their particular weight limit that was in place when the cap was enacted. The Interstate Highway cap has been 80,000 lbs since I can remember.

Most of the grain that was trucked from Montana to Lewiston went via non-Interstate Highways - US Highway 12, Montana Highway 200, etc.


Back to that old "its a railroad conspiracy theory' thing again. Give it a break.


Bert


http://www.aar.org
http://www.cabt.org

Since you seem to know absolutely nothing about the railroad industry, here's a primer. The AAR is the American Association of Rairoads, the lobbying arm of the rail industry. The AAR has a surogate group it uses called the Coalition Against Bigger Trucks, which is predicated soley on opposing increased GVW for trucks. It was CABT that was the major force in getting the federal cap on weight limits imposed.

Now, whether it is a conspiracy or not is up to your imagination.[D)]

Even in this weeks newspapers, there's an article that states the usual knee-jerk opposition to trucks and highways from the rail industry:

http://www.helenair.com/articles/2006/06/14/montana/a08061406_02.txt

Kitzenberg leading caravan for four-lane U.S. Highway 2

Quote of note: "The lone opposition he’s encountered to the “four-for-two” idea has come from BNSF Railway, which Kitzenberg (says) wants to keep its shipping monopoly across the Hi-Line. 'If you’ve got a monopoly and are making money, why would you want competition?' the legislator asked.”


Digging a bit further into the AAR link that YOU provided leads us to:

http://www.aar.org/GetFile.asp?File_ID=281

Most interesting is the third paragraph under "Issue Overview."

You should really read your own links before you post them. The noted paragraph blows your supposed "conspiricy" out of the water. [:o)]



Dave,

I really love how you seem to make a habit of acting all smug in your responses, and then have them thrown in your face. Did you read the link? The trucking industy opposed the weight increase. Let me say that again, the TRUCKING industy. Now I know you will put your usual spin on it, the railroads bribed them with all there money. But at the end of the day it shows that YOU are the one that knows nothing about the railroad industry.


Bert


Hmmmmm. Quothe Bert "The trucking industy opposed the weight increase. Let me say that again, the TRUCKING industy."

Question for Bert: Who was it then that proposed the GVW increase? C'mon, it is an easy answer, no spin required.

Here's a hint: You are batting 1.000 in eschewing internal polar opposition.


He's quoting something from a link YOU originally provided in a vain attempt to prove a conspiricy. The only "spinning" here seems to be yours.


It could have been the constuction industry. They would love the extra work from all the increase in wear the GVW increase would bring. If the trucking industry proposed it, then why switch? Sounds like one of those darn "conspiracy" things again.


Bert

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Posted by jeaton on Friday, June 16, 2006 10:52 AM
I don't think I "cherry picked" data. I took the data from a table in the Whiteside paper and I acknowledged that the data made the point that that charges fromMontana origins produce a higher RVC.

What I found interesting was that the among the data provided was a column showing that, for the origin points selected, Montana shippers were actually charged less per bushel than Nebraska shippers. Obviously, that is the result of a longer haul and I am sure that there are numerous cases where Montana origins are more remote from other markets and the situation would be reversed.

Seems to me that in the whole scheme of the grain marketing thing, it isn't the markup on the frieght charges or the calculated freight charge to move a thousand bushels of grain one mile, rather it is the cost of getting the grain to the destination.

For all the legal and economic arguements made, there is but one goal and that is to reduce the rail transportation charges assessed against a certain category of shippers. The proposed means to accompli***his include more enforcement of existing regulations to changes in the law. Some would probably like to see the establishment of a permanent independent government commission to sort it all out and perhaps even set prescribed freight charges.

Although my view on the issue obviously leans toward the railroads' side, I confess that I do not have the wisdom to say for certain who is right. However, I do think I am close on the optional outcomes that I stated in previous posts.

In spite of any changes made the railroads, operating at capacity and understanding their resulting pricing power, don't engage in any significant price war and rates remain about the same.

The changes actually accompli***he goal of reducing transportation charges which results in lower revenue and less cash for capacity improvements.

Seems to me the choice is between lower freight charges or better service. I don't think you get both.

"We have met the enemy and he is us." Pogo Possum "We have met the anemone... and he is Russ." Bucky Katt "Prediction is very difficult, especially if it's about the future." Niels Bohr, Nobel laureate in physics

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Posted by MichaelSol on Friday, June 16, 2006 11:04 AM
QUOTE: Originally posted by jeaton
Seems to me the choice is between lower freight charges or better service. I don't think you get both.

Well, if anyone bothers to actually read the paper, and many like it, that's the point, these shippers are paying a higher rate, and getting worse service.
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Posted by MP173 on Friday, June 16, 2006 11:17 AM
I dont think there is any question, the rail's service is mediocre, at best, on a system wide level.

