"Open Access" and regulation of railroad freight rates.

[Anonymous]

Well, then, there is nothing left to discuss, is there?  If you insist on using your own definitions - no matter how generally unaccepted they are -, then "by definition", you can't be wrong in anything that you say.

     Methinks the same type of definition contortions could be used to prove that the sky is, or isn't blue.

Well, the definition I use is quite straightforward, e.g. no gray area, no arbitrary R/VC standards, etc.  Either you have one physical connection to one Class I railroad, or you don't.

 

[JSGreen]

'specially if I get to define what is and isnt "Blue"!

[Murphy Siding]

Well, then, there is nothing left to discuss, is there?  If you insist on using your own definitions - no matter how generally unaccepted they are -, then "by definition", you can't be wrong in anything that you say.

     Methinks the same type of definition contortions could be used to prove that the sky is, or isn't blue.

[Datafever]

I think that we need to agree on what it means to be a captive rail shipper.  By definition of the Staggers Act, any shipper that pays over the 180% R/VC rate is a "potentially captive shipper".  So, any shipper that pays a rate of 180% R/VC or less is not a captive shipper.  In addition, the GAO report already referenced by greyhounds talks about the need to look at all competitive options, including trucks and barges.  Beyond that, I have found nothing that clearly defines exactly what a captive shipper is.

However, I think that it is safe to say that any shipper that falls into the potentially captive category on the basis of the rate that it is charged can be deemed to be a captive shipper if other shipping options are not available or are available only at a higher rate than the shipper already pays.

NOTE:  This would include shippers that use trucks for short-haul to a facility that then uses rail for long-haul transport.  In other words, for the example that I have previously used, those elevators may still be considered to be captive shippers IF the overall rate that they pay (truck + rail combined) is over 180% R/VC.  Why?  Because the cost of shipping by truck to final destination is probably prohibitive and not a viable option.

What does this mean.  Well, it partly means that futuremodal is somewhat right.  He just didn't do a very good job of wording it.  It also means that he is somewhat wrong.  All transportation options need to be taken into account in order to determine if a shipper is captive, and no shipper is captive if they pay less than 180% R/VC regardless of whether any other alternatives exist.

The GAO report comment still stands - it is difficult to determine the number of captive shippers.  In fact, when it is taken into account that shippers may be captive even though they do no direct business with a railroad, it becomes even more complicated to determine exactly which shippers are captive.

Again from my example, let's say that the elevator utilizes truck transport (short haul) to a facility for long haul rail transport.  Even if the long haul transport is charged at a rate that is under 180% R/VC, that still doesn't mean that the originating elevator's overall rate would not exceed 180% R/VC, which would make that elevator a captive shipper even though the facility to which it ships is not a captive shipper.  And the reverse situation also applies.  If the long haul transport is charged at a rate over 180% R/VC (making that facility a potentially captive shipper), that still doesn't mean that the originating elevator is a captive shipper when its overall costs are taken into account.

The GAO report is quite correct in its assessment.  I would even say that it understates the task.  It is probably impossible to determine the number of captive shippers.

I would counter that using rates as the determining factor is a bit misleading, since rates can change at a whim.  We all know about the long term coal hauling contracts that have come under renewal periods.  Mines and power plants that may have received rates at or below the 180% standard are now being foced to accept rates well over the 180% standard.  Since such studies tend to use older data, it is likely the GAO analysis is using the old rate structure which would then understate the number of captive shippers. 

Using the physical connection concept has more merit, because it is "fixed" without an actual construction or trackage rights amelioration.

You have to remember, there are current customers, and there are potential customers.  There may be thousands of facilities with one rail connection which are currently idle for lack of rail competition.  That's the shutdown factor, a variable not accounted for in the GAO's study.  Thus, using current active rate structures as the basis for determining captive shippers misses entirely these idle accounts.

Hey, the dead and comatose don't complain, do they?

Well, then, there is nothing left to discuss, is there?  If you insist on using your own definitions - no matter how generally unaccepted they are -, then "by definition", you can't be wrong in anything that you say.

[Anonymous]

I think that we need to agree on what it means to be a captive rail shipper.  By definition of the Staggers Act, any shipper that pays over the 180% R/VC rate is a "potentially captive shipper".  So, any shipper that pays a rate of 180% R/VC or less is not a captive shipper.  In addition, the GAO report already referenced by greyhounds talks about the need to look at all competitive options, including trucks and barges.  Beyond that, I have found nothing that clearly defines exactly what a captive shipper is.

However, I think that it is safe to say that any shipper that falls into the potentially captive category on the basis of the rate that it is charged can be deemed to be a captive shipper if other shipping options are not available or are available only at a higher rate than the shipper already pays.

