double-stack vs piggyback

[Anonymous]

I'll state this as simply as possible to give you the best possible odds of comprehending the point at hand:  

So, who peed in your Wheaties?  There is no need to act like a jerk.

Item.   Just giving land to states for trust is NOT going to raise the kind of capital required to accomplish the purchase and refurbishment of right of way.  Few states have bucks just sitting around to do that.  If the goal is accquire and rebuild, that requires cash.  Just having land doesnt necessarily generate cash. 

So, thanks for sharing all of your great and unfailing knowledge with us mere mortals on all the subjects on which you are an expert (which appears to be all of them). 

So, unless you are a candidate for public office, I for one would request a little civililty in the discourse...

Anyone reading this dialog will see that it is you who is being pedantic and fit for a hissy.  So, if indeed you want "civility" in this discussion, you can start by being more straightforward and less melodramatic.

[MichaelSol]

Item.   Just giving land to states for trust is NOT going to raise the kind of capital required to accomplish the purchase and refurbishment of right of way.  Few states have bucks just sitting around to do that.  If the goal is accquire and rebuild, that requires cash.  Just having land doesnt necessarily generate cash. 

The idea is that a land transfer provides an incentive for states to issue bonds to raise the necessary cash. South Dakota used its bonding capacity to finance its rail acquisitions in the early 1980s and certainly is how most states undertake large projects of that sort.

Recall, the original NP and CP/UP land grants didn't offer any cash to the railroad companies either. Few companies had "bucks just sitting around" to build a transcontinental railroad and the land grants certainly did not provide direct cash. But they did provide an incentive to the construction efforts, and provided collateral for the companies to issue ... bonds.

In the case of the states mentioned above, they have been treated differently than earlier admissions to the Union, in which federal land had historically been transferred to the states or sold off  -- precisely to encourage development of the states. In an earlier phase of land grants to railroads by states -- during a time when states themselves were sometimes barred by their own constitutions from lending money or credit for "internal improvements" --  the land was almost always former federal land.

MILW, GN, CNW were all "state land grant" roads in one form or another, for example,  all organized in Northwest Ordinance states, receiving both federal and state land grants, compared to IC, UP, CP and NP which were federal land grant railroads.

GN, for instance, was granted several million acres and several million dollars in Minnesota state bonds. Minnesota state grants in 1857 and 1862 gave ten sections per mile of track, for a total of 3,256,790 acres, which was the same grant as the original UP federal grant -- ten sections per mile and substantially more than the Illinois Central. Oddly, IC is recognized as a land grant road, while GN, for some reason, is given a pass as having benefitted from land grants.

[JSGreen]

I'll state this as simply as possible to give you the best possible odds of comprehending the point at hand:  

So, who peed in your Wheaties?  There is no need to act like a jerk.

Item.   Just giving land to states for trust is NOT going to raise the kind of capital required to accomplish the purchase and refurbishment of right of way.  Few states have bucks just sitting around to do that.  If the goal is accquire and rebuild, that requires cash.  Just having land doesnt necessarily generate cash. 

So, thanks for sharing all of your great and unfailing knowledge with us mere mortals on all the subjects on which you are an expert (which appears to be all of them). 

So, unless you are a candidate for public office, I for one would request a little civililty in the discourse...

[Anonymous]

And you are wrong regarding the problem of federal land ownership in States such as Idaho and Nevada - there is a large and growing grass roots effort to get the management of these lands away from the dunderheads back East and return more managerial control of public lands over to States and localities.  Most reasoned people will acknowledge that localized control makes sense, and only the extreme partisans think otherwise.

How can I be wrong about something I didnt discuss?  I asked a question, posed an answer, and commented about the desirability of same.  To whit...

"So, are you advocating that the FEDS reimburse the states' cost of creating a new RR by giving them National Forest and BLM land?  Are they supposed to then turn around and sell that land to developers to raise the money?  " src="../emoticons/icon_smile_8ball.gif">

No, thanks. "

Be more careful in your reading and attribution in the future, please.

I'll state this as simply as possible to give you the best possible odds of comprehending the point at hand:  

1.  States manage their lands as an endowment.  That means they retain ownership of the land, but use the resources from that land as a way to derive revenue.

2.  Therefore, a land grant to the States for the purpose of facilitating the purchase of railroad ROW's would not subsequently be "sold to developers" to raise that cash, but would be utilized as an endowment. 

3.  A more liberal approach would involve an actual land sale, but with the caveat of retaining prevailing public access and forbidding on site development.  Thus again, there would be no selling of the land to developers.

This way, it's a win-win for everyone except those who wish to repress the economies of the West.

[JSGreen]

And you are wrong regarding the problem of federal land ownership in States such as Idaho and Nevada - there is a large and growing grass roots effort to get the management of these lands away from the dunderheads back East and return more managerial control of public lands over to States and localities.  Most reasoned people will acknowledge that localized control makes sense, and only the extreme partisans think otherwise.

How can I be wrong about something I didnt discuss?  I asked a question, posed an answer, and commented about the desirability of same.  To whit...

"So, are you advocating that the FEDS reimburse the states' cost of creating a new RR by giving them National Forest and BLM land?  Are they supposed to then turn around and sell that land to developers to raise the money?  ">

No, thanks. "

Be more careful in your reading and attribution in the future, please.

[n012944]

  

The only way public money will be used to upgrade these lines is if the State of Montana siezes them in a Imminent Domain action.  Then the state will still need to find some way to connect them to a rail system who wants to use them.  MRL will be reluctant since that just moves the connection problem farther down the line.  Who can force a carrier to provide service on tracks they do not own?

Assuming that action would pass muster with the courts, Montana would still need neighboring states to do the same thing at the same time so that the tracks are freed for multiple use from commodity origin to destination.  Otherwise, Montana would be on an island, with only UP via Monida Pass or CP via Sweetwater as potential competition suitors.  Neither route offers much in the way of an improvement over BNSF's routes to the West Coast for Montana export grain. 

Now, if Idaho and Washington were to do the same thing, then the list of likely transporter participants grows exponentially.

I see that you still have little respect for the Fifth Article of Amendment to the United States Constitution.  Also consider that a multistate eminent domain suit would take a very long time to work its way through the various courts.  If the states happened to win, where would they come up with the money to purchase the property?  More taxes would be political suicide.

Don't try playing holier than thou now, when you know perfectly well the railroads themselves used Eminent Domain to obtain the initial right of way. 

And to think of all the people and buisnesses that were displaced in the late 1800's, I am floored that there was not more of an outcry

 

Bert

[Anonymous]

"Personally, I prefer land grants to States such as Montana, Idaho, and Washington e.g. states that have significant (and property tax exempt) holdings of federally owned land within their borders.  Those land grants themselves would more than pay for the assessed value of railroad ROW."

So, are you advocating that the FEDS reimburse the states' cost of creating a new RR by giving them National Forest and BLM land?  Are they supposed to then turn around and sell that land to developers to raise the money? 

No, thanks.  That is a one dimensional solution to a preceived problem -- and I think I can relax, because not enough people perceive this to be a problem, so there will not be a grass roots effort to make it happen.

Most of the Western States use their state land holdings to fund schools, etc. using practical, environmentally sustainable resource utilization.  It is only the federal government that seems to lose money with it's land holdings, and not coincidently it is the federal lands that have the worst environmental record.  Since many Western States have more than 25% of the land within their borders under federal control, it makes sense - both environmentally and economically - if a large portion of these mismanaged federal lands were turned over to the states for more localized control.

And you are wrong regarding the problem of federal land ownership in States such as Idaho and Nevada - there is a large and growing grass roots effort to get the management of these lands away from the dunderheads back East and return more managerial control of public lands over to States and localities.  Most reasoned people will acknowledge that localized control makes sense, and only the extreme partisans think otherwise.

[JSGreen]

"Personally, I prefer land grants to States such as Montana, Idaho, and Washington e.g. states that have significant (and property tax exempt) holdings of federally owned land within their borders.  Those land grants themselves would more than pay for the assessed value of railroad ROW."

So, are you advocating that the FEDS reimburse the states' cost of creating a new RR by giving them National Forest and BLM land?  Are they supposed to then turn around and sell that land to developers to raise the money? 

No, thanks.  That is a one dimensional solution to a preceived problem -- and I think I can relax, because not enough people perceive this to be a problem, so there will not be a grass roots effort to make it happen.

[Anonymous]

  

The only way public money will be used to upgrade these lines is if the State of Montana siezes them in a Imminent Domain action.  Then the state will still need to find some way to connect them to a rail system who wants to use them.  MRL will be reluctant since that just moves the connection problem farther down the line.  Who can force a carrier to provide service on tracks they do not own?

Assuming that action would pass muster with the courts, Montana would still need neighboring states to do the same thing at the same time so that the tracks are freed for multiple use from commodity origin to destination.  Otherwise, Montana would be on an island, with only UP via Monida Pass or CP via Sweetwater as potential competition suitors.  Neither route offers much in the way of an improvement over BNSF's routes to the West Coast for Montana export grain. 

Now, if Idaho and Washington were to do the same thing, then the list of likely transporter participants grows exponentially.

I see that you still have little respect for the Fifth Article of Amendment to the United States Constitution.  Also consider that a multistate eminent domain suit would take a very long time to work its way through the various courts.  If the states happened to win, where would they come up with the money to purchase the property?  More taxes would be political suicide.

Don't try playing holier than thou now, when you know perfectly well the railroads themselves used Eminent Domain to obtain the initial right of way.  In principle, ED is supposed to be reserved for public entities, not private, and the purpose of ED is to obtain a public good, e.g. public access.  It certainly makes more sense for a State consortium to use ED to facilitate that public usage caveat than it is to use ED for private entities which subsequently bar that public access.

More taxes would be political suicide?  If the railroads are forced to pay into the Highway Trust Fund via a diesel fuel tax (as suggested by UPS and yours truly, e.g. great minds think alike!), how is that political suicide?  If anything, the public will appreciate the inclusion of railroads which heretofore have been exempted from paying that tax.  Tax fairness plays very well with the public.  Since railroads are now drawing from that Fund, it is appropriate that they pay into it as well.

Personally, I prefer land grants to States such as Montana, Idaho, and Washington e.g. states that have significant (and property tax exempt) holdings of federally owned land within their borders.  Those land grants themselves would more than pay for the assessed value of railroad ROW.

[CSSHEGEWISCH]

  

The only way public money will be used to upgrade these lines is if the State of Montana siezes them in a Imminent Domain action.  Then the state will still need to find some way to connect them to a rail system who wants to use them.  MRL will be reluctant since that just moves the connection problem farther down the line.  Who can force a carrier to provide service on tracks they do not own?

Assuming that action would pass muster with the courts, Montana would still need neighboring states to do the same thing at the same time so that the tracks are freed for multiple use from commodity origin to destination.  Otherwise, Montana would be on an island, with only UP via Monida Pass or CP via Sweetwater as potential competition suitors.  Neither route offers much in the way of an improvement over BNSF's routes to the West Coast for Montana export grain. 

Now, if Idaho and Washington were to do the same thing, then the list of likely transporter participants grows exponentially.

I see that you still have little respect for the Fifth Article of Amendment to the United States Constitution.  Also consider that a multistate eminent domain suit would take a very long time to work its way through the various courts.  If the states happened to win, where would they come up with the money to purchase the property?  More taxes would be political suicide.

[Anonymous]

  

The only way public money will be used to upgrade these lines is if the State of Montana siezes them in a Imminent Domain action.  Then the state will still need to find some way to connect them to a rail system who wants to use them.  MRL will be reluctant since that just moves the connection problem farther down the line.  Who can force a carrier to provide service on tracks they do not own?

Assuming that action would pass muster with the courts, Montana would still need neighboring states to do the same thing at the same time so that the tracks are freed for multiple use from commodity origin to destination.  Otherwise, Montana would be on an island, with only UP via Monida Pass or CP via Sweetwater as potential competition suitors.  Neither route offers much in the way of an improvement over BNSF's routes to the West Coast for Montana export grain. 

Now, if Idaho and Washington were to do the same thing, then the list of likely transporter participants grows exponentially.

[greyhounds]

I have to agree with Michael on this one.  While aluminum cars made the mty train lighter the loaded trains actually increased in weight.  The reason was the railroads increased the load per car account the lighter cars allowed for more freight load but then they also increased the number of cars per train as well as increasing the loaded weight of the cars from 220,000 lbs to 286,000 lbs.  Even if the number of cars had remained the same the loaded train would still weigh more.  If they had kept the number of cars the same and kept the load the same then the loaded train would be lighter but then that is not the way the railroad industry works.  

Well you can agree with anyone you wish to agree with.

But you do agree that they took weight out of the train by reducing the tare.  Which is what I said. 

[arbfbe]

I have to agree with Michael on this one.  While aluminum cars made the mty train lighter the loaded trains actually increased in weight.  The reason was the railroads increased the load per car account the lighter cars allowed for more freight load but then they also increased the number of cars per train as well as increasing the loaded weight of the cars from 220,000 lbs to 286,000 lbs.  Even if the number of cars had remained the same the loaded train would still weigh more.  If they had kept the number of cars the same and kept the load the same then the loaded train would be lighter but then that is not the way the railroad industry works.  

[greyhounds]

This has to be one of the most ignorant things about railroading I've ever read in my life.  I've long suspected that Mr. Sol can not 'connect the dots'.   This writing by him further leads me in that direction.  He just doesn't understand this stuff.

Sorry Strawbridge, you are on the record as stating it was to make the trains lighter. Claiming that other people "don't understand" the argument requires people to read what you say, and then pretend you didn't say it..

I was explicit early on in that discussion that overall friction on the train had nothing to do with the tare ratio, that loading on axles and train speed were the only train factors that could be included in the Davis Equation, since it would be useless to include the tare ratio since that had nothing to do with the axle loading on a loaded car. Nothing.

You babbled on for three pages arguing that railroads were trying to make trains lighter. That air resistance had little to do with horsepower needs. Then when you realized you had goofed up yet again, you tried to morph it, as usual, into an argument that railroads were doing a good thing by improving tare. Which had zero to do with axle loading which was increasing, not decreasing.  Your usual sleight of hand change of the subject.

Strawbridge:
The most significant resistance factor is the grade.  You can either pile on the power or reduce the tare weight to deal with the grades.

Strawbridge, 8/26/06, 2:05 a.m.:
But they pale in comparison to reducing the weight you have to drag up a hill.

Strawbridge: 8/26/06, 11: 22 p.m. :
No, you're wrong agiain.  They've reduced weight.  What do you think aluminum gondolas do?  ....  They did this to reduce train weight.

The problem for you is, you actually said it. The record is clear and complete on that item. Aluminum gons didn't reduce the train weight. They allowed more product to be carried on the same axle loading. The "train weight" stayed the same. Aluminum had zero to do with the resistance factors encountered by the train which needed to be overcome by horsepower. You were simply wrong.

You didn't know what you were talking about. Reducing tare weight wasn't for  the purpose of reducing train weight, it was for the purpose of improving the economic efficiency of the train movement. Reducing train weight was not part of that picture, rather the reverse.

As usual, you got it backwards. You didn't understand it, and no one is putting words in your mouth by pointing it out. You put them there all by yourself.

I won't say it was the most ignorant thing I have ever read in railroading. You've written a lot.

OK, we have reached the inevitable point where Mr. Sol claims that:

I said what he says I said because he says that I said it.

Did Not!

Say Good Night Mikey.  You make Gracie look smart.

[MichaelSol]

This has to be one of the most ignorant things about railroading I've ever read in my life.  I've long suspected that Mr. Sol can not 'connect the dots'.   This writing by him further leads me in that direction.  He just doesn't understand this stuff.

Sorry Strawbridge, you are on the record as stating it was to make the trains lighter. Claiming that other people "don't understand" the argument requires people to read what you say, and then pretend you didn't say it..

I was explicit early on in that discussion that overall friction on the train had nothing to do with the tare ratio, that loading on axles and train speed were the only train factors that could be included in the Davis Equation, since it would be useless to include the tare ratio since that had nothing to do with the axle loading on a loaded car. Nothing.

You babbled on for three pages arguing that railroads were trying to make trains lighter. That air resistance had little to do with horsepower needs. Then when you realized you had goofed up yet again, you tried to morph it, as usual, into an argument that railroads were doing a good thing by improving tare. Which had zero to do with axle loading which was increasing, not decreasing.  Your usual sleight of hand change of the subject.

Strawbridge:
The most significant resistance factor is the grade.  You can either pile on the power or reduce the tare weight to deal with the grades.

Strawbridge, 8/26/06, 2:05 a.m.:
But they pale in comparison to reducing the weight you have to drag up a hill.

Strawbridge: 8/26/06, 11: 22 p.m. :
No, you're wrong agiain.  They've reduced weight.  What do you think aluminum gondolas do?  ....  They did this to reduce train weight.

The problem for you is, you actually said it. The record is clear and complete on that item. Aluminum gons didn't reduce the train weight. They allowed more product to be carried on the same axle loading. The "train weight" stayed the same. Aluminum had zero to do with the resistance factors encountered by the train which needed to be overcome by horsepower. You were simply wrong.

You didn't know what you were talking about. Reducing tare weight wasn't for  the purpose of reducing train weight, it was for the purpose of improving the economic efficiency of the train movement. Reducing train weight was not part of that picture, rather the reverse.

As usual, you got it backwards. You didn't understand it, and no one is putting words in your mouth by pointing it out. You put them there all by yourself.

I won't say it was the most ignorant thing I have ever read in railroading. You've written a lot.

[CSSHEGEWISCH]

Piggyback, in the sense of trailer-on-flat-car, may continue to shrink somewhat but it will continue to be offered as long as a substantial number of customers want it.

[arbfbe]

  

.  Public investment to fluidize these bottlenecks in exchange for some form of public access across the rail spectrum wouldn't seem to be an objectionable idea, would it?

 

That sure sounds great but in the case of the BNSF the will abandon such track rather than allow public money to upgrade the line particularly if it means allowing another railroad onto the trackage.  The perfect examples are the BNSF lines between Helena and Great Falls as well as the lines between Great Falls and Pacific Jct.  You can expect those lines to fall as soon as the BNSF has forced the shippers to relocate nearer the mainlines.

The only way public money will be used to upgrade these lines is if the State of Montana siezes them in a Imminent Domain action.  Then the state will still need to find some way to connect them to a rail system who wants to use them.  MRL will be reluctant since that just moves the connection problem farther down the line.  Who can force a carrier to provide service on tracks they do not own?

[greyhounds]

Hey, in case anyone wants to know...NS 218 this morning (7am) had 52 trailers, no containers.  Of the 52 trailers, at least 12 were UPS trailers, probably more as there were lease trailers on the train.

Lots of big orange too. 

Trains 217/218, the Greensboro - Chicago trains typically only have 50 - 60 trailers...there must be pretty good revenue for these to justify that small of train. 

 

What is the average trailer revenue per mile these days?  About a buck a mile?   That yields about $45k for this trailer.  That seems thin.