I think that is just the nature of the industry. Trucking moves (at least in truckload operations) one load at a time and thus can control each movement independently.
Railroads, however are moving multiple loads dependent on each other and thus are subject to the snowball effect that can occur.

It gets back to what I discussed earlier, this is an asset intense industry. There is a tradeoff between capacity and return. It must become frustrating when that is a negetive correlation....sort of like the airline industry.

ed
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Posted by jeaton on Friday, June 16, 2006 11:38 AM
QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by jeaton
Seems to me the choice is between lower freight charges or better service. I don't think you get both.

Well, if anyone bothers to actually read the paper, and many like it, that's the point, these shippers are paying a higher rate, and getting worse service.

I read the entire paper several days ago and just reread the discussion on car supply. In spite of the fact that the usual harvest peak shipping activity came along with a surge in shipping out of storage, the car supply situation was quite bad. I didn't note any evidence that it was any worse than any other grain origin areas.

My question is how does reducing revenue and cash flow improve that situation?

"We have met the enemy and he is us." Pogo Possum "We have met the anemone... and he is Russ." Bucky Katt "Prediction is very difficult, especially if it's about the future." Niels Bohr, Nobel laureate in physics

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Posted by MichaelSol on Friday, June 16, 2006 11:41 AM
QUOTE: Originally posted by MP173

I think we are at the point of splitting hairs. The farmer doesnt pay dollars per bushel mile to move wheat, he pays dollars per bushel. That is the economic reality. Nebraska is paying more per bushel to move their wheat to PNW. Slice it, dice it, blend it, chop it, it is still more.
I

The Whiteside paper does not address inverse pricing. It doesn't claim to. Now you are asserting that because it does not address inverse pricing, that the resulting price is somehow "fair."

If you agree so strongly with the Whiteside Paper, then you have to take it as a whole. If you don't, that's cherry picking.

And again, for the umpteenth time, I don't like the way Whiteside presents things, because it can be confusing, and misunderstood. This paper is no exception.

The point -- yes, the apparently inscrutible point -- is that Montana shippers are forced to pay a substantially higher cost per mile of transportation to ship its products to the market, than a shipper a thousand miles further away, even though over the same railroad line.

Now, I see on this thread the innovative idea that shippers only ship bushels, that the heretofore important role of transportation to cover miles is irrelevant. Well, that is interesting. It is the cost per unit per mile that defines whether a market area is viable or not because that is what defines the market area.

The point is the opposite of what you contend. Whitside is not contending that Nebraska shippers are shippng wheat to Portland more cheaply -- what they are contending is by using Nebraska rates as a comparison it is demonstrably true that Montana shippers are charged a much higher rate to move the same commodity over the same rail line to the same destination -- that is, the variable costs of the move should be the same -- for the component of the move that has to do with miles traveled.

That is, the comparison shows that BNSF will indeed charge shippers a much lower rate if those shippers are located in areas of transportation competition. Since the rate charged over the mileage traveled presumably covers costs, Whiteside is attempting to show that the cost of the service -- per mile of service provided -- is considerably lower to other shippers, and that BNSF presumably sets those rates likewise to generate a profit.

Accordingly, that shows why the Revenue to Variable Cost of service ratio is so high to Montana shippers compared to -- for example -- Nebraska shippers. This is why that data is located on the chart before the R/VC data. This is why I don't like the presentations sometimes -- I understand what he is trying to do, but readers who don't, will take it literally to mean that he is suggesting that Nebraska shippers pay less than Montana shippers -- which is an inverse pricing situation -- and which has also existed on BNSF, but is not the point of that particular paper.

Whiteside is attempting to show a statistical basis that evidences the discrimination in rate setting -- and that the rate setting cannot be related to cost of service, but rather purely to price gouging on the service. He uses rates to the same destination to show the relationship between the service offered and the R/VC ratio.

He is not even suggesting that Nebraska shippers ship a carload at a lower price -- but at a much lower rate. It seems odd to have to suggest this on a railroad thread, but even the alleged railroaders here seem to miss the point: price is not the same thing as rate and the interpretations offered on this thread are obviously confusing the two concepts.


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Posted by MichaelSol on Friday, June 16, 2006 12:46 PM
Ed maintains that because the actual cost of the shipment is more, then Nebraska shippers pay more. It is ironclad logic.

Here's what Whiteside is saying. I am taking some round numbers by way of hypotheticals.

Montana shippers pay $150 to ship 100 miles. It costs the railroad $50 in handlng and $50 mileage (.50 per mile). Railroad makes $50.

Nebraska shippers pay $200 to ship 300 miles.
It costs the railroad $50 for handling, and $150 mileage. Railroad earns Zilch.

The ironclad logic of edblysard observes that it is "cheaper" for Montana shippers to ship their wheat.