NOTE:  This would include shippers that use trucks for short-haul to a facility that then uses rail for long-haul transport.  In other words, for the example that I have previously used, those elevators may still be considered to be captive shippers IF the overall rate that they pay (truck + rail combined) is over 180% R/VC.  Why?  Because the cost of shipping by truck to final destination is probably prohibitive and not a viable option.

What does this mean.  Well, it partly means that futuremodal is somewhat right.  He just didn't do a very good job of wording it.  It also means that he is somewhat wrong.  All transportation options need to be taken into account in order to determine if a shipper is captive, and no shipper is captive if they pay less than 180% R/VC regardless of whether any other alternatives exist.

The GAO report comment still stands - it is difficult to determine the number of captive shippers.  In fact, when it is taken into account that shippers may be captive even though they do no direct business with a railroad, it becomes even more complicated to determine exactly which shippers are captive.

Again from my example, let's say that the elevator utilizes truck transport (short haul) to a facility for long haul rail transport.  Even if the long haul transport is charged at a rate that is under 180% R/VC, that still doesn't mean that the originating elevator's overall rate would not exceed 180% R/VC, which would make that elevator a captive shipper even though the facility to which it ships is not a captive shipper.  And the reverse situation also applies.  If the long haul transport is charged at a rate over 180% R/VC (making that facility a potentially captive shipper), that still doesn't mean that the originating elevator is a captive shipper when its overall costs are taken into account.

The GAO report is quite correct in its assessment.  I would even say that it understates the task.  It is probably impossible to determine the number of captive shippers.

I would counter that using rates as the determining factor is a bit misleading, since rates can change at a whim.  We all know about the long term coal hauling contracts that have come under renewal periods.  Mines and power plants that may have received rates at or below the 180% standard are now being foced to accept rates well over the 180% standard.  Since such studies tend to use older data, it is likely the GAO analysis is using the old rate structure which would then understate the number of captive shippers. 

Using the physical connection concept has more merit, because it is "fixed" without an actual construction or trackage rights amelioration.

You have to remember, there are current customers, and there are potential customers.  There may be thousands of facilities with one rail connection which are currently idle for lack of rail competition.  That's the shutdown factor, a variable not accounted for in the GAO's study.  Thus, using current active rate structures as the basis for determining captive shippers misses entirely these idle accounts.

Hey, the dead and comatose don't complain, do they?

[Anonymous]

Even the GAO report notes an uncertainty about the number of captive shippers. 

" It is difficult to determine the number of captive shippers,.."

Difficult?  Sure, if one is too lazy to go out and make a physical count of all the rail shippers who have physical access to only one railroad.  I think if those beauracrats would get off their fat **** and make the physical counts, we'd find actual captive shippers to be much, much more than what the GAO is willing to admit.

Memo to GAO:  It's easy to find an actual count of captive rail shippers- any rail shipper with only one physical connection to a Class I rail service provider is captive.  Doesn't matter if they "can" ship by truck or barge, or use multiple modes, or not, or if they can modify production to fit the lack of desired rail service, or not.  Having only one physical connection is captive, period.

So, according to FM, the Exxon-Mobile refinery near Joliet, Illinois, which is served by barges on the commercially navigable Des Plaines River, is adjacent to Interstate 55, and has Lord Knows how many pipeline hook ins - is, acording to him, "captive" to the railroad.

It isn't.  A fool could see that.  FM doesn't see that.  Is there a status in life of being "less than a fool"?

Anyone with more than a double digit IQ could see that those different modes ship different products from that refinery for the most part, and those products are all bound for different places.  Barges are limited to waterways, so anything bound for non-waterway locales must go by rail or pipeline.  Pipelines can only carry certain bulk items, not the speciality items.  Thus for specific products, the refinery near Joliet is a captive situation if it only has one Class I rail connection.

Gee, we went over this a while back, when the double digit crowd erroneously claimed that pipelines and railroads carry the same things to the same places.  Either Ken forgot, or he just couldn't grasp it.

So yes, Ken, you are what you typed.

[CSSHEGEWISCH]

     Perhaps, a better definition of captive shipper is: any shipper served by only one railroad, who uses that fact as a tool to try and lower his rates from said railroad? ()

This is a good starting point.  I would add to the definition that said shipper is also attempting to use any political influence he may have to lower his rates and protect his own political assets from his customers (utility rates?).

