futuremodal wrote: One other thing about this double stack vs piggyback debate, and it plays into the perception that US railroads favor foreign producers over domestic producers - While most dry vans are still manufactured in the US and North America, most domestic containers these days are manufactured overseas. Thus, the railroads' preference for COFC over TOFC ends up favoring foreign manufacturers over US manufacturers. It's bad enough that differential pricing schemes always cross subsidize foreign importers at the expense of captive US rail shippers. Now the railroads are adding to that anti-US aspect by favoring domestic double stack over TOFC. Well, that's par for the course, isn't it?
One other thing about this double stack vs piggyback debate, and it plays into the perception that US railroads favor foreign producers over domestic producers - While most dry vans are still manufactured in the US and North America, most domestic containers these days are manufactured overseas. Thus, the railroads' preference for COFC over TOFC ends up favoring foreign manufacturers over US manufacturers.
It's bad enough that differential pricing schemes always cross subsidize foreign importers at the expense of captive US rail shippers. Now the railroads are adding to that anti-US aspect by favoring domestic double stack over TOFC.
Well, that's par for the course, isn't it?
Ah, no.
There are very, very few "captive shippers". The GAO says about 6%. There aren't enough of them to cross subsidize much of anything.
And there is no "cross subsidy". The railroads aren't going to haul for a loss, and if it's not moving at a loss it's not being subsidized. Now some freight natually has a lower mark up (margin) than other freight. But that doesn't mean a thing in and of itself. A railroad can make more money hauling freight at a 10% mark up than it does at a 200% mark up - it depends on the volume.
Double stack rates are lower than TOFC rates because of two things: 1) the intermodal market is very competitive and there is a downward pressure on rates - so costs savings tend to get passed through, and 2) the expense of moving freight on the rail by double stacked containers is significantly less than moving freight TOFC. The perfectly natural result of these two things is that double stack rates are lower than TOFC rates.
There is nothing prohibiting a trucker from putting a high cube van on a train. He's not going to move it for the same price he can get on a double stack, but the trade off is for the trucker to analyze.
Double stack/domestic containerization revolutionized long haul freight movement in North America. We'd certainly be at grid-lock without it. When domestic intermodal service first began to develop, around 1921, it was a container based network. Then the asinine Federal Government got involved and issued an economic decree that stopped container development. The railroads had to develop a trailer based intermodal system to comply with the wrong headed regulations, not because it was the most economic system.
When the regulations were removed, in 1981, the system turned back to containerization. The result of natural market forces seeking the low cost solution.
CSXrules4eva wrote: futuremodal wrote: One other thing about this double stack vs piggyback debate, and it plays into the perception that US railroads favor foreign producers over domestic producers - While most dry vans are still manufactured in the US and North America, most domestic containers these days are manufactured overseas. Thus, the railroads' preference for COFC over TOFC ends up favoring foreign manufacturers over US manufacturers. It's bad enough that differential pricing schemes always cross subsidize foreign importers at the expense of captive US rail shippers. Now the railroads are adding to that anti-US aspect by favoring domestic double stack over TOFC. Well, that's par for the course, isn't it? I guess it must be cheaper for the railroads to ship COFC, due to the fact of what futuremodel stated in regards to railroads perfering to ship overseas containers instead of domestic. I do have a question as to why, it is cheaper to ship COFC vs. TOFC?? I'm a bit stumped here. Maybe this is one of the reasons why I don't seen anymore TOFC here in Philadelphia, it's mainly COFC. Some of the only times I see TOFC, is in a mixed consist here in Philly.
I guess it must be cheaper for the railroads to ship COFC, due to the fact of what futuremodel stated in regards to railroads perfering to ship overseas containers instead of domestic. I do have a question as to why, it is cheaper to ship COFC vs. TOFC?? I'm a bit stumped here. Maybe this is one of the reasons why I don't seen anymore TOFC here in Philadelphia, it's mainly COFC. Some of the only times I see TOFC, is in a mixed consist here in Philly.
The biggest drivers are equipment cost and teminal track capacity. A 5 platform spine car costs about as much as a 5 platform well car, so stacking can save about 1/2 in equipment costs. Loading track capacity is also a high cost item when it comes to expand a terminal, so stacking can help defer capital expenditures - and capital is in tight supply on all the RRs
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
oltmannd wrote: futuremodal wrote: most domestic containers these days are manufactured overseas. Really? By whom? How do they get them here? There's 95,000 53', 102" wide containers in UMLER. These are the backbone of the domestic stack service. As far as I know, most of these can't be stacked more than two high, so shipping them on container ships is problematic. Also, I've never heard of 102" wide OR 53' foot containers moving on container ships. JB Hunt's came from Wabash National. Scheider has some, too. From their press release. Container features include:· Same load configuration as a van trailer· Ability to be double-stacked when used on the rail· High-durability, lightweight painted/galvanized steel that is rust-resistant to protect transport of food, garments and other sensitive cargo· Easy loading, reduced product damage and smooth, clean look of non-corrugated, plywood-free interior sidewalls· 109 ½ inch interior height for greater loading capacity· Authorization for use on any railroad
futuremodal wrote: most domestic containers these days are manufactured overseas.
most domestic containers these days are manufactured overseas.
Really? By whom? How do they get them here?
There's 95,000 53', 102" wide containers in UMLER.
These are the backbone of the domestic stack service.
As far as I know, most of these can't be stacked more than two high, so shipping them on container ships is problematic. Also, I've never heard of 102" wide OR 53' foot containers moving on container ships.
JB Hunt's came from Wabash National. Scheider has some, too. From their press release.
Container features include:· Same load configuration as a van trailer· Ability to be double-stacked when used on the rail· High-durability, lightweight painted/galvanized steel that is rust-resistant to protect transport of food, garments and other sensitive cargo· Easy loading, reduced product damage and smooth, clean look of non-corrugated, plywood-free interior sidewalls· 109 ½ inch interior height for greater loading capacity· Authorization for use on any railroad
For what it's worth, Wabash has stopped manufacturing domestic containers as per their recent press release:
http://www.marketwire.com/mw/release_html_b1?release_id=113608
Quote of note from Bill Greubel, Chief Executive Officer at Wabash: "It has become increasingly clear that corrugated steel boxes from China and Korea adequately satisfy customer requirements at prices significantly lower than our container offering."
That leaves Schneider, until they decide to pull out. Anyone else left in the US to manufacture domestic containers?
greyhounds wrote: futuremodal wrote: One other thing about this double stack vs piggyback debate, and it plays into the perception that US railroads favor foreign producers over domestic producers - While most dry vans are still manufactured in the US and North America, most domestic containers these days are manufactured overseas. Thus, the railroads' preference for COFC over TOFC ends up favoring foreign manufacturers over US manufacturers. It's bad enough that differential pricing schemes always cross subsidize foreign importers at the expense of captive US rail shippers. Now the railroads are adding to that anti-US aspect by favoring domestic double stack over TOFC. Well, that's par for the course, isn't it? Ah, no. There are very, very few "captive shippers". The GAO says about 6%. There aren't enough of them to cross subsidize much of anything.