The ironclad logic of railroading would note that the amount of physical plant necessary to support a 300 mile run is much greater than the 100 mile run. Someone might note that the cost of fuel, crews, equipment etc has to be greater on the 300 mile run.

The Montana shipper is getting the "deal" and should be "happy".

The Nebraska shipper ought to be miserable, except that his "rate" allows him to look to Duluth, Portland, and Gulf Ports. When the rate in Duluth is $4.86, he nets $14,268 per carload. As soon as the price in Portland reaches $5.83/bu, he ships to Portland because he can net $14,287. The price in Portland is currently $5.64.

At certain points, the rate makes it feasible under market conditions for the Nebraska shipper to buy the haul. Then the price goes back down in Portland because of Nebraska, Minnesota, etc. wheat. Then they stop shipping again and go back to their other markets.

The railroad makes 30% net on the Montana shipper, notwithstanding his lower price.

The railroad makes nothing on the Nebraska shipper notwithstanding the price received is 25% higher.

Odd how that works, and the difference that "mileage" makes. That is how "price" can be lower, but "rate" can be higher and how that affects everything, farmer, railroad, broker, buyer.

The Montana shipper wonders why he is paying the entire cost of providing alternative and standby service for Nebraska shippers, seeing his own market depressed by that standby service, and wonders why he is paying all the profit for the railroad to do that to him.

But it is true, notwithstanding the arcane world of pricing and competition, that it is possible to stand there and say, gee, Montana shippers get a cheaper "price", they should be happy. Even if it was only a single $1 cheaper, notwithstanding 1,000 miles difference, they should be happy. After all, it's a "cheaper price." That is edblysard's view of railroading and how it does business.

The Staggers Act, however, talks in terms of "rates," and that is a different conversation altogether.

That is why the Whitehead paper's R/VC ratios are the important data, because that is the language of the Staggers Act.
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Posted by MichaelSol on Friday, June 16, 2006 12:49 PM
QUOTE: Originally posted by jeaton
I read the entire paper several days ago and just reread the discussion on car supply. In spite of the fact that the usual harvest peak shipping activity came along with a surge in shipping out of storage, the car supply situation was quite bad. I didn't note any evidence that it was any worse than any other grain origin areas.

I have in other threads posted the discussions of how the car supply is diverted to competitve shippers first, so as not to lose the business, and then when all is taken care of, finally given over to the captive shippers who have incurred storage costs, operating loan extensions and interest charges, and in many cases where storage is inadequate for an entire crop, losses in the crop as well. Extra costs compared to their competitors that they cannot recover, even as they are then required to pay a higher rate for the privilege.
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Posted by MichaelSol on Friday, June 16, 2006 12:54 PM
QUOTE: Originally posted by jeaton
My question is how does reducing revenue and cash flow improve that situation?

Well, this suggests that railroads are the captive, and cannot raise rates to their subsidized shippers. Well, maybe they would make more money if they didn't serve them at all, or more money if they raised the rates to provide a fair return to the railroad not only for the service provided, but the standby service for market selection that is also provided to those shippers.
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Posted by jeaton on Friday, June 16, 2006 1:08 PM
Sorry that I didn't get the rate/price thing. Old habit. For thirty years I and my peers used "rate" as the term for the dollar amount when multiplied times the number of units in a shipment-pounds,cwt, tons, trailer loads, car loads, trainloads or whatever produced the charge for the shipment. I guess that is what you mean when you speak of price.

I guess then by "rate" you mean something like a calculation of the revenue per car mile, ton mile, bushel mile or something like that. That those "rates" are lower for longer hauls than for shorter hauls, reflects a couple of issues. One is almost a tradition that goes back to loose car freight days when the handling at origin and destination added a kind of a fixed cost that when added to the line haul cost produced an average cost per mile that declined as the distanced increased. While not so relavant to unit train movements, there are still some cost that are perceived to be "per shipment".

The other cause of the "inverse rate" is a result of a pricing or market strategy that is at least some effort to keep from pricing out the more remote shipper from a given market, even if the "profit" from such shipments is lower than that of shipments of a shorter haul. A profit maximizing strategy obviously will consider the impact that price will have on total revenues and profits. Move transportation prices to a point that a shipper can no longer compete in a market means a carrier gets zero revenue from that shipper. Just wondering, but if the Montana grain shippers get the rate reductions sought, does that possibly put the Nebraska wheat shippers out of the PNW?

(Buy the way, I have no financial interest in UP, BNSF, wheat, barley, Montana or Nebraska.)

"We have met the enemy and he is us." Pogo Possum "We have met the anemone... and he is Russ." Bucky Katt "Prediction is very difficult, especially if it's about the future." Niels Bohr, Nobel laureate in physics

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Posted by n012944 on Friday, June 16, 2006 1:11 PM
QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by jeaton
I read the entire paper several days ago and just reread the discussion on car supply. In spite of the fact that the usual harvest peak shipping activity came along with a surge in shipping out of storage, the car supply situation was quite bad. I didn't note any evidence that it was any worse than any other grain origin areas.