 

ed

I just checked the BNSF public rates between Chicago and Denver today. 

Westbound a 53' NACS container w/o chassis goes terminal to terminal for $1,150.  Which is like $1.10/mile. 

Eastbound is a whole 'nother story.  The same equipment moves for $500, which is under $0.50/mile.  When the supply is the same (just as many containers have to leave Denver as arrive Denver) but the demand is less, the price has got to fall.

Of course the BNSF could go after all that good Colorado Beef and Lamb originating Denver, Ft. Morgan, and Greely.  If they can move loads for $500 they could own that business at a much higher rate.

[greyhounds]

Now why is he doing this?  Was he unable to follow the arguement?  Is he just being dishonest?  I don't know.  But I do know he's putting false words in my mouth in an effort to discredit me.

Niether did I say trains were getting lighter.

OK, let's look at "false words":

Strawbridge: 8/24,06 9:20 p.m.:
To understand why weight is a much more critical factor than "air resistance" ...

Strawbridge:
It's more important to reduce train weight - ...

Tom was/is right.  The lightweight equipment was more important than the cosmetic streamlining. BTW, it also could be accelerated/decelerated faster.

Strawbridge, 8/26/06, 12:42 a.m.;

If you don't understand that grades and curvature are significant factors in rail operations and that "Wind Resistance" is an afterthought, you're beyond any possible reason.

Strawbridge:
The most significant resistance factor is the grade.  You can either pile on the power or reduce the tare weight to deal with the grades.

Strawbridge, 8/26/06, 2:05 a.m.:
But they pale in comparison to reducing the weight you have to drag up a hill.

Strawbridge: 8/26/06, 11: 22 p.m. :
No, you're wrong agiain.  They've reduced weight.  What do you think aluminum gondolas do?  ....  They did this to reduce train weight.

What is clear from Strawbridge's own words is that 1) he confused tare ratio with axle load, and 2) but that he clearly believed that by reducing tare, railroads were attempting to reduce train weight.

It was ridiculous, but no one put any words into Strawbridge's mouth that he had not uttered on his own.

What Strawbridge clearly confused was the fact that efforts to improve the tare ratio had nothing to do with axle loading or train weight. But, that is the exact opposite of what he tried to argue when he tried to argue that the solution to resistance problems was to go to lighter trains.

Indeed, on 8/28/06, he noted after finally "doing the math" that a 286 k carload operated against 36,939 lbs of resistance at 50 mph in a 7,200 ton train, whereas 263k cars on the same train operated at 37,934 lbs of resistance.

That the heavier cars were more efficient!

That increasing, not decreasing, car weight would reduce the total resistance incurred by a train of equal overall weight.

Compare that to his earlier comments above and decide for yourself  why Strawbridge has fall back on the allegation that someone is "putting false words into my mouth into an effort to discredit me." This is a guy who thought that railroads were reducing car weight and reducing train weight and, as usual, sticking his strong opinions in on the subject. That you were "beyond any possible reason" if you disagreed with him.

Look at his comments on the ICC opinion on captivity. Was the ICC reversed on the captivity analysis? Nope. Strawbridge made a patently false assertion. Did Strawbridge claim that trains and train cars were getting lighter? Not only did he claim it, he claimed that weight was singularly important, that wind resistance an "afterthought" and that reducing car and train weight was the only way of effectively reducing train resistance. He repeated it multiple times in his usual effort to browbeat the argument into submission to his routinely false premises. He left absolutely no doubt on the topic although he now claims he did not claim that "trains were getting lighter"; and presumably will now claim that there was obviously no need to ....

The problem with Strawbridge's claim that people are "putting words" in his mouth is that it's simply not true. The words are his.

This has to be one of the most ignorant things about railroading I've ever read in my life.  I've long suspected that Mr. Sol can not 'connect the dots'.   This writing by him further leads me in that direction.  He just doesn't understand this stuff.

I clearly stated I was talking about tare weight.  He quotes me on that.  Tare is the weight of the equipment you have to put under the payload.  You don't get paid for moving the equipment weight, you only get paid for moving the payload weight.  Sol doesn't understand enough to differentiate between tare and payload.  He just proved it.

Heavier cars are not, as Sol now claims, more efficient.  Heavier cars are less efficient.  The goal is to build as light of a car as is economically feasible.  What you want to do is increase is the payload, not the dead weight of the car you have to drag around to get paid.  That's what I said.  I never said that trains were getting lighter. 

Lightening the train does not mean run lighter, smaller trains.  Mr. Sol doesn't apear to understand this.  He can't 'connect those dots.'  Lightening the train means getting the nonproductive tare weight out.  I clearly said I was talking about tare - but he couldn't follow the discussion.

And Mr Sol, that ICC decision was reversed on appeal and the good guys won.  The railroad prevailed. 

[Anonymous]

The free enterprise, competitive market, economic model is based upon four ASSUMPTIONS to work.  The one that seems to get passed over in this forum is the "Complete ease of entry and exit into the market (industry)" portion of the model.  That assumption means anyone with an interest can open shop and begin a viable business.  In the transportation industry this works pretty good in the trucking segment.  It may even describe the barge segment.  Unless you are talking about commercial service in Alaska the assumption gets tenuous when describing the airlines.  Railroading? Forget it.  Account capital costs associated with right of way acquisition there is no freedom of entry and exit into the market or industry.  The freedom of entry assumption is in the economic model to balance the trend towards monopoly.  If that feature of the model is missing then the railroads follow the model perfectly, the tend towards the monopoly position.  I think that pretty much describes the railroad/captive shipper situation in the US.  Yes, folks, the economists have great models.  They can get an outstanding view of how it is going to shake out.  The problem is the unwashed glom on to the model and treat the assumptions as facts.  Just because the US has a free market economy it is not true all the needed assumptions are truths in each segment.  That is just too far a stretch.

Futuremodal believes the answer is to grant open access on rail lines and build entirely new lines to make competition a reality.  Sure that would work according to the economic model.  The capital cost realities of new construction work against that solution.  The political realities of new construction or existing owners allowing tenants onto their nicely functioning monopoly property are not promising either.  Trucks, barges, airplanes, ox carts and back packs are all competitive with railroads in a very limited sense.  For specific products in specific instances each could blow the doors off a railroad and in most of these cases I would bet they are now the primary mode of transport having relegated the railroads irrelevant.

So if we cannot provide ease of entry and exit into the industry by making capital free, and who knows where capital would flow under that circumstance, we have to deal with the reality of the economics.  One only has to look at the problems faced by the DM&E in their quest to provide competition in the Powder River Basin to imagine the cost and challenge to provide competition to the myriad of captive shippers across the rest of the country.  Since that is not likely going to happen soon it falls on the STB to provide fairness to the captives.  Now the railroads will defind fairness far differently than the captives will and so far then have been able to keep the STB at bay even to the point of blunting their rulings so far.  The econimic model can predict how that will work but cannot predict how the politics will play out.  

Actually, that's a very succinct synopsis, very well put.

To correct something though, what I believe as you stated needs clarification.  What I want for the US rail network is to facilitate some form of comprehensive intramodal competition.  Whether that's open access or some variation of the concept is left to debate.  The utility/transmission model seems appropriate for the US rail system - allow competitors overhead rights on the rails.  At least that's a start.  But keep in mind, if all Class I's could access all Class I trackage via current trackage rights protocols, then half the battle is won.  The new infrastructural requirements then would be focussed on the bottlenecks, not on long stretches of redundancy, so it's not like there'd be a sudden need of doubling of the US rail network (and the subsequent decades long delays).  And with competitive access, you now open the door for regional and state consortiums to fill the gaps using fuel tax revenues - after all, it is the regional and state interests that are most concerned with eliminating bottlenecks so their little part of the world is most attractive to economic investment capital. 

Public capital is used to build highways, why not bottleneck-eliminating OA rail lines?  At least with public capital we can direct the rail infrastructural investment to the places WE need it, aka those areas that would serve the interests of US producers and exporters, and not the places that only seem to serve the purposes of Asian importers (think Santa Fe).

You are well aware of the current rail bottlenecks we have here in the PNW - The Funnel, Stampede Pass, Stevens Pass, Deadman's Pass, the Columbia Gorge - as well as the embargoed lines that would work great if the subsequent owners would cooperate to get things moving, aka the I-15 corridor in Montana.  Public investment to fluidize these bottlenecks in exchange for some form of public access across the rail spectrum wouldn't seem to be an objectionable idea, would it?

[MichaelSol]

Now why is he doing this?  Was he unable to follow the arguement?  Is he just being dishonest?  I don't know.  But I do know he's putting false words in my mouth in an effort to discredit me.

Niether did I say trains were getting lighter.

OK, let's look at "false words":

Strawbridge: 8/24,06 9:20 p.m.:
To understand why weight is a much more critical factor than "air resistance" ...

Strawbridge:
It's more important to reduce train weight - ...

Tom was/is right.  The lightweight equipment was more important than the cosmetic streamlining. BTW, it also could be accelerated/decelerated faster.

Strawbridge, 8/26/06, 12:42 a.m.;

If you don't understand that grades and curvature are significant factors in rail operations and that "Wind Resistance" is an afterthought, you're beyond any possible reason.

Strawbridge:
The most significant resistance factor is the grade.  You can either pile on the power or reduce the tare weight to deal with the grades.

Strawbridge, 8/26/06, 2:05 a.m.:
But they pale in comparison to reducing the weight you have to drag up a hill.

Strawbridge: 8/26/06, 11: 22 p.m. :
No, you're wrong agiain.  They've reduced weight.  What do you think aluminum gondolas do?  ....  They did this to reduce train weight.

What is clear from Strawbridge's own words is that 1) he confused tare ratio with axle load, and 2) but that he clearly believed that by reducing tare, railroads were attempting to reduce train weight.

It was ridiculous, but no one put any words into Strawbridge's mouth that he had not uttered on his own.

What Strawbridge clearly confused was the fact that efforts to improve the tare ratio had nothing to do with axle loading or train weight. But, that is the exact opposite of what he tried to argue when he tried to argue that the solution to resistance problems was to go to lighter trains.

Indeed, on 8/28/06, he noted after finally "doing the math" that a 286 k carload operated against 36,939 lbs of resistance at 50 mph in a 7,200 ton train, whereas 263k cars on the same train operated at 37,934 lbs of resistance.

That the heavier cars were more efficient!

That increasing, not decreasing, car weight would reduce the total resistance incurred by a train of equal overall weight.

Compare that to his earlier comments above and decide for yourself  why Strawbridge has fall back on the allegation that someone is "putting false words into my mouth into an effort to discredit me." This is a guy who thought that railroads were reducing car weight and reducing train weight and, as usual, sticking his strong opinions in on the subject. That you were "beyond any possible reason" if you disagreed with him.

Look at his comments on the ICC opinion on captivity. Was the ICC reversed on the captivity analysis? Nope. Strawbridge made a patently false assertion. Did Strawbridge claim that trains and train cars were getting lighter? Not only did he claim it, he claimed that weight was singularly important, that wind resistance an "afterthought" and that reducing car and train weight was the only way of effectively reducing train resistance. He repeated it multiple times in his usual effort to browbeat the argument into submission to his routinely false premises. He left absolutely no doubt on the topic although he now claims he did not claim that "trains were getting lighter"; and presumably will now claim that there was obviously no need to ....

The problem with Strawbridge's claim that people are "putting words" in his mouth is that it's simply not true. The words are his.

[arbfbe]

The free enterprise, competitive market, economic model is based upon four ASSUMPTIONS to work.  The one that seems to get passed over in this forum is the "Complete ease of entry and exit into the market (industry)" portion of the model.  That assumption means anyone with an interest can open shop and begin a viable business.  In the transportation industry this works pretty good in the trucking segment.  It may even describe the barge segment.  Unless you are talking about commercial service in Alaska the assumption gets tenuous when describing the airlines.  Railroading? Forget it.  Account capital costs associated with right of way acquisition there is no freedom of entry and exit into the market or industry.  The freedom of entry assumption is in the economic model to balance the trend towards monopoly.  If that feature of the model is missing then the railroads follow the model perfectly, the tend towards the monopoly position.  I think that pretty much describes the railroad/captive shipper situation in the US.  Yes, folks, the economists have great models.  They can get an outstanding view of how it is going to shake out.  The problem is the unwashed glom on to the model and treat the assumptions as facts.  Just because the US has a free market economy it is not true all the needed assumptions are truths in each segment.  That is just too far a stretch.

Futuremodal believes the answer is to grant open access on rail lines and build entirely new lines to make competition a reality.  Sure that would work according to the economic model.  The capital cost realities of new construction work against that solution.  The political realities of new construction or existing owners allowing tenants onto their nicely functioning monopoly property are not promising either.  Trucks, barges, airplanes, ox carts and back packs are all competitive with railroads in a very limited sense.  For specific products in specific instances each could blow the doors off a railroad and in most of these cases I would bet they are now the primary mode of transport having relegated the railroads irrelevant.

So if we cannot provide ease of entry and exit into the industry by making capital free, and who knows where capital would flow under that circumstance, we have to deal with the reality of the economics.  One only has to look at the problems faced by the DM&E in their quest to provide competition in the Powder River Basin to imagine the cost and challenge to provide competition to the myriad of captive shippers across the rest of the country.  Since that is not likely going to happen soon it falls on the STB to provide fairness to the captives.  Now the railroads will defind fairness far differently than the captives will and so far then have been able to keep the STB at bay even to the point of blunting their rulings so far.  The econimic model can predict how that will work but cannot predict how the politics will play out.  

[MichaelSol]

We know he's biased and frequently misinterpets data as well as simply being argumentative -- after all, he claimed that air resistance did not affect train speed and horsepower needs, and that trains and train cars were getting lighter not heavier -- but is there any reason to conclude that an ALJ, and then the full ICC, were biased?

That after five years of hearings and argument by educated, experienced experts from both sides, that the ICC knew less about this than Ken Strawbridge?

Hardly.

See, this presents me with a delima. 

Sol went on and on about the ICC decision against the railroad in the McCarty Farms case.  Indicating that it's decisiion against the BN proved his points.  But he totally left out the fact that the decision was reversed in court and remanded back to the ICC.  The 2nd time around the regulators ruled in favor of the railroad.  And this time the decision, which was in favor of the railroad and adverse to Sol's way of thinking, was upheld on appeal.

Sol left all that out for some reason or another.

So, when I pointed out that the decision he was citing was reversed, he went off like a cheap firecracker.  What's really troubling is that he's trying to discredit me by falsely claiming I said things that I never said.

Nope, it's all true. For instance, you most recently tried to say this:

Strawbridge: The stardard initially used by the "administrative" law judge was a simple revenue to variable cost ratio.  That standard got knocked in the head by a U.S. Court of Appeals.  But Mr. Sol keeps trying to use that same standard as the sole test of a shipper being captive.  Why?  I guess it serves his purpose.

The Appeals court decision did not "knock anything in the head" regarding the the "test of shipper captivity." That portion of the ICC opinion was not reversed. But, you don't care about "details" like that. You falsely represent things like that all the time. It is your legendary "sleight of hand" to substitute one fact for another, to justify some bizarre position on a wheat industry you know nothing about, but insist on inserting yourself time and again, to prove some personal point..

The fact is, the discussion was whether or not the Montana shippers were captive.  The Appeals Court decision you cited did not reverse on the finding that under the test, Montana shippers were captive under the standard set forth in the Staggers Act.

This is simply the latest in a long line of Strawbridge fabrications -- Sol didn't cite to an appeal court opinion that reversed on the issue of captivity, because in fact there is no such opinion, and captivity happened to be the latest artificial controversy that Strawbridge tried to stir up.

Sol did not, in fact, make any reference to Strawbridge's imaginary, fabricated court opinion. That, Strawbridge complains, presents Strawbridge with a "dilemma". I'll bet it does.

No one is trying to discredit him. He does it all by himself.

[n012944]

While adding capacity could increase income, it would also increase expenses since the additional track would have to be maintained, additional property taxes would have to be paid (it's difficult to hide a new track from the county assessor), etc, etc, etc.  If the track owner is satisfied with his current rate of return on existing investment, why should he invest more money which may not improve the rate of return?  Additional income doesn't always add to the bottom line.

You need to go back and research just how utilities function.  Since premium pricing with few customers is out due to regulation, they must constantly expand their customer base to increase income.  Yes, there are investments in additional infrastructure pretty much for each new customer, but somehow they manage to include the cost of that new infrastructure into the overall rate structure.

 

Really?  Well here in Chicago, Comed, the major utility company in the area is about to raise rates up to 55% to pay for new infrastructrure.  With the housing boom of the last ten years or so,Comed has gotten many new customers, so under your theory, rates should not have to be raised at all.  But as usual, there are many holes in your ideas.

 

Bert

[Anonymous]

While adding capacity could increase income, it would also increase expenses since the additional track would have to be maintained, additional property taxes would have to be paid (it's difficult to hide a new track from the county assessor), etc, etc, etc.  If the track owner is satisfied with his current rate of return on existing investment, why should he invest more money which may not improve the rate of return?  Additional income doesn't always add to the bottom line.

You need to go back and research just how utilities function.  Since premium pricing with few customers is out due to regulation, they must constantly expand their customer base to increase income.  Yes, there are investments in additional infrastructure pretty much for each new customer, but somehow they manage to include the cost of that new infrastructure into the overall rate structure.

[CSSHEGEWISCH]

While adding capacity could increase income, it would also increase expenses since the additional track would have to be maintained, additional property taxes would have to be paid (it's difficult to hide a new track from the county assessor), etc, etc, etc.  If the track owner is satisfied with his current rate of return on existing investment, why should he invest more money which may not improve the rate of return?  Additional income doesn't always add to the bottom line.

[greyhounds]

Didja' ever notice............how some threads take on the tone of an election campaign?  (insert *head spinning* smilie here)

No.  Election campaigns involve negative attack ads, smear campaigns, and claiming your opponent is unkind to puppies.  That would never happen here. 

What would you have me do?   Just ignor it when the man puts false words in my mouth?

[Anonymous]

Didja' ever notice............how some threads take on the tone of an election campaign?  (insert *head spinning* smilie here)

No.  Election campaigns involve negative attack ads, smear campaigns, and claiming your opponent is unkind to puppies.  That would never happen here. 

[greyhounds]

We know he's biased and frequently misinterpets data as well as simply being argumentative -- after all, he claimed that air resistance did not affect train speed and horsepower needs, and that trains and train cars were getting lighter not heavier -- but is there any reason to conclude that an ALJ, and then the full ICC, were biased?

That after five years of hearings and argument by educated, experienced experts from both sides, that the ICC knew less about this than Ken Strawbridge?

Hardly.

See, this presents me with a delima. 

Sol went on and on about the ICC decision against the railroad in the McCarty Farms case.  Indicating that it's decisiion against the BN proved his points.  But he totally left out the fact that the decision was reversed in court and remanded back to the ICC.  The 2nd time around the regulators ruled in favor of the railroad.  And this time the decision, which was in favor of the railroad and adverse to Sol's way of thinking, was upheld on appeal.

