Two more articles on rail incapacity = trouble for RR's

[Anonymous]

The first is a link to a ProgressiveRailroading.com commentary by rail industry analyst Tony Hatch entitled "Unintended consequences: The impact of rails’ service woes could be widespread" -

http://www.progressiverailroading.com/commentary/article.asp?id=9010

The second article was posted on the TrainOrders site. Here's the link. Sorry it is a pain to get through the "previews" on the Forbes.com website!

http://www.forbes.com/2006/06/14/rail-profits-invest-cx_np_0615oxford.html?partner=alerts

Quote of Note: "It is almost universally acknowledged that cutting excess capacity should not have been the primary objective of rail mergers. "

Hmmmm, can't wait for the responses to that one!


Here's the text in full:

=======

Oxford Analytica
U.S. Railroad Profits Tied To New Investment
Oxford Analytica 06.15.06, 6:00 AM ET

With nearly 160,000 kilometers (km) of track, U.S. rail
infrastructure is more than double that in Russia or China. It is
also the most efficient and profitable network in the world.

However, the system suffers from increasing delays and bottlenecks.
Rail customers are up in arms. A cadre of company representatives
recently descended on Washington to lobby Congress for reforms aimed
at reducing and more fairly distributing the costs created by delays.
This capacity crunch has been caused by dramatic traffic growth,
reductions in infrastructure and industry consolidation:

Surging traffic: The main cause of the rail capacity crisis is
increased traffic. The principal sources of this growth are coal and
"inter-modal" traffic.

Longer-range deliveries: The problem is exacerbated because the
average length of each freight haul rose from 990 km in 1980 to 1,450
km today.

Consolidation: While traffic and trip lengths have increased sharply,
the capacity of the freight rail network has declined. This fall in
infrastructure was caused by the deregulation of the industry 25
years ago, and the railroads' subsequent decisions to merge their
operations and contract their networks.

In the early 1970s, the U.S. freight rail system was in disarray.
Clearly, the rail industry faced a choice between deregulation and
disaster. However, the Staggers Rail Act of 1980 allowed the industry
to recover, replacing the century-old regulatory structure with a
framework that allowed railroads to set their own shipping rates
based on expenses and traffic demand.

Following deregulation, the ICC adjusted its regulations regarding
railroad mergers. It encouraged linkups that would cut excess
capacity, as long as they did not eliminate competition. The Staggers
Act also resulted in the liberalization of abandonment rules,
enabling railroad companies to dispose of unprofitable lines more
easily.

While deregulation may have saved the industry from ruin, increased
profits and stimulated innovation, it is also responsible for some of
the current capacity problems:

-- It is almost universally acknowledged that cutting excess capacity
should not have been the primary objective of rail mergers.

-- After the spate of mergers created a small number of "mega"
companies, carriers concentrated their shipments on high-density
lines that were easy and profitable to maintain, and shed tens of
thousands of miles of marginal track.

Another disadvantage of deregulation is that while federal and state
governments have provided extensive funding for truck, barge and
airline infrastructure over the past 25 years, freight railroads
receive little assistance. Yet, underinvestment by the rail companies
themselves is also partly to blame:

Government neglect: The federal highway administration estimates that
large trucks pay only about 50-80% of the infrastructure costs
attributed to them, due to huge federal road-building grants. In
contrast, railroads pay all of their infrastructure and right-of-way
costs, and are responsible for the associated risks.

Private sector underinvestment: Nevertheless, the railroad companies
may also have underinvested in infrastructure.

Rising costs: However, infrastructure costs are rising rapidly.

As a result of deregulation, the number of Class One railroad
companies in the U.S. has declined from 73 in 1975 to seven today.
However, a push for further consolidation appears to be gathering
strength:

BNSF-CN deal: In late 1999, BNSF, the second largest U.S. railroad,
announced plans to merge with Canadian National (CN), the largest
railroad in Canada. The revelation touched off a firestorm of
opposition from federal regulators, other railroads and freight
business consumers. The primary concern was that the remaining North
American railroads would pursue their own mergers, eventually
producing a transcontinental rail duopoly.

Merger moratorium: Washington eventually slapped a 15-month
moratorium on all rail industry mergers while regulators reviewed and
strengthened the applicable rules. This moratorium killed the BNSF-CN
deal, and resulted in stricter merger regulations that required clear
demonstrations of public benefits.

Renewed consolidation drive: However, a new merger deal between CN
and BNSF, or some combination of the other major railroads, is likely
in the near future. Unless regulators handle these proposals
carefully, they could have continued deleterious effects on prices,
competition and rail infrastructure.