I have in other threads posted the discussions of how the car supply is diverted to competitve shippers first, so as not to lose the business, and then when all is taken care of, finally given over to the captive shippers who have incurred storage costs, operating loan extensions and interest charges, and in many cases where storage is inadequate for an entire crop, losses in the crop as well. Extra costs compared to their competitors that they cannot recover.



Many COOPs in across the midwest have bought their own cars. Maybe that should be something that the Montana farmers consider.

Bert

An "expensive model collector"

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Posted by MichaelSol on Friday, June 16, 2006 2:02 PM
QUOTE: Originally posted by n012944
Many COOPs in across the midwest have bought their own cars. Maybe that should be something that the Montana farmers consider.

Most farmers aren't the actual shippers. Most Co-ops in Montana are the same Co-ops you would see in the Midwest, CHS (Cenex Heartland States) for example. Shippers do include shippers with car fleets, Peavey, ADM, Columbia Grain, United Harvest.

The problem, I understand, is that railroads are somewhat less concerned with empties movements on shipper-owned fleets, than they are with railroad owned equipment, and there is a resulting inefficiency with shipper owned fleets -- another point of contention between shippers and railroads. Something I've heard, haven't seen much data on it.
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Posted by MichaelSol on Friday, June 16, 2006 2:21 PM
QUOTE: Originally posted by jeaton

Sorry that I didn't get the rate/price thing. Old habit. For thirty years I and my peers used "rate" as the term for the dollar amount when multiplied times the number of units in a shipment-pounds,cwt, tons, trailer loads, car loads, trainloads or whatever produced the charge for the shipment. I guess that is what you mean when you speak of price.

I know you did. Everyone does. However, the terminology when speaking of actual rates -- "a quantity measured with respect to another measured quantity" -- then the discussion needs to slow down and recognize that "price" is actually different than "rate." That's edblysard's stumbling block, he thinks the cheaper "price" is all there is to it.

I know I saw that some time ago on another thread, and I think you were there, when the proposition was made that a railroad should reject a $300 "rate" -- Wenatchee to Everett, because the RR "obviously" made more money from a $1500 "rate" to Chicago. I pointed out that "rate" is not "revenue" and frankly I was a little surprised that "railroaders" of varying degrees of self-description did not understand that difference.
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Posted by MP173 on Friday, June 16, 2006 3:45 PM
So, if I understand this correctly (not a given), then the major issue is that a price which is higher, but results in a rate per bushel which allows a shipper to go to a certain market opens that market up to competition.

Thus, Montana farmers are competing against other farmers, more distant, for the right to sell their product at the highest possible price per bushel (net).

How much of an influence does that other market have on the price of wheat? Lets say Nebraska tips over and ships to PNW, instead of Duluth or Houston...what quantity causes the price per bushel of wheat to drop?

It seems the buyer of the wheat is looking to purchase at the best possible price. The seller is looking to sell at the best possible price. The transportation companies are looking to move it at the best possible price.

Is Duluth not a market for Montana? If not, I can see the point of wanting to keep it at V180.

My only caution is that not knowing how to determine the variable costs...and I am not going to read the Staggers Act to determine how, I would be extremely careful about using VC ratios without having a basis for determining those costs.

In the meanwhile, you gotta figure out a way to increase those wheat prices. It is obvious that an increase on those would be beneficial. Such is the economics of commodities (as anyone owning gold has discovered this week). There is no value added, simply a price.

ed
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Posted by MichaelSol on Friday, June 16, 2006 6:27 PM
QUOTE: Originally posted by MP173
Is Duluth not a market for Montana? If not, I can see the point of wanting to keep it at V180.

The combination of high rates to Duluth (the discrimination works in both directions) and the price at Duluth almost never makes it feasible. I am trying to remember if I have ever seen Montana wheat go to Duluth, but I cannot recall it ever happening. Minnesota wheat, however, has been offered inverse pricing as recently as 2003, specifically where the cost to ship through Montana to Portland was cheaper by price than it was to ship from Montana to Portland. BNSF, interestingly, justified the inverse pricing on the grounds that there was "demand" in Portland, and they felt an obligation to help meet it. Of course, that kept the natural price down in Portland, even while Minnesota farmers made more money on their shipments than Montana farmers at less than half the distance.

In that instance, the BNSF took an active role in keeping the price of wheat down.
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Posted by MichaelSol on Friday, June 16, 2006 6:33 PM
QUOTE: Originally posted by MP173
[My only caution is that not knowing how to determine the variable costs...and I am not going to read the Staggers Act to determine how, I would be extremely careful about using VC ratios without having a basis for determining those costs.

