Datafever wrote: futuremodal wrote: Datafever wrote: futuremodal wrote: Datafever wrote: futuremodal wrote: 10,000 tons of coal are not going to move by highway. 250 containers bi-weekly are not going to move by highway. A million bushels of grain bought on the market is not going to move by highway. Not entirely accurate. Back in the 60's/70's, many grain elevators switched from rail transportation to truck transportation. The rail service could not compete with trucking rates. No, they didn't just "switch" per free market incentives. The railroads stopped providing timely service (kind of hard to compete in real time markets when the railroad can't get the hoppers you ordered until three weeks later), or they abandoned the line serving the rail shipper altogether. When rail shippers can get timely rail service at reasonable rates, they use it, because there is no other mode that can compete with railroads when railroads are running on all cylinders, metaphorically speaking. Well, the grain elevators that I know of, switched because of "free market incentives". The railroad did not stop anything - their service continued normally. The railroads agents were fairly ticked off at the elevator operators for switching to truck transportation. Unless you're talking about a relatively short haul for the truck transport, you're missing something. Could it be that the elevator in question was given incentive to truck their grain to another railroad's facility, or a barge facility? One thing that happened frequently during the abandonment years was that some line hauls became longer as the direct line was cut off by abandonment. This caused more circuituous routings, and subsequently higher rates to cover those higher direct costs. Other lines could not handle the "new" 264k cars, so you get incentives to truck to 264k compiant railheads. You may call that "free market", but I call it government sanctioned market skewing. Let me tell you what I know. On one branch line, during the late 60s to mid 70s, five elevators switched from rail transport to truck transport. This led to the abandonment of the branch line. The branch had been served by a weekly local and all grain hauled in box cars. One of the elevator managers was my next door neighbor. His position was that it was a matter of rates, and I have no reason to doubt him.Another elevator was located on a main line. Again, the switch was made from rail transport to truck transport. The RR agent and the elevator manager were next door neighbors, and after the switch to truck transport, the agent (retired by then) never spoke to the elevator manager again. It was my understanding that it was a matter of rates.In neither case was RR abandonment an issue in any decision to switch to truck transport. Where was the grain trucked to? I don't know. Not barge. Another railroad? Unlikely. To another elevator that was able to get volume discounts? Possibly.
futuremodal wrote: Datafever wrote: futuremodal wrote: Datafever wrote: futuremodal wrote: 10,000 tons of coal are not going to move by highway. 250 containers bi-weekly are not going to move by highway. A million bushels of grain bought on the market is not going to move by highway. Not entirely accurate. Back in the 60's/70's, many grain elevators switched from rail transportation to truck transportation. The rail service could not compete with trucking rates. No, they didn't just "switch" per free market incentives. The railroads stopped providing timely service (kind of hard to compete in real time markets when the railroad can't get the hoppers you ordered until three weeks later), or they abandoned the line serving the rail shipper altogether. When rail shippers can get timely rail service at reasonable rates, they use it, because there is no other mode that can compete with railroads when railroads are running on all cylinders, metaphorically speaking. Well, the grain elevators that I know of, switched because of "free market incentives". The railroad did not stop anything - their service continued normally. The railroads agents were fairly ticked off at the elevator operators for switching to truck transportation. Unless you're talking about a relatively short haul for the truck transport, you're missing something. Could it be that the elevator in question was given incentive to truck their grain to another railroad's facility, or a barge facility? One thing that happened frequently during the abandonment years was that some line hauls became longer as the direct line was cut off by abandonment. This caused more circuituous routings, and subsequently higher rates to cover those higher direct costs. Other lines could not handle the "new" 264k cars, so you get incentives to truck to 264k compiant railheads. You may call that "free market", but I call it government sanctioned market skewing.
Datafever wrote: futuremodal wrote: Datafever wrote: futuremