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

[greyhounds]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by greyhounds
If the high margins Sol harps on are real, and I'm not convinced they are, they could certaily be justified by the low volume of freight comming out of Montana.

2005 Winter wheat
Montana. 3rd in the nation
1,499,434,000 bushels

Nebraska, sixth in the nation
68,640,000 bushels

Well that certainly explains why Montana pays high "rates" and Nebraska pays lower "rates" doesn't it?

Yes, Sol, it does. You're just being your own deceiptive self, spinning selected numbers to further your political agenda.

You see, in Nebraska they can grow other crops. You know, corn, soybeans, The elevators handle and export all the crops.

Now they can't basically grow anything but unneeded wheat and some barley in Montana. So you're making a false comparision, which you do all the time.

Why don't you look up the total grain shipments from Nebraska - I mean those trains can take wheat one trip, beans the next, and corn the third. Except from Montana where the farming is so poor that only wheat and barley can be grown.

[greyhounds]

QUOTE: Originally posted by MP173

So, there really hasnt been any inverse pricing since 2003. There may have been some circumstances which caused BNSF to have done that. I wont try to comment as to the reasons since I dont know.

It almost seems as if Montana wheat farmers expect a closed economic environment. In other words, when an "outside" source of wheat appears, it provides undue competition, driving pricing down.

My guess is that PNW wheat commands a premium price, dont know why, but it is just an educated guess...and the movement of wheat into those ports upsets the market pricing. Just a hunch.

ed

"Inverse pricing" was a way cool, gutsy, ecnomicaly and ethically sound move on the part of the BNSF that protected its shareholders and employees alike.

In case some of you haven't noticed, they grow a little bit of wheat in Montana. Why? I don't know - absent government welfare subsidy checks they certainly can't sell it at a profit, but they keep growing it. They're literally farming for the sake of farming.

Anyway the BNSF has to haul some of this wheat. So they've got this equipment, these facilities, and these employees to move this Montana wheat that nobody really needs or wants.

A few years ago, because of extended drought conditions, which were, of course, the fault of a BNSF conspiracy, Montana wheat production took a nose dive.

2000= 149,968,540 bushels
2001= 118,666,464 bushels
2002= 67,732,673 bushels

So there was the BNSF; equiped, staffed and configured to move 149,968,540 bushels and looking at crop forecast of less than half that. What to do?

Well, the railroad could have just sat around, hoped for rain, parked their equipment and laid off employees. That seems to be what the Montana farmers and politicians wanted. You see, there was some grain in storage - and if it was held long enough the shortage created by the drought would drive wheat prices up and the Montana folks with grain in storage would make a nice fat buck. They'd be acting in their own best economic interests, as it were.

Of course the BNSF figured that the grain comming out of storage would not make up for the tremendous reduction in production.

So what the railroad wisely did was take "emergency rate action." They reduced the rates on wheat to the PNW from points further east, i.e. Minnesota. Wheat that would normally have never moved to the PNW could now be competitive there because of the reduced BNSF rates. BNSF kept its equipment utilized and its people working as best it could.

Now they couldn't do this on a long term basis, but for the short term, it was the best available solution. As an example, if your only alternative is to put the equipment in storage, the ownership costs of that equipment become a non-issue. You can do it for a couple years, but long-term, it would be a going out of business stragegy.

Of course, the BNSF did not reduce the rates out of Montana. There was no reason to do so. The BNSF was already fully competitive with the truck/barge competition. Any rate reduction out of Montana would be just 'giving it away'.

This was all just a logical and ethical buisiness decision. And it drove some people in Montana nuts. Those folks were perfectly willing to act in their own economic best interst, but they got really, really, really mad when the BNSF acted in its own economic best interest.

As for now, the drought is over and the "inverse rates" are gone. There's no longer a need for the BNSF to "low ball some rates" in order to keep its equipment and crews busy. But they'll be another drought in Montana someday.

The people who complain about the "inverse rates" just wanted the BNSF to take it in the shorts without doing what it could to protect its interests. It was just fine for them to act in their own best interest, but it was wrong for another entitiy to act in its own best interest. People who think like that think they are born to priviledge - and they turn my stomach.

Ken Strawbridge

[MichaelSol]

QUOTE: Originally posted by greyhounds

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by greyhounds
The farmers are in no way "entitled" (his word) to those gains than I am.
...
I suppose Sol will try to redefine "entitiled" in a similar manner as to how he has tried to redefine "rate".