[Murphy Siding]

     Perhaps, a better definition of captive shipper is: any shipper served by only one railroad, who uses that fact as a tool to try and lower his rates from said railroad? ()

[Datafever]

I think that we need to agree on what it means to be a captive rail shipper.  By definition of the Staggers Act, any shipper that pays over the 180% R/VC rate is a "potentially captive shipper".  So, any shipper that pays a rate of 180% R/VC or less is not a captive shipper.  In addition, the GAO report already referenced by greyhounds talks about the need to look at all competitive options, including trucks and barges.  Beyond that, I have found nothing that clearly defines exactly what a captive shipper is.

However, I think that it is safe to say that any shipper that falls into the potentially captive category on the basis of the rate that it is charged can be deemed to be a captive shipper if other shipping options are not available or are available only at a higher rate than the shipper already pays.

NOTE:  This would include shippers that use trucks for short-haul to a facility that then uses rail for long-haul transport.  In other words, for the example that I have previously used, those elevators may still be considered to be captive shippers IF the overall rate that they pay (truck + rail combined) is over 180% R/VC.  Why?  Because the cost of shipping by truck to final destination is probably prohibitive and not a viable option.

What does this mean.  Well, it partly means that futuremodal is somewhat right.  He just didn't do a very good job of wording it.  It also means that he is somewhat wrong.  All transportation options need to be taken into account in order to determine if a shipper is captive, and no shipper is captive if they pay less than 180% R/VC regardless of whether any other alternatives exist.

The GAO report comment still stands - it is difficult to determine the number of captive shippers.  In fact, when it is taken into account that shippers may be captive even though they do no direct business with a railroad, it becomes even more complicated to determine exactly which shippers are captive.

Again from my example, let's say that the elevator utilizes truck transport (short haul) to a facility for long haul rail transport.  Even if the long haul transport is charged at a rate that is under 180% R/VC, that still doesn't mean that the originating elevator's overall rate would not exceed 180% R/VC, which would make that elevator a captive shipper even though the facility to which it ships is not a captive shipper.  And the reverse situation also applies.  If the long haul transport is charged at a rate over 180% R/VC (making that facility a potentially captive shipper), that still doesn't mean that the originating elevator is a captive shipper when its overall costs are taken into account.

The GAO report is quite correct in its assessment.  I would even say that it understates the task.  It is probably impossible to determine the number of captive shippers.

[greyhounds]

Even the GAO report notes an uncertainty about the number of captive shippers. 

" It is difficult to determine the number of captive shippers,.."

Difficult?  Sure, if one is too lazy to go out and make a physical count of all the rail shippers who have physical access to only one railroad.  I think if those beauracrats would get off their fat **** and make the physical counts, we'd find actual captive shippers to be much, much more than what the GAO is willing to admit.

Memo to GAO:  It's easy to find an actual count of captive rail shippers- any rail shipper with only one physical connection to a Class I rail service provider is captive.  Doesn't matter if they "can" ship by truck or barge, or use multiple modes, or not, or if they can modify production to fit the lack of desired rail service, or not.  Having only one physical connection is captive, period.

So, according to FM, the Exxon-Mobile refinery near Joliet, Illinois, which is served by barges on the commercially navigable Des Plaines River, is adjacent to Interstate 55, and has Lord Knows how many pipeline hook ins - is, acording to him, "captive" to the railroad.

It isn't.  A fool could see that.  FM doesn't see that.  Is there a status in life of being "less than a fool"?

[greyhounds]

Ed, pay close attention - I have never said that trucks don't pay their way.  On the contrary, I have stated quite conclusively that truckers do pay most of the cost of maintaining inter-state highways (e.g. including but not limited to those blue and red shield Interstate Highways), with state and local highways being partially subsidized with property taxes, sales taxes, etc.  This segues into one of the myths being perpetrated on this forum and other railroad information venues - that trucks are subsidized while railroads are not.  Obviously, it's not a simple as that, there are complexities to the various levels (federal/state/local) of public road funding.  The truth is that on the federal level trucks do pay their fair share, and since a comparison of railroads to highways is mostly limited to the interstate corridors, at that level it can be argued that there is an equivalence of "paying their own way" among both truckers and railroads.  And since railroads more and more are using trucks as the intermediaries between railhead and dock, there is no partiality at the state and local funding levels either between trucking companies and rail companies.

If anyone would like to access some facts instead of FM's propaganda, the details are in the previously cited GAO report.  Pages 62-63. "...combination unit trucks paid 80 percent of their cost responsibility and the heaviest combinations paid (only) half of their cost responsibility."   Barges are also heavily subsidized.

The GAO concludes that this is a really bad idea.