Wrong. Dead wrong. The GAO is using non specific data not necessarily related to the railroads' actual customer base. They, like you, count the existence of even a nearby gravel road as *proof* that said shipper has the option of trucking to counter the captivity to one Class I rail offerring. The GAO, like you, either cannot or will not allow for modal differentiation in determining best use analysis of the nation's transportation system.
In retrospect, how did they even come up with the 6% figure? Did they actually find some producers inaccessable to truckers?
We've been through this time and again, and the same dense skulls continue to classify the different modes into the same broad catagorization for the sake of muddying up the issue. Of course, if there were no captive shippers, there'd be no differential pricing, would there?
And there is no "cross subsidy".
Differential pricing is a cross subsidy. They are one and the same. You know this, you just don't want to acknowledge it.
Double stack/domestic containerization revolutionized long haul freight movement in North America. We'd certainly be at grid-lock without it. When domestic intermodal service first began to develop, around 1921, it was a container based network. Then the asinine Federal Government got involved and issued an economic decree that stopped container development. The railroads had to develop a trailer based intermodal system to comply with the wrong headed regulations, not because it was the most economic system. When the regulations were removed, in 1981, the system turned back to containerization. The result of natural market forces seeking the low cost solution.
The removal of regulations only allowed the railroads to limit the market reach to their POV. It is not a free market force that has resulted in domestic containerization, it is the monopoly power of the railroads that has forced domestic containerization on intermodal firms. It's also been a huge waste of capital for our economy, as we've basically had to build superfluous equipment to meet the railroads' demands (free of true free market forces) while continuing to meet the boots on the ground demand of shippers. The latter want more trucking capacity, pure and simple, because that's their bread and butter/meat and potatoes mode, with railroads being more of a side dish. They'll survive without railroads if need be, but in no way would they survive without trucking.
Increasing truck capacity is the only way our economy will keep rolling along. Domestic containerization limits that ability.
greyhounds wrote: Ah, no. There are very, very few "captive shippers". The GAO says about 6%. There aren't enough of them to cross subsidize much of anything.
False premise.
In 1981, Union Pacific noted that 5% of its shippers contributed 80% of its revenue. No correlation between shipper numbers and revenue.
The number of captive shippers is not the same thing as revenue contribution extracted from captive shippers because captive shippers make a substantially higher revenue contribution to the railroad. In 1996,
Movements of captive rail traffic came from 129 industry groups, broken down as follows for the top five:
STCC
112 .. Bituminous coal or lignite .. $3.52B
371...Motor vehicles or equipment..$1.1B
281...Industrial Inorganic or Organic chemicals ..$1.5B
282..Plastics materials or synthetic fibers..740M
011..Field crops...$607M
"Amount and Characteristics of 'Captive Rail Traffic'". [Abstract of June, 1998 study conducted by L.E. Peabody & Associates, Inc.]
These figures date from when GAO estimated that captive shippers accounted for only 4% per cent of all rail shippers.
At the current GAO estimated 6%, a proportionate increase in the revenue percentage extracted from captive shippers sugggests that, currently, the 6% of shippers that are captive are supplying 46.5% of the revenue received by U.S. railroads, or $18.2 Billion of 2004's industry freight revenues of $39.1 Billion. Net industry operating income in 2004 was $5.4 Billion, less than one-third the amount that only 6% of the shippers were generating.
While I am skeptical of the GAO numbers, the increase of 50% in the number of captive shippers may provide a useful guideline. Allocating costs, a compelling argument can be made that captive shippers are providing 100% of the net earnings of Class I railroads, even as the shippers enjoying competitive advantages over their trapped counterparts enjoy better service and benefit from the bulk of the capital investments paid for by the net operating income. That is the classic burden of cross subsidization that railroads argued justified deregulation -- so that they would not be compelled to cross-subsizide -- because, as railroads then eloquently argued, cross-subsidization distorts investment decisions and skews markets.
The average captive shipper pays approximately 244% of the R/VC, and the average non-captive shipper something between 97% and 115% of R/VC. After fully distributing costs, there is simply no way to argue that captive shippers are not cross-subsidizing a substantial number of non-captive shippers.
Shippers enjoying competitive pricing are getting one h*** of a deal for their transportation dollar. The shippers not so lucky are paying for that deal ....
futuremodal wrote: oltmannd wrote: futuremodal wrote: most domestic containers these days are manufactured overseas. Really? By whom? How do they get them here? There's 95,000 53', 102" wide containers in UMLER. These are the backbone of the domestic stack service. As far as I know, most of these can't be stacked more than two high, so shipping them on container ships is problematic. Also, I've never heard of 102" wide OR 53' foot containers moving on container ships. JB Hunt's came from Wabash National. Scheider has some, too. From their press release. Container features include:· Same load configuration as a van trailer· Ability to be double-stacked when used on the rail· High-durability, lightweight painted/galvanized steel that is rust-resistant to protect transport of food, garments and other sensitive cargo· Easy loading, reduced product damage and smooth, clean look of non-corrugated, plywood-free interior sidewalls· 109 ½ inch interior height for greater loading capacity· Authorization for use on any railroad For what it's worth, Wabash has stopped manufacturing domestic containers as per their recent press release: http://www.marketwire.com/mw/release_html_b1?release_id=113608 Quote of note from Bill Greubel, Chief Executive Officer at Wabash: "It has become increasingly clear that corrugated steel boxes from China and Korea adequately satisfy customer requirements at prices significantly lower than our container offering." That leaves Schneider, until they decide to pull out. Anyone else left in the US to manufacture domestic containers?
Stoughton, for one, built a lot of those aluminum EMP boxes. Don't know if they're still doing it, though.
http://www.uprr.com/customers/intermodal/emp/graphics/emp_s_2.gif
Also, Hyundai in Tijuana.
Also, looks like those steel 53' x 102" boxes have a payload only about 3-4% less than an aluminum box. http://www.pacerstack.com/services/equipment_notlogged_specs.html. If you're going to load out before you cube out, you're likely to select a shorter trailer to begin with, I suppose.
It appears that 53' 102" containers, whereever they come from, are the functional equal of their dry van counterparts. So, trailers offer no real advantage over containers.
oltmannd wrote: futuremodal wrote: oltmannd wrote: futuremodal wrote: most domestic containers these days are manufactured overseas. Really? By whom? How do they get them here? There's 95,000 53', 102" wide containers in UMLER. These are the backbone of the domestic stack service. As far as I know, most of these can't be stacked more than two high, so shipping them on container ships is problematic. Also, I've never heard of 102" wide OR 53' foot containers moving on container ships. JB Hunt's came from Wabash National. Scheider has some, too. From their press release. Container features include:· Same load configuration as a van trailer· Ability to be double-stacked when used on the rail· High-durability, lightweight painted/galvanized steel that is rust-resistant to protect transport of food, garments and other sensitive cargo· Easy loading, reduced product damage and smooth, clean look of non-corrugated, plywood-free interior sidewalls· 109 ½ inch interior height for greater loading capacity· Authorization for use on any railroad For what it's worth, Wabash has stopped manufacturing domestic containers as per their recent press release: http://www.marketwire.com/mw/release_html_b1?release_id=113608 Quote of note from Bill Greubel, Chief Executive Officer at Wabash: "It has become increasingly clear that corrugated steel boxes from China and Korea adequately satisfy customer requirements at prices significantly lower than our container offering." That leaves Schneider, until they decide to pull out. Anyone else left in the US to manufacture domestic containers? Stoughton, for one, built a lot of those aluminum EMP boxes. Don't know if they're still doing it, though. http://www.uprr.com/customers/intermodal/emp/graphics/emp_s_2.gif Also, Hyundai in Tijuana. Also, looks like those steel 53' x 102" boxes have a payload only about 3-4% less than an aluminum box. http://www.pacerstack.com/services/equipment_notlogged_specs.html. If you're going to load out before you cube out, you're likely to select a shorter trailer to begin with, I suppose. It appears that 53' 102" containers, whereever they come from, are the functional equal of their dry van counterparts. So, trailers offer no real advantage over containers.