Sol left all that out for some reason or another.

So, when I pointed out that the decision he was citing was reversed, he went off like a cheap firecracker.  What's really troubling is that he's trying to discredit me by falsely claiming I said things that I never said.

For example, I never said air resistance didn't afftect train speed and horsepower requirements.  You'd have to be ignorant to say that.  I'm not.  So I didn't say it.  But Sol now falsely says that I said it in an effort to discredit me.

Now why is he doing this?  Was he unable to follow the arguement?  Is he just being dishonest?  I don't know.  But I do know he's putting false words in my mouth in an effort to discredit me.

Niether did I say trains were getting lighter. 

I'm pretty much of the opinion that it's a combination of both factors.   He can look up a lot of information and cite it,  but he can't process it rationally.  He can't understand the discussions. And, I've come to the conclusion that the man will abandon honesty in order to win a "discussion". 

But those are just my opinions.  I don't really know why he tries to put false words in my mouth in an effort to discredit me.  But I know he does that.

[TomDiehl]

One thing that has never been evident to me through all of FM's postings about the topic is how his theory of open access can generate extra capacity on the same track that is capacity-constrained in the current method of operation.

I will use a theoretical example of the mostly single track Los Angeles-El Paso segment of the Sunset Route.  FM has stated that the rates charged by the owners of the track to train operators would be regulated.  If the firm owning the capacity-constrained Sunset Route is earning an adequate rate of return on investment in the existing line, where is the incentive to add capacity and maintain that same adequate rate of return on a now appreciably larger investment?

Now Paul, Dave's mind is made up, don't confuse him with the facts or reality of the situation.

Sometimes you must make yourself walk away from FM.  It is not worth the headache.

Bert

But he's always good for a laugh.

[n012944]

One thing that has never been evident to me through all of FM's postings about the topic is how his theory of open access can generate extra capacity on the same track that is capacity-constrained in the current method of operation.

I will use a theoretical example of the mostly single track Los Angeles-El Paso segment of the Sunset Route.  FM has stated that the rates charged by the owners of the track to train operators would be regulated.  If the firm owning the capacity-constrained Sunset Route is earning an adequate rate of return on investment in the existing line, where is the incentive to add capacity and maintain that same adequate rate of return on a now appreciably larger investment?

Now Paul, Dave's mind is made up, don't confuse him with the facts or reality of the situation.

 

Sometimes you must make yourself walk away from FM.  It is not worth the headache.

 

Bert

[Anonymous]

One thing that has never been evident to me through all of FM's postings about the topic is how his theory of open access can generate extra capacity on the same track that is capacity-constrained in the current method of operation.

I will use a theoretical example of the mostly single track Los Angeles-El Paso segment of the Sunset Route.  FM has stated that the rates charged by the owners of the track to train operators would be regulated.  If the firm owning the capacity-constrained Sunset Route is earning an adequate rate of return on investment in the existing line, where is the incentive to add capacity and maintain that same adequate rate of return on a now appreciably larger investment?

I've read that paragraph three times and it still doens't make any sense!

By "rates" I assume you are refering to the user fee or toll.

You have it backwards.  By regulating the user fees (the equalization of private ROW to public ROW)you keep the owners from exploiting capacity crunches, thus their incentive to limit capacity to maximize the tolls is extinguished.  Now their income is dependent on volume, not premium, so adding capacity as demanded equates to added income, while not adding capacity means less income.

Make no mistake - railroad pathways are of the utility persuasion, de facto if not de jure.

[TomDiehl]

One thing that has never been evident to me through all of FM's postings about the topic is how his theory of open access can generate extra capacity on the same track that is capacity-constrained in the current method of operation.

I will use a theoretical example of the mostly single track Los Angeles-El Paso segment of the Sunset Route.  FM has stated that the rates charged by the owners of the track to train operators would be regulated.  If the firm owning the capacity-constrained Sunset Route is earning an adequate rate of return on investment in the existing line, where is the incentive to add capacity and maintain that same adequate rate of return on a now appreciably larger investment?

Now Paul, Dave's mind is made up, don't confuse him with the facts or reality of the situation.

[CSSHEGEWISCH]

One thing that has never been evident to me through all of FM's postings about the topic is how his theory of open access can generate extra capacity on the same track that is capacity-constrained in the current method of operation.

I will use a theoretical example of the mostly single track Los Angeles-El Paso segment of the Sunset Route.  FM has stated that the rates charged by the owners of the track to train operators would be regulated.  If the firm owning the capacity-constrained Sunset Route is earning an adequate rate of return on investment in the existing line, where is the incentive to add capacity and maintain that same adequate rate of return on a now appreciably larger investment?

[TomDiehl]

Tom, I'll sum it up this way:  Bailouts of closed access rail systems have never happened, have they? (insert sarcastic smilie here)  Seems to me the US system is in a constant state of perpetual bailout, whether by direct financial aid, or indirect legal exemption.  One fact is clear - the growth in OA is stronger than that of CA.  Live with it.

In a free market society, competitive access is preferable to a lack of competitive access.

The point is, the open access model you keep promoting is no improvement in this area. Maybe in your limited mind it's "clear the open access has stronger growth than closed access," but you've shown no proof of this.

And exactly why is competitive access to private property preferable? That flies completely in the face of "free market society." Are you going to impose emminent domain back at the railroads to have the government take over their tracks? Then have the government take over the repair and maintenance of them, as well as build new lines? We've seen how well this works with the highway system for which they already have responsibility. Putting those two statements together you're contradicting yourself yet again.

The free market DOES exist. There is no law stopping anyone from buying a truck and starting a long haul business, or buying a barge and tug to operate on the waterways. The right-of-way is built and maintained with tax dollars.

There also is no law stopping any person or company from building a new roadway and charging tolls on it, or using it to operate their own vehicles. Just like this, there is no law stopping any person or company from building a new railroad, traditional or newer technology such as monorail or maglev. They also have the right to operate this as a private right-of-way or open it on a toll basis. If you've been following even the posts in here, the most desirable rail routes are already near or at capacity operating the owning company's trains. There's no capacity or incentive to open the access on these lines. To increase the capacity just in case someone might want to run a train on their lines is speculation, and the railroads are spending big bucks to increase their capacity just to handle the traffic they already have. No need to speculate there.

You need to learn the difference between private property and tax supported public property.

[Anonymous]

Hey, in case anyone wants to know...NS 218 this morning (7am) had 52 trailers, no containers.  Of the 52 trailers, at least 12 were UPS trailers, probably more as there were lease trailers on the train.

Lots of big orange too. 

Trains 217/218, the Greensboro - Chicago trains typically only have 50 - 60 trailers...there must be pretty good revenue for these to justify that small of train. 

 

What is the average trailer revenue per mile these days?  About a buck a mile?   That yields about $45k for this trailer.  That seems thin.

 

ed

All the railroads have to do to attract more trailers is to keep the TOFC rates consistently below the cost of taking that trailer OTR.  Just make sure you get it to the unloading dock on time, that's all we ask.

It is interesting in the barge vs rail debate, since the barges can stack 'em five high, their container per platform ratio potential is 2 1/2 times that of the railroads.  But for trailers, both types can only go single stack - barges can be specialized to have multiple decks for trailers, but that usually is not practical since they prefer to load trailers bulk crane lift style, not ro/ro.  Too much specialized infrastructure at the barge ports, and not that much demand for shipping trailers at 7 mph.  So any trailers are shipped as add ons to container barges, and such is a rare occurance.  

But ISO containers only need to meet ship departure schedules, and thus they can be shipped JIT.  That's why containerization has really blossomed on the Columbia/Snake waterway.  Haven't seen much in the way of domestic containerization though.

[Anonymous]

Someone please tell Tom that when he is replying to a single post, try to keep the subsequent *responses* within a single post as well, not five or six.

Tom, I'll sum it up this way:  Bailouts of closed access rail systems have never happened, have they? (insert sarcastic smilie here)  Seems to me the US system is in a constant state of perpetual bailout, whether by direct financial aid, or indirect legal exemption.  One fact is clear - the growth in OA is stronger than that of CA.  Live with it.

In a free market society, competitive access is preferable to a lack of competitive access.

[MP173]

Hey, in case anyone wants to know...NS 218 this morning (7am) had 52 trailers, no containers.  Of the 52 trailers, at least 12 were UPS trailers, probably more as there were lease trailers on the train.

Lots of big orange too. 

Trains 217/218, the Greensboro - Chicago trains typically only have 50 - 60 trailers...there must be pretty good revenue for these to justify that small of train. 

 

What is the average trailer revenue per mile these days?  About a buck a mile?   That yields about $45k for this trailer.  That seems thin.

 

ed

[TomDiehl]

Also it begs the question "who built the rivers?"

Which begs the question "where did you learn your geology?"

The barge lines, or the government didn't "build the rivers." Call it natural erosion, hand of God, or what have you, they existed before the boats were built.

Rail lines, as well as highways need to be built by man.

And those are facts of life and geology.

[TomDiehl]

Plus, Tidewater and Foss (as well as anyone else) is welcome to build a rail line between two end points. Why are you hung up on the idea they have to use certain passes or canyons? Let them find their own routes like the railroads did. Or let the government build a rail line for them, like they maintain the riverways. Oh wait, the government is so far in debt now our grandchildren will be paying the principal.

The AAR clone strikes again!  How about we make the railroads open access like the waterways and highways, instead of building each potential rail transporter their own exclusive line?  Read that last phrase again, it bears worth contemplation.  

Where is it written in stone that each individual transportation service provider must build their own exclusive transportation pathway?

Apparently it is written only on the stoney minds of rail propagandists!

It isn't. Any more than it is written that a private company, that has invested it's own money in developing a transportation right-of-way needs to allow the use of it by anyone, in any way they see fit, without compensating the owner. If they build, or pay to have built, such a right-of-way, they have every right to dictate its use.

But that must be written in the stoney minds of the open access propagandists.

[TomDiehl]

And the old "open access" argument still isn't flying. Highways and riverways aren't single lane, or even single lane dual direction like most of the railroads. Plus, we still haven't heard how you figured out the logistics of making the concept actually work. Lots of things sound good in theory, but fall flat on their face with an attempt to try and make them work.

As per your AAR submindset, you ignore that little segment of land outside North America known as "The Rest Of The World", where railroad OA in various implementations continues to grow unabated.  And why you think having signal controlled bottlenecks somehow bars multiple user access on highway and riverways is something only a psychologist can answer - don't highways have signalled intersections?  Aren't locks through dams one user at a time?  It's amazing but true, if a certain transporation pathway is signalled to control fluidity through bottlenecks, you can have multiple users aplenty without accident or delay.  In fact, there are some sections of US railroads where multiple users access single track sections with no apparent drawbacks...........

Yes, we've been reading how well this "open access" works in the rest of the world, especially in England. The government just had to financially bail out one of the right-of-way owners with big bucks (well, big Pounds in this case). But then, since the news is just "propaganda" to you, don't clutter your little mind with such things.

Bottlenecks on the highways or the waterways are a small percentage of the distance travelled by the cargo carriers. The railroads have built up a system and adjusted it over the years dependant on market forces rather than political pressures. If you ever listened to the news you would have heard of the infamous Alaskan "Bridge to Nowhere," an excellent example of the government deciding where to invest transportation funds. The trackage rights setups you describe are hardly "open access." Only certain trains from certain railroads can operate on the given section of track.

And I notice you still haven't told us how "open access" is supposed to work here in the US.

[TomDiehl]

And some creative accounting with the Waterway Trust Fund "helps *reduce* the federal deficit?" Maybe you haven't been watching the news for the last six years.

The point I made that is obvious to everyone but you is that the Waterway Trust Fund is being held in account as a way of countering deficits (much like the Social Security *Trust Fund*), and is not being fully dispersed for use on waterways projects.  We're not arguing about the relative size of the federal deficit.  Perhaps you shouldn't have the CBS Evening Indoctrination.......er, *News*.... on while you are typing away on your computer, it seems to cause crossed signals in your mind.

Oh I'm sorry. Keeping up on current events is obviously beyond your limited capabilities. We don't want to clutter your brain with useless information like this. But I guess you don't care that once you get a job, your portion of that federal debt will be $375,000. And that's according to our Comptroller General, David Walker. So any supposed "reduce federal defict" talk is, at best, suspect, just like the rest of your "arguments."

The bottom line to this is, a certain amount of money is required to maintain the waterways. Only a small percentage is recovered by "User Fees." Guess where the rest is coming from, our govenment borrowing money against taxes to be collected in the future. At this rate it will be our grandchildren.

[TomDiehl]

The problem with trying to determine the portion of waterway maintenance costs attributable to users is that you can't come up with a reliable standard of measure.  Take dredging, for instance.  Some including the CBO would say the cost of dredging should be fully borne by the barge lines, yet the accumulation of silt behind dams would not occur if the river was free flowing, so since prior usage scenarios were sans siltation, why should silt removal be borne by the bargelines under slack water conditions?  Yet, we also know that capacity of the old river boats was limited by free flowing conditions, including a seasonal cessation of navigation during low water periods.  Since modern barge lines have far deeper draft than the old river boats, should we pro-rate any maintenance dredging cost over those sections of the river that used to be shallower than current draft?

To their credit, the barge lines argue that since the dams themselves provide a valuable commodity called electricity, all the costs associated with waterway maintenance should be included in the cost of producing that electricity.  Well, that is true, those projects are producing both a transportation service and a valuable commodity, something the railroads can't claim.

For the record, most of the Waterways Trust Fund is kept in limbo to help *reduce* the federal deficit, and is not being fully dispersed for use in waterways projects.

What's most important to remember here is that the rail companies are not being discriminated against by this perceived waterways subsidy.  Waterways are Open Acess, railroads are not.  Anyone can start up a barge company with relatively minimal investment (e.g. no need for a $2 billion federal loan guarantee for a PRB extension or a $1 billion federal grant to aid in a double stack clearance project!)  Both UP and BNSF have every right in the world to start up their own barging divisions if they choose.  Contrast that with the various public subidies of the railroads, which have not resulted in any improved public access benefits.  Though UP or BNSF can start up a barge division and use the Columbia/Snake River Waterway, neither Tidewater nor Foss have the right to start up their own rail divisions and use Marias Pass or Weber Canyon.

To the point of the dams, would the river be navigable by the barges if the dams weren't there to maintain a minimum water level?

Yes, but only part of the year.

"To their (barge lines) credit, they argue?" I hate to break the news to you Dave, but not every dam is hydroelectric.

I hate to break the news to you Tom, but every dam on the Columbia/Snake Waterway is hydroelectric.

So making the rivers navigable for "only part of the year" makes a difference who built or maintains the dams and waterways?

And you suddenly want to narrow the discussion to one river. Lame tactic.

[TomDiehl]

Regarding other modes, specifically barge traffic, while there are prior claims to the use of the river systems, where they existed, the expenses for inland waterway improvements are still not meet by user fees. Since some of the conversation has turned to the 80's take a look at part 4 of the linked CBO report from the 80's. http://www.cbo.gov/ftpdoc.cfm?index=5321&type=1

Per page 34 only 10% of the costs were/projected to be recovered through users fees for operations of which "maintenance dredging and operation of navigation aids" amounted to 3/5ths of the expenditure.

Why do certain members of the public act as though the railroads are treating them unfairly when the government is giving away the right of ways to barge operators? Railroads where released from the majority of their common carrier obligations due to the skewing of the transportation marketplace by such practices as those above.

A little bit off topic, and the whole "give away" thing is more than quite a bit askew. 

It is humorous to hear railroads and their fans complain about "subsidized" waterways, while apparently forgetting those land grants without which most Western railroads wouldn't even exist.  Even giving credence to the argument that waterway user's fees only amount to a small percentage of the total cost of maintaining those waterways, the amount of *subsidy* given to waterways is still just a fraction of the subsidy given to the original land grant railroads.

Talk about living in the past. Those land grants to the western railroads you keep refering to were about a century ago. Add to that, if the railroads hadn't built a transportation system into this area, the land would have been nearly worthless until the government could build highways into the area. And that would have had to wait until the automobile and motor truck was invented and perfected enough to be able to run long distances.

The railroads own the land the track is on, pay taxes on it, and maintain those tracks and property. QUITE a bit different than using a government maintained waterway that isn't paying taxes and only charges a fraction of what the maintenance costs as a user fee.

Tom, you really should apply for a job with the AAR.  You really seem to have no independent thought abilities other than to repeat the same worn out mantra's while at the same time ignoring the massive amounts of aid that the railroads have received and continue to receive, both financial and legal.

Or as they say, weak minds think alike.

And you need to learn the difference between "independent thought" and "stay awake in history class." Maybe you should get together with that other weak mind running Iran so you can both rewrite history to you liking. You start spouting "No holocost" for him and he'll start spouting "the US railroads should forever be grateful and obligated for land grants they received a century ago."

So tell us "Mr Expert" (and I use that term loosely), how much subsidy and land grants have the big railroads received in this country in the last one or two decades?

[Anonymous]

The problem with trying to determine the portion of waterway maintenance costs attributable to users is that you can't come up with a reliable standard of measure.  Take dredging, for instance.  Some including the CBO would say the cost of dredging should be fully borne by the barge lines, yet the accumulation of silt behind dams would not occur if the river was free flowing, so since prior usage scenarios were sans siltation, why should silt removal be borne by the bargelines under slack water conditions?  Yet, we also know that capacity of the old river boats was limited by free flowing conditions, including a seasonal cessation of navigation during low water periods.  Since modern barge lines have far deeper draft than the old river boats, should we pro-rate any maintenance dredging cost over those sections of the river that used to be shallower than current draft?

To their credit, the barge lines argue that since the dams themselves provide a valuable commodity called electricity, all the costs associated with waterway maintenance should be included in the cost of producing that electricity.  Well, that is true, those projects are producing both a transportation service and a valuable commodity, something the railroads can't claim.

For the record, most of the Waterways Trust Fund is kept in limbo to help *reduce* the federal deficit, and is not being fully dispersed for use in waterways projects.

What's most important to remember here is that the rail companies are not being discriminated against by this perceived waterways subsidy.  Waterways are Open Acess, railroads are not.  Anyone can start up a barge company with relatively minimal investment (e.g. no need for a $2 billion federal loan guarantee for a PRB extension or a $1 billion federal grant to aid in a double stack clearance project!)  Both UP and BNSF have every right in the world to start up their own barging divisions if they choose.  Contrast that with the various public subidies of the railroads, which have not resulted in any improved public access benefits.  Though UP or BNSF can start up a barge division and use the Columbia/Snake River Waterway, neither Tidewater nor Foss have the right to start up their own rail divisions and use Marias Pass or Weber Canyon.

To the point of the dams, would the river be navigable by the barges if the dams weren't there to maintain a minimum water level?

Yes, but only part of the year.

"To their (barge lines) credit, they argue?" I hate to break the news to you Dave, but not every dam is hydroelectric.