Read it and realize it FM.  This is the second time it's been linked to in this thread.  Why don't you read the thing?

http://www.gao.gov/new.items/d0794.pdf

 

 

[Datafever]

Okay, I have managed to obtain a little more information.  The railroad agent (who is now 82 years old) maintains that it was not a case of the railroad raising rates.  Trucking companies managed to do a good job of marketing and selling a niche market - short haul transportation of grain to facilities that were able to negotiate lower rates because of volume (i.e. units trains), thereby providing an overall cost savings to the customers in question.  Which is kind of what I had been trying to say. 

The agent was given early retirement and the line was abandoned years later under a rule that allowed lines to be abandoned is there had been no traffic over the line for at least two years.

I don't know how you see it, but the agent and I see it this way - the trucking industry was able to undercut the railroad and drive them out of business (the business of providing short-haul transportation).  To me, that sounds like competition.

Now, I can't say that this was the case in a majority of cases, or even in a small minority of cases, but it was the case on this particular branch line.  Therefore, it is not always the case that only another railroad can be competition for a railroad that is servicing a "captive shipper".  Which is possibly why researchers have a difficult time in trying to determine exactly which shippers are captive and which are not.

You contradict yourself.  You say trucks were the competition, yet you admit the trucks were hauling to the railroad's unit train terminal.  Since the railroad didn't lose the business other than the carload traffic off the branchline, the trucks acted as collaberators with the railroad rather than competitors.

It's not competition if said *competitors* are delivering to the same railroad's facility.  Sounds more like the trucks were the non-union alternative to local carload.  All the railroad cared about is the unit train facility, how the grain got there wasn't important to them.  Remember, under carload service the branchline didn't have to pay for itself (e.g. variable costs + fixed cost of the branchline) since the branchline fed revenue loads out onto the mainline.  Then railroad management figured out that they could keep that same traffic on the mainline without the hassles of keeping the branchline up to speed - just build a consolidation terminal.  It's too bad that the railroads have used these tactics to force trucks onto our roads and highways, and it's also more of a burden for the former shippers on that branchline.  Question:  How many of those 5 elevators and 2 mills have since shut down?  I would be suprised if all the players are still alive and kicking.

Competition takes many forms.  First of all, I never said that the railroad kept the business.  It was possible that another railroad was able to pick up some of the business.  That makes for competition right there.

Second, if the competition is broken down into its various components, then the truckers were able to "win" the short haul portion of the business.  Net result is fewer bucks in the pockets of the railroad and more bucks in the pockets of the truckers.  That's what competition is.

But from the standpoint of the shipper - which is really the only view that really matters - the truckers were a viable alternative to the railroad.  Ergo, competition.  Whether the truckers took the product all the way to final destination or not is quite irrelevant.

P.s.  Two of the elevators have closed.  The lumber yards are both still open.
P.P.S.S.  At least one of those closures had nothing to do with the rail/truck situation.  As it turns out, the elevator manager who was my next door neighbor was also skimming off the top.  I found out about that years later.  He was fired and business was so broke that the association decided to split and merge with the neighboring towns' associations.

[Datafever]

That was interesting.....I suppose one could then approach the argument about how if trucks had to pay for the road they were driving on perhaps this would have leveled the playing field with the railroads.  Railroads had to pay for their land, maintenance, and so on while trucks get to drive on a big federal subsidy - the road.

Well, just to be a stick in the mud and point out the other side, it could also be argued that government ownership of the railroad infrastructure would be an equally acceptable solution.  It isn't a stance that I would take, but...

Not the stance I would take either but I see your point.  In other words, federalize the system, right?  I think we would see disaster on a grand scale.  Part of the reason railroads are doing so well now is that they are money making machines in a market - they survive because they trim and expand at will were needed in order to maximize their profits.  Give this control to the government (just like the ICC before Staggers) and you will have a rash of bankruptcies and the like - just like the 70's. 

Let me throw this hypothetical out there:

Let's say that the government said that trucks must pay their way on the road system - and I don't mean a small increase in their license fee, I mean someone actually sits down and figures out what a truck will do to a road during it's lifetime and how much it will cost to fix it.  Then let's say that they charge trucks accordingly (in other words - the truck is paying for the infrastructure as if it owned the portion affected by the truck).  Basically leveling the playing field with the railroads, so to speak.

Railroads already do this with their infrastructure - all the track, signals, land, etc. is bought and paid for.  Which one would survive?  Which one would turn a profit and continue to function with least amount of interruption?  Which one is attuned to using their resources in the most cost-effective fashion?

Short answer?  They both survive.  Even with a "level" playing field (if it were even possible to completely ascertain how to accomplish that), trucks have advantages that the rails cannot compete with, such as a road system that goes everywhere.