Well, not sure what we're arguing about regarding where doms are made, now and in the future. Can you make an argument that we'll still have at least some domestic production of domestic containers in the near future, or are you willing to concede that we'll probably lose that market entirely in the not so distant future?
Regarding the capacity of doms vs dry vans, that difference too is something that will be become more pronounced in the near future, as dry van makers become more innovative in expanding capacity of the existing 53' 102" length/width limits. The obvious area for expansion is heightwise, something that is feasible with dry vans, not feasible with domestic containers unless railroads are willing to increase clearances beyond 20'2". Remember, such change can happen rapidly in the trucking industry, where intramodal competition is fierce, whereas in the railroad industry such change is multi-decades process due to the relative lack of intramodal competition. The end result will be either more TOFC or more OTR's with these higher capacity dry vans. My bet is that most will go OTR.
There's a reason trucking firms will only use domestic containers in the intermodal lanes, and not in general highway usage - domestic containers simply do not have the capacity of dry vans, e.g. the difference is more significant that you'd admit.
futuremodal wrote: oltmannd wrote: futuremodal wrote: oltmannd wrote: futuremodal wrote: most domestic containers these days are manufactured overseas. Really? By whom? How do they get them here? There's 95,000 53', 102" wide containers in UMLER. These are the backbone of the domestic stack service. As far as I know, most of these can't be stacked more than two high, so shipping them on container ships is problematic. Also, I've never heard of 102" wide OR 53' foot containers moving on container ships. JB Hunt's came from Wabash National. Scheider has some, too. From their press release. Container features include:· Same load configuration as a van trailer· Ability to be double-stacked when used on the rail· High-durability, lightweight painted/galvanized steel that is rust-resistant to protect transport of food, garments and other sensitive cargo· Easy loading, reduced product damage and smooth, clean look of non-corrugated, plywood-free interior sidewalls· 109 ½ inch interior height for greater loading capacity· Authorization for use on any railroad For what it's worth, Wabash has stopped manufacturing domestic containers as per their recent press release: http://www.marketwire.com/mw/release_html_b1?release_id=113608 Quote of note from Bill Greubel, Chief Executive Officer at Wabash: "It has become increasingly clear that corrugated steel boxes from China and Korea adequately satisfy customer requirements at prices significantly lower than our container offering." That leaves Schneider, until they decide to pull out. Anyone else left in the US to manufacture domestic containers? Stoughton, for one, built a lot of those aluminum EMP boxes. Don't know if they're still doing it, though. http://www.uprr.com/customers/intermodal/emp/graphics/emp_s_2.gif Also, Hyundai in Tijuana. Also, looks like those steel 53' x 102" boxes have a payload only about 3-4% less than an aluminum box. http://www.pacerstack.com/services/equipment_notlogged_specs.html. If you're going to load out before you cube out, you're likely to select a shorter trailer to begin with, I suppose. It appears that 53' 102" containers, whereever they come from, are the functional equal of their dry van counterparts. So, trailers offer no real advantage over containers. There's a reason trucking firms will only use domestic containers in the intermodal lanes, and not in general highway usage - domestic containers simply do not have the capacity of dry vans, e.g. the difference is more significant that you'd admit.
I'll admit it if you can explain it to me.
I see the same cube and about 2000# less capacity for 53' 102" box vs. van. Seems to me that a product would have to have exactly the right density for the van to have any advantage over the box. Too dense and you'd opt for a 48'er and get even more capacity. Not dense enough and it cubes out before you need the extra 2000# capcy.
Might RR rates be lower for containers than trailers? Could that be the reason truckers opt for the box on intermodal lanes?
oltmannd wrote: futuremodal wrote: oltmannd wrote: futuremodal wrote: oltmannd wrote: futuremodal wrote: most domestic containers these days are manufactured overseas. Really? By whom? How do they get them here? There's 95,000 53', 102" wide containers in UMLER. These are the backbone of the domestic stack service. As far as I know, most of these can't be stacked more than two high, so shipping them on container ships is problematic. Also, I've never heard of 102" wide OR 53' foot containers moving on container ships. JB Hunt's came from Wabash National. Scheider has some, too. From their press release. Container features include:· Same load configuration as a van trailer· Ability to be double-stacked when used on the rail· High-durability, lightweight painted/galvanized steel that is rust-resistant to protect transport of food, garments and other sensitive cargo· Easy loading, reduced product damage and smooth, clean look of non-corrugated, plywood-free interior sidewalls· 109 ½ inch interior height for greater loading capacity· Authorization for use on any railroad For what it's worth, Wabash has stopped manufacturing domestic containers as per their recent press release: http://www.marketwire.com/mw/release_html_b1?release_id=113608 Quote of note from Bill Greubel, Chief Executive Officer at Wabash: "It has become increasingly clear that corrugated steel boxes from China and Korea adequately satisfy customer requirements at prices significantly lower than our container offering." That leaves Schneider, until they decide to pull out. Anyone else left in the US to manufacture domestic containers? Stoughton, for one, built a lot of those aluminum EMP boxes. Don't know if they're still doing it, though. http://www.uprr.com/customers/intermodal/emp/graphics/emp_s_2.gif Also, Hyundai in Tijuana. Also, looks like those steel 53' x 102" boxes have a payload only about 3-4% less than an aluminum box. http://www.pacerstack.com/services/equipment_notlogged_specs.html. If you're going to load out before you cube out, you're likely to select a shorter trailer to begin with, I suppose. It appears that 53' 102" containers, whereever they come from, are the functional equal of their dry van counterparts. So, trailers offer no real advantage over containers. There's a reason trucking firms will only use domestic containers in the intermodal lanes, and not in general highway usage - domestic containers simply do not have the capacity of dry vans, e.g. the difference is more significant that you'd admit. I'll admit it if you can explain it to me. I see the same cube and about 2000# less capacity for 53' 102" box vs. van. Seems to me that a product would have to have exactly the right density for the van to have any advantage over the box. Too dense and you'd opt for a 48'er and get even more capacity. Not dense enough and it cubes out before you need the extra 2000# capcy. Might RR rates be lower for containers than trailers? Could that be the reason truckers opt for the box on intermodal lanes?