The system for doing so has been in place for quite some time.

From the STB:

URCS is the STB's railroad general purpose costing system that is used to estimate variable and total unit costs for Class I U.S. railroads. URCS only develops costs for U.S. Class I railroads. The STB does publish URCS east and west regional costs. Those costs are based on a compilation of Class I data. The URCS costs are updated annually.

URCS is divided into three phases or steps. Phase I is the collection of data and special studies (Variability Study, Switching Study; etc). Phase II is the calculating system average variable unit costs based on system data and cost relationships developed in Phase I. Phase II is updated annually. Phase III is the Movement Costing Program which is used to estimates the system average variable and total costs of a shipment.

URCS evolved from the Interstate Commerce Commission's (ICC) railroad general purpose costing method - Rail Form A (RFA). RFA was developed by the ICC in 1938. Congress called for revision to RFA in the 1970's. URCS was developed in the late 1970's and early 1980's and reviewed by the Railroad Accounting Standards Board (RAPB). URCS was adopted by the ICC in 1989 in Ex Parte No. 431 as the ICC's general purpose costing system and the ICC termination Act of 1995 retained the provision that the market dominance determination be base on URCS costs. 10707(d)(1)(B)

URCS is used by the STB for a variety of statutory and non statutory functions. URCS is statutorily required for making the jurisdictional determination in railroad maximum rate reasonableness proceedings. URCS is also used to develop variable costs for making cost determinations in abandonment proceeding; to provide the railroad industry and shipper with a standardized costing model; costing the STB Car Load Waybill Sample to develop industry cost information; and to provide interested parties with basic cost information.
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Posted by Anonymous on Friday, June 16, 2006 7:31 PM
QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by n012944

QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by n012944

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by rrandb

All I'm saying is if Idaho had wanted the truck/barge traffic there IDOT was that hard to work with. If they did roadblock the border it was not for the benift of BNSF. Idaho had asked for 120,000. A reason is at that weight 120,000 we did 8 mph uphill and 4 mph downhill. Granted it was winter and there was 5" of ice and cinders on the road. The point is the damage to the road at those weights is not that much different. Did the Feds do that maybe to help BNSF. I do not think so but it would fit the DC/railroad colusion theory.


It is a generally accepted fact that the rail industry had a major hand in convincing the federal government to cap each state's GVW limits for non-Interstate highways, with each state able to grandfather in their particular weight limit that was in place when the cap was enacted. The Interstate Highway cap has been 80,000 lbs since I can remember.

Most of the grain that was trucked from Montana to Lewiston went via non-Interstate Highways - US Highway 12, Montana Highway 200, etc.


Back to that old "its a railroad conspiracy theory' thing again. Give it a break.


Bert


http://www.aar.org
http://www.cabt.org

Since you seem to know absolutely nothing about the railroad industry, here's a primer. The AAR is the American Association of Rairoads, the lobbying arm of the rail industry. The AAR has a surogate group it uses called the Coalition Against Bigger Trucks, which is predicated soley on opposing increased GVW for trucks. It was CABT that was the major force in getting the federal cap on weight limits imposed.

Now, whether it is a conspiracy or not is up to your imagination.[D)]

Even in this weeks newspapers, there's an article that states the usual knee-jerk opposition to trucks and highways from the rail industry:

http://www.helenair.com/articles/2006/06/14/montana/a08061406_02.txt

Kitzenberg leading caravan for four-lane U.S. Highway 2

Quote of note: "The lone opposition he’s encountered to the “four-for-two” idea has come from BNSF Railway, which Kitzenberg (says) wants to keep its shipping monopoly across the Hi-Line. 'If you’ve got a monopoly and are making money, why would you want competition?' the legislator asked.”


Digging a bit further into the AAR link that YOU provided leads us to:

http://www.aar.org/GetFile.asp?File_ID=281

Most interesting is the third paragraph under "Issue Overview."

You should really read your own links before you post them. The noted paragraph blows your supposed "conspiricy" out of the water. [:o)]



Dave,

I really love how you seem to make a habit of acting all smug in your responses, and then have them thrown in your face. Did you read the link? The trucking industy opposed the weight increase. Let me say that again, the TRUCKING industy. Now I know you will put your usual spin on it, the railroads bribed them with all there money. But at the end of the day it shows that YOU are the one that knows nothing about the railroad industry.


Bert


Hmmmmm. Quothe Bert "The trucking industy opposed the weight increase. Let me say that again, the TRUCKING industy."

Question for Bert: Who was it then that proposed the GVW increase? C'mon, it is an easy answer, no spin required.

Here's a hint: You are batting 1.000 in eschewing internal polar opposition.


He's quoting something from a link YOU originally provided in a vain attempt to prove a conspiricy. The only "spinning" here seems to be yours.


You guys make me laugh!