Trucks have a relatively low fixed cost.  The cost of the tractor, the trailor, etc.  That allows for many players to enter the game.  Railroads have a much higher fixed cost.  One locomotive does not make for even a small railroad.  But trucks have a high variable cost, while a railroad has a much lower variable cost.  That means that trucks can compete very well at the short haul.  They can even compete at the long haul for certain types of service.  But trains generally can provide cost efficiency at the long haul.  I guess you could say that intermodal has the potential of being the best of both worlds.

[solzrules]

That was interesting.....I suppose one could then approach the argument about how if trucks had to pay for the road they were driving on perhaps this would have leveled the playing field with the railroads.  Railroads had to pay for their land, maintenance, and so on while trucks get to drive on a big federal subsidy - the road.

Well, just to be a stick in the mud and point out the other side, it could also be argued that government ownership of the railroad infrastructure would be an equally acceptable solution.  It isn't a stance that I would take, but...

Not the stance I would take either but I see your point.  In other words, federalize the system, right?  I think we would see disaster on a grand scale.  Part of the reason railroads are doing so well now is that they are money making machines in a market - they survive because they trim and expand at will were needed in order to maximize their profits.  Give this control to the government (just like the ICC before Staggers) and you will have a rash of bankruptcies and the like - just like the 70's. 

Let me throw this hypothetical out there:

Let's say that the government said that trucks must pay their way on the road system - and I don't mean a small increase in their license fee, I mean someone actually sits down and figures out what a truck will do to a road during it's lifetime and how much it will cost to fix it.  Then let's say that they charge trucks accordingly (in other words - the truck is paying for the infrastructure as if it owned the portion affected by the truck).  Basically leveling the playing field with the railroads, so to speak.

Railroads already do this with their infrastructure - all the track, signals, land, etc. is bought and paid for.  Which one would survive?  Which one would turn a profit and continue to function with least amount of interruption?  Which one is attuned to using their resources in the most cost-effective fashion?

[Anonymous]

Same thing with alot of the produce yes there is that new train going to upstate New York however by the time they get it loaded and unloaded at each end a team truck could have been loaded made its run to Hunts Point in New York City dropped off and be on its way back to WA to PU another load.  I for one have made a run from Salinas CA to Greencastle PA in 48 hours with spring mix which is baby lettuce mix and that stuff is hotter than hot trucks do offer some advantages over trains.  And by the way Dave trucks do pay for the roads what do you think all the taxes they pay for on the fuel goes for right now the federal fuel tax on diesel alone is 33 cents a gallon plus the state taxes add all the other taxes the avarage trucke pays 30K a year in highway taxes a year alone that is BEFORE any income taxes.

Ed, pay close attention - I have never said that trucks don't pay their way.  On the contrary, I have stated quite conclusively that truckers do pay most of the cost of maintaining inter-state highways (e.g. including but not limited to those blue and red shield Interstate Highways), with state and local highways being partially subsidized with property taxes, sales taxes, etc.  This segues into one of the myths being perpetrated on this forum and other railroad information venues - that trucks are subsidized while railroads are not.  Obviously, it's not a simple as that, there are complexities to the various levels (federal/state/local) of public road funding.  The truth is that on the federal level trucks do pay their fair share, and since a comparison of railroads to highways is mostly limited to the interstate corridors, at that level it can be argued that there is an equivalence of "paying their own way" among both truckers and railroads.  And since railroads more and more are using trucks as the intermediaries between railhead and dock, there is no partiality at the state and local funding levels either between trucking companies and rail companies.

[Anonymous]

    So, yes-the railroad did lose business to trucks.  To reach a different conclussion isn't being realistic.

Guess again, cluss!  If you read Datafever's explanation, the railroad kept the business via terminal consolidation.  The trucks just delivered to the unit train terminal to save the railroad the hassle of operating a marginal branchline.  It was the railroad's preference. 

So, no - the railroad did not lose business to trucks.  They simply utilized trucks to feed the consolidated terminal, e.g. the trucks acted as the railroad's cargo collection system.  The trucks were probably non-union, so there was a certain degree of labor cost reduction in the supply chain.

However, there was no increase in supply chain efficiency, rather a reduction.  Carload freight is still 3 to 4 times as fuel efficient as the largest trucks out there, and even with unit train consolidation there is no reason carload's cannot be aggregated into unit train configs. 

A shortline outfit (read:  non-union) probably could have run the line profitably, but this was pre-Staggers.

[Anonymous]

Okay, I have managed to obtain a little more information.  The railroad agent (who is now 82 years old) maintains that it was not a case of the railroad raising rates.  Trucking companies managed to do a good job of marketing and selling a niche market - short haul transportation of grain to facilities that were able to negotiate lower rates because of volume (i.e. units trains), thereby providing an overall cost savings to the customers in question.  Which is kind of what I had been trying to say. 