That was the term you have repeatedly used. You will define as your needs change. You always do.

I've been consistant, which wil always confuse Mr. Sol.

The farmers are not, in any way 'entitiled" to the railroad's productivity gains. But the railroad may use those gains in furthering its own best interest.

Ken Strawbridge

Never said it. What I specifically said was that the controlling law says if it earns an R/VC less than 180% they can do whatever they like. Over that, they have to justify it, because the shipper is, by definition captive. Doesn't matter if its from efficiency gains driven by competitive shippers, deflation in the economy, or dumb luck -- railroads are not "entitled" to charge whatever they please to captive shippers.

That's the deal that railroads agreed to in return for being able to aggressively pursue efficiency gains, and that's they deal they got.

And that also happens to be the law.

[MichaelSol]

QUOTE: Originally posted by greyhounds
If the high margins Sol harps on are real, and I'm not convinced they are, they could certaily be justified by the low volume of freight comming out of Montana.

2005 Winter wheat
Montana. 3rd in the nation
94,500,000 bushels

Nebraska, sixth in the nation
68,640,000 bushels

Well that certainly explains why Montana pays high "rates" and Nebraska pays lower "rates" doesn't it?

[greyhounds]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by greyhounds
The farmers are in no way "entitled" (his word) to those gains than I am.
...
I suppose Sol will try to redefine "entitiled" in a similar manner as to how he has tried to redefine "rate".

That was the term you have repeatedly used. You will define as your needs change. You always do.

I've been consistant, which will always confuse Mr. Sol.

The farmers are not, in any way 'entitiled" to the railroad's productivity gains. But the railroad may use those gains in furthering its own best interest.

Ken Strawbridge

[MichaelSol]

QUOTE: Originally posted by greyhounds
The farmers are in no way "entitled" (his word) to those gains than I am.
...
I suppose Sol will try to redefine "entitiled" in a similar manner as to how he has tried to redefine "rate".

That was the term you have repeatedly used. You will define it as your needs change. You always do.

[greyhounds]

QUOTE: Originally posted by MichaelSol

Has anyone seriously argued that there is not "an" advantage to shuttles? Or is this just another false argument? No doubt the railroad likes them. The R/VC at Shelby for a single car is 172%. The Shuttle R/VC is 338%.

Interesting though that the article suggests that farmers are more willing to use them, when they get a better price as a result of the efficiency gained by the railroad -- the very incentive that Strawbridge argued earlier the farmers were not entitled to.

Does any of that mean that 338% is a contemplated "reasonable rate" under the Staggers Act?

I stand by my assertion that the farmers are in no way "entitled" to any (as in no, none, zip, nadda) of the railroad's productivity gains. Those gains belong to the railroad. Just one of the many things Sol fails to understand . The railroad invested in the new 286K cars, the railroad acquired the more efficient locomotives, etc.

The farmers are in no way "entitled" (his word) to those gains than I am.

However, the BNSF may freely choose to use its productivity gains in a manner that is in its own best interest. In this case they see their total gains of moving to a shuttle train system as outweighing anything they must "share" to get the grain gathering system reconfigured.

I suppose Sol will try to redefine "entitiled" in a similar manner as to how he has tried to redefine "rate".

As to the supposed R/VC of 338% being "reasonable" -

I don't buy the costing system. At all. Rail costing is complex and a "one size fits all" political formula just won't be accurate.

But leaving that aside, the R/VC at best measures margin, not profitablity. Profitability can be expressed as margin x volume =profitability. A railroad could concievably haul all its freight at a 338% R/VC and go broke due to lack of volume. Conversely, a railroad could haul all its freight at 110% R/VC and make a lot of money. It will depend on the volume. Sol always leaves this out.

The grain volume (wheat and barley) produced in Montana is so pathetically small that high margins would naturally be required to produce transportation profitability.

In 2005, according to the Montana Wheat and Barley Committe, Montana produced only 192,480,000 bushels of wheat and only 39,200,000 bushels of barley. And 2005 was the largest wheat production year since 1995.

At the Committee's load factors of 3,366 bushels per car for wheat and 3,847 bushels per car for barley that would only be 157 cars of wheat per day and 28 cars of barley per day. That's not even two trains per day! Out of the whole state of Montana! This whole Montana rate thing is much ado about very little.

The BNSF will originate as many coal trains out of the Powder River Basin in 15 days as grain trains out of Montana in a year.