The links to AAR and CABT were to refute Bert's allegation that the railroad industry had nothing to do with pushing legislation to limit GVW. Should be pretty straightforward. Did Bert then acknowledge his mistake? Of course not.

Then Bert uses the AAR and CABT links to "prove" that the trucking industry opposes increasing GVW standards, an allegation about as out of context as you can get. The AAR and ATA made a pact that the ATA would not push for increased GVW in return for the AAR not pushing for a decrease in GVW. Now that capacity issues have made that pact superfluous, not to mention having no positive impact on the railroad industry, the trucking industry is ready to ditch the pact and push for increased GVW and LCV standards to aid in keeping the US economy from slipping back into a recession, something to which the rail industry seems oblivious.

But, just so Tom gets a refresher course in forum participation, here's the link to a previous thread from a few months ago in which we discussed the ATA's recent support for increasing GVW and LCV standards:

https://www.trains.com/community/forum/topic.asp?TOPIC_ID=61093

I'll give Bert a pass on this one since I don't remember him being around for that discussion.

Now, is everybody happy?[:)]
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Posted by TomDiehl on Friday, June 16, 2006 9:17 PM
QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by n012944

QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by n012944

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by rrandb

All I'm saying is if Idaho had wanted the truck/barge traffic there IDOT was that hard to work with. If they did roadblock the border it was not for the benift of BNSF. Idaho had asked for 120,000. A reason is at that weight 120,000 we did 8 mph uphill and 4 mph downhill. Granted it was winter and there was 5" of ice and cinders on the road. The point is the damage to the road at those weights is not that much different. Did the Feds do that maybe to help BNSF. I do not think so but it would fit the DC/railroad colusion theory.


It is a generally accepted fact that the rail industry had a major hand in convincing the federal government to cap each state's GVW limits for non-Interstate highways, with each state able to grandfather in their particular weight limit that was in place when the cap was enacted. The Interstate Highway cap has been 80,000 lbs since I can remember.

Most of the grain that was trucked from Montana to Lewiston went via non-Interstate Highways - US Highway 12, Montana Highway 200, etc.


Back to that old "its a railroad conspiracy theory' thing again. Give it a break.


Bert


http://www.aar.org
http://www.cabt.org

Since you seem to know absolutely nothing about the railroad industry, here's a primer. The AAR is the American Association of Rairoads, the lobbying arm of the rail industry. The AAR has a surogate group it uses called the Coalition Against Bigger Trucks, which is predicated soley on opposing increased GVW for trucks. It was CABT that was the major force in getting the federal cap on weight limits imposed.

Now, whether it is a conspiracy or not is up to your imagination.[D)]

Even in this weeks newspapers, there's an article that states the usual knee-jerk opposition to trucks and highways from the rail industry:

http://www.helenair.com/articles/2006/06/14/montana/a08061406_02.txt

Kitzenberg leading caravan for four-lane U.S. Highway 2

Quote of note: "The lone opposition he’s encountered to the “four-for-two” idea has come from BNSF Railway, which Kitzenberg (says) wants to keep its shipping monopoly across the Hi-Line. 'If you’ve got a monopoly and are making money, why would you want competition?' the legislator asked.”


Digging a bit further into the AAR link that YOU provided leads us to:

http://www.aar.org/GetFile.asp?File_ID=281

Most interesting is the third paragraph under "Issue Overview."

You should really read your own links before you post them. The noted paragraph blows your supposed "conspiricy" out of the water. [:o)]



Dave,

I really love how you seem to make a habit of acting all smug in your responses, and then have them thrown in your face. Did you read the link? The trucking industy opposed the weight increase. Let me say that again, the TRUCKING industy. Now I know you will put your usual spin on it, the railroads bribed them with all there money. But at the end of the day it shows that YOU are the one that knows nothing about the railroad industry.


Bert


Hmmmmm. Quothe Bert "The trucking industy opposed the weight increase. Let me say that again, the TRUCKING industy."

Question for Bert: Who was it then that proposed the GVW increase? C'mon, it is an easy answer, no spin required.

Here's a hint: You are batting 1.000 in eschewing internal polar opposition.


He's quoting something from a link YOU originally provided in a vain attempt to prove a conspiricy. The only "spinning" here seems to be yours.


You guys make me laugh!

The links to AAR and CABT were to refute Bert's allegation that the railroad industry had nothing to do with pushing legislation to limit GVW. Should be pretty straightforward. Did Bert then acknowledge his mistake? Of course not.

Then Bert uses the AAR and CABT links to "prove" that the trucking industry opposes increasing GVW standards, an allegation about as out of context as you can get. The AAR and ATA made a pact that the ATA would not push for increased GVW in return for the AAR not pushing for a decrease in GVW. Now that capacity issues have made that pact superfluous, not to mention having no positive impact on the railroad industry, the trucking industry is ready to ditch the pact and push for increased GVW and LCV standards to aid in keeping the US economy from slipping back into a recession, something to which the rail industry seems oblivious.