I hate to break the news to you Tom, but every dam on the Columbia/Snake Waterway is hydroelectric.

And some creative accounting with the Waterway Trust Fund "helps *reduce* the federal deficit?" Maybe you haven't been watching the news for the last six years.

The point I made that is obvious to everyone but you is that the Waterway Trust Fund is being held in account as a way of countering deficits (much like the Social Security *Trust Fund*), and is not being fully dispersed for use on waterways projects.  We're not arguing about the relative size of the federal deficit.  Perhaps you shouldn't have the CBS Evening Indoctrination.......er, *News*.... on while you are typing away on your computer, it seems to cause crossed signals in your mind.

And the old "open access" argument still isn't flying. Highways and riverways aren't single lane, or even single lane dual direction like most of the railroads. Plus, we still haven't heard how you figured out the logistics of making the concept actually work. Lots of things sound good in theory, but fall flat on their face with an attempt to try and make them work.

As per your AAR submindset, you ignore that little segment of land outside North America known as "The Rest Of The World", where railroad OA in various implementations continues to grow unabated.  And why you think having signal controlled bottlenecks somehow bars multiple user access on highway and riverways is something only a psychologist can answer - don't highways have signalled intersections?  Aren't locks through dams one user at a time?  It's amazing but true, if a certain transporation pathway is signalled to control fluidity through bottlenecks, you can have multiple users aplenty without accident or delay.  In fact, there are some sections of US railroads where multiple users access single track sections with no apparent drawbacks...........

Plus, Tidewater and Foss (as well as anyone else) is welcome to build a rail line between two end points. Why are you hung up on the idea they have to use certain passes or canyons? Let them find their own routes like the railroads did. Or let the government build a rail line for them, like they maintain the riverways. Oh wait, the government is so far in debt now our grandchildren will be paying the principal.

The AAR clone strikes again!  How about we make the railroads open access like the waterways and highways, instead of building each potential rail transporter their own exclusive line?  Read that last phrase again, it bears worth contemplation.  

Where is it written in stone that each individual transportation service provider must build their own exclusive transportation pathway?

Apparently it is written only on the stoney minds of rail propagandists!

Also it begs the question "who built the rivers?"

Which begs the question "where did you learn your geology?"

[Anonymous]

Regarding other modes, specifically barge traffic, while there are prior claims to the use of the river systems, where they existed, the expenses for inland waterway improvements are still not meet by user fees. Since some of the conversation has turned to the 80's take a look at part 4 of the linked CBO report from the 80's. http://www.cbo.gov/ftpdoc.cfm?index=5321&type=1

Per page 34 only 10% of the costs were/projected to be recovered through users fees for operations of which "maintenance dredging and operation of navigation aids" amounted to 3/5ths of the expenditure.

Why do certain members of the public act as though the railroads are treating them unfairly when the government is giving away the right of ways to barge operators? Railroads where released from the majority of their common carrier obligations due to the skewing of the transportation marketplace by such practices as those above.

A little bit off topic, and the whole "give away" thing is more than quite a bit askew. 

It is humorous to hear railroads and their fans complain about "subsidized" waterways, while apparently forgetting those land grants without which most Western railroads wouldn't even exist.  Even giving credence to the argument that waterway user's fees only amount to a small percentage of the total cost of maintaining those waterways, the amount of *subsidy* given to waterways is still just a fraction of the subsidy given to the original land grant railroads.

Talk about living in the past. Those land grants to the western railroads you keep refering to were about a century ago. Add to that, if the railroads hadn't built a transportation system into this area, the land would have been nearly worthless until the government could build highways into the area. And that would have had to wait until the automobile and motor truck was invented and perfected enough to be able to run long distances.

The railroads own the land the track is on, pay taxes on it, and maintain those tracks and property. QUITE a bit different than using a government maintained waterway that isn't paying taxes and only charges a fraction of what the maintenance costs as a user fee.

Tom, you really should apply for a job with the AAR.  You really seem to have no independent thought abilities other than to repeat the same worn out mantra's while at the same time ignoring the massive amounts of aid that the railroads have received and continue to receive, both financial and legal.

Or as they say, weak minds think alike.

[MichaelSol]

Also it begs the question "who built the rivers?"

It is true that private initiative primarily developed steamboat trade on the Mississippi, the Ohio, and extended trade far inland on the upper Missouri, as well as provided development to California via sailing and steamships, and to the Oregon Territory. Likewise the Oregon Trail and others like it represented in most instances private initiative. Roads like the Sawyer's Wagon Road, the Bozeman-Bridger Road in 1864, the Minnesota-Montana Road in 1866, and the Corinne-Dunraven Road in 1874 began to criss-cross the West.

Great civilizations and commerce over thousands of miles dating back thousands of years had risen and fallen through those perfectly ordinary methods of transportation and without the benefits of railroads. When the Spanish arrived in Mexico, they traveled on a well-developed Aztec road system.

The Government initiated the Pacific Rail Surveys, and built the Mullan Road, but really got involved when it created the Northern Pacific Railroad and the Union Pacific Railroad.

Recall, both of these were created by specific government legislation representing specific political goals of the United States government, just as the Erie Canal had been promoted as a government project prior to that time, the Panama Canal after that time and the St. Lawrence Seaway more recently.

Big road projects, big rail projects and big canal projects all resulted from government initiative and support. Railroads were always part of that picture.

[TomDiehl]

The problem with trying to determine the portion of waterway maintenance costs attributable to users is that you can't come up with a reliable standard of measure.  Take dredging, for instance.  Some including the CBO would say the cost of dredging should be fully borne by the barge lines, yet the accumulation of silt behind dams would not occur if the river was free flowing, so since prior usage scenarios were sans siltation, why should silt removal be borne by the bargelines under slack water conditions?  Yet, we also know that capacity of the old river boats was limited by free flowing conditions, including a seasonal cessation of navigation during low water periods.  Since modern barge lines have far deeper draft than the old river boats, should we pro-rate any maintenance dredging cost over those sections of the river that used to be shallower than current draft?

To their credit, the barge lines argue that since the dams themselves provide a valuable commodity called electricity, all the costs associated with waterway maintenance should be included in the cost of producing that electricity.  Well, that is true, those projects are producing both a transportation service and a valuable commodity, something the railroads can't claim.

For the record, most of the Waterways Trust Fund is kept in limbo to help *reduce* the federal deficit, and is not being fully dispersed for use in waterways projects.

What's most important to remember here is that the rail companies are not being discriminated against by this perceived waterways subsidy.  Waterways are Open Acess, railroads are not.  Anyone can start up a barge company with relatively minimal investment (e.g. no need for a $2 billion federal loan guarantee for a PRB extension or a $1 billion federal grant to aid in a double stack clearance project!)  Both UP and BNSF have every right in the world to start up their own barging divisions if they choose.  Contrast that with the various public subidies of the railroads, which have not resulted in any improved public access benefits.  Though UP or BNSF can start up a barge division and use the Columbia/Snake River Waterway, neither Tidewater nor Foss have the right to start up their own rail divisions and use Marias Pass or Weber Canyon.

To the point of the dams, would the river be navigable by the barges if the dams weren't there to maintain a minimum water level?

"To their (barge lines) credit, they argue?" I hate to break the news to you Dave, but not every dam is hydroelectric.

And some creative accounting with the Waterway Trust Fund "helps *reduce* the federal deficit?" Maybe you haven't been watching the news for the last six years.

And the old "open access" argument still isn't flying. Highways and riverways aren't single lane, or even single lane dual direction like most of the railroads. Plus, we still haven't heard how you figured out the logistics of making the concept actually work. Lots of things sound good in theory, but fall flat on their face with an attempt to try and make them work.

Plus, Tidewater and Foss (as well as anyone else) is welcome to build a rail line between two end points. Why are you hung up on the idea they have to use certain passes or canyons? Let them find their own routes like the railroads did. Or let the government build a rail line for them, like they maintain the riverways. Oh wait, the government is so far in debt now our grandchildren will be paying the principal.

Also it begs the question "who built the rivers?"

[TomDiehl]

Regarding other modes, specifically barge traffic, while there are prior claims to the use of the river systems, where they existed, the expenses for inland waterway improvements are still not meet by user fees. Since some of the conversation has turned to the 80's take a look at part 4 of the linked CBO report from the 80's. http://www.cbo.gov/ftpdoc.cfm?index=5321&type=1

Per page 34 only 10% of the costs were/projected to be recovered through users fees for operations of which "maintenance dredging and operation of navigation aids" amounted to 3/5ths of the expenditure.

Why do certain members of the public act as though the railroads are treating them unfairly when the government is giving away the right of ways to barge operators? Railroads where released from the majority of their common carrier obligations due to the skewing of the transportation marketplace by such practices as those above.

A little bit off topic, and the whole "give away" thing is more than quite a bit askew. 

It is humorous to hear railroads and their fans complain about "subsidized" waterways, while apparently forgetting those land grants without which most Western railroads wouldn't even exist.  Even giving credence to the argument that waterway user's fees only amount to a small percentage of the total cost of maintaining those waterways, the amount of *subsidy* given to waterways is still just a fraction of the subsidy given to the original land grant railroads.

Talk about living in the past. Those land grants to the western railroads you keep refering to were about a century ago. Add to that, if the railroads hadn't built a transportation system into this area, the land would have been nearly worthless until the government could build highways into the area. And that would have had to wait until the automobile and motor truck was invented and perfected enough to be able to run long distances.

The railroads own the land the track is on, pay taxes on it, and maintain those tracks and property. QUITE a bit different than using a government maintained waterway that isn't paying taxes and only charges a fraction of what the maintenance costs as a user fee.

[Anonymous]

Regarding other modes, specifically barge traffic, while there are prior claims to the use of the river systems, where they existed, the expenses for inland waterway improvements are still not meet by user fees. Since some of the conversation has turned to the 80's take a look at part 4 of the linked CBO report from the 80's. http://www.cbo.gov/ftpdoc.cfm?index=5321&type=1

Per page 34 only 10% of the costs were/projected to be recovered through users fees for operations of which "maintenance dredging and operation of navigation aids" amounted to 3/5ths of the expenditure.

Why do certain members of the public act as though the railroads are treating them unfairly when the government is giving away the right of ways to barge operators? Railroads where released from the majority of their common carrier obligations due to the skewing of the transportation marketplace by such practices as those above.

A little bit off topic, and the whole "give away" thing is more than quite a bit askew. 

It is humorous to hear railroads and their fans complain about "subsidized" waterways, while apparently forgetting those land grants without which most Western railroads wouldn't even exist.  Even giving credence to the argument that waterway user's fees only amount to a small percentage of the total cost of maintaining those waterways, the amount of *subsidy* given to waterways is still just a fraction of the subsidy given to the original land grant railroads.

The problem with trying to determine the portion of waterway maintenance costs attributable to users is that you can't come up with a reliable standard of measure.  Take dredging, for instance.  Some including the CBO would say the cost of dredging should be fully borne by the barge lines, yet the accumulation of silt behind dams would not occur if the river was free flowing, so since prior usage scenarios were sans siltation, why should silt removal be borne by the bargelines under slack water conditions?  Yet, we also know that capacity of the old river boats was limited by free flowing conditions, including a seasonal cessation of navigation during low water periods.  Since modern barge lines have far deeper draft than the old river boats, should we pro-rate any maintenance dredging cost over those sections of the river that used to be shallower than current draft?

To their credit, the barge lines argue that since the dams themselves provide a valuable commodity called electricity, all the costs associated with waterway maintenance should be included in the cost of producing that electricity.  Well, that is true, those projects are producing both a transportation service and a valuable commodity, something the railroads can't claim.

For the record, most of the Waterways Trust Fund is kept in limbo to help *reduce* the federal deficit, and is not being fully dispersed for use in waterways projects.

What's most important to remember here is that the rail companies are not being discriminated against by this perceived waterways subsidy.  Waterways are Open Acess, railroads are not.  Anyone can start up a barge company with relatively minimal investment (e.g. no need for a $2 billion federal loan guarantee for a PRB extension or a $1 billion federal grant to aid in a double stack clearance project!)  Both UP and BNSF have every right in the world to start up their own barging divisions if they choose.  Contrast that with the various public subidies of the railroads, which have not resulted in any improved public access benefits.  Though UP or BNSF can start up a barge division and use the Columbia/Snake River Waterway, neither Tidewater nor Foss have the right to start up their own rail divisions and use Marias Pass or Weber Canyon.

[MichaelSol]

As to me not being able to read a chart, take a look at page 14 in;

http://rscc.mt.gov/docs/White_Paper_Meeting_10_05.pdf#search=%22whiteside%20associates%20governor%20montana%20wheat%20rates%22:

The blue line is the actual freight rate for the year shown on the x axis.  Note that despite what Mr. Sol says, the rate in 2004 was $0.61/bushel less than the 1982 rate level.  In other words, the rate went down.

For some reason he denies this. 

This is bizarrre.

The red line shows that rail rates would have been very high had rail rates tracked the inflation index used to measure the cost of french fries. But industrial and production items never track that inflation index. Whatever that shows, other than the high cost of french fries and sports cars, I do not know. It is not relevant to rail costs or rates in any way, shape or form.

The CPI cannot provide an adjustment to rail costs and rates because it measures nothing in the industry and is designed to measure completely different metrics. You might as well take a bowling ball to a spelling bee. It's the wrong implement at the wrong place for the wrong purpose at the wrong time. The CPI does not measure or assess anything at all that is relevant to railroading, unless it would be regarding employee compensation.

The blue line, a Rail Cost indexed line, clearly shows a higher cost per bushel in 2004 than the 1982 level. Further, the Rail Cost inflation index line as adjusted for productivity (provided by employees losing their jobs) shows that what cost 92 cents per bushel in 2004 should have cost 42 cents adjusted for the inflation/deflation in rail costs and productivity increases.

Had that been true, and BN earning the same rate of return as its 1981 ROS of 8.7%, it would have received 42 cents per bushel in 2004. But, it was actually receiving 240% ROS on Montana wheat in 2004 at 92 cents per bushel (92 cents revenue vs 38 cents operating costs per bushel).

That doesn't happen in "competitive" industries.

Interestingly, that Cost/Productivity line does represent what actually happened to rates in the rail industry as a whole during the time period defined by the chart. Ultimately, the Chart shows that real rail rates for Montana wheat increased, and that Montana wheat transportation rates compared to average industry rates increased dramatically.

Strawbridge can't read the graph, and still insists that the french fry inflation index applies.

[MichaelSol]

Regarding other modes, specifically barge traffic, while there are prior claims to the use of the river systems, where they existed, the expenses for inland waterway improvements are still not meet by user fees. Since some of the conversation has turned to the 80's take a look at part 4 of the linked CBO report from the 80's. http://www.cbo.gov/ftpdoc.cfm?index=5321&type=1

Per page 34 only 10% of the costs were/projected to be recovered through users fees for operations of which "maintenance dredging and operation of navigation aids" amounted to 3/5ths of the expenditure.

Why do certain members of the public act as though the railroads are treating them unfairly when the government is giving away the right of ways to barge operators? Railroads where released from the majority of their common carrier obligations due to the skewing of the transportation marketplace by such practices as those above.

I don't think anyone here is arguing that barge subsidies were fair, economical, or beneficial as an economic force. Like any subsidy, monopoly, or regulation, they distorted rational markets and rational investment decision-making.

The point here is that such traffic was irrelevant for a certain market of wheat, irregardless of any supposed advantages obtained. That is, notwithstanding government's role, it provided no advantages for Montana wheat, except as an escape valve for some wheat during a time of railcar shortages or even perhaps ridiculous rail prices and even then that was dependent on the willingness of Idaho taxpayers to pay for the destruction of their roads to subsidize truck transport of Montana wheat to a barge terminal. As you might guess, that attitude didn't last too long nothwithstanding the favorable, subsidized barge rates.

Too, there is a habit among some to look at some artificial perception of efficiency as controlling, without recognizing that marketing and markets are usually far more important.

This was demonstrated historically in Eastern Washington:

The Milwaukee "cut heavily" into the Northern Pacific’s markets for grain hauling and machinery deliveries. By 1910, the Milwaukee and the Great Northern’s routes through the Cascades overcame the natural efficiencies and economies of "nature’s gravity route" down the Columbia River to Portland, delivering 20% more wheat to the Puget Sound and twice as much flour. [Meinig, D.W., The Great Columbia Plain: A Historical Geography 1805-1910 (Seattle: University of Washington Press, 1968), p. 266.]

Well, the buyers were in Seattle, and the better ocean going facilities were in Seattle.

In the 1970s and early 1980s, markets were again, as always, a key. Cargill was a big buyer of Montana export wheat and a big driver of the market. It's big terminal was Pier 87 in Seattle.

What good would the truck/barge down the Columbia do for that?

Nothing.

And BN knew it.

Strawbridge doesn't.

Likewise, Continental Grain had bought a number of Montana elevators in the late 1970s, and was a big buyer of Montana wheat, most of which it moved through it's Tacoma export facilities. Western Farmer's Association marketed through Seattle's Pier 87. Farmer's Coop elevators -- all Seattle destinations. Fisher Flour Mills in Seattle -- a big buyer of Montana wheat. For as much as 60% of Montana export wheat, going down the Columbia River made no sense at all; that's not where the wheat was going during that time frame.

Strawbridge argues, in the absence of any facts, his unique version of "logic" but his argument begs a basic question:

How could a truck/barge rate be competitive to a destination that they didn't go to?

 

[VPayne]

Regarding other modes, specifically barge traffic, while there are prior claims to the use of the river systems, where they existed, the expenses for inland waterway improvements are still not meet by user fees. Since some of the conversation has turned to the 80's take a look at part 4 of the linked CBO report from the 80's. http://www.cbo.gov/ftpdoc.cfm?index=5321&type=1

Per page 34 only 10% of the costs were/projected to be recovered through users fees for operations of which "maintenance dredging and operation of navigation aids" amounted to 3/5ths of the expenditure.

Why do certain members of the public act as though the railroads are treating them unfairly when the government is giving away the right of ways to barge operators? Railroads where released from the majority of their common carrier obligations due to the skewing of the transportation marketplace by such practices as those above.

[MichaelSol]

The mendacious Ken Strawbridge now confuses a lack of evidence -- that trucks provided competition -- with an entirely different legal question of the standard used to assess unreasonableness of rates. Isn't this how the conversation typically goes: change the subject, then pretend it applies to the original premise ... somehow?

The point of BN somehow providing "efficiencies" over trucks gets lost and that trucks were providing an alternative gets lost.

It was supposed to.

Strawbridge:

The stardard initially used by the "administrative" law judge was a simple revenue to variable cost ratio.  That standard got knocked in the head by a U.S. Court of Appeals.  But Mr. Sol keeps trying to use that same standard as the sole test of a shipper being captive.  Why?  I guess it serves his purpose.

No, it's because it is absolutely false, and completely and I think intentionally misrepresents what the court said and did.

The federal court decided that the ICC's use of the R/VC standard was in error for the purpose of determining rate reasonableness.