You're comparing the domestic container to a standard 53' dry van, not the newer ultra high cube dry vans. We should also include the double combo trailers when comparing/contrasting domestic containers. Unless the railroads can induce UPS to use those 28' containers (or a close equivalent, aka 30' or 31'), you won't see a 28' domestic container in regular service anytime soon. Those double 31's beat a domestic container hands down in cubic capacity per driver, and those trucking firms that dispatch the double and triple combo trailer units prefer TOFC for said trailers in intermodal usage, not domestic containers.
And yes, railroad rates for containers are lower than those for trailers, although a lot of that is due to priority TOFC vs usually non priority COFC. But yes, non priority TOFC is still priced higher than COFC. More daunting is the reduction of TOFC terminals available to trucking firms in deference to continued operation of COFC terminals in the same locales. Which brings us back around to the AAR and it's claims that it wants to "take trucks off the highways". If the AAR's idea of taking trucks off the highway means forcing the use of domestic containers for those trucking outfits that would opt for rail vs highway passage, then the AAR has missed the boat. TOFC is the only way to accomodate the predictable evolution into larger and larger dry vans without having to completely retool the railcar fleet, something you can't do with well cars (although using well cars for dry vans is perfectly functional and adaptable, as those 53' wells can accomodate 57' trailers and/or 10'6" high boxes on said dry vans.) But if we wanted to start using 57' containers or 10'6" high cube containers, the whole double stack fleet becomes superfluous, so we're stuck with the less efficient box for the sake of the railroads' internal efficiency obsession. Not a good way to keep up with national productivity goals.
BTW - Isn't Hyundai a Korean comglomerate? And isn't Tijuana down in Mexico? So when intermodal firms buy Hyundai domestic containers, we have neither income going to US stockholders, nor to US workers.
MichaelSol wrote: greyhounds wrote: Ah, no. There are very, very few "captive shippers". The GAO says about 6%. There aren't enough of them to cross subsidize much of anything. False premise. In 1981, Union Pacific noted that 5% of its shippers contributed 80% of its revenue. No correlation between shipper numbers and revenue. The number of captive shippers is not the same thing as revenue contribution extracted from captive shippers because captive shippers make a substantially higher revenue contribution to the railroad. In 1996, Over 31% of railroad industry revenue was generated by "captive rail traffic;" Captive rail traffic accounted for 600 million tons; Captive rail traffic produced $11 billion in revenue for the railroads; Movements of captive rail traffic came from 129 industry groups, broken down as follows for the top five: STCC 112 .. Bituminous coal or lignite .. $3.52B 371...Motor vehicles or equipment..$1.1B 281...Industrial Inorganic or Organic chemicals ..$1.5B 282..Plastics materials or synthetic fibers..740M 011..Field crops...$607M "Amount and Characteristics of 'Captive Rail Traffic'". [Abstract of June, 1998 study conducted by L.E. Peabody & Associates, Inc.] These figures date from when GAO estimated that captive shippers accounted for only 4% per cent of all rail shippers.
Oh, this is "good". Here's a link.
http://www.railcompetition.org/library/studyabstracts/199806captive.htm
The study cited by Mr. Sol concludes that traffic is "captive" if it exceeds a revenue to variable cost ratio of 180%. I looked at what Sol wrote and wondered how "motor vehicles" could be captive. I worked for a motor vehicle manufacturer, International Harvester, and we didn't ship any production by rail.
But his cited study is worse than that. It shows "freight fowarder traffic" as "captive". Heck, that's LTL - so according to Sol and his cited study, the railroads have "captive" LTL. They also have "captive" shipments of "aircraft and parts" and highway trailers.
A highway trailer can not be 'captive' to rail movement, it's silly.
Anyway, selecting the 180% level as an indicator of "captivity" will lead you to the conclusion Mr. Sol seeks. But it's totally bogus.
You can pick any arbitrary standard, write some BS, and arrive at any conclusion. The 180% level is simply an arbitrary "standard" that means nothing with respect to the "captivity" of the shipper. The BNSF could make 200% on a shuttle train originating 20 miles (Mendota, IL) from a barge terminal, but this study and Mr. Sol would claim the movement to be "captive" simplt because the railroad made a good buck on it.
Remeber, consultants get paid to produce studies that conclude what their clients want to be concluded.
greyhounds wrote: I worked for a motor vehicle manufacturer, International Harvester, and we didn't ship any production by rail.
I worked for a motor vehicle manufacturer, International Harvester, and we didn't ship any production by rail.
greyhounds: I looked at what Sol wrote and wondered how "motor vehicles" could be captive. I worked for a motor vehicle manufacturer, International Harvester, and we didn't ship any production by rail.
I looked at what Sol wrote and wondered how "motor vehicles" could be captive. I worked for a motor vehicle manufacturer, International Harvester, and we didn't ship any production by rail.
The study shows that $1.1 Billion of "Motor vehicles or Equipment is captive". A pretty small chunk of the total motor vehicle and parts market.
But tough if you are one of the producers in that chunk -- your competitors have a built-in advantage, and you are probably domestic, and they are likely foreign.
Notwithstanding the allegation that IHC did not ship by rail [three of our four Internationals were shipped by rail -- don't have the Line Ticket for the fourth in its file, and like erikem, my 1980 Scout was also shipped by rail], other motor vehicle manufacturers do most emphatically ship by rail. One of the advantages that new entries into domestic automotive production enjoy is their ability to select locations with competing rail lines available which gives them a competive advantage over established domestic plants (i.e. American manufacturers).
Toyota has a specific plant location policy to that effect.
Toyota has also done somewhat better than Navistar the past few years.
Strawbridge: But his cited study is worse than that. It shows "freight fowarder traffic" as "captive".
But his cited study is worse than that. It shows "freight fowarder traffic" as "captive".
The study does not show that freight forwarder traffic is captive. It shows that $19 Million in freight forwarder traffic is captive.