But, just so Tom gets a refresher course in forum participation, here's the link to a previous thread from a few months ago in which we discussed the ATA's recent support for increasing GVW and LCV standards:

https://www.trains.com/community/forum/topic.asp?TOPIC_ID=61093

I'll give Bert a pass on this one since I don't remember him being around for that discussion.

Now, is everybody happy?[:)]


So what you're saying is the links you offered here refute a link you offered on an earlier post.

Talking in circles again, I see.

More evidence you're not even looking at the links you offer as "proof" of your position.
Smile, it makes people wonder what you're up to. Chief of Sanitation; Clowntown
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Posted by MichaelSol on Friday, June 16, 2006 9:55 PM
Good grief, trim yer posts -- looks like an entry in the Encyclopedia Britannica ...
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Posted by Anonymous on Friday, June 16, 2006 10:06 PM
QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by n012944

QUOTE: Originally posted by TomDiehl

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by n012944

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by rrandb

All I'm saying is if Idaho had wanted the truck/barge traffic there IDOT was that hard to work with. If they did roadblock the border it was not for the benift of BNSF. Idaho had asked for 120,000. A reason is at that weight 120,000 we did 8 mph uphill and 4 mph downhill. Granted it was winter and there was 5" of ice and cinders on the road. The point is the damage to the road at those weights is not that much different. Did the Feds do that maybe to help BNSF. I do not think so but it would fit the DC/railroad colusion theory.


It is a generally accepted fact that the rail industry had a major hand in convincing the federal government to cap each state's GVW limits for non-Interstate highways, with each state able to grandfather in their particular weight limit that was in place when the cap was enacted. The Interstate Highway cap has been 80,000 lbs since I can remember.

Most of the grain that was trucked from Montana to Lewiston went via non-Interstate Highways - US Highway 12, Montana Highway 200, etc.


Back to that old "its a railroad conspiracy theory' thing again. Give it a break.


Bert


http://www.aar.org
http://www.cabt.org

Since you seem to know absolutely nothing about the railroad industry, here's a primer. The AAR is the American Association of Rairoads, the lobbying arm of the rail industry. The AAR has a surogate group it uses called the Coalition Against Bigger Trucks, which is predicated soley on opposing increased GVW for trucks. It was CABT that was the major force in getting the federal cap on weight limits imposed.

Now, whether it is a conspiracy or not is up to your imagination.[D)]

Even in this weeks newspapers, there's an article that states the usual knee-jerk opposition to trucks and highways from the rail industry:

http://www.helenair.com/articles/2006/06/14/montana/a08061406_02.txt

Kitzenberg leading caravan for four-lane U.S. Highway 2

Quote of note: "The lone opposition he’s encountered to the “four-for-two” idea has come from BNSF Railway, which Kitzenberg (says) wants to keep its shipping monopoly across the Hi-Line. 'If you’ve got a monopoly and are making money, why would you want competition?' the legislator asked.”


Digging a bit further into the AAR link that YOU provided leads us to:

http://www.aar.org/GetFile.asp?File_ID=281

Most interesting is the third paragraph under "Issue Overview."

You should really read your own links before you post them. The noted paragraph blows your supposed "conspiricy" out of the water. [:o)]



Dave,

I really love how you seem to make a habit of acting all smug in your responses, and then have them thrown in your face. Did you read the link? The trucking industy opposed the weight increase. Let me say that again, the TRUCKING industy. Now I know you will put your usual spin on it, the railroads bribed them with all there money. But at the end of the day it shows that YOU are the one that knows nothing about the railroad industry.


Bert


Hmmmmm. Quothe Bert "The trucking industy opposed the weight increase. Let me say that again, the TRUCKING industy."

Question for Bert: Who was it then that proposed the GVW increase? C'mon, it is an easy answer, no spin required.

Here's a hint: You are batting 1.000 in eschewing internal polar opposition.


He's quoting something from a link YOU originally provided in a vain attempt to prove a conspiricy. The only "spinning" here seems to be yours.


You guys make me laugh!

The links to AAR and CABT were to refute Bert's allegation that the railroad industry had nothing to do with pushing legislation to limit GVW. Should be pretty straightforward. Did Bert then acknowledge his mistake? Of course not.

Then Bert uses the AAR and CABT links to "prove" that the trucking industry opposes increasing GVW standards, an allegation about as out of context as you can get. The AAR and ATA made a pact that the ATA would not push for increased GVW in return for the AAR not pushing for a decrease in GVW. Now that capacity issues have made that pact superfluous, not to mention having no positive impact on the railroad industry, the trucking industry is ready to ditch the pact and push for increased GVW and LCV standards to aid in keeping the US economy from slipping back into a recession, something to which the rail industry seems oblivious.