Many of the rail industry's current challenges were created by the
furious period of consolidation that followed deregulation in 1980.
While these mergers restored profitability, they encouraged
reductions in infrastructure and underinvestment that have
exacerbated the current capacity crunch. Although further mergers
attempts are likely, increased investment might lead to greater
improvements in performance, efficiency and profitability.

To read an extended version of this article, log on to Oxford
Analytica's Web site.

Oxford Analytica is an independent strategic-consulting firm drawing
on a network of more than 1,000 scholar experts at Oxford and other
leading universities and research institutions around the world. For
more information, please visit www.oxan.com.

[TomDiehl]

Nothing unusual from you here. You highlight the parts you think support you position of the evil railroads and ignore the rest of the article.

Points such as:

"The Staggers Act also resulted in the liberalization of abandonment rules,
enabling railroad companies to dispose of unprofitable lines more
easily."

Note the word "unprofitable."

"carriers concentrated their shipments on high-density
lines that were easy and profitable to maintain, and shed tens of
thousands of miles of marginal track."

Note the term "marginal track."

"Government neglect: The federal highway administration estimates that
large trucks pay only about 50-80% of the infrastructure costs
attributed to them, due to huge federal road-building grants. In
contrast, railroads pay all of their infrastructure and right-of-way
costs, and are responsible for the associated risks."

Note the phrase "railroads pay all of their infrastructure and right-of-way
costs, and are responsible for the associated risks."

Unlike David, male, from the Pacific Northwest's usual opinion, there's two sides to every story.

[CSSHEGEWISCH]

The last time I really looked, hindsight is always 20/20. Looking at decision-making in retrospect can be unfair since you have the luxury of factoring in events and subsequent decisions that happened after the initial decision and whose occurrence would have been difficult or impossible to foretell. To wit, the North Shore Line was abandoned in toto on January 21, 1963, the Regional Transportation Authority came into existence in 1974. Should North Shore's management have cut back service to buy time instead of total abandonment? In retrospect, that sounds like a better decision. In the context of 1962-1963, it would be a wrong decision since the creation of the RTA or even local mass transit districts wasn't even on the political radar.

[PBenham]

The costs of having "excess" capacity are the added costs, like property taxes, which here in the NYSSR are at confiscatory levels, and have been since Nelson Rockefeller was governor. NYSSR got stung, however when all the Republic's class Is (except D&H,which waited until 1988 to bite the big one, and Chessie.) were bankrupt and were exempt from paying until they re-organized. Then the NYSSR got most of it's dough, without interest. Then, there are the people that you need to keep to maintain the underutilized trackage, dispatch it, operate it, protect it and try to find business for it.

[Anonymous]

What you're missing Tom is that both these articles are from the railroad industry's POV. Why else would they also incude the fallacy of "subsidized" trucking, since we all know (even if folks like you can't admit) that trucking is the key link for getting the goods to the consumers and/or from the point of origin? Since it is this link that is most likely "subsidized" via non-user fees, and since the rail industry is completely dependent on this vital link, the rail industry itself is a beneficiary of that "subsidy", so why should they continue to obfuscate the issue ("trucks are subsidized, but we pay for our own ROW. Waaaaah.") to solicit pity from the general citizenry?

We have also pointed out the fallacy of "unprofitability" and "marginality" of underutilized trackage. The timber industry has mega-units of "unprofitable" assets right now, yet they keep these assets at a marginal cost for decades, because they know these assets will become profitable in time. Perhaps that's because the timber industry likes being in the timber industry and is willing to invest the time and cost of maintaining assets until such can be utilized more profitably, whereas the railroad industry seems to have had a distain for itself and the concept of moving bulk commodities at speed, at least for the last four decades. The contrary thing of it is, demand for transporation services is a steadily growing market segment, has been for the last four decades, yet the railroads have treated their assets like an anachronism that is no longer demanded. The point has been made ad nauseum that there has always been an implicit demand for shippers to use so-called marginal rail lines, but the methods and styles preferred by the shippers did not fit into the narrow strictures of railroad SOP. The railroads en masse seemed more willing to scrap it than to allow others to innovate profitable usage of the track.

It should strike you as profound that folks on top of the industry are finally willing to admit the mistakes incorporated in Staggers, mistakes that were obvious from day 1 to those outside the industry.

[MP173]

Nice rear view mirror Dave.

It is easy for everyone to admit we have a capacity issue NOW. It wasnt so 25 years ago. However, an economy which grows at 3% per year will double in size in those 25 years. Meanwhile...who would have paid for that excess capacity?

David Morgan had a great idea back in the day that the lines should be "railbanked".