futuremodal wrote: oltmannd wrote: futuremodal wrote: oltmannd wrote: futuremodal wrote: oltmannd wrote: futuremodal wrote: most domestic containers these days are manufactured overseas. Really? By whom? How do they get them here? There's 95,000 53', 102" wide containers in UMLER. These are the backbone of the domestic stack service. As far as I know, most of these can't be stacked more than two high, so shipping them on container ships is problematic. Also, I've never heard of 102" wide OR 53' foot containers moving on container ships. JB Hunt's came from Wabash National. Scheider has some, too. From their press release. Container features include:· Same load configuration as a van trailer· Ability to be double-stacked when used on the rail· High-durability, lightweight painted/galvanized steel that is rust-resistant to protect transport of food, garments and other sensitive cargo· Easy loading, reduced product damage and smooth, clean look of non-corrugated, plywood-free interior sidewalls· 109 ½ inch interior height for greater loading capacity· Authorization for use on any railroad For what it's worth, Wabash has stopped manufacturing domestic containers as per their recent press release: http://www.marketwire.com/mw/release_html_b1?release_id=113608 Quote of note from Bill Greubel, Chief Executive Officer at Wabash: "It has become increasingly clear that corrugated steel boxes from China and Korea adequately satisfy customer requirements at prices significantly lower than our container offering." That leaves Schneider, until they decide to pull out. Anyone else left in the US to manufacture domestic containers? Stoughton, for one, built a lot of those aluminum EMP boxes. Don't know if they're still doing it, though. http://www.uprr.com/customers/intermodal/emp/graphics/emp_s_2.gif Also, Hyundai in Tijuana. Also, looks like those steel 53' x 102" boxes have a payload only about 3-4% less than an aluminum box. http://www.pacerstack.com/services/equipment_notlogged_specs.html. If you're going to load out before you cube out, you're likely to select a shorter trailer to begin with, I suppose. It appears that 53' 102" containers, whereever they come from, are the functional equal of their dry van counterparts. So, trailers offer no real advantage over containers. There's a reason trucking firms will only use domestic containers in the intermodal lanes, and not in general highway usage - domestic containers simply do not have the capacity of dry vans, e.g. the difference is more significant that you'd admit. I'll admit it if you can explain it to me. I see the same cube and about 2000# less capacity for 53' 102" box vs. van. Seems to me that a product would have to have exactly the right density for the van to have any advantage over the box. Too dense and you'd opt for a 48'er and get even more capacity. Not dense enough and it cubes out before you need the extra 2000# capcy. Might RR rates be lower for containers than trailers? Could that be the reason truckers opt for the box on intermodal lanes? You're comparing the domestic container to a standard 53' dry van, not the newer ultra high cube dry vans. We should also include the double combo trailers when comparing/contrasting domestic containers. Unless the railroads can induce UPS to use those 28' containers (or a close equivalent, aka 30' or 31'), you won't see a 28' domestic container in regular service anytime soon. Those double 31's beat a domestic container hands down in cubic capacity per driver, and those trucking firms that dispatch the double and triple combo trailer units prefer TOFC for said trailers in intermodal usage, not domestic containers. And yes, railroad rates for containers are lower than those for trailers, although a lot of that is due to priority TOFC vs usually non priority COFC. But yes, non priority TOFC is still priced higher than COFC. More daunting is the reduction of TOFC terminals available to trucking firms in deference to continued operation of COFC terminals in the same locales. Which brings us back around to the AAR and it's claims that it wants to "take trucks off the highways". If the AAR's idea of taking trucks off the highway means forcing the use of domestic containers for those trucking outfits that would opt for rail vs highway passage, then the AAR has missed the boat. TOFC is the only way to accomodate the predictable evolution into larger and larger dry vans without having to completely retool the railcar fleet, something you can't do with well cars (although using well cars for dry vans is perfectly functional and adaptable, as those 53' wells can accomodate 57' trailers and/or 10'6" high boxes on said dry vans.) But if we wanted to start using 57' containers or 10'6" high cube containers, the whole double stack fleet becomes superfluous, so we're stuck with the less efficient box for the sake of the railroads' internal efficiency obsession. Not a good way to keep up with national productivity goals. BTW - Isn't Hyundai a Korean comglomerate? And isn't Tijuana down in Mexico? So when intermodal firms buy Hyundai domestic containers, we have neither income going to US stockholders, nor to US workers.
I understand what you're saying but the vast majority of traffic I see moving on the highways, at least in the eas
futuremodal wrote: One other thing about this double stack vs piggyback debate, and it plays into the perception that US railroads favor foreign producers over domestic producers - \
One other thing about this double stack vs piggyback debate, and it plays into the perception that US railroads favor foreign producers over domestic producers - \
Funny, the only person I have ever seen say anthing about this "perception" is you.
Bert
An "expensive model collector"
n012944 wrote: futuremodal wrote: One other thing about this double stack vs piggyback debate, and it plays into the perception that US railroads favor foreign producers over domestic producers - \<>Funny, the only person I have ever seen say anthing about this "perception" is you. <>Bert
"Apr. 11, 2003
"Gov. Perry Touts Toyota Rail Legislation
"SB 15 Authorizes $15 Million For Rail Line Construction At Plant Site
"SAN ANTONIO – During a ceremonial public signing, Gov. Rick Perry today touted Senate Bill 15, which allows the Texas Department of Economic Development to use $15 million from its Smart Jobs Fund to build a second rail line linking the new Toyota plant site in south San Antonio to the nearest Burlington Northern connection.
"The estimated cost of the rail project is $20 million. The remaining $5 million will be funded through revenue bonds. A Bexar County Rural Rail Transportation District already has been created to undertake the project, which is expected to take 18 months to complete."
Even foreign corporations are aware that, in America, to be a captive shipper under current railroad pricing policy and the inability of the STB to enforce the Staggers Act is a death sentence. In this case, Texas taxpayers are willing to even subsidize foreign corporations to continue to destroy America's domestic auto industry.
MichaelSol wrote:If you review the ARC ["The Alliance for Rail Competition, whose members ship a wide variety of bulk, packaged and intermodal freight by rail"] and CURE websites, representing the major captive shipper industries, that's about all they talk about. If you review relevant Senate and House committee testimony over the past five years, you will see literally thousands of pages of testimony on the point.
Yea right, I will go read that right now However, FM, I guess I was wrong, other people are as off base as you. Sorry for not realizing that.
n012944 wrote: MichaelSol wrote:If you review the ARC ["The Alliance for Rail Competition, whose members ship a wide variety of bulk, packaged and intermodal freight by rail"] and CURE websites, representing the major captive shipper industries, that's about all they talk about. If you review relevant Senate and House committee testimony over the past five years, you will see literally thousands of pages of testimony on the point. Yea right, I will go read that right now However, FM, I guess I was wrong, other people are as off base as you. Sorry for not realizing that. Bert
Yep, the entire US manufacturing sector and their proponents are all off base, and only the railroad industry and their supporters are right. Par for the course embodied by this forum.
oltmannd wrote: I understand what you're saying but the vast majority of traffic I see moving on the highways, at least in the east, is in std 53' 102" vans. Doubles are very rare and triples are verboten. There will always be a niche for TOFC, particularly for UPS and LTL guys. The "railroads internal efficiency obsession" is an economically driven integral part of the supply chain. As long as optimizing RR costs don't sub-optimized the whole supply chain, then it's in everyone's best interest to do it. The RRs don't dream this stuff up on their own. In fact, they tend to fight change because they can't afford the capital. APL was the on that drove the change and is responsible for creating the domestic stack service. RR margins on domestic stack are better than on TOFC. Domestic stack is growing. TOFC is shrinking. Both services are still offered. Nobody is coercing anyone. The market has spoken. Draw your own conclusions. And, Tijuana is neither in Korea nor China.
I understand what you're saying but the vast majority of traffic I see moving on the highways, at least in the east, is in std 53' 102" vans. Doubles are very rare and triples are verboten.
There will always be a niche for TOFC, particularly for UPS and LTL guys.
The "railroads internal efficiency obsession" is an economically driven integral part of the supply chain. As long as optimizing RR costs don't sub-optimized the whole supply chain, then it's in everyone's best interest to do it. The RRs don't dream this stuff up on their own. In fact, they tend to fight change because they can't afford the capital. APL was the on that drove the change and is responsible for creating the domestic stack service.