It made no such finding regarding using the R/VC standard for captivity.

Based on that decision, the ICC then adopted a CMP standard for rate reasonableness. It did not change its finding regarding captivity -- that there was no effective competition to BN for transportation of export grain out of Montana, by truck, by barge, by plane, or by catapult.

"On July 22, 1993, the ICC served an order in response to the D.C. Circuit's February 9, 1993 decision. In its order, the ICC stated it would use the Constrained Market Pricing/Stand-Alone Cost principles in assessing the reasonableness of BNSF Railway wheat and barley rates moving from Montana to Pacific Coast ports from 1978 forward. The ICC assigned the case to the Office of Hearings to develop a procedural schedule. On October 28, 1994, plaintiffs filed their opening evidence arguing that the revenue received by BNSF Railway exceeded the stand alone costs of transporting that traffic and that BNSF Railway rates were unreasonably high. BNSF Railway filed its evidence March 29, 1995, showing that the stand alone costs of transporting the traffic exceeded the revenue derived by BNSF Railway on that traffic and that consequently, its rates were not unreasonably high. The parties filed briefs simultaneously on August 16, 1995. In a decision served August 14, 1997, in McCarty Farms, Inc. et al. v. Burlington Northern Inc., No. 37808, the STB, successor to the ICC, ruled that the plaintiffs had failed to demonstrate that BNSF Railway rates charged to transport export wheat and barley from Montana to West Coast ports were unreasonable" under the CMP standard. [Summary from Class Action Reporter, Wednesday, April 21, 1999, Vol. 1, No. 54 ].

Nothing in there about captivity at all.

You would search in vain in the Staggers Act for any reference to the CMP standard, although the R/VC standard is clearly there. You would also search in vain for any refutation of the ICC's earlier decisions regarding market dominance. Indeed, the federal courts didn't reverse on those issues at all. Only the method of calculating rate reasonableness was appealed. That is the last step in the analysis process, and comes after a finding of captivity.

The finding on captivity was not overturned. BN did not appeal that finding. It stands, and it stands based on the R/VC test.

Recall there are two steps in the process:

1) market dominance.

2) rate reasonableness.

BN was found to be market dominant (the shippers captive) and this was not appealed nor overturned nor was the R/VC standard changed for that determination.

The second step was challenged, by one of the railroads that had earlier agreed that the R/VC standard was appropriate for such determinations in order to achieve passage of the Staggers Act. Based on other court opinions, and regulatory proceedings in other industries, BN now argued that a CMP standard used in telecommunications cases should apply to rate reasonableness. Even at that, it turned CMP on its head to achieve the desired result.

"McCarty Farms, the State of Montana, and BN then sought review of the ICC decisions by this court.  In an opinion issued in 1993, we questioned the theoretical basis of the R/VC test and remanded the proceedings to the ICC for the purpose of reconsidering whether it was appropriate to use the R/VC test instead of the Constrained Market Pricing ("CMP") test to evaluate the reasonableness of the challenged rates."  Burlington Northern R.R. v. ICC, 985 F.2d 589 (D.C. Cir. 1993). 1998 DC Circuit opinion.

Oops, Strawbridge didn't understand the case. The market captivity findings of the ICC decisions were allowed to stand. The railroad itself decided not to appeal them.

Wonder why?

The fact is, Strawbridge has to live with the fact that the Montana export wheat market, 1980-1987, was determined by the ICC to be a captive market and that portion of the ICC decision remains valid for historical purposes and as a testament to the validity of that portion of the decision.

The CMP test is an interesting study of federal court power over congressional legislation. The R/VC test is in the statute. The CMP test is not. The R/VC test was designed by economists, not judges, and was approved by the rail industry.

Note the above Circuit Court opinion -- "we questioned the theoretical basis of the R/VC standard ..." that the ICC had applied using Congressional guidelines. That "theoretical basis" was developed by economists and accepted by the industry. It was enacted by Congress. Which judges have the competence or education to question the "theoretical basis" of an economic standard?

When the question later came back to them after CMP was applied, they refused to offer an opinion on the utility of using the CMP method, stating that their role was to defer to the regulatory agency unless manifest "abuse of discretion" could be shown. But, the use of the R/VC standard by the ICC was not a manifest abuse of discretion, it couldn't be, it was the standard required by law! 

The Circuit Court simply muddled the whole process when it decided to make judgments on economic theory the first time around, then refused to do so the second time around.

And yet, among economists, it is the CMP test, not the R/VC test, that is both theoretically and practically suspect.

Here are the comments by Alfred Kahn, generally regarded as the "Father of Deregulation", on the earlier telecommunications decisions that adopted the CMP test by regulatory quasi-judical fiat:

"I never dreamed, however, in proclaiming that efficient prices should be based on incremental costs, that policymakers would then proceed to ignore the actual incremental costs of the incumbent suppliers and instead adopt as the basis for policy the costs of a hypothetical, most efficient new entrant, constructing an entire set of facilities as though writing on a blank slate .... The entire logic of the marginal cost pricing principle requires that prices reflect the additional costs that society will actually incur or save if purchasers take somewhat more or somewhat less of the product or service in question. " [Alfred E. Kahn, "Whom the Gods Would Destroy, or How Not to Deregulate," AEI–Brookings Joint Center First Distinguished Lecture, AEI–Brookings Joint Center for Regulatory Studies, WASHINGTON, D.C., 2001.]

 

[Murphy Siding]

Didja' ever notice............how some threads take on the tone of an election campaign?  (insert *head spinning* smilie here)

[greyhounds]

Aside from grain car shortages, one other plausible reason that might have existed that caused grain to go to Columbia River ports by truck, rather than PNW ports by rail. That would havae happened if BN raised prices substantially. If true, hardly a "competitive" tactic at a time of grain car shortages, and certainly does not speak to any efficiencies, but rather the company taking advantage of its own equipment shortages to coerce more profit. 

Well, first Mr. Sol said: 

"In 1980, a good percentage of wheat did leave Montana by truck, to the Lewiston barge terminal. There was a pretty good rate there. A relatively short truck movement over a two lane road through a wilderness. After the trucks tore up the highway, Idaho put a weight limit that killed the traffic"

Then he said the move never existed - trucking was only to processors that went out of business.

Now he says it existed due to a railcar shortage and high rail rates.

Pretty unbelievable - but now as unbelievable as what he follows with: 

The following is an Appeals Court summary of the timeline and issues as handled by the ICC regarding wheat and barley railroad transportation prices in Montana in the early 1980s.

"In their Montana suit, McCarty Farms and the other class representatives alleged that BN was charging unreasonable rates for transporting single cars of wheat for the two-year period ending September 12, 1980, in violation of 49 U.S.C. § 10701(a) of the Interstate Commerce Act. See McCarty Farms, Inc. v. Burlington Northern, Inc. , 787 F. Supp. 937 (D. Mont. 1992).

"Under the doctrine of primary jurisdiction, the district court referred the action to the Interstate Commerce Com- mission ("ICC" or "Commission") to determine the rate rea- sonableness issues. On March 27, 1981, McCarty Farms filed the referred complaint with the ICC (Docket No. 37809), in which it challenged not only BN's single-car wheat rates, but also its single-car rates for barley. McCarty Farms sought a prescription on future rates and did not limit its request for reparations to the two-year period specified in its complaint filed with the district court. McCarty Farms' Petition for Declaratory Order and Complaint at 6 (March 27, 1981). In an unpublished decision served on December 14, 1981, an Administrative Law Judge found that (1) BN had market dominance over wheat and barley traffic, (2) BN's present and past rates were unreasonable insofar as they exceeded 200% of the variable cost of service, and (3) a revenue-to- variable cost ratio of 200% was to be the maximum reason- able rate for the transportation of wheat and barley.

<>"McCarty Farms was not alone, however, in challenging the reasonableness of BN's rates. In a separate proceeding filed with the ICC (Docket No. 37815S), the State of Montana challenged BN's rates for multiple-car and trainload ship- ments of wheat and barley and sought prescription for rea- sonable rates for the future. In an unpublished decision served on July 30, 1982, the ICC reopened the case filed by McCarty Farms (Docket No. 37809). The ICC instituted a separate proceeding regarding the reasonableness of barley rates (Docket No. 37809 (Sub-No. 1)) because it did not believe they were part of the district court's referral. The ICC consolidated the proceedings filed by McCarty Farms and those filed by the State of Montana.

"The three consolidated cases before the ICC were held in abeyance indefinitely. In May 1984, McCarty Farms and the other class representatives filed a complaint in the district court, seeking a writ of mandamus. In response, the ICC reopened the proceedings on September 11, 1984. In a decision served on December 28, 1984, the ICC ruled that, to the extent market dominance issues had not been developed, additional evidence concerning market dominance would be accepted. After extensive discovery, on May 22, 1987, the ICC ruled that BN was market dominant over the subject wheat and barley shipments moving from Montana to the Pacific Northwest. McCarty Farms v. Burlington Northern, Inc. , 3 I.C.C.2d 822 (1987).

"Having determined that BN was market dominant for the movements at issue, the ICC turned to the rate reasonable- ness analysis. On February 5, 1988, the ICC decided that the Revenue-to-Variable Cost ("R/VC") standard was an appro- priate means for testing the challenged rates and found that the rates charged by BN were unreasonable. The ICC directed BN to (1) compute the reparations due, (2) modify its existing rate structure, and (3) present a proposal of compli- ance to the ICC. On February 21, 1989, the ICC issued an unpublished decision that corrected several costing problems in the R/VC test and recomputed the ratios by which repara- tions were to be calculated. The ICC directed BN to submit a quantification of reparations due the class based on the corrected procedure and a proposal for modifying its existing rate structure so that BN would comply with the maximum reasonableness standard in the future.

"On March 20, 1991, the ICC affirmed its earlier decisions in which it concluded that BN was market dominant over the movement of wheat and barley and that BN's rates for this traffic were unreasonable. The ICC calculated the amount of reparations owed by BN through 1986 to be $9,685,918 plus interest, and imposed on BN a future rate prescription procedure. McCarty Farms v. Burlington Northern, Inc. , 7 I.C.C.2d 1026 (1991)." [McCarty Farms, Inc., et al. -vs- Surface Transportation Board and United States of America, USCA, DC, 1998)].

This was covering the same period of time that Strawbridge now insists BN was lowering rates, passing through efficiencies and becoming competitive with truck/barge service for export wheat. He comes to this conclusion based on reading truck/rail charts for all wheat during that time period.

The question is straightfoward: 1) was the agency law judge wrong, and was the agency opinion wrong, or 2) is Strawbridge misinterpreting his chart?

Any bets?

Yes, I'll bet on myself.  The "agency law judge" was wrong.  His decision was reversed in court and the case sent back to the ICC.  The railroad won the case and its rate stood.  It did not have to make monetary restitution. 

The stardard initially used by the "administrative" law judge was a simple revenue to variable cost ratio.  That standard got knocked in the head by a U.S. Court of Appeals.  But Mr. Sol keeps trying to use that same standard as the sole test of a shipper being captive.  Why?  I guess it serves his purpose.

If anybody wants to read about it for themselves, here's a source.  (Report pages 15-17, which will be different from the PDF page numbers.)

http://www.mdt.mt.gov/publications/docs/brochures/railways/railcomp_study.pdf#search=%22montana%20wheat%20senat%20railroad%22

Why Mr. Sol would write that the outcome of the case was the exact opposition of the real outcome is unclear.  But he sure did that.

As to me not being able to r

[MichaelSol]

Aside from grain car shortages, one other plausible reason that might have existed that caused grain to go to Columbia River ports by truck, rather than PNW ports by rail. That would have happened if BN raised prices substantially. If true, hardly a "competitive" tactic at a time of grain car shortages, and certainly does not speak to any efficiencies, but rather the company taking advantage of its own equipment shortages to coerce more profit. 

The following is an Appeals Court summary of the timeline and issues as handled by the ICC regarding wheat and barley railroad transportation prices in Montana in the early 1980s.

"In their Montana suit, McCarty Farms and the other class representatives alleged that BN was charging unreasonable rates for transporting single cars of wheat for the two-year period ending September 12, 1980, in violation of 49 U.S.C. § 10701(a) of the Interstate Commerce Act. See McCarty Farms, Inc. v. Burlington Northern, Inc. , 787 F. Supp. 937 (D. Mont. 1992).

"Under the doctrine of primary jurisdiction, the district court referred the action to the Interstate Commerce Commission ("ICC" or "Commission") to determine the rate reasonableness issues. On March 27, 1981, McCarty Farms filed the referred complaint with the ICC (Docket No. 37809), in which it challenged not only BN's single-car wheat rates, but also its single-car rates for barley. McCarty Farms sought a prescription on future rates and did not limit its request for reparations to the two-year period specified in its complaint filed with the district court. McCarty Farms' Petition for Declaratory Order and Complaint at 6 (March 27, 1981). In an unpublished decision served on December 14, 1981, an Administrative Law Judge found that (1) BN had market dominance over wheat and barley traffic, (2) BN's present and past rates were unreasonable insofar as they exceeded 200% of the variable cost of service, and (3) a revenue-to- variable cost ratio of 200% was to be the maximum reasonable rate for the transportation of wheat and barley.

"McCarty Farms was not alone, however, in challenging the reasonableness of BN's rates. In a separate proceeding filed with the ICC (Docket No. 37815S), the State of Montana challenged BN's rates for multiple-car and trainload shipments of wheat and barley and sought prescription for reasonable rates for the future. In an unpublished decision served on July 30, 1982, the ICC reopened the case filed by McCarty Farms (Docket No. 37809). The ICC instituted a separate proceeding regarding the reasonableness of barley rates (Docket No. 37809 (Sub-No. 1)) because it did not believe they were part of the district court's referral. The ICC consolidated the proceedings filed by McCarty Farms and those filed by the State of Montana.

"The three consolidated cases before the ICC were held in abeyance indefinitely. In May 1984, McCarty Farms and the other class representatives filed a complaint in the district court, seeking a writ of mandamus. In response, the ICC reopened the proceedings on September 11, 1984. In a decision served on December 28, 1984, the ICC ruled that, to the extent market dominance issues had not been developed, additional evidence concerning market dominance would be accepted. After extensive discovery, on May 22, 1987, the ICC ruled that BN was market dominant over the subject wheat and barley shipments moving from Montana to the Pacific Northwest. McCarty Farms v. Burlington Northern, Inc. , 3 I.C.C.2d 822 (1987).

"Having determined that BN was market dominant for the movements at issue, the ICC turned to the rate reasonableness analysis. On February 5, 1988, the ICC decided that the Revenue-to-Variable Cost ("R/VC") standard was an appropriate means for testing the challenged rates and found that the rates charged by BN were unreasonable. The ICC directed BN to (1) compute the reparations due, (2) modify its existing rate structure, and (3) present a proposal of compliance to the ICC. On February 21, 1989, the ICC issued an unpublished decision that corrected several costing problems in the R/VC test and recomputed the ratios by which reparations were to be calculated. The ICC directed BN to submit a quantification of reparations due the class based on the corrected procedure and a proposal for modifying its existing rate structure so that BN would comply with the maximum reasonableness standard in the future.

"On March 20, 1991, the ICC affirmed its earlier decisions in which it concluded that BN was market dominant over the movement of wheat and barley and that BN's rates for this traffic were unreasonable. The ICC calculated the amount of reparations owed by BN through 1986 to be $9,685,918 plus interest, and imposed on BN a future rate prescription procedure. McCarty Farms v. Burlington Northern, Inc. , 7 I.C.C.2d 1026 (1991)." [McCarty Farms, Inc., et al. -vs- Surface Transportation Board and United States of America, USCA, DC, 1998)].

This was covering the same period of time that Strawbridge now insists BN was lowering rates, passing through efficiencies and becoming "competitive" with truck/barge service for export wheat, notwithstanding the fact that truck/barge had never been able to compete. He comes to this conclusion based on reading truck/rail charts for all wheat during that time period.

The question is straightfoward: 1) was the agency law judge wrong, and was the agency opinion wrong, or 2) is Strawbridge misinterpreting his chart?

Any bets?

Consider this. His chart contains no information regarding the distinction. None whatsoever.

So, he makes up a conclusion: that the entire 30% of wheat that was trucked was for export to barge terminals. How does he know that? He doesn't. He hasn't a shred of proof to offer -- he simply says it is logical. How is it logical? Because it supports his bias, that's the only reason he can offer. He reads his bias into the chart without any basis to do so. Indeed, he argues that rail rates for Montana grain went down, when all the available published information by neutral government agencies says they went up.

We know he's biased and frequently misinterpets data as well as simply being argumentative -- after all, he claimed that air resistance did not affect train speed and horsepower needs, and that trains and train cars were getting lighter not heavier -- but is there any reason to conclude that an ALJ, and then the full ICC, were biased?

That after five years of hearings and argument by educated, experienced experts from both sides, that the ICC knew less about this than Ken Strawbridge?

Hardly.

[MichaelSol]

Well, that's Michael Sol's story this time.  He has to try to explain away the diversion to rail of export wheat from a truck/barge combination movement on the Snake River. 

The only logical reason for the wheat to shift from the truck/barge movement to BNSF movement would be the fact that BNSF lowered its overall costs to the Montana producers and this caused them to shift their production to rail movement away from truck/barge.

But that disproves two pet core beliefs of Michael Sol.  1) The railroad is a 'monopoly' (it can't be a monopoly if a viable competing truck/barge system using the Snake River exists) and, 2) The railroad is using this 'monopoly' to charge high rates to the Montana farmers (the farmers would shift back to truck/barge if the rail rates were too high.)

So now Mr. Sol is simply saying the trucks never handled the export wheat.  It went to domestic processors that have largely gone out of business.  That's what he's saying this time.

But on June 13, 2006 ----

In 1980, a good percentage of wheat did leave Montana by truck, to the Lewiston barge terminal. There was a pretty good rate there. A relatively short truck movement over a two lane road through a wilderness. After the trucks tore up the highway, Idaho put a weight limit that killed the traffic.

He was blaming an Idaho highway weight limit for "killing" traffic that he now claims never existed. 

Real hard to keep 'em straight when you keep making 'em up, isn't it Mr. Sol.

No, that was one reason that the brief boom in truck movements, due to a nation-wide shortage of railroad grain cars, died out relatively quickly. I was there. I saw the traffic. I saw it vanish. And I saw the non-export truck traffic dry up as users and processors closed. As studies show, there was no intermodal competition prior to deregulation in Montana for wheat.

Now, a grain car shortage, with millions of dollars of wheat sitting on the ground, now that was a different story ... for the producer, all the costs except transportation are sunk at that point, the banker is calling, and the railroad says it has no cars.

Call the trucks. Costs more but what are you going to do? Feed the mice?

Strawbridge:

The truth of the matter is that the BN simply took the business by offering a lower system through put cost than its competition.  There is no other logical explination.  The export grain that moved on the Snake River changed to moving on the BN because the BN beat its competiton on cost.  The movement wouldn't have shifted to a higher cost system.