Looking back, probably a good idea.

What lines, specifically would you nominate for a "redo"?

Mark Hemphill had an interesting point that traffic would gravitate to the best physical route. Think about where the massive tonnage moves today. The absolute best route between LA and Chicago is the BNSF Transcon and that is where the overwhelming tonnage is located. UP's lines are inferior.

Chicago - New York seem pretty equal between NS and CSX with both slugging it out. NS may have the more difficult route, but has the ability to run trains, while CSX hasnt figured it out yet.

There are routes that definately could be used today....OK lets throw in the MILW PCE as one, but others such as Erie Lackawana, B&O (St. Louis - Cumberland). The NYC route (Kankakee Belt) would be ideal to avoid Chicago.

Railroads are in business, as are other companies, to make money. By eliminating competing lines, they strengthened their franchise to do so.

Macro-economically speaking we will be seeing the effects of those eliminations. Micro-economically, the railroads have never been healthier.

ed

[Murphy Siding]

Weird analogy there- the timber industry. I wonder if the timber industry keeps all those "unprofitable assets" (land covered with trees) for the lumber?[;)]. Every year, the trees grow, producing more lumber, and more lumber. The under-performing rails lines won't produce a future cash crop by virtue of just sitting there,sucking up water and sunlight.

[edblysard]

QUOTE: Originally posted by futuremodal

What you're missing Tom is that both these articles are from the railroad industry's POV.

Wrong, David...
The first one was written by Tony Hatch, a Wall Street Analyst.
The second one is from an Oxford think tank.
Neither Mr. Hatch, nor the Oxford Analytica, are affiliated with a railroad in any way.

The first article is written from the authors point of view, the second from the groups final analysis.

I could find no endorsement from any railroad in either article.

Have you ever dealt in real world facts, or do you always twist things to fit your prejudices?

Ed

[TomDiehl]

QUOTE: Originally posted by futuremodal

What you're missing Tom is that both these articles are from the railroad industry's POV. Why else would they also incude the fallacy of "subsidized" trucking, since we all know (even if folks like you can't admit) that trucking is the key link for getting the goods to the consumers and/or from the point of origin? Since it is this link that is most likely "subsidized" via non-user fees, and since the rail industry is completely dependent on this vital link, the rail industry itself is a beneficiary of that "subsidy", so why should they continue to obfuscate the issue ("trucks are subsidized, but we pay for our own ROW. Waaaaah.") to solicit pity from the general citizenry?

First of all, your claim of this being the railroads POV is refuted by your original post, final paragraph. Since it's obvious you still can't read even what you post, let me quote it for you:

"Oxford Analytica is an independent strategic-consulting firm drawing
on a network of more than 1,000 scholar experts at Oxford and other
leading universities and research institutions around the world. For
more information, please visit www.oxan.com."

An "independent strategic-consulting firm" that repeats the railroads POV??? Sounds pretty contradictory.

Second, what debate is there on subsidized trucking? Many threads have stated that taxes and fees that trucking pays doesn't cover the cost of the highway infrastructure. Our taxes pay for trucking, but what point are you trying to make with "that trucking is the key link for getting the goods to the consumers and/or from the point of origin?" That's rarely been disputed. Or are you arguing with yourself again?

[TomDiehl]

QUOTE: Originally posted by futuremodal
We have also pointed out the fallacy of "unprofitability" and "marginality" of underutilized trackage. The timber industry has mega-units of "unprofitable" assets right now, yet they keep these assets at a marginal cost for decades, because they know these assets will become profitable in time. Perhaps that's because the timber industry likes being in the timber industry and is willing to invest the time and cost of maintaining assets until such can be utilized more profitably, whereas the railroad industry seems to have had a distain for itself and the concept of moving bulk commodities at speed, at least for the last four decades. The contrary thing of it is, demand for transporation services is a steadily growing market segment, has been for the last four decades, yet the railroads have treated their assets like an anachronism that is no longer demanded. The point has been made ad nauseum that there has always been an implicit demand for shippers to use so-called marginal rail lines, but the methods and styles preferred by the shippers did not fit into the narrow strictures of railroad SOP. The railroads en masse seemed more willing to scrap it than to allow others to innovate profitable usage of the track.

It should strike you as profound that folks on top of the industry are finally willing to admit the mistakes incorporated in Staggers, mistakes that were obvious from day 1 to those outside the industry.

So are you saying that railroads should grow trees on their unused right of way and sell it to timber companies. Maybe I should dig up some links photos of the unused portions of the East Broad Top Railroad here in PA. That would be about the ONLY relationship in what you're saying. It's like comparing a wheat field to a highway.