RR margins on domestic stack are better than on TOFC. Domestic stack is growing. TOFC is shrinking. Both services are still offered. Nobody is coercing anyone. The market has spoken. Draw your own conclusions.
And, Tijuana is neither in Korea nor China.
So, when was Tijuana and Baja California admitted to the Union as the 51st State? Must of happened during the Lewinsky scandal!
What you're missing is that "efficiency obsession" is not an outgrowth of normal free market forces but of monopoly market skewing ("Omigosh, there he goes again!"). What the railroads are doing in my opinion is using their monopoly power to engage in social engineering over the supply chain by pushing domestic double stack at the expense of TOFC, simply because double stack pleases the bean counters at the Class I's, and despite the desires of the customers who wish to utilize a flexible, adaptable intermodal concept to improve their lot. TOFC is the logical choice of the supply chain if all things were equal in a free market sense - I believe you would see very little domestic double stack but a whole bunch more of TOFC if we had an open access rail system or some variation thereof, e.g. we'd actually see a dramatic shift off highways to rail with OA. I know, folks here are tired of OA being brought into the fray time and again by yours truly, but you can't discuss railroad market anomolies without addressing the lack of intramodal competition.
BTW - yes, domestic double stack is growing, but at the expense of TOFC, not at the expense of OTR. Despite high diesel fuel prices and the artificial restrictions placed on OTR outfits, very little traffic is shifting from the highways to rail. The trucking companies still control 80% of the revenue share of intercity freight. If you look at the number of TOFC ramps that have been shut down in the last few decades, you'd have to conclude that railroads are only taking money out of one pocket, sticking it another pocket, and convincing themselves they're making inroads into getting "trucks off the highways" with domestic double stack. If they really wanted to get trucks off the highways, they'd be opening new TOFC ramps instead of shutting them down.
futuremodal wrote: oltmannd wrote: I understand what you're saying but the vast majority of traffic I see moving on the highways, at least in the east, is in std 53' 102" vans. Doubles are very rare and triples are verboten. There will always be a niche for TOFC, particularly for UPS and LTL guys. The "railroads internal efficiency obsession" is an economically driven integral part of the supply chain. As long as optimizing RR costs don't sub-optimized the whole supply chain, then it's in everyone's best interest to do it. The RRs don't dream this stuff up on their own. In fact, they tend to fight change because they can't afford the capital. APL was the on that drove the change and is responsible for creating the domestic stack service. RR margins on domestic stack are better than on TOFC. Domestic stack is growing. TOFC is shrinking. Both services are still offered. Nobody is coercing anyone. The market has spoken. Draw your own conclusions. And, Tijuana is neither in Korea nor China. So, when was Tijuana and Baja California admitted to the Union as the 51st State? Must of happened during the Lewinsky scandal!. BTW - yes, domestic double stack is growing, but at the expense of TOFC, not at the expense of OTR.
So, when was Tijuana and Baja California admitted to the Union as the 51st State? Must of happened during the Lewinsky scandal!.
BTW - yes, domestic double stack is growing, but at the expense of TOFC, not at the expense of OTR.
I think we gave them Oklahoma or a old battleship or something in trade.
As far as truckload traffic conversion, check out NS's quarterly analyst presentations on the web. They show double digit growth in truckload traffic - trailer and containers combined, but broken out, the TOFC component is shinking (you can't see this in the presentation, but you already know this. The "domestic" traffic shown is the old, traditional IMC, RR controlled trailer business). This growth is in spite of fuel cost adjustments and rate hike that are attempting to keep the growth barely managable.
The first slide in the presentation also shows NS traffic growth exceeding intercity truckload growth and industrial production. If not highway conversions, then where is the new traffic coming from? Imports don't explain all of the gap.
I don't know of any TOFC ranps that are closing or have recently closed on NS....
Lionel collector, stuck in an N scaler's modelling space.
oltmannd wrote: futuremodal wrote: oltmannd wrote: I understand what you're saying but the vast majority of traffic I see moving on the highways, at least in the east, is in std 53' 102" vans. Doubles are very rare and triples are verboten. There will always be a niche for TOFC, particularly for UPS and LTL guys. The "railroads internal efficiency obsession" is an economically driven integral part of the supply chain. As long as optimizing RR costs don't sub-optimized the whole supply chain, then it's in everyone's best interest to do it. The RRs don't dream this stuff up on their own. In fact, they tend to fight change because they can't afford the capital. APL was the on that drove the change and is responsible for creating the domestic stack service. RR margins on domestic stack are better than on TOFC. Domestic stack is growing. TOFC is shrinking. Both services are still offered. Nobody is coercing anyone. The market has spoken. Draw your own conclusions. And, Tijuana is neither in Korea nor China. So, when was Tijuana and Baja California admitted to the Union as the 51st State? Must of happened during the Lewinsky scandal!. BTW - yes, domestic double stack is growing, but at the expense of TOFC, not at the expense of OTR. I think we gave them Oklahoma or a old battleship or something in trade. As far as truckload traffic conversion, check out NS's quarterly analyst presentations on the web. They show double digit growth in truckload traffic - trailer and containers combined, but broken out, the TOFC component is shinking (you can't see this in the presentation, but you already know this. The "domestic" traffic shown is the old, traditional IMC, RR controlled trailer business). This growth is in spite of fuel cost adjustments and rate hike that are attempting to keep the growth barely managable. The first slide in the presentation also shows NS traffic growth exceeding intercity truckload growth and industrial production. If not highway conversions, then where is the new traffic coming from? Imports don't explain all of the gap. I don't know of any TOFC ranps that are closing or have recently closed on NS....
Most of the ramp closings I know of are out west, e.g. Shelby MT, Nampa ID, etc. This is consistent with the trend toward consolidation.
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) Secondly, if the NS *growth* was coming from the highways, wouldn't the trucking stats show a decrease in growth, not an increase?
What it amounts to is what we all know from internal railroad trends - growth in railroad domestic containerization may be indicative of a shift from boxcar to container, not OTR truck to rail. If I'm right, then what we're seeing is an ironic decrease in load factor/productivity for the railroads, as the more efficient boxcar capacity is being replaced by the less efficient double stack capacity.
Remember my comments on the "restuffing" thread? I contend that it is nothing short of idiocy to restuff import goods from an ISO container into a domestic container at the inbound port - if indeed the labor costs and theft allowances are low enough to justify such actions, then it's better to restuff from the ISO into boxcars, and then unstuff back directly into dry vans or at a distribution warehouse on the destination end.
Seems to me that this restuffing concept from ISO into domestic containers is another way for the railroads to tout the *benefits* of domestic double stack service, when in fact it represents a reduction in actual productivity.
futuremodal wrote: 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)
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?
n012944 wrote: futuremodal wrote: 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?
I was wondering when someone was going to point that out. I guess I'm not the only one Michael will be reporting to Bergie that is following him around and pointing out the error in his examples.
MichaelSol wrote: greyhounds: I looked at what Sol wrote and wondered how "motor vehicles" could be captive. I worked for a motor vehicle manufacturer, International Harvester, and we didn't ship any production by rail. The study shows that $1.1 Billion of "Motor vehicles or Equipment is captive". A pretty small chunk of the total motor vehicle and parts market. But tough if you are one of the producers in that chunk -- your competitors have a built-in advantage, and you are probably domestic, and they are likely foreign. Notwithstanding the allegation that IHC did not ship by rail [three of our four Internationals were shipped by rail -- don't have the Line Ticket for the fourth in its file, and like erikem, my 1980 Scout was also shipped by rail], other motor vehicle manufacturers do most emphatically ship by rail. One of the advantages that new entries into domestic automotive production enjoy is their ability to select locations with competing rail lines available which gives them a competive advantage over established domestic plants (i.e. American manufacturers). Toyota has a specific plant location policy to that effect. Toyota has also done somewhat better than Navistar the past few years. Strawbridge: But his cited study is worse than that. It shows "freight fowarder traffic" as "captive". The study does not show that freight forwarder traffic is captive. It shows that $19 Million in freight forwarder traffic is captive.
Well, they quit making the Scout and closed the factory by the time I got there. It was a good vehicle but they didn't have anyplace to sell it. People buy SUV's from auto dealers and IH was a tad short on those. When I was at IH no vehicles were shipped by rail.
Did you also get a "Farmall" by rail in 1960?
As to the important part:
MichaelSol wrote: It shows that $19 Million in freight forwarder traffic is captive.
It shows that $19 Million in freight forwarder traffic is captive.
No, the study doesn't "show" that.
I have trouble figuring out Michael Sol. He makes all kinds of mistatements and misrepresentations. Why, I don't know.
1) He's a troll.
2) He doesn't understand
3) He's deliberately misrepresenting things.
I don't know which one. But I do know he's wrong again.
He's claiming that 31% of rail revenue comes from captive traffic and cites a study to support his false claim. But a simple reading of an abstract of his cited study informs that the study's authors counted any revenue that exceeded 180% of variable costs as being "Captive". In other words they 'cooked' the numbers to produce a desired result. Sol has tried to redefine things before to suit his purpose, and now he's redefining what a captive shipper is.
A rate above 180% of variable does not, in and of itself, indicate that a rail customer is "captive". The 180% benchmark is a floor, not a ceiling. Anything below that is considered competitive. A rail customer may not bring a rate complaint to the Surf Board if the rate is under 180% of the calculated (in a very crude way) of the railroads' variable costs.
If the rate exceeds 180% of the crudely calculated variable cost the customer may bring a complaint and attempt to prove market dominance on the part of the rail system in an effort to have the Federal Government order a rate reduction.
The study Sol is citing simply wrongly counted everything above 180% as captive. And now he's gonna' pound the table. And he's wrong again.
The assertation that the revenue to variable cost ratio is a "crude" mesurement doesn't come from me, it comes from a paper produced by the Minneapolis Federal Reserve Bank. Basically, it's a really stupid measurement. As both the Federal Reserve and General Accounting Office have observed, if a railroad improves efficiency, and passes every bit of the savings along to the customer, the ratio will go up, not down.
So, according to Sol's cited study ---
If a railroad has a rate that is at 175% of variable costs and:
1) Manages to improve its operations and reduce its costs, and
2) Passes every last penny of the savings along to its customer
The ratio will increase and Sol will now claim the business to be newly captive. In other words, he'd claim the business was now 'captive' because the railroad reduced its charges to the customer.
This is dumb, dumb, dumb. But I can't say why he does this.
In any event, even by "cooking" the numbers - the most they could show is that "31%" of rail revenue came from "captive" shippers". The real number is far, far below that. There is no rail monopoly. And there is no cross subsidy from "captive" shippers to competiive shippers.
There is no Earthly reason for railroad management to cross subsidize anything. That would be irrational on their part. And irrational corporate managers don't last very long at all.
I know that the ramps are disappearing but they are useless to load anything but a 89 footer, you need a mi-jack or equivalent to load spines and well cars. So, the fact that ramps are disappearing isn't always indicative of TOFC going down. But I agree that TOFC is a distant second to containers.
greyhounds: In any event, even by "cooking" the numbers - the most they could show is that "31%" of rail revenue came from "captive" shippers". The real number is far, far below that. There is no rail monopoly. And there is no cross subsidy from "captive" shippers to competiive shippers.
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.
So why does Strawbridge say such things? For the same reasons he says that a stock buyback with debt that results in a lower stock share price for fewer remaining shares of stock actually means that those stockholders are better off -- increased "shareholder value"! For the same reasons that he claimed that the Milwaukee gateways were useless, in the face of a reality that they were a roaring success. And that air resistance has a negligble effect on horsepower needs of trains. That trains and train cars are getting lighter and lighter. The list, by now, goes on and on.
Now, how does Strawbridge know that the "numbers are far, far below" the 31% revenue from captive shippers shown by the captive shipper studies?
This is a key to these exchanges -- he never says.
Never an analysis, never a citation to any study. Gosh, with all these statistical studies out there, you'd think somebody would do one that supports Strawbridge! Just never seems to be there though for some reason. Just conclusory statements accompanied by the usual "wrong," "dumb" "troll", etc.
I have offered multiple citations to sources. He has none.
Regarding the "Amount and Characteristics of 'Captive Rail Traffic'". [Abstract of June, 1998 study conducted by L.E. Peabody & Associates, Inc.], the L.E. Peabody website is at http://www.lepeabody.com/.
You can see that their experience far outweighs the National Spokesman for greyhounds. Is that significant? Look at their research experience: http://www.lepeabody.com/ResearchExpertise.html
Their staff profiles show an impressive breadth of experience: http://www.lepeabody.com/StaffProfiles.html.
Would you bet your investment dollars on what they say, or what Ken Strawbridge "says"?
However Strawbridge is right on one point. The 180% R/VC standard is indeed an arbitrary standard.
So is a 75 mph speed limit, so is 12" to a foot and 5,280 feet to a mile. So is the age of consent at age 16, so is a .08% blood alchohol content for a DUI. Usury laws set an arbitrary interest rate percentage on loans.
Society functions by setting standards. They are all, ultimately, arbitrary. Get on the wrong side of an arbitrary standard, you go to jail.
What Strawbridge proposes to replace such "arbitrary" standards, it is hard to tell.
In this instance, the original R/VC proposal was 160%. That was based on econometric studies which showed that, if a railroad was earning above that percentage, it demonstrated a lack of competition because competition tends to inherently limit profitability, and studies showed that happened to be a threshold above which which the profitability should be inviting competition. It would simply be difficult to be able to charge much above that threshold if competition were available.
At that time the total of fixed and variable costs for an average railroad movement was approximately 140% (between 130-150%) of the variable costs. The proposed threshold offered a 13% profit margin for railroads which at that time exceeded the cost of capital.
Railroads successfully argued for a 180% threshold instead. That offered an average of a 22% rate of return. That was seen to be more than sufficient to meet the rail industry's concerns that individual rate cases may have circumstances under which specific fixed costs caused the fixed plus variable cost to substantially exceed the 140% (FC+VC) average.
Recall, the variable costs involved are given -- whatever they are, the railroads get 'em -- 100% of the variable costs are entirely recovered by the formula. In no way, shape or form does a railroad "suffer" under the formula because of increased costs of anything associated with a particular service due to variable costs of that service.