Well, this is getting pretty strained. Just keep repeating it, and maybe you will go home to Kansas. U.S. Gov., Federal Reserve, GAO, Whiteside & Associates, R.L. Banks & Assoc., every independent study ever done all say the rates went up, or that the shippers were captive within the meaning of the Staggers Act, as did the Interstate Commerce Commission in 1987, in a decision which specifically covers that relevant time period.

Strawbridge says the prices went down.

Take your pick on who is rewriting history.

We have argued that in some detail in the past here, and the only way Strawbridge could make it work was by using the wrong inflation index. He had to outright misrepresent what had happened, claiming that an index used for french fries was more appropriate than one used for rail costs. But, that's the only way, when given an actual example, that he could make his argument work -- his usual use of the false premise.

If there was barge competition, the ICC couldn't find it when they declared that Montana wheat shippers were captive, 1980-1986, which was the time period of the data presented at the hearings. Yet, 30% of wheat was still being hauled by truck. Was the ICC blind? No, the ICC understood it was a different market being served. But, the export wheat shippers were captive. There is a regulatory opinion on the subject, specifically saying that, after presentations by all parties concerned.

I am sure Strawbridge would have changed their minds if only he had an opportunity to present the stuff he presents here. BN was apparently unable to successfully present the argument at the time, or didn't attempt to offer an implausible argument in the first place. I am sure Strawbridge could do better than BN did. He obviously knows more about it than the railroad, the shippers, the State, or the ICC.

Whether or not that is a "pet core belief" of Michael Sol's or not isn't relevant. It happens to be the existing record, based on literally millions of dollars worth of studies, litigation, and argument by people far more knowledgeable on both sides of the argument than Ken Strawbridge, and the yet the only person or institution contradicting it is Ken Strawbridge on a railfan forum because of his clearly personal agenda.

At some point, any reader has to take a deep breath and simply say, sorry Ken, the record on this topic is well-developed and not ambiguous. Michael Sol had nothing to do with creating that record, but rather it has been analyzed by a broad spectrum of parties, state and federal agencies, shippers, and in addition to hired consultants, neutral government agencies with no axe to grind on the matter.

And they all keep coming to the same conclusion.

And Ken Strawbridge keeps spluttering that they're wrong, all wrong, because of course, only Ken Strawbridge knows all about the Montana wheat market.

The Montana wheat market of 25 years ago, no less.

 

[Anonymous]

It is interesting to note that railroads paying their full cost of capital could not beat barge movements. What is the recovery rate from the barge industry in the form of "user fees" for the Army Core of Engineers designed lock & dam inland water system?

If I recall correctly it is around 10 to 30%. Why are we worried about a private companies, the railroads, charging 300% of variable costs when the government is charging 30% to their competitor for the use of the inland waterway system?

You have to remember, there were riverboats on the Columbia Snake river systems prior to the dams being built.  The Corps of Engineers were required by law to design the dams with locks and navigation aids to maintain this prior usage claim.  There was an efficiency gain for river shipping companies when the slack water was introduced, and the barge company fees are set as a determination of this improvement over the free flowing prior river system.

Don't let the econuts and the rail oligarchy fool you.  The barge lines do pay their own way, and they do it within the scope of a completely open access system.  Contrast that with the railroads, who received huge land grants, anti-trust exemption, and now they are getting a portion of the highway users' money's to fatten their wallets.  And all that occurs in a closed access system, aka monopolistic.  If anything, it's the railroads that are taking advantage of the US taxpayers.

[greyhounds]

True, and in this case, confusing export wheat, which went to the Columbia River if by truck, with "wheat hauled by truck" are two different topics -- once again Strawbridge's sleight of hand. This is the identical switcheroo Strawbridge tried to play when, in discussing Port of Seattle, he "claimed" the numbers were all wrong, then began using intermodal figures for the entire Pacific Northwest, "claiming" they were Port of Seattle.

It is true there was a great deal of domestic wheat that moved interstate by truck, to Spokane, to Boise, to Canada, and also intrastate, to refiners, flour mills, cattle feed, supplements,  breweries, bakeries.

Most of that went by truck.

That was, "once upon a time."

Those businesses are for the most part gone.

Except for a small dribble, so are the trucks.

However, trucks did not carry export wheat to PNW ports then, and they do not now.

The railroads have always carried that traffic.

Well, that's Michael Sol's story this time.  He has to try to explain away the diversion to rail of export wheat from a truck/barge combination movement on the Snake River. 

The only logical reason for the wheat to shift from the truck/barge movement to BNSF movement would be the fact that BNSF lowered its overall costs to the Montana producers and this caused them to shift their production to rail movement away from truck/barge.

But that disproves two pet core beliefs of Michael Sol.  1) The railroad is a 'monopoly' (it can't be a monopoly if a viable competing truck/barge system using the Snake River exists) and, 2) The railroad is using this 'monopoly' to charge high rates to the Montana farmers (the farmers would shift back to truck/barge if the rail rates were too high.)

So now Mr. Sol is simply saying the trucks never handled the export wheat.  It went to domestic processors that have largely gone out of business.  That's what he's saying this time.

But on June 13, 2006 ----

In 1980, a good percentage of wheat did leave Montana by truck, to the Lewiston barge terminal. There was a pretty good rate there. A relatively short truck movement over a two lane road through a wilderness. After the trucks tore up the highway, Idaho put a weight limit that killed the traffic.

He was blaming an Idaho highway weight limit for "killing" traffic that he now claims never existed. 

Real hard to keep 'em straight when you keep making 'em up, isn't it Mr. Sol.

The truth of the matter is that the BN simply took the business by offering a lower system through put cost than its competition.  There is no other logical explination.  The export grain that moved on the Snake River changed to moving on the BN because the BN beat its competiton on cost.  The movement wouldn't have shifted to a higher cost system.

But this means the BNSF has competition (the Snake River barges and the highways are still there) and that it's had to, and has to, compete on price.  This blows Sol's 'monopoly' belief out of the water - so he simply says it never happened.

In other words, he rewrites history to serve his purpose, again.

 

[VPayne]

It is interesting to note that railroads paying their full cost of capital could not beat barge movements. What is the recovery rate from the barge industry in the form of "user fees" for the Army Core of Engineers designed lock & dam inland water system?

If I recall correctly it is around 10 to 30%. Why are we worried about a private companies, the railroads, charging 300% of variable costs when the government is charging 30% to their competitor for the use of the inland waterway system?

[Anonymous]

There's also the matter of Identity Protected Grain shipments, as well as the too small for unit train output of some specialized rotation crops.  The IPG shipments must move in ISO containers from point of origin to final destination overseas, in either 20' or 40' containers.  For any IPG shipments from Montana to Asia, the only viable choice right now is to truck either to Spokane or Lewiston.  For the Spokane move, BNSF's quotes rates of about $640 per 20' and $670 per 40' to Puget Sound.  For the Lewiston move, the barge companies charge a per container rate of about $120 per 20' and $160 per 40' to Portland, e.g. about a fourth of what BNSF charges for relatively the same distance!

Since it's roughly the same distance from central Montana to either Spokane or Lewiston, the truck rates will be the same to either destination.  Assuming the same cost of drayage, it's clear that IPG shippers will use the truck/barge combo rather than the truck/rail combo, since they'll save $500 a pop.  The only factor that could make them choose the truck/rail via Spokane is the relative lack of ocean carriers that call on Portland, but the likelyhood is that those Portland carriers will serve the same Asian markets as the Puget Sound carriers.

Of course, BNSF could reopen it's Shelby intermodal terminal, or open a new one in Great Falls, both of which are closer to the grain growers than either Spokane or Lewiston.  Then it'd be a snap that most such shipments would move by rail, even with monopolistic rates.  FYI - BNSF currently is not posting any intermodal rates out of Billings;  Is a Billings terminal shutdown next on the screw Montana agenda?

It's somewhat ironic that the railroads have been moving more and more to bulk shipping over-efficiency-itus, while at the same time grain growers are likely to move toward the more lucrative specialized crop markets.  BNSF is cutting back on carload and intermodal services in Big Sky country in deference to consolidated unit train terminals, while the growers are starting to demand more individualized transportation options to conform to their new crop specialization.

Gee, if BNSF had actually treated it's bulk grain customers in such a way as to allow them to be more competitive on the world markets, maybe those growers wouldn't have so much incentive to move to the high risk/high reward specialized crop markets.

[Anonymous]

 

However, trucks did not carry export wheat to PNW ports then, and they do not now.

The railroads have always carried that traffic.

To be fair, there was a brief period of time right after the opening of slack water to Lewiston Idaho where the truck/barge combo could effectively compete with the late 70's and early 80's rail haul of export grain out of Monana to the Lower Columbia deep water ports.  As we know, this was when the Milwaukee began it's rapid meltdown to the PCE retrenchment, and BN was having internal operating problems of it's own.  Since then, BN/BNSF has gotten it's act together in terms of moving to the 286k car, shuttle then unit trains, etc., aka the "productivity gains", while at the same time the barge capacity has remained virtually unchanged and the feds have imposed a moratorium on similar productivity increases in trucks.

So no, there were no trucks hauling grain from Montana to the Pacific Coast ports.  It simply wasn't feasible, then or now.  Because as I've stated a million times now, trucks cannot compete with railroads for the bulk commodity transportation market.  The truck/barge combo could somewhat offset the inherent advantages of the railroads for a time, but the average truck haul out of Montana to Lewiston is just too long for the barge economics to make up for.

Today, you can truck grain from North Central Idaho to Lewiston and beat the unit train dynamics (BN tried to run a unit train from Lewiston to the Portland area, but it didn't even come close to beating the barge economics), but not from Montana or beyond.  At best, we can get a backhaul of grain in a dry van from Montana or North Dakota now and then, but the OTR trucker grain haul is virtually dead, and it was a short life span to begin with.

Is it theoretically possible for the truck/barge combo via Lewiston to become efficient enough to compete with BNSF?  In theory yes, GVW standards could be lifted to allow 160k truckloads, the barge lines could go "Mississippi-style" with larger than lock barge tows (wherein it takes two trips per barge tow through each lock, break 'em apart then put 'em back together again, very time consuming).  In practicallity, no, it's just not likely for that scenario to avail itself.

And as it stands now, the truck/barge combo from Montana to Portland via Lewiston is no competition for BNSF.  Ergo, BNSF has no competition for hauling grain from Montana to the Pacific Coast.

[MichaelSol]

Strawbridge:

So about one of every three grains of wheat moved by truck in a market Sol claims is "captive" to rail.  It obviously isn't. 

This is egregious. "one of every three grains of wheat moved by truck in a market ... Sol claims is captive. It obviously isn't." Note the use of present tense.

One of every three grains moved in the 1970s-1980s not only by truck, but in a domestic market. That market is gone.

However, confusing that with the market that Sol claims "is" captive [present tense] leaves out the fact that the current market moves about 2% by truck, because the market has shifted from a mixed domestic/export market to an almost entirely export market westbound. Another Strawbridge sleight of hand -- intentionally confusing one thing with another, and slipping in 20 year old data to justify that the market "isn't" captive and hoping no one notices.

That export market has never, ever been served by truck unless there was a significant grain car shortage and even then the trucks never went all the way to the ports, ever.

[MichaelSol]

Now if we were to accept the teachings of Mr. Sol, we would accept the belief that the railroad holds its shippers captive and is able to charge them exhorbitant rates which causes great economic harm to these poor decent American Farmers. 

But that doesn't make sense.  The railroad would not gain business by increasing its charges to the wheat producers...

 The "poor farmers" still had that truck alternative and they wouldn't have shifted from truck to rail in the tremendous way they did if overall rail use cost had gone up.  The BN (BNSF) reduced the costs of moving wheat out of Montana (they did the same for a lot of commodities throughout their service area.)

.

Except, that didn't happen.

General Accountability Office, 'Freight Railroads: Preliminary Observations on Rates, Competition, and Capacity Issues' released June 21, 2006:

"Grain rates initially declined from 1985 to 1987, but then diverged from industry trends and increased, resulting in a net 9 percent nominal increase by 2004." ...

But Strawbridge says this "doesn't make sense." But, that is the Strawbridge/Wilcox logic: it doesn't make sense to them, because it does not fit their preconceived conclusions about Montana wheat which, for some reason, each takes an intense interest in these days...

When the ICC was asked to look at it in that time frame, the 1980s, the ICC agreed with the Montana wheat farmers and resolved the case in their favor after they complained that the BN used its position to extract rates that were significantly higher than justified by costs, substantially higher than industry averages, and significantly higher than charges to wheat shippers elsewhere for similar service over similar distances.p. 20. McCarty Farms, et. al., vs. Burlington Northern, Inc., 3 ICC2d 822 (1987).

Strawbridge:

And it certainly gained business.  The railroad certainly would not have gained this business if it was charging too much in the face of a viable alternative, trucking.  No, the railroad would only gain business if it reduced the costs of using its services to move the grain.

The market that railroads had always exclusively served grew. The market that the railroads had not substantially served nearly disappeared. The market that trucks did not serve grew. The market that trucks had traditionally served nearly disappeared.

Look at Strawbridge's own figures of the decline in the trucking percentage -- then look at the government report that shows that all rail grain rates increased between 1987 and now, and the percentage of Montana wheat carried at over 300% R/VC increased between 1985 and now from 14% to 39%.

Strawbridge:

 The railroad would not gain business by increasing its charges to the wheat producers...

In a competitive market, true. But prices did, in fact, increase.

Notwithstanding railroad grain transportation price increases over nearly a 20 year period, as documented by the GAO, the percentage carried by trucks declined from 30% to almost nothing today.

That is because the trucks served a different  market, and that market evaporated. Naturally, the railroad could only acquire/retain virtually all of the market in the face of price increases, only if in fact the market was captive. That's the key indicator of a captive market! And that happens to be exactly what happened.

There is simply no plausible support in the statistical record for Strawbridge's claims, although the Goebbels analogy certainly seems to play a role in how he stakes his position based on outright misrepresentations.

Strawbridge:

In other words, the Burlington Northern brought the unit grain train to Montana in the 1980's.

The first recorded unit grain train in Montana was operated by Milwaukee Road in 1973.

Strawbridge:

Of course, Mr. Sol and FM Dave will falsely contend that the unit trains actually drove overall rail system costs up ...

Well, actually, a study done at Illinois Central Gulf pretty conclusively showed that 100 ton cars in unit train configurations did just that. What that has to do with this discussion, I do not know, but an AAR study in 1981 came to similar conclusions.

Ahlf, Robert E., "The Behavior of Railroad Track and the Economical Practices of Its Maintenance and Upgrading," in Roadbed and Rails: Fundamentals, Maintenance, and Economics, Institute of Railroad Engineering, 1988.

Ahlf, Robert E., "The Behavior of Railroad Track, and the Economical Practices of its Maintenance and Rehabilitation," presented at the Railroad Track Maintenance seminar, Madison, WI, March 2001.

"Economically Optimum Axle Load for Freight Cars," Robert Ahlf, Bulletin -- American Railway Engineering Association, January, 1984.

Ahlf, Robert E., "The Implications of the 100-Ton Car," Modern Railroads, February, 1980. Reprinted in Railway Gazette International.

"Economic and Physical Consequences of Operating Respective Car Weights over Track Structures," 40 pp., MSol manuscript copy, December 4, 1980, Robert Ahlf, Illinois Central Gulf Railroad.

"It would have been perceived by the industry as an embarrassment to re-emphasize the 80-ton car...the industry was so economically destitute at the time, that there was no interest in optimizing for long term economics. These axle-load-related track maintenance costs are related to, and defined by, long term economics." Personal Communication, Ahlf to Sol, 9/12/2006. 

The AAR studies are referred to in NORTH DAKOTA STRATEGIC FREIGHT ANALYSIS, Item IV. Heavier Loading Rail Cars, Prepared by John D. Bitzan, Denver D. Tolliver, Upper Great Plains Transportation Institute, North Dakota State University, Fargo, North Dakota, October 2001.

I discussed these studies with a retired senior engineer NP, BN, who lived through the transition, and he confirmed that "the marketing guys came up with this idea, nobody did any studies on the 100 ton car, and the railroad company paid for it. The next bright idea was to put them in unit trains. It was a disaster."

 

[MichaelSol]

Now if we were to accept the teachings of Mr. Sol, we would accept the belief that the railroad holds its shippers captive and is able to charge them exhorbitant rates which causes great economic harm to these poor decent American Farmers. 

"If you tell a lie big enough and keep repeating it, people will eventually come to believe it."

Joseph Goebbels

True, and in this case, confusing export wheat, which went to the Columbia River if by truck, with "wheat hauled by truck" are two different topics -- once again Strawbridge's sleight of hand. This is the identical switcheroo Strawbridge tried to play when, in discussing Port of Seattle, he "claimed" the numbers were all wrong, then began using intermodal figures for the entire Pacific Northwest, "claiming" they were Port of Seattle.

It is true there was a great deal of domestic wheat that moved interstate by truck, to Spokane, to Boise, to Canada, and also intrastate, to refiners, flour mills, cattle feed, supplements,  breweries, bakeries.

Most of that went by truck.

That was, "once upon a time."

Those businesses are for the most part gone.

Except for a small dribble, so are the trucks.

However, trucks did not carry export wheat to PNW ports then, and they do not now.

The railroads have always carried that traffic.

Prior to deregulation, studies showed that "intermodal competition has not been apparent to shippers of agricultural commodities in Montana. Its lack has led to frustrations of producers and merchandisers. ... Advantages of intermodal competition lies in the pressure it brings on the carriers to underbid rivals for each haul." It didn't exist for export wheat in Montana. Charles H. Rust; George St. George, "Role of Transportation in Agricultural Marketing and Development,"  American Journal of Agricultural Economics,  Vol. 51, No. 5, Proceedings Issue. (Dec., 1969), pp. 1471-1478.

The fact is that 97% of Montana westbound wheat now goes to Pacific NW ports, and that it goes by rail is explained by the market and significant changes in the market, not by changes in the relative truck/railroad cost factor, because, in fact, nothing has changed in the proportion of Montana wheat traffic that the railroads have carried to the ports.

The mode of transportation for that market is the same in 2006 as it was in 1990, 1980, 1970, 1960, or 1950 for that matter.

 

[JSGreen]

http://www.ugpti.org/pubs/pdf/SP139.pdf#search=%22montana%20wheat%20truck%201980%22

After poking around at the website cited abouve, I found this interesting table which expands the advantage of unit grain, and breaks it down to cost per bushel.  It does not relate car availability and service levels, as discussed in his other reference, but it does show interesting facets of unit train vs small loads...

Montana Export Wheat Rates

The table didnt paste coherently, so you'll have to visit the link to see the table...

[Anonymous]

Now if we were to accept the teachings of Mr. Sol, we would accept the belief that the railroad holds its shippers captive and is able to charge them exhorbitant rates which causes great economic harm to these poor decent American Farmers. 

"If you tell a lie big enough and keep repeating it, people will eventually come to believe it."

Joseph Goebbels

Wow!  Bob just zinged Ken with this little axiom!  Way to go Bob!

Oh, I'm sure Bob in his smarmy way was trying to aid Ken's shakey POV, but it sure backfired.

Ken just keeps on telling the Big AAR Lie, and some eventually buy into it.  "Why, there's plenty of competition for railroads, that's why they pass on the gains from efficiency to their customers."  What a load of c**p.

You notice Ken never uses the phrase "intramodal competition", never acknowledges global price competition, never acknowledges global events that shape commodity price and demand, never gives a whit of credence to the concept of the shut down price.

Because he doesn't know jack about these more onerous and obvious variables.  He lives in a childish world of simple ignorance, because to acknowledge the larger truths blows his little hobby right out of the water.

 

More later.

[oltmannd]

Now if we were to accept the teachings of Mr. Sol, we would accept the belief that the railroad holds its shippers captive and is able to charge them exhorbitant rates which causes great economic harm to these poor decent American Farmers. 

"If you tell a lie big enough and keep repeating it, people will eventually come to believe it."

Joseph Goebbels

"Everything You Know is Wrong!"  Just listen: http://www.firesigntheatre.com/albums/eykiw1.mp3

[bobwilcox]

Now if we were to accept the teachings of Mr. Sol, we would accept the belief that the railroad holds its shippers captive and is able to charge them exhorbitant rates which causes great economic harm to these poor decent American Farmers. 

"If you tell a lie big enough and keep repeating it, people will eventually come to believe it."

Joseph Goebbels

[greyhounds]

He rants about trucking further to rail terminals.  In doing so he ignors the absolute fact that before rail deregulation as much as 39% of Montana wheat was trucked much further distances to the Snake River barge terminals.  The efficiency improvements of the BNSF have reduced trucking distances, not increased them as he falsely claims.

"Prior to deregulation" two things were happening in Montana, the Milwaukee Road was withdrawing, and export sales had kicked up with a second round of Russian wheat sales. In 1979, the Milwaukee's efforts to discourage traffic were becoming highly "successful". There was already a national grain car shortage because of high export sales, and BN was unable to replace both the Milwaukee fleet and meet the additional demand. According to one estimate, the railcar fleet available to Montana farmers to ship was  8,000 grain cars short, which was an enormous shortfall.  Pat Williams, Representative, Letter to Neil Goldschmidt, Secretary of Transportation, September 12, 1979.

Trucks made up the difference, but were used on the shortest haul possible -- to the Columbia River system barge facilities. This was because of the inability of the rail system to haul the wheat, not because trucks provided a "better" alternative at the time.

Did BN "efficiencies" after deregulation reduce the need for trucks?

In January, 1980, the United States imposed a grain embargo on exports to the Soviet Union. Wheat exports gradually declined thereafter even after the embargo was lifted, falling 22 percent in the 1983/84 season alone.

Accordingly, the rail fleet was able to handle demand after deregulation and during that time period. Trucking naturally fell off as a result.

Well, again Mr. Sol is revising history.  

Trucks held a signficant part of the Montana wheat business through the mid 1980's, contrary to what he says.  In 1981 (with the Soviet embargo) they moved 32.7% of the wheat - 32,788,838 of 100,230814 bushels. So about one of every three grains of wheat moved by truck in a market Sol claims is "captive" to rail.  It obviously isn't. 

By 1986 things hadn't changed much - the trucks still had 30.8% of the market  - 24,874,916 of 80,676,713 bushels.  But then ...

The truck share began to decline significantly, down to 5.4% in 2004 - only 6,539,537 of 120.537,824 bushels.

http://wbc.agr.mt.gov/Buyers_Processors/Grain_movement/mtmovement_truckrail_bu.pdf

Now if we were to accept the teachings of Mr. Sol, we would accept the belief that the railroad holds its shippers captive and is able to charge them exhorbitant rates which causes great economic harm to these poor decent American Farmers. 

But that doesn't make sense.  The railroad would not gain business by increasing its charges to the wheat producers.  And it certainly gained business.  The railroad certainly would not have gained this business if it was charging too much in the face of a viable alternative, trucking.  No, the railroad would only gain business if it reduced the costs of using its services to move the grain.

What happend was that the railroad improved its efficiency, and passed the cost savings along.  (They had to pass it along, there was all this truck competition.) This caused greater use of rail transportaiton and less use of truck transportation.  In other words, the Burlington Northern brought the unit grain train to Montana in the 1980's.

http://www.ugpti.org/pubs/pdf/SP139.pdf#search=%22montana%20wheat%20truck%201980%22

Of course, Mr. Sol and FM Dave will falsely contend that the unit trains actually drove overall rail system costs up and simply shifted cost to the poor farmer by making them truck further to a unit train terminal.  But that doesn't make any sense either.

The "poor farmers" still had that truck alternative and they wouldn't have shifted from truck to rail in the tremendous way they did if overall rail use cost had gone up.  The BN (BNSF) reduced the costs of moving wheat out of Montana (they did the same for a lot of commodities throughout their service area.)  These cost reductions were largely passed on to their customers - and we all benifit.  (please see previously cited Minneapolis Federal Reserve Bank paper.)

As I've said before, the Montana Legislature should be passing resolutions praising the BNSF for how the railraod has helped the state's economy.  But there aren't many votes to be gained doing that.

I hope I've provided enough citations.  

 

 

[MichaelSol]

Sounds like a lot of sour grapes to me.  Its seems that Dave believes that the railroads should provide a social service for farmers, as opposed to the profit seeking buisness that it is.

His post said nothing of the sort.

Average revenue per car/unit

Consumer products ...$972.00

Industrial products ... $1,836

Coal ......................... $1,094

Agricultural products .. $2,326

Source: BNSF Railway 2005 Annual Report.

 

From Rail Price Advisor, 1st Q, 2003:

Cost per ton to ship......CXS ...NS..... BN..... UP

Captive Farm Products $29.86 $21.18 $43.64 $36.47

Non-captive Farm ....... $14.45 $ 9.72 $18.44 $16.20

 

Captive Coal ...............$15.85 $15.79 $18.43 $18.70

Non-captive Coal ..........$ 7.67 $ 7.25 $ 7.79 $ 8.30

 

Captive Chemicals .......$32.83 $36.08 $48.43 $42.18

Non-captive Chemicals .$15.88 $16.56 $20.46 $18.73

 

Captive Lumber ............$30.87 $26.51 $58.70 $55.97

Non-captive Lumber .... $14.94 $12.17 $24.80 $24.86

 

Captive Pulp Paper .......$38.70 $37.41 $59.92 $55.07

Non-captive Pulp Paper $18.73 $17.17 $25.32 $24.46

 

For each major railroad in 2001, the average RVC's of captive and competitive traffic was as follows:

Captive Competitive

BN 238.1% 100.6%

CSX 232.9% 112.7%

NS 237.7% 109.1%

UP 239.8% 106.5%

The following from General Accountability Office, 'Freight Railroads: Preliminary Observations on Rates, Competition, and Capacity Issues' released June 21, 2006:

"Grain rates initially declined from 1985 to 1987, but then diverged from industry trends and increased, resulting in a net 9 percent nominal increase by 2004." ...

"Our preliminary analysis indicates that this overall change in traffic traveling over 300 percent R/VC can be seen in certain states and commodities. For example, 39 percent of grain originating in Montana and 20 percent of coal in West Virginia traveled over 300 percent R/VC in 2004. This represents a significant increase from 1985, when 14 percent of grain in Montana and 4 percent of coal in West Virginia traveled over 300 percent R/VC." ...

"There is widespread agreement the rate relief process is inaccessible to most shippers and does not provide expeditious handling and resolution of complaints. The process is expensive, time consuming and complex, and, as a result, several shipper's organizations told us that it is unlikely they would ever file a rate case. Since 2001, only 10 cases have been filed, and these cases took between 2.6 and 3.6 years--an average of 3.3 years per case--to complete. In addition, while STB does not keep records of the cost of a rate case, shippers we interviewed agreed that the process can cost approximately $3 million per litigant." ...

The following from Rail Price Advisor (op. cit.):

Revenue percentage of all traffic, percent from captive

Farm Products 7.5% 34.2%

Metallic Ores 1.2% 46.6%

Coal 21.1% 43.6%

Ordinance or Accessories 0.2% 73.0%

Chemicals 21.1% 65.9%

Petroleum or Coal Products 3.0% 49.1%

Stone, Clay and Glass Products 3.2% 40.6%

Fabricated Metal Products 1.8% 30.2%

 

[n012944]

  

Gee, you'd think a dentist hit a nerve.  I mean look at that response.  It's unbelievable.   I guess the truth hurts.

And, as usual, Dave thinks he knows more than everybody - including the people at the Federal Reserve who write papers on economic issues. 

If someone (in this case, the Surface Transportation Board) disagrees with him, he dismisses them as "hacks".  And, as usual again, he rewrites history to suit his needs.

A clear example of his revision of history is when he references "forcing the BNSF to reduce its rates from two decades ago".  What the STB said was that the raillroads had achieved a productivity gains over a 20 year period and passed those productivity gains through to their customers because they clearly operate in a competitive environment.  Dave changes this around to something that happened 20 years ago instead of being an ongoing process over a 20 year period.

He rants about trucking further to rail terminals.  In doing so he ignors the absolute fact that before rail deregulation as much as 39% of Montana wheat was trucked much further distances to the Snake River barge terminals.  The efficiency improvements of the BNSF have reduced trucking distances, not increased them as he falsely claims.

Well, explain to us how the federales can so blatantly contradict themselves?  One agency states absurdly that railroads operate in a competitive environment, then reps from the MFR state that 30% of rail shippers are captive.  You cannot have captive customers and a competitive environment at the same time.  Clearly, the STB report is weighted by AAR influence, not by classical economists who argue intuitively that an integrated rail system is a natural monopoly.  If railroads "clearly" have competition, then clearly there'd be more than one rail service provider for every stretch of track, because the only way to have clear intramodal competition is to have more than one operator on the only rail connection most rail shippers have. 

This is the same guy who promotes the concept of "aggregation" when espousing the advantages of railroads, but conviently forgets about that key concept when stating his belief that trucks are competition for railroads.  Memo to Strawbridge:  Trucks do not haul aggregated units, they only haul single, sometimes double, and rarely triple units.  Ergo, a mode that cannot aggregate into large consists is no competition for the mode that can.

And despite Ken's allusion to throngs of trucks hauling grain to Lewiston from the nation's grain fields, the fact remains that it is the individual farmers who now have to truck their grain farther and farther to the nearest railhead across the nation, not just Montana.  There's a world of difference between farmer owned trucks and standard OTR truckers.  Rarely if ever did you have OTR outfits taking the grain straight from the farm to Lewiston.  Most of the time, the farmer would truck via his own rig to the nearest local elevator, and it is the elevator operators who would decide whether to ship their grain onward via carload rail or OTR truckload to Lewiston.  Then we get *deregulation* and UP and BN start abandoning the lines to the elevators in favor of 26 and 52 car shuttle train facilities, then they stop service to the shuttle facilities in favor of consolidated 110 unit train terminals.  While all this is happening, the railroads move from 220k to 264k to 286k cars, while at the same time lobbying the feds to restrict increases in truck GVW.  What you get is the loss of the intermediate elevators the OTR's used to patronize, and the OTR's aren't going to shorthaul themselves from the remaining elevators to the unit train loaders, neither are they going to drive out in the farmer's fields and take the grain from farm to unit train facility, sot the farmer ends up having to buy his own road worthy trucks just to get his grain from farm to unit train facility.  Despite Ken's *expertise* on farming and trucking in Montana and the PNW, the farmer generally doesn't have the time to drive his own OTR rig from farm to Lewiston if he's farming in Montana or North Dakota.

Get it through your head, Ken - today's farmers absolutely do have to truck their own grain in their own rigs exponentially farther today than 20 years ago, and this is entirely due to the railroads.  I should know - we farm, our neighbors all farm, and this is the reality that Ken ignores.

Sounds like a lot of sour grapes to me.  Its seems that Dave believes that the railroads should provide a social service for farmers, as opposed to the profit seeking buisness that it is.

[MichaelSol]

He rants about trucking further to rail terminals.  In doing so he ignors the absolute fact that before rail deregulation as much as 39% of Montana wheat was trucked much further distances to the Snake River barge terminals.  The efficiency improvements of the BNSF have reduced trucking distances, not increased them as he falsely claims.

"Prior to deregulation" two things were happening in Montana, the Milwaukee Road was withdrawing, and export sales had kicked up with a second round of Russian wheat sales. In 1979, the Milwaukee's efforts to discourage traffic were becoming highly "successful". There was already a national grain car shortage because of high export sales, and BN was unable to replace both the Milwaukee fleet and meet the additional demand. According to one estimate, the railcar fleet available to Montana farmers to ship was  8,000 grain cars short, which was an enormous shortfall.  Pat Williams, Representative, Letter to Neil Goldschmidt, Secretary of Transportation, September 12, 1979.

Trucks made up the difference, but were used on the shortest haul possible -- to the Columbia River system barge facilities. This was because of the inability of the rail system to haul the wheat, not because trucks provided a "better" alternative at the time.

Did BN "efficiencies" after deregulation reduce the need for trucks?

In January, 1980, the United States imposed a grain embargo on exports to the Soviet Union. Wheat exports gradually declined thereafter even after the embargo was lifted, falling 22 percent in the 1983/84 season alone.

Accordingly, the rail fleet was able to handle demand after deregulation and during that time period. Trucking naturally fell off as a result.

[Anonymous]

So, FM, are you arguing that it was a mistake to deregulate the RR's?  Given some of your other musings on these threads, I wouldn't think so, but would re-regulating the RR's be of a piece with the "open access" I think you're calling for?

No, I'm arguing that regulation would have been less likely if railroads back in the day's before regulation had internally addressed the intramodal competitive issues - whether that be separate entities operating infrastructure and transporter operations, or having the railroads simply allow each other access over each other's lines to serve key terminals and gateways, or perhaps something else.

But they didn't, and the result was regulation.

As for today, I would favor strong anti-trust action rather than some form of pre-Staggers regulation.  Allow DM&E and KCS full access over both UP and BNSF out west where true intramodal competition is lacking, do the same back East to some extent.

Or do the AT&T style breakup of infrastructure from transporter operations.

Just do whatever it takes to get some true intramodal competition going.

[Anonymous]

So, FM, are you arguing that it was a mistake to deregulate the RR's?  Given some of your other musings on these threads, I wouldn't think so, but would re-regulating the RR's be of a piece with the "open access" I think you're calling for?

[oltmannd]

Two things regarding the NS slide show:  First, this is an NS slide show, so it's going to be favorable to NS's side of the story, right?  (insert cynical smilie here) 

OK I will give you that we should take the NS slide show with a grain of salt, however should we also take the numbers given by Mr. Sol with a grain of salt too?  They were studies that were paid for by shippers who  claim to be captive.   Why is it that certain people on this board use numbers from studies done by "captive" shippers as examples, yet when other sides are shown, be it from an independent goverment office like the GAO or the railroads, we are told to take them with a grain of salt?   

Two different things going on here, not necessarily related.  My comments on the NS slide show is more pertaining to the usual corporate slide show characterization, e.g. such are presented to show only a favorable aspect of the company's decisions, e.g. they are not going to present the downsides.  It is similar to the stuff we get on the corporate PR Newswire items - it's "rah rah" stuff, not a cost/benefit analysis.  It's hard to justify a claim that NS's domestic double stack program is taking freight off the highways, soley because the gain in domestic double stack exceeds the gains presented by the trucking industry.  Did we also see the trends in NS's boxcar loadings in that slide show?  Is it possible that the upward trend in domestic double stack is inversely correlated with a downward trend  in boxcar loadings over the same time period?  If so, do ya think NS is going to tell us?

I got yer carloading stats right here!  It really wouldn't hurt you to look at ALL the slides and maybe even read the text, you know!  It isn't always all happy talk.

http://www.nscorp.com/nscorphtml/speech06/dws072606/dws072606.pdf

(slide 6 - broken out by major commodity group.  This is all non-intermodal stuff.  Includes grain and slab unit trains.  Does not include coal.)

Up 2% over all, similar to industrial production.  Note that chemical is down 7% YOY.  This is all tank car traffic and is not generally converted to intermodal..

And automotive is down 3%.  Ag down 1% 2Q. (Slide 3)

Non-coal revenue growth is lowest in intermodal (Slide 5)

Wait a minute!  Domestic double stack down 9%, truckload up 11%!  (Slide 10)

Weren't you all telling me about how domestic double stack is growing at the expense of OTR?  From these stats it looks as if the only shift is from doms to trailers, aka still no shift of highway traffic to rail.

 

"Domestic" is mostly old-line IMC business in RR controlled trailers (and NACS containers).  This is mostly TOFC business.  "Truckload" includes domestic stack business (JB Hunt, Schneider, etc) and the containers they lease from the RR.

Automotive is down because of Ford's woes.  Ford is NS's #1 customer.  Ag is mostly grain.

Slide 5 is revenue per unit.  Intermodal is "only" up 8% becuase of traffic mix.  Stack traffic is up (low cost, low rates, but high margin).  IMC TOFC is down  (very high cost, medium rates, very low margin)

Slide 10 shows net of + 4000 between domestic (RR controlled equipment) and truckload (primarily shipper owned equipment) YTD.

Another intersting fact is that paper shipments are being diverted from truck to boxcars!  Even as paper production is getting soft, (NS chemical shipments down), paper shipment in box cars is increasing. 

[MichaelSol]

Per ton costs of shipment, BNSF*:

Captive Farm Products .. $43.64

Non-captive Farm Products..$18.44

Is that for the same distance...or what would the rate be for ton/mile, not just per ton?

I would expect it to cost more to go further....so not having the distance, or some assurance about it being a quote for the same distance, the numbers are not impressive....

Well, a set of captive shipper costs vs non-captive shipper costs, in several categories, shows the captive shipper pays a substantially higher cost per ton.  There is no evidence that captive shippers are located further distances from their natural market than non-capitve shippers, but rather that captivity, not distance, is the determining factor.

The use of a ton-mile statistic would show that the more distant shippers pay less, typically, than short haul.

 

[JSGreen]

[

Per ton costs of shipment, BNSF*:

Captive Farm Products .. $43.64

Non-captive Farm Products..$18.44

Is that for the same distance...or what would the rate be for ton/mile, not just per ton?

I would expect it to cost more to go further....so not having the distance, or some assurance about it being a quote for the same distance, the numbers are not impressive....

[MichaelSol]

Who cares? If these wheat farmers can't compete with their counterpart in China, Austrailia or Alberta they can sell the farm and get a job in Seattle.  Why should they be bailed out by the BNSF or we taxpayers.

?

Whoa, Nellie.

Per ton costs of shipment, BNSF*:

Captive Farm Products .. $43.64

Non-captive Farm Products..$18.44

How could a captive wheat shipper "compete" with a non-captive USA shipper, let alone shippers in "China, Austrailia or Alberta" ?