The agent was given early retirement and the line was abandoned years later under a rule that allowed lines to be abandoned is there had been no traffic over the line for at least two years.

I don't know how you see it, but the agent and I see it this way - the trucking industry was able to undercut the railroad and drive them out of business (the business of providing short-haul transportation).  To me, that sounds like competition.

Now, I can't say that this was the case in a majority of cases, or even in a small minority of cases, but it was the case on this particular branch line.  Therefore, it is not always the case that only another railroad can be competition for a railroad that is servicing a "captive shipper".  Which is possibly why researchers have a difficult time in trying to determine exactly which shippers are captive and which are not.

You contradict yourself.  You say trucks were the competition, yet you admit the trucks were hauling to the railroad's unit train terminal.  Since the railroad didn't lose the business other than the carload traffic off the branchline, the trucks acted as collaberators with the railroad rather than competitors.

It's not competition if said *competitors* are delivering to the same railroad's facility.  Sounds more like the trucks were the non-union alternative to local carload.  All the railroad cared about is the unit train facility, how the grain got there wasn't important to them.  Remember, under carload service the branchline didn't have to pay for itself (e.g. variable costs + fixed cost of the branchline) since the branchline fed revenue loads out onto the mainline.  Then railroad management figured out that they could keep that same traffic on the mainline without the hassles of keeping the branchline up to speed - just build a consolidation terminal.  It's too bad that the railroads have used these tactics to force trucks onto our roads and highways, and it's also more of a burden for the former shippers on that branchline.  Question:  How many of those 5 elevators and 2 mills have since shut down?  I would be suprised if all the players are still alive and kicking.

[edbenton]

Same thing with alot of the produce yes there is that new train going to upstate New York however by the time they get it loaded and unloaded at each end a team truck could have been loaded made its run to Hunts Point in New York City dropped off and be on its way back to WA to PU another load.  I for one have made a run from Salinas CA to Greencastle PA in 48 hours with spring mix which is baby lettuce mix and that stuff is hotter than hot trucks do offer some advantages over trains.  And by the way Dave trucks do pay for the roads what do you think all the taxes they pay for on the fuel goes for right now the federal fuel tax on diesel alone is 33 cents a gallon plus the state taxes add all the other taxes the avarage trucke pays 30K a year in highway taxes a year alone that is BEFORE any income taxes.

[greyhounds]

Oh, I'm twisting words?

Let's look at some basic facts.  Feel free to disagree with any if you so choose:

1.  Railroads are better at the long haul.  Agree or disagree?

It depends.

2.  Trucks are better at the short haul.  Agree or disagree?

It depends.

3.  Amending #'s 1 and 2 above, railroad unit trains are better at the short haul than trucks.  Agree or disagree?

They can be, but it's situation specific.

4.  Specific to your anecdotal example, the likelyhood that the truck hauls were long hauls is zero percent.  Agree or disagree?

5.  The likelyhood is that boxcar grain shipments were anything but prefered by mainline managers and grain terminal handlers.  Agree or disagree?

Disagree, if they preferred carboxes, they wouldn't have switched to trucks.

6.  By your own admission, it is likely that the railroad in question kept the longhaul, therefore trucks did not take this business from the railroad.  Agree or disagree?

How do you know the grain moved a long distance?  What do you define as a long distance?  Most US grain never gets in a railcar.  (rail market share of grain is 32%) Most grain is trucked to a river terminal or a processor that turns it into flour, animal feed. ethanol, whatever.  It's a low value commodity that can't support much in the way of transportation costs.

What you've got to realize is that the branch line/small country elevator grain gathering system was built when farmers moved the grain out of the fields with a team of horses pulling a wagon.  (I grew up in Mason County, IL - which had around 14,000 folks.  It was rural.  There was one farmer on the sand ground southwest of town who still used draft horses.  I remember seeing his team and wagon in line with the trucks to unload at the Rickett Grain Company.  This would have been about 1960.)

True story told to me by my father.  Happened before I happened.  He was harvesting his corn.  He had my mother driving the team while he walked through the corn throwing the ears into the wagon. 

 Pull the ears of the stalks by hand and give 'em a toss in to the horse drawn wagon.  Hell of a way to harvest corn.  But it was the best system available.

So he gets careless, lets one fly, and clobbers my future mother right side of the head with an ear of Illinois field corn.  She cried. Years latter, he'd still laugh and she'd still get mad about the story.  He had married a "town girl" and had to put up with such softness. 

Today, the grain comes out of the fields in a tractor trailer.   Please don't tell me that it doesn't, I see it.  They're harvesting the Illinois corn and soybeans now and I drive by those fields every day.  I live about 1/4 mile from what was this year a soybean field.  I see the freaking semis in the fields taking on the loads.