If the high margins Sol harps on are real, and I'm not convinced they are, they could certaily be justified by the low volume of freight comming out of Montana.

[MP173]

So, there really hasnt been any inverse pricing since 2003. There may have been some circumstances which caused BNSF to have done that. I wont try to comment as to the reasons since I dont know.

It almost seems as if Montana wheat farmers expect a closed economic environment. In other words, when an "outside" source of wheat appears, it provides undue competition, driving pricing down.

My guess is that PNW wheat commands a premium price, dont know why, but it is just an educated guess...and the movement of wheat into those ports upsets the market pricing. Just a hunch.

ed

[MichaelSol]

Has anyone seriously argued that there is not "an" advantage to shuttles? Or is this just another false argument? No doubt the railroad likes them. The R/VC at Shelby for a single car is 172%. The Shuttle R/VC is 338%.

Interesting though that the article suggests that farmers are more willing to use them, when they get a better price as a result of the efficiency gained by the railroad -- the very incentive that Strawbridge argued earlier the farmers were not entitled to.

Does any of that mean that 338% is a contemplated "reasonable rate" under the Staggers Act?

[greyhounds]

There are some reasonable people in Montana.

http://www.greatfallstribune.com/apps/pbcs.dll/article?AID=/20050807/NEWS01/508070301&SearchID=73...

Note the real advantages of the shuttle loaders.

Ken Strawbridge

[Anonymous]

QUOTE: Originally posted by TomDiehl

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.

[#wstupid]

[(-D]

This is so simple even you should be able to get it.[sigh]

The AAR and CABT links were provided as proof the rail industry has played a major role in lobbying for stricter GVW limits. As part and parcel of this lobbying effort, both AAR and CABT will naturally claim that the trucking industry also supports stricter GVW limits. This refutes Bert's claim that the railroad industry had nothing to do with efforts to enact stricter GVW limits.

However, the ATA refutes this false claim by the AAR and CABT, since the ATA has come out in favor of higher GVW limits. This refutes Bert's subsequent claim that the trucking industry supports stricter GVW limits.

And in conformity with predictable double digit IQ responses, Tom then goes on to claim circular reasoning on my part.

Tom, it is the AAR, not myself, who claims trucking industry support for stricter GVW limits. The ATA site refutes this, ergo it is the AAR that has published a false premise. I am aware of this tendency to falsify information on the part of the AAR, I have commented on it several times in the past.

Let's make a deal: We'll let the AAR speak for the rail industry, and we'll let the ATA speak for the trucking industry. Okay?

[MichaelSol]

Jay, don't be coy. I specifically said everyone calls it that, but, when you break down the discussion, you have a "something" that can be lower, and a "something per mile, per bushel, per whatever" that can go up. To have a discussion you need to identify a terminology. It was useful in this case to refer back to definitions understood clearly in the general business world, that "price" is the quote, and that rate is, well, exactly what I said it was -- a quantity measured with respect to another measured quantity -- and this allows us to have a discussion without confusing the industry jargon of "rate" with an actual measurement of "rate" which is a different measurement, as it happens.

I understand that greyhounds would object to any effort to clarify the discussion, just as he does above where he strenously argues terminal costs and line haul costs and rates and spin and prices and agendas and politics without a single acknowledgment that of course all of that is nicely summarized by the R/VC ratios, which of course do not support his argument at all.

That's the part of the Whiteside paper he studiously ignores, and, of course, that is the measure mandated by law on this topic.

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%

[Anonymous]

QUOTE: Originally posted by MichaelSol

Good grief, trim yer posts -- looks like an entry in the Encyclopedia Britannica ...

So you don't care for that 3D effect?[8D]

[jeaton]

I have to add that in 30 some years on both the carrier side and the shipper side of the business, I never heard anybody use the term "rate" in the context he suggested. And I don't think I had a sheltered existence.

[greyhounds]

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

[rrandb]

Could you possibly quote some more post on top of each other??? [#dots]

[Anonymous]

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!!

[MichaelSol]

Good grief, trim yer posts -- looks like an entry in the Encyclopedia Britannica ...

[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.

[Anonymous]

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?[:)]

[MichaelSol]

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.

[MichaelSol]

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.

[MP173]

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

[MichaelSol]

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.

[MichaelSol]

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.

[n012944]

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

[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 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.)

[MichaelSol]

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.

[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, even as they are then required to pay a higher rate for the privilege.

[MichaelSol]

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.