Experienced analysis has shown that it is realistic to refer to the 180% R/VC threshold, in general, as the point at which there is little doubt that a shipper is captive. Indeed, econometricians now have 26 years of data to look at.
Railroads offering service in competitive corridors are charging between 96% and 130% of the R/VC. Where shippers are captive, the charges tend to be between 200% and 400%.
It may be true that 180% is "arbitrary" according to Strawbridge, but no one is complaining about rates that are 181% R/VC.
They are complaining about rates that are between 230% and 400% R/VC -- probable profit margins to the railroad of between 40% and 65% . Rates of return that simply could not exist in a competitive environment.
Recall, the Staggers Act represented a contract: deregulation in return for certain constraints.
It is not technically true, by the statutory definition, that a rate above 180% raises a presumption that a shipper is captive, only that it changes the burden of proof. The presumption is that rates are reasonable and no captivity exists below 180%. Above that, the burden of proof shifts.
But, and this is where Strawbridge misunderstands the regulation: a shipper may be captive (the railroad "market dominant") by virtue of the R/VC definition, but the rate may still be "reasonable." The Peabody study says nothing to the contrary when it says that captive shippers contribute nearly one third of railroad revenue.
However, for those experienced in the field, nearly every report, study or paper on the topic reaches nearly the same conclusion as the L. E. Peabody study: that, as a practical reality, the threshold defines "captivity."
That is the result of actual education and experience, rather than the Strawbridge approach based entirely on ideology.
The idea that nearly one-third of shipper revenue came from captive shippers was also reported by Business Week, "Railroads: Asleep at the Switch", April 2, 2001. Was Business Week being "wrong," "dumb" or a "troll"? If so, why so?
Why are national publications reporting this, but Strawbridge never challenges them? Why are economists reporting this, but Strawbridge never offers an opposing view from equally reputable experts? Not even the railroads have challenged these figures.
Likewise, Strawbridge presents no actual evidence to the contrary.
from Peabody & Associates study: "Movements of captive rail traffic were comprised of 129 different industry groups, broken down as follows: ... 441 Freight Forwarder Traffic $19 M"
"Movements of captive rail traffic were comprised of 129 different industry groups, broken down as follows:
...
MichaelSol: The study does not show that freight forwarder traffic is captive. It shows that $19 Million in freight forwarder traffic is captive.
Strawbridge: MichaelSol: It shows that $19 Million in freight forwarder traffic is captive. No, the study doesn't "show" that. I have trouble figuring out Michael Sol. He makes all kinds of mistatements and misrepresentations. Why, I don't know.
MichaelSol: It shows that $19 Million in freight forwarder traffic is captive.
Interesting.
TomDiehl wrote: n012944 wrote: futuremodal wrote: 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? I was wondering when someone was going to point that out. I guess I'm not the only one Michael will be reporting to Bergie that is following him around and pointing out the error in his examples.
What "error" are you pointing out and what is your basis for your claim?
And why are you crying about being reported to Bergie?
Your materially and intentionally false representations regarding dieselization studies that you pretended existed, and your plagarism on that topic was quite a while ago. And I did not contact anyone about that, other than what you read publicly on this forum.
Have you intentionally misrepresented something more recently that caused you to be contacted by the moderator? Well, what was it?
futuremodal wrote: oltmannd wrote: futuremodal wrote: oltmannd wrote: I understand what you're saying but the vast majority of traffic I see moving on the highways, at least in the east, is in std 53' 102" vans. Doubles are very rare and triples are verboten. There will always be a niche for TOFC, particularly for UPS and LTL guys. The "railroads internal efficiency obsession" is an economically driven integral part of the supply chain. As long as optimizing RR costs don't sub-optimized the whole supply chain, then it's in everyone's best interest to do it. The RRs don't dream this stuff up on their own. In fact, they tend to fight change because they can't afford the capital. APL was the on that drove the change and is responsible for creating the domestic stack service. RR margins on domestic stack are better than on TOFC. Domestic stack is growing. TOFC is shrinking. Both services are still offered. Nobody is coercing anyone. The market has spoken. Draw your own conclusions. And, Tijuana is neither in Korea nor China. So, when was Tijuana and Baja California admitted to the Union as the 51st State? Must of happened during the Lewinsky scandal!. BTW - yes, domestic double stack is growing, but at the expense of TOFC, not at the expense of OTR. I think we gave them Oklahoma or a old battleship or something in trade. As far as truckload traffic conversion, check out NS's quarterly analyst presentations on the web. They show double digit growth in truckload traffic - trailer and containers combined, but broken out, the TOFC component is shinking (you can't see this in the presentation, but you already know this. The "domestic" traffic shown is the old, traditional IMC, RR controlled trailer business). This growth is in spite of fuel cost adjustments and rate hike that are attempting to keep the growth barely managable. The first slide in the presentation also shows NS traffic growth exceeding intercity truckload growth and industrial production. If not highway conversions, then where is the new traffic coming from? Imports don't explain all of the gap. I don't know of any TOFC ranps that are closing or have recently closed on NS.... Most of the ramp closings I know of are out west, e.g. Shelby MT, Nampa ID, etc. This is consistent with the trend toward consolidation. 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) Secondly, if the NS *growth* was coming from the highways, wouldn't the trucking stats show a decrease in growth, not an increase? What it amounts to is what we all know from internal railroad trends - growth in railroad domestic containerization may be indicative of a shift from boxcar to container, not OTR truck to rail. If I'm right, then what we're seeing is an ironic decrease in load factor/productivity for the railroads, as the more efficient boxcar capacity is being replaced by the less efficient double stack capacity. Remember my comments on the "restuffing" thread? I contend that it is nothing short of idiocy to restuff import goods from an ISO container into a domestic container at the inbound port - if indeed the labor costs and theft allowances are low enough to justify such actions, then it's better to restuff from the ISO into boxcars, and then unstuff back directly into dry vans or at a distribution warehouse on the destination end. Seems to me that this restuffing concept from ISO into domestic containers is another way for the railroads to tout the *benefits* of domestic double stack service, when in fact it represents a reduction in actual productivity.
Your arguements are so 1970s! Box car diversions are rare these days. NS's words that goes with the slides will be spun favorable to NS, of course, but the basic stats presented speak for themselves. NS has presented these basic stats in the same format to Wall Street for many years - unchanged in format and methodology.
Can't argue with a guy who won't let facts get in the way of his position.
I have nothing more to add.
broncoman wrote: I know that the ramps are disappearing but they are useless to load anything but a 89 footer, you need a mi-jack or equivalent to load spines and well cars. So, the fact that ramps are disappearing isn't always indicative of TOFC going down. But I agree that TOFC is a distant second to containers.
RR jargon fades away slowly. Many folks call any intermodal terminal a "ramp" whether or not there is, or ever was an actual ramp at the intermodal terminal.
Last circus loading ramp on Conrail was Island Ave. in Pittsburgh which was replaced with a new, bigger terminal on the east side of town in Pitcairn in the mid 90s. (and, yes, FM, they still handle TOFC there.....)
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