Now don't you think that change from draft horses to tractor trailers changed the economics?   It did.  And it eliminated the need for very costly and very inefficient rail branches and the equally costly and inefficient small country elevator system.  That's why those branches and elevators went away.  The more efficient trucks made 'em obsolete.  Railroads don't make money by not hauling freight.  They would have kept the business if they could.  But things changed, and the railroads had to adapt or die.

 

 

 

[Datafever]

That was interesting.....I suppose one could then approach the argument about how if trucks had to pay for the road they were driving on perhaps this would have leveled the playing field with the railroads.  Railroads had to pay for their land, maintenance, and so on while trucks get to drive on a big federal subsidy - the road.

Well, just to be a stick in the mud and point out the other side, it could also be argued that government ownership of the railroad infrastructure would be an equally acceptable solution.  It isn't a stance that I would take, but...

[Limitedclear]

The point is, the railroad didn't lose the business to trucks, it rather used available trucks to force consolidation of the terminal operations, and "massage" a loss of online business on the branch to eventually *show* the ICC that the line had no more customers.

Ergo, trucks were not the competition.

You sure have a way of twisting words to fit things into your own scenario.

Oh, I'm twisting words?

Let's look at some basic facts.  Feel free to disagree with any if you so choose:

1.  Railroads are better at the long haul.  Agree or disagree? DISAGREE

2.  Trucks are better at the short haul.  Agree or disagree? DISAGREE

3.  Amending #'s 1 and 2 above, railroad unit trains are better at the short haul than trucks.  Agree or disagree? AGREE

4.  Specific to your anecdotal example, the likelyhood that the truck hauls were long hauls is zero percent.  Agree or disagree? INSUFFICIENT INFORMATION TO FORM OPINION

5.  The likelyhood is that boxcar grain shipments were anything but prefered by mainline managers and grain terminal handlers.  Agree or disagree? INSUFFICIENT INFORMATION TO FORM OPINION

6.  By your own admission, it is likely that the railroad in question kept the longhaul, therefore trucks did not take this business from the railroad.  Agree or disagree?  DISAGREE

As usual FM you are engaging in gross over generalizations to fit a square peg in a round hole. It can be done, but it is very messy and not what was intended.

Concerning railroads and short hauls you should read George Betke's article in this month's RAILWAY AGE.

LC

 

[jeaton]

Don't disagree with anything he says as you will then be branded as a  ... liberal.

Me?  A liberal?  That's a real hoot!

Well, from Idaho Ronald Reagan looked like a liberal, so if it comes up don't take it too hard.

[solzrules]

Okay, I have managed to obtain a little more information.  The railroad agent (who is now 82 years old) maintains that it was not a case of the railroad raising rates.  Trucking companies managed to do a good job of marketing and selling a niche market - short haul transportation of grain to facilities that were able to negotiate lower rates because of volume (i.e. units trains), thereby providing an overall cost savings to the customers in question.  Which is kind of what I had been trying to say. 

The agent was given early retirement and the line was abandoned years later under a rule that allowed lines to be abandoned is there had been no traffic over the line for at least two years.

I don't know how you see it, but the agent and I see it this way - the trucking industry was able to undercut the railroad and drive them out of business (the business of providing short-haul transportation).  To me, that sounds like competition.

Now, I can't say that this was the case in a majority of cases, or even in a small minority of cases, but it was the case on this particular branch line.  Therefore, it is not always the case that only another railroad can be competition for a railroad that is servicing a "captive shipper".  Which is possibly why researchers have a difficult time in trying to determine exactly which shippers are captive and which are not.

That was interesting.....I suppose one could then approach the argument about how if trucks had to pay for the road they were driving on perhaps this would have leveled the playing field with the railroads.  Railroads had to pay for their land, maintenance, and so on while trucks get to drive on a big federal subsidy - the road.

[Datafever]

Okay, I have managed to obtain a little more information.  The railroad agent (who is now 82 years old) maintains that it was not a case of the railroad raising rates.  Trucking companies managed to do a good job of marketing and selling a niche market - short haul transportation of grain to facilities that were able to negotiate lower rates because of volume (i.e. units trains), thereby providing an overall cost savings to the customers in question.  Which is kind of what I had been trying to say. 

The agent was given early retirement and the line was abandoned years later under a rule that allowed lines to be abandoned is there had been no traffic over the line for at least two years.

I don't know how you see it, but the agent and I see it this way - the trucking industry was able to undercut the railroad and drive them out of business (the business of providing short-haul transportation).  To me, that sounds like competition.