The non-captive shipper is getting the "bail out," not the captive shipper.

You've got it backwards.

Why?

*This is from Rail Price Advisor (lst Quarter, 2003). According to RPA, the “per ton” information is calculated from the 2001 Surface Transportation Board Revenue Shortfall Allocation Methodology" (RSAM) study.

 

[Anonymous]

  

Gee, you'd think a dentist hit a nerve.  I mean look at that response.  It's unbelievable.   I guess the truth hurts.

And, as usual, Dave thinks he knows more than everybody - including the people at the Federal Reserve who write papers on economic issues. 

If someone (in this case, the Surface Transportation Board) disagrees with him, he dismisses them as "hacks".  And, as usual again, he rewrites history to suit his needs.

A clear example of his revision of history is when he references "forcing the BNSF to reduce its rates from two decades ago".  What the STB said was that the raillroads had achieved a productivity gains over a 20 year period and passed those productivity gains through to their customers because they clearly operate in a competitive environment.  Dave changes this around to something that happened 20 years ago instead of being an ongoing process over a 20 year period.

He rants about trucking further to rail terminals.  In doing so he ignors the absolute fact that before rail deregulation as much as 39% of Montana wheat was trucked much further distances to the Snake River barge terminals.  The efficiency improvements of the BNSF have reduced trucking distances, not increased them as he falsely claims.

Well, explain to us how the federales can so blatantly contradict themselves?  One agency states absurdly that railroads operate in a competitive environment, then reps from the MFR state that 30% of rail shippers are captive.  You cannot have captive customers and a competitive environment at the same time.  Clearly, the STB report is weighted by AAR influence, not by classical economists who argue intuitively that an integrated rail system is a natural monopoly.  If railroads "clearly" have competition, then clearly there'd be more than one rail service provider for every stretch of track, because the only way to have clear intramodal competition is to have more than one operator on the only rail connection most rail shippers have. 

This is the same guy who promotes the concept of "aggregation" when espousing the advantages of railroads, but conviently forgets about that key concept when stating his belief that trucks are competition for railroads.  Memo to Strawbridge:  Trucks do not haul aggregated units, they only haul single, sometimes double, and rarely triple units.  Ergo, a mode that cannot aggregate into large consists is no competition for the mode that can.

And despite Ken's allusion to throngs of trucks hauling grain to Lewiston from the nation's grain fields, the fact remains that it is the individual farmers who now have to truck their grain farther and farther to the nearest railhead across the nation, not just Montana.  There's a world of difference between farmer owned trucks and standard OTR truckers.  Rarely if ever did you have OTR outfits taking the grain straight from the farm to Lewiston.  Most of the time, the farmer would truck via his own rig to the nearest local elevator, and it is the elevator operators who would decide whether to ship their grain onward via carload rail or OTR truckload to Lewiston.  Then we get *deregulation* and UP and BN start abandoning the lines to the elevators in favor of 26 and 52 car shuttle train facilities, then they stop service to the shuttle facilities in favor of consolidated 110 unit train terminals.  While all this is happening, the railroads move from 220k to 264k to 286k cars, while at the same time lobbying the feds to restrict increases in truck GVW.  What you get is the loss of the intermediate elevators the OTR's used to patronize, and the OTR's aren't going to shorthaul themselves from the remaining elevators to the unit train loaders, neither are they going to drive out in the farmer's fields and take the grain from farm to unit train facility, sot the farmer ends up having to buy his own road worthy trucks just to get his grain from farm to unit train facility.  Despite Ken's *expertise* on farming and trucking in Montana and the PNW, the farmer generally doesn't have the time to drive his own OTR rig from farm to Lewiston if he's farming in Montana or North Dakota.

Get it through your head, Ken - today's farmers absolutely do have to truck their own grain in their own rigs exponentially farther today than 20 years ago, and this is entirely due to the railroads.  I should know - we farm, our neighbors all farm, and this is the reality that Ken ignores.

Who cares? If these wheat farmers can't compete with their counterpart in China, Austrailia or Alberta they can sell the farm and get a job in Seattle.  Why should they be bailed out by the BNSF or we taxpayers?

The only area where US farmers "can't" compete globally with other ag nations is in the cost of transportation from farm to outbound port.  Clearly, this puts the onus on the railroads and the federal overseers of said system.  Since we taxpayers are giving a huge indirect subsidy to BNSF and the others via their government granted monopolies, perhaps we should start at the root of the problem and first eliminate the ongoing anti-trust exemption the railroads enjoy, and use our historic anti-trust oversight to force competition onto the rail system.

Once that's done and put in motion, we'll start talking about reducing farm subsidies.

[bobwilcox]

  

Gee, you'd think a dentist hit a nerve.  I mean look at that response.  It's unbelievable.   I guess the truth hurts.

And, as usual, Dave thinks he knows more than everybody - including the people at the Federal Reserve who write papers on economic issues. 

If someone (in this case, the Surface Transportation Board) disagrees with him, he dismisses them as "hacks".  And, as usual again, he rewrites history to suit his needs.

A clear example of his revision of history is when he references "forcing the BNSF to reduce its rates from two decades ago".  What the STB said was that the raillroads had achieved a productivity gains over a 20 year period and passed those productivity gains through to their customers because they clearly operate in a competitive environment.  Dave changes this around to something that happened 20 years ago instead of being an ongoing process over a 20 year period.

He rants about trucking further to rail terminals.  In doing so he ignors the absolute fact that before rail deregulation as much as 39% of Montana wheat was trucked much further distances to the Snake River barge terminals.  The efficiency improvements of the BNSF have reduced trucking distances, not increased them as he falsely claims.

Well, explain to us how the federales can so blatantly contradict themselves?  One agency states absurdly that railroads operate in a competitive environment, then reps from the MFR state that 30% of rail shippers are captive.  You cannot have captive customers and a competitive environment at the same time.  Clearly, the STB report is weighted by AAR influence, not by classical economists who argue intuitively that an integrated rail system is a natural monopoly.  If railroads "clearly" have competition, then clearly there'd be more than one rail service provider for every stretch of track, because the only way to have clear intramodal competition is to have more than one operator on the only rail connection most rail shippers have. 

This is the same guy who promotes the concept of "aggregation" when espousing the advantages of railroads, but conviently forgets about that key concept when stating his belief that trucks are competition for railroads.  Memo to Strawbridge:  Trucks do not haul aggregated units, they only haul single, sometimes double, and rarely triple units.  Ergo, a mode that cannot aggregate into large consists is no competition for the mode that can.

And despite Ken's allusion to throngs of trucks hauling grain to Lewiston from the nation's grain fields, the fact remains that it is the individual farmers who now have to truck their grain farther and farther to the nearest railhead across the nation, not just Montana.  There's a world of difference between farmer owned trucks and standard OTR truckers.  Rarely if ever did you have OTR outfits taking the grain straight from the farm to Lewiston.  Most of the time, the farmer would truck via his own rig to the nearest local elevator, and it is the elevator operators who would decide whether to ship their grain onward via carload rail or OTR truckload to Lewiston.  Then we get *deregulation* and UP and BN start abandoning the lines to the elevators in favor of 26 and 52 car shuttle train facilities, then they stop service to the shuttle facilities in favor of consolidated 110 unit train terminals.  While all this is happening, the railroads move from 220k to 264k to 286k cars, while at the same time lobbying the feds to restrict increases in truck GVW.  What you get is the loss of the intermediate elevators the OTR's used to patronize, and the OTR's aren't going to shorthaul themselves from the remaining elevators to the unit train loaders, neither are they going to drive out in the farmer's fields and take the grain from farm to unit train facility, sot the farmer ends up having to buy his own road worthy trucks just to get his grain from farm to unit train facility.  Despite Ken's *expertise* on farming and trucking in Montana and the PNW, the farmer generally doesn't have the time to drive his own OTR rig from farm to Lewiston if he's farming in Montana or North Dakota.

Get it through your head, Ken - today's farmers absolutely do have to truck their own grain in their own rigs exponentially farther today than 20 years ago, and this is entirely due to the railroads.  I should know - we farm, our neighbors all farm, and this is the reality that Ken ignores.

 

Who cares? If these wheat farmers can't compete with their counterpart in China, Austrailia or Alberta they can sell the farm and get a job in Seattle.  Why should they be bailed out by the BNSF or we taxpayers.

?

[Anonymous]

..they are using their monopoly power to try and "nudge" trucking companies to use COFC over TOFC... 

Dave what is your estimate of the railroads market share, % of units, in the intercity movment of dry fans.  100%?, 10% or 1%. 

Are those "dry fans" made in China or the USA?

Gee Dave I guess you know the answer to the question but do not want to admit once again you are blowing smoke.  Perhaps you are more interested in spelling than railroading.  Frankly I am not interested in childish posts about spelling and I think few others posting here are either.

Who said anything about spelling?  I proofread your post, and you have no spelling errors - every single word is spelled correctly!  That deserves a big A+!

Now, as for asking a question completely out of context.............

[TomDiehl]

But, what I would like to know, (with whatever honesty can be put forth) is what are, say MichaelSol's Strawbridge's, futurmodal's or TomDiehl's basis for the apparent expertise here.. are you guys railroad types, accountants, finance managers, or just very well versed in this particular arena?  I am not taking shots at anyone, just real curious that's all.  I have read many threads on this site, with the above taking a major part, so I am just wondering, that's all.

In addition to what I've posted on my profile (click on the user name in any entry to see their profile), I also conduct shop tours at the East Broad Top Railroad's 19th century style overhead shaft driven shops. Over the past 5 years, the Friends of the East Broad Top have been performing stabilization and repair work on the shops building as volunteer workers. Most of my knowledge of the current railroad scene comes from reading and what sounds logical from a business point of view. I also have a very accurate BS detector and with years of that experience, it's easy for me to sort out the substance from the "fluff and fog."

[Anonymous]

  

Gee, you'd think a dentist hit a nerve.  I mean look at that response.  It's unbelievable.   I guess the truth hurts.

And, as usual, Dave thinks he knows more than everybody - including the people at the Federal Reserve who write papers on economic issues. 

If someone (in this case, the Surface Transportation Board) disagrees with him, he dismisses them as "hacks".  And, as usual again, he rewrites history to suit his needs.

A clear example of his revision of history is when he references "forcing the BNSF to reduce its rates from two decades ago".  What the STB said was that the raillroads had achieved a productivity gains over a 20 year period and passed those productivity gains through to their customers because they clearly operate in a competitive environment.  Dave changes this around to something that happened 20 years ago instead of being an ongoing process over a 20 year period.

He rants about trucking further to rail terminals.  In doing so he ignors the absolute fact that before rail deregulation as much as 39% of Montana wheat was trucked much further distances to the Snake River barge terminals.  The efficiency improvements of the BNSF have reduced trucking distances, not increased them as he falsely claims.

Well, explain to us how the federales can so blatantly contradict themselves?  One agency states absurdly that railroads operate in a competitive environment, then reps from the MFR state that 30% of rail shippers are captive.  You cannot have captive customers and a competitive environment at the same time.  Clearly, the STB report is weighted by AAR influence, not by classical economists who argue intuitively that an integrated rail system is a natural monopoly.  If railroads "clearly" have competition, then clearly there'd be more than one rail service provider for every stretch of track, because the only way to have clear intramodal competition is to have more than one operator on the only rail connection most rail shippers have. 

This is the same guy who promotes the concept of "aggregation" when espousing the advantages of railroads, but conviently forgets about that key concept when stating his belief that trucks are competition for railroads.  Memo to Strawbridge:  Trucks do not haul aggregated units, they only haul single, sometimes double, and rarely triple units.  Ergo, a mode that cannot aggregate into large consists is no competition for the mode that can.

And despite Ken's allusion to throngs of trucks hauling grain to Lewiston from the nation's grain fields, the fact remains that it is the individual farmers who now have to truck their grain farther and farther to the nearest railhead across the nation, not just Montana.  There's a world of difference between farmer owned trucks and standard OTR truckers.  Rarely if ever did you have OTR outfits taking the grain straight from the farm to Lewiston.  Most of the time, the farmer would truck via his own rig to the nearest local elevator, and it is the elevator operators who would decide whether to ship their grain onward via carload rail or OTR truckload to Lewiston.  Then we get *deregulation* and UP and BN start abandoning the lines to the elevators in favor of 26 and 52 car shuttle train facilities, then they stop service to the shuttle facilities in favor of consolidated 110 unit train terminals.  While all this is happening, the railroads move from 220k to 264k to 286k cars, while at the same time lobbying the feds to restrict increases in truck GVW.  What you get is the loss of the intermediate elevators the OTR's used to patronize, and the OTR's aren't going to shorthaul themselves from the remaining elevators to the unit train loaders, neither are they going to drive out in the farmer's fields and take the grain from farm to unit train facility, sot the farmer ends up having to buy his own road worthy trucks just to get his grain from farm to unit train facility.  Despite Ken's *expertise* on farming and trucking in Montana and the PNW, the farmer generally doesn't have the time to drive his own OTR rig from farm to Lewiston if he's farming in Montana or North Dakota.

Get it through your head, Ken - today's farmers absolutely do have to truck their own grain in their own rigs exponentially farther today than 20 years ago, and this is entirely due to the railroads.  I should know - we farm, our neighbors all farm, and this is the reality that Ken ignores.

[bobwilcox]

..they are using their monopoly power to try and "nudge" trucking companies to use COFC over TOFC... 

Dave what is your estimate of the railroads market share, % of units, in the intercity movment of dry fans.  100%?, 10% or 1%. 

Are those "dry fans" made in China or the USA?

 

Gee Dave I guess you know the answer to the question but do not want to admit once again you are blowing smoke.  Perhaps you are more interested in spelling than railroading.  Frankly I am not interested in childish posts about spelling and I think few others posting here are either.

 

[Anonymous]

..they are using their monopoly power to try and "nudge" trucking companies to use COFC over TOFC... 

Dave what is your estimate of the railroads market share, % of units, in the intercity movment of dry fans.  100%?, 10% or 1%. 

Are those "dry fans" made in China or the USA?

 

[bobwilcox]

..they are using their monopoly power to try and "nudge" trucking companies to use COFC over TOFC... 

Dave what is your estimate of the railroads market share, % of units, in the intercity movment of dry fans.  100%?, 10% or 1%. 

[greyhounds]

The interesting part of these exchanges is how Stawbridge attacks legions of reports and studies by professionals with all sorts of relevant backgrounds, and can never cite a number, analysis or study that supports what he says. It always a simple litany of "wrong," "dumb" "troll", etc, etc.

"There is no rail monopoly." Both ICC and STB have handed down decisions that state the contrary in given markets.

All Right!  OK!  You want a citation, here's your sign:

http://minneapolisfed.org/pubs/fedgaz/03-11/tracks.cfm

This is from the Minneapolis Federal Reserve.  It basically refutes everything you've said.  

No, it actual upholds the contention that 30% or more of rail shippers are captive:

"Nationwide, as much as 30 percent of railroad revenue came from shipments transported at rates that exceeded the government threshold for warranting possible government review."

"Nonetheless, various government and industry sources note that the top five railroads control about 90 percent of the country's rail traffic, and that has a lot of shippers claiming they are the victim of market power wielded by railroads that are often the only transport option for commodities."

"...the GAO points out that “rail rates were generally higher in areas considered to have less railroad-to-railroad competition.” There is virtually no competition on the Great Falls line,.."

And it pretty well trashes that revenue/variable cost thingy you have been using.  It specifically cites a STB study that finds that "on the whole, the railroad industry clearly operates in a competitive environment".

That 2000 STB study focusses on the parts of the country where there is an assumption of intramodal competition among railroads.  In fact, the only part of the country where there is de facto intramodal competition is in the Midwest, where most terminal sites have up to 6 Class I's actually competing.  Some parts of the Northeast have at least 3 Class I's.  But for the rest of the country, it is at best a duopoly situation, with UP/BNSF in the West and NS/CSX in the East/Southeast.  And as is clearly evidenced by the MFR report, the Northern Tier has virtually no intramodal competition, which is why the counter to Ken's ignorant claims is the focal point of the report.

The problem with the STB's 2k report is that it assumes a drop in rates from two decades ago is *evidence* of an existence of competition, when in fact that so called drop in rates ostensibly provided for captive shippers is simply the threshhold of which a farm, co-op, or industrial production facility will have to cease operations altogether.  In that vein, the "competition" to which the STB refers is not true intramodal competition, but commodity price competition from overseas and the *competition* of potential shut down of the particular industry.  Since the STB is manned by rail industry hacks, it's spin on the analysis is not suprising.  But don't hold your breath waiting for Ken to admit this troubling fact.

Here's a passage from the Federal Reserve paper:

"The R/VC formula is also a crude measuring stick for determining market power, particularly given productivity improvements among railroads. For example, if revenue (from a commodity shipment) is $1.50, and the variable cost is $1, the R/VC is 150 percent. But if productivity enhancements are able to shave 50 cents off the carrier's variable cost, and that savings is passed on to shippers—and price trends suggest that has been happening for the last two decades—the R/VC ratio nonetheless goes over the threshold at 200 percent.

What the report doesn't say is that the initial productivity related rate decreases occured initially in the study period, then were subsequently jacked up to optimize the impact of the differential rate scenario.  To add insult to injury, the *productivity gains* mentioned may actually productivity decreases for the total Stateside supply chain.  Obviously, it is more *productive* to ship grain by unit train than by carload, at least for the railroad.  It is not more productive for the farmer, who now must truck his grain distances up to tenfold over that to the local elevator, as reluctantly cited in the article.....

"This model does create certain hardships—some farmers might have to truck crops longer distances to elevators, and some elevators will go out of business." 

Again, the article goes on to repeat the egregious falsehood that commodity price decreases to the consumer must be the result of railroad productivity gains, when in fact the drop in commodity prices to the consumer are the result of global competition, not railroad productivity gains "passed on" to the shippers.

The STB's 2000 report states that “while there are clearly instances where railroads retain a certain degree of pricing power, nearly all of the productivity gains have been passed to rail customers ... evidence that, on the whole, the railroad industry clearly operates in a competitive environment.”

As I have shown above, it ain't intramodal competition, it ain't even intermodal competition that has resulted in ostensible rail rate reductions over the last two decades.  It is global commodity price competition and the subsequent spector of domestic industry shut down potential that has on average resulted in lower rail rates.  Of course, when it comes to drawing conclusions, the STB conviently muddles the stark contrast in rates presented by the differential pricing model.

As I've pointed out time and again to no avail, it makes no matter to a captive shipper that his real rail rate may have dropped by 10%, 20%, or so, when (1) the rates for his competitor who happens to have real intramodal rail competition available has dropped by much more than his did due to the inequities of differential pricing, (2) his total transportation costs Stateside have actually increased due to the need to have to truck his product longer and longer distances to the nearest service provided railhead, and (3) global pricing pressures on his cultivated product have forced said commodity price to go down.

These are facts that Ken and others with similar tunnel vision do not have the intellectual capacity to grasp. 

"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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