[edblysard]

Well,
Re read both articles again, and can find nothing new, in fact, both seem to be almost carbon copies of similar articles written last year, and the year before.
Nor can I find where Mr. Hatch spoke with or interviewed a single railroad's CEO, CFO, President, Superintendent, or even a switchman.

Ditto for the Oxford Group, whose analysis does not attribute any input from an officer of any major railroad, shortline, regional or switching/terminal road.

Mr. Hatch did state he sat in on the STB fuel surcharge meeting, and visited with a rail shippers group, (really an unbiased group, I am sure) but beyond that, his contact with a railroad or railroad officers seem to be zero.
If he did have contact, he failed to mention it.

How David can present this as the railroad industry's point of view is absurd, as it clearly is the point of view from a Wall Street investment analysis and an investment advisory group.
Both clearly state who they are, and who they represent at the end of their respective articles.

Dave, you may want to go back to reading the National Enquirer and Globe.
At least no one will be bothered with anything you misrepresent out of those two resource publications, and you might find out where the government and BNSF is hiding Elvis.

(Pretty sure they have him stashed in one of those abandoned wheat silos in Montana...)

Ed

[rrandb]

It's what he does best. Hey everybody has to be good at something.[banghead]

[edblysard]

He's good at it?
Naww…I think it is just what he does best.
But at least he is consistent.
[:D]Ed

[n012944]

This is getting sad, just sad. How many people in the early 1970's when the CNW abandoned most of the old CGW across Iowa and Illinois sat back and said, "the company that buys the CNW is going to wi***hey had this track back in 30 years?" NO ONE. Dave, do you have a job on sports talk radio? You are doing exactly what those people make a living doing, sitting back on Monday, saying how you could have done a better job coaching the football team the day before. I seem to have a feeling that you were not around in the 70''s/early 80's when most of the cutting occured. It was bleak times for the railroad industry. I don't think that you understand what they were going thru and what they were facing. But just keep being a monday morning quarterback, it seems to be what you do best.

Bert

[Anonymous]

Everybody tells me, "Just go out, make more money, and pay for it yourself."

Are you now telling the railroads, "Just go out, make more money, and lay some new heavy tracks?"

Andrew N.F.

[rrandb]

QUOTE: Originally posted by falconer

Everybody tells me, "Just go out, make more money, and pay for it yourself."
Are you now telling the railroads, "Just go out, make more money, and lay some new heavy tracks?"
Andrew N.F.

The railroads are "laying some new heavy track" when they are needed due to capacity constraints based on todays traffic patterns. It's what they do.

[Anonymous]

So now banjo boy is saying Wall Street rail analysts aren't part of the rail industry overview? Does anyone expect the AAR to produce these kinds of analysis?

Ed, stick your head back up your anal pore. That's the only way the synapses between your right and left brain can make the connection.

[edblysard]

Dave,
Tony Hatch is a Wall Street broker, not a spokesman for the rail industry.
He recommends stock purchases.
He is not a industry leader, anymore than you are.
Thank god for small favors.

And you just pointed out it is an "overview" of the rail industry,
(which anyone, including you, could write)
not the "point of view" of the industry itself.

Is it a genetic defect, you know, the idiot gene, or were you just born stupid and have gotten better at it through practice?

Ed

[rrandb]

Some one has Opinions confused with Facts. It ain't ED. But there is an obvious case of a rectal cranial inversion.

[Anonymous]

QUOTE: Originally posted by rrandb

Some one has Opinions confused with Facts. It ain't ED. But there is an obvious case of a rectal cranial inversion.

Someone has reality confused with fantasy. It is ed whose brain don't work unless it is stimulated by fecal matter, and you who has not thought this thing through. Eddyboy has now stated that one HAS to be employed by the railroad industry in order for his or her views to be counted as being in the railroad industry POV.

I guess that leaves TRAINS, Railway Age, ProgressiveRailroading.com, et al out of the mix, eh?

[edblysard]

Yup,
Born stupid and a little anal retentive to boot...
Guess that makes him a dumb...?
(bet his mom kept the leash a little to tight when he was young)

Note Dave changed slightly what he is claiming; originally that this is “the” point of view from industry leaders now has changed to “in” the point of view of the railroad industry…which just makes him a liar and an idiot.

Then by following Dave’s logic or the total lack of, the opinion of a Kentucky coal miner on Alaska crab fishing is “the” point of view of the seafood industry.
How moronic!
Get a life, David.