But, just so Tom gets a refresher course in forum participation, here's the link to a previous thread from a few months ago in which we discussed the ATA's recent support for increasing GVW and LCV standards:

https://www.trains.com/community/forum/topic.asp?TOPIC_ID=61093

I'll give Bert a pass on this one since I don't remember him being around for that discussion.

Now, is everybody happy?[:)]


So what you're saying is the links you offered here refute a link you offered on an earlier post.

Talking in circles again, I see.

More evidence you're not even looking at the links you offer as "proof" of your position.


I thought this horse died from its beatings days ago...hey, IT DID!!
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    December 2001
  • From: K.C.,MO.
  • 1,063 posts
Posted by rrandb on Saturday, June 17, 2006 12:10 AM
Could you possibly quote some more post on top of each other??? [#dots]
  • Member since
    August 2003
  • From: Antioch, IL
  • 4,371 posts
Posted by greyhounds on Saturday, June 17, 2006 10:53 AM
QUOTE: Originally posted by MichaelSol


If you agree so strongly with the Whiteside Paper, then you have to take it as a whole. If you don't, that's cherry picking.

And again, for the umpteenth time, I don't like the way Whiteside presents things, because it can be confusing, and misunderstood. This paper is no exception.

The point -- yes, the apparently inscrutible point -- is that Montana shippers are forced to pay a substantially higher cost per mile of transportation to ship its products to the market, than a shipper a thousand miles further away, even though over the same railroad line.

Now, I see on this thread the innovative idea that shippers only ship bushels, that the heretofore important role of transportation to cover miles is irrelevant. Well, that is interesting. It is the cost per unit per mile that defines whether a market area is viable or not because that is what defines the market area.

The point is the opposite of what you contend. Whitside is not contending that Nebraska shippers are shippng wheat to Portland more cheaply -- what they are contending is by using Nebraska rates as a comparison it is demonstrably true that Montana shippers are charged a much higher rate to move the same commodity over the same rail line to the same destination -- that is, the variable costs of the move should be the same -- for the component of the move that has to do with miles traveled.

That is, the comparison shows that BNSF will indeed charge shippers a much lower rate if those shippers are located in areas of transportation competition. Since the rate charged over the mileage traveled presumably covers costs, Whiteside is attempting to show that the cost of the service -- per mile of service provided -- is considerably lower to other shippers, and that BNSF presumably sets those rates likewise to generate a profit.



No.

Bt chnaging the meaning of the word rate Sol is spinning the numbers to support his false contention that the BNSF charges Montana shippers more than Nebraska shippers. Of course the Whiteside data show just the opposite. i.e. The rate from Great Falls, MT is shown as $3,291.80/carload ($0.98/bushel). The rate from Alliance, NE is shown as $4,685.20/carload (($1.39/bushel).

This is obviously $1,393.40/carload ($0.41/bushel) in favor of the Montana shipper. Since this doesn't support Sol's political agenda he has to spin it. He does so by dividing by the miles. This results in per mile figures of $3.77/car mile from Great Falls and $3.01 from Alliance. This, according to Sol, is "proof" that the BNSF charges Montana shippers more - but since it actually charges them less, he's being dishonest.

It's only 873 miles from Great Falls. It's 1,554 from Alliance. Absent special circumstances, the derived per mile figure (it isn't a rate) on the longer haul will be less than the shorter haul. Sol seeks to make something very natural into a monopoly conspriracy to support his politics.

Line haul costs, the costs that varry with the length of haul make up only a fraction of total rail costs. Rail line haul costs are unbeatable, it's the terminal and other costs that you have to worry about.

And terminal costs do not vary with the length of haul. They will be similar for shipments from Great Falls and Alliance. Only the line haul will differ. As an example I'll show a 500 mile move vs a 1,000 mile move. Terminal costs/car are $300 at origin and destination and line haul is $1.85/car mile.

The figure for the 500 mile move will be $300+$300+(500 miles x $1.85/mile)=$1,525
The figure for the 1,000 mile move will be $300+$300+(1,000 miles x $1.85/mile)=$2,450

Now just as with the BNSF rates, that's more for the longer haul.

But if you divide by the miles, as Sol does with his political spin, you get a higher "per mile" figure for the shorter haul.

500 miles = $1,525/500 miles = $3.05/mile
1,000 miles= $2,450/1,000 miles =$2.45 /mile

This is just natural - since the terminal costs are the same for both moves. The shorter haul will always have fewer miles to spread the terminal costs over. This will make its "figure per mile" natually greater.

Now, Sol seeks to spin this into something evil. He can express the charges as "per car mile", "per 1,000 bushel miles", whatever. It's all dishonest spin.

Ken Strawbridge



"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.

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