Now, I can't say that this was the case in a majority of cases, or even in a small minority of cases, but it was the case on this particular branch line.  Therefore, it is not always the case that only another railroad can be competition for a railroad that is servicing a "captive shipper".  Which is possibly why researchers have a difficult time in trying to determine exactly which shippers are captive and which are not.

[Datafever]

Don't disagree with anything he says as you will then be branded as a ... liberal.

Me?  A liberal?  That's a real hoot!

[Datafever]

Take a branch line (about 50 miles long) that has 5 grain elevators (a fairly seasonal commodity) and 2 lumber yards (also a fairly seasonal commodity) as its only customers.  The longest train that I can ever recall seeing was probably 12 cars.  And that was a train that ran once a week.  It certainly would not take much to convince anyone that the line was unprofitable.  As long as the track was capable of maintaining speeds of 35 mph or so without maintenance, I reckon that the railroad was willing to just keep things at the status quo.  But with business not even paying the salary and expenses of the railroad agent (who drove that line every day), the engineer, and the conductor.  (Well, that might be a bit of an exaggeration.)

And therein comes the benefit of not having to pay for your own infrastructure costs directly.  A short haul trucker can move those goods faster and cheaper to get them to a facility which can produce enough volume to put together a unit train (which may or may not have been on the same railroad at that point - there was another railroad within 100 miles).

So, for those grain elevators (and the lumber yards), truckers were able to take the business away from the railroad for the short haul business.  Therefore, the truckers were in direct competition with the railroad in providing short haul services.

Oh, and railroads are not always better at the long haul.  Depends upon the commodity being moved.

[jeaton]

Datafever

Typical simpleminded use of a convential wisdom generalization to try to prove something.  The guy is really good.

Be warned.  Don't disagree with anything he says as you will then be branded as a (gasp) liberal.

 

[Anonymous]

The point is, the railroad didn't lose the business to trucks, it rather used available trucks to force consolidation of the terminal operations, and "massage" a loss of online business on the branch to eventually *show* the ICC that the line had no more customers.

Ergo, trucks were not the competition.

You sure have a way of twisting words to fit things into your own scenario.

Oh, I'm twisting words?

Let's look at some basic facts.  Feel free to disagree with any if you so choose:

1.  Railroads are better at the long haul.  Agree or disagree?

2.  Trucks are better at the short haul.  Agree or disagree?

3.  Amending #'s 1 and 2 above, railroad unit trains are better at the short haul than trucks.  Agree or disagree?

4.  Specific to your anecdotal example, the likelyhood that the truck hauls were long hauls is zero percent.  Agree or disagree?

5.  The likelyhood is that boxcar grain shipments were anything but prefered by mainline managers and grain terminal handlers.  Agree or disagree?

6.  By your own admission, it is likely that the railroad in question kept the longhaul, therefore trucks did not take this business from the railroad.  Agree or disagree?

[Datafever]

The point is, the railroad didn't lose the business to trucks, it rather used available trucks to force consolidation of the terminal operations, and "massage" a loss of online business on the branch to eventually *show* the ICC that the line had no more customers.

Ergo, trucks were not the competition.

You sure have a way of twisting words to fit things into your own scenario.

[Murphy Siding]

Boxcars!  That explains it.  Labor intensive to unload, less capacity than hoppers.  The likelyhood is that the line was just too light in the rail to support hoppers, and hoppers are prefered for unloading or transloading whether it be at a mill or ship loading facility.  The railroad in question probably used the backdoor method of abandonment - not actually filing for abandonment what with five active customers, but rather using rate manipulation vis-a-vis boxcar vs hopper to *encourage* the clients to truck their grain to another terminal on the same railroad that could handle hoppers.  That's the "matter of rates" to which your friend refers.

The point is, the railroad didn't lose the business to trucks, it rather used available trucks to force consolidation of the terminal operations, and "massage" a loss of online business on the branch to eventually *show* the ICC that the line had no more customers.

Ergo, trucks were not the competition.

     Boy, Dave, you're reading a lot into this!  There's no reason to read between the lines on this.  All the info is written on the lines.  The railroad did lose the business to trucks.  It lost it, because it couldn't be competitive, with the boxcar rates it offered.  If the railroad could have made money by lowering the *boxcar* rate to the *hopper* rate, as you infer,they would have.  The point is, they couldn't make money doing that,so they didn't do that.  At that given point, under those circmstances. the railroad lost the business to trucks, due to that "matter of rates".  The railroad *could* have kept all the business away from the trucks.  All they would have had to do was charge a nickel per carload.  That wouldn't profitable either.  So, yes-the railroad did lose business to trucks.  To reach a different conclussion isn't being realistic.