Ed

[TomDiehl]

And the award for the fist insult of the thread goes to (drum roll, please):

QUOTE: Originally posted by futuremodal

So now banjo boy is saying Wall Street rail analysts aren't part of the rail industry overview? Does anyone expect the AAR to produce these kinds of analysis?

Ed, stick your head back up your anal pore. That's the only way the synapses between your right and left brain can make the connection.

[edblysard]

Tom,
He is even wrong here...
Humans are one of the few mammals which do not have anal pores, (musk glands located near on in the rectum) to leave scent marks.

Most mammals do, the common house cat has several sets, even a set located on either side of their eyes, above the cheek bone next to the eyes...(ever wonder why your cat like to rub it head against you? It is marking you with its scent as “their” person or property...)

Humans, though have no anal pores to "scent" their waste....it is one of our defense mechanisms to help us hide from predators.

He can’t even get the facts right in his adolescent themed insults.

Sad, just flat out pitiful….

[TomDiehl]

QUOTE: Originally posted by edblysard

Tom,
He is even wrong here...
Humans are one of the few mammals which do not have anal pores, (musk glands located near on in the rectum) to leave scent marks.

Most mammals do, the common house cat has several sets, even a set located on either side of their eyes, above the cheek bone next to the eyes...(ever wonder why your cat like to rub it head against you? It is marking you with its scent as “their” person or property...)

Humans, though have no anal pores to "scent" their waste....it is one of our defense mechanisms to help us hide from predators.

He can’t even get the facts right in his adolescent themed insults.

Sad, just flat out pitiful….

It also proves a certain Montana Lawyer wrong when he tries to paint David, male, from the Pacific Northwest, as a victim in the insult tossing.

[edblysard]

Yes,
But he is good at a first year law student trick...starting a fight, screaming foul and then accusing you of throwing the first punch.
He is pretty good with misdirection too...
Once you start taking his argument apart, or picking up on his mistakes, he redirects the thread, or insults you in an attempt to steer you away from his mistake and focus you on something else.

He plays the aggrieved and injured party quite well too.

You know what a real estate liquidation attorney does....so it is quite ironic he plays the part of having some great concern about the farmers losing their lands....seems that is what keeps him in business.

Plus, he seems to subscribe to the well know ploy of,
"If you can’t dazzle them with your brilliance, baffle them with your bull...."
Which is why he throws out reams of old, out dated statistics, claiming it is valid 30 years after the fact, pound after pound of junk from a railroad that went bankrupt...as if that should be a bench mark of sorts...or twist current data to fit his pitiful conspiracy theory.

And he is smarter than anyone here on the forum, just ask him!
He won’t, or cant back it up, but he will sure tell you he is…

Let’s see, steam locomotives are more cost efficient than diesels, the Milwaukee Road went bankrupt because it had too much business…(if that’s the way it works, then Microsoft and Honda America ought to be closing down sometime tomorrow!), 2+2=6 when you factor in (fill in the blank with this weeks government or BNSF conspiracy, or use the new and improved Michael Sol math, available on DVD soon!)….Long haul trucks help pay for, and in reality subsidize railroads, not to mention they pay for the complete repair and maintenance of the interstate highway system…BNSF is evil and their railroad lobbyist control Congress, and I bet he was abducted and probed at least once!
Shame the mind implant didn’t take!

In reality, he and Dave are just trolls, both get their pleasure from arguing with and insulting people, it allows them to feel as if they are smarter and better than anyone else...which is why both employ the shifting point of contention and variable data trick...they don’t really care about the subjects they discuss, all they are after is the arguments they can start....they both use it for self gratification.
What’s sad is how many people get suckered into arguing with them...you can never win, because they are not arguing a point or a concept, they are just arguing for arguments sake and the sick pleasure they derive from it.
What a pitiful existence, such sad and empty lives they both must live.

Both are kinda like my ex wife, she has never been wrong in her life either, never ever.
Just ask her....

Ed[:D]

[TomDiehl]

I think the biggest problem is that neither of them realize that I've been in positions for many years that have taught me to spot BS a mile away.

And they do have a problem when you shine the light of truth on their arguments.

Better run and recharge my beacon. [swg]

[edblysard]

Enjoy!
(although truth, or manner for that matter, is not something either one of them are faintly familar with...)

[zardoz]

I hear footsteps...could they be Bergie's?

[mudchicken]

QUOTE: Originally posted by zardoz

I hear footsteps...could they be Bergie's?

Oh please!......or it's FM's alma-mater out looking for his ego inflated carcass so it can take back a degree that has been horribly mis-applied. ( or is it something created to pad a resume?)[}:)][}:)][}:)]

[daveklepper]

Can it and get back to the railroading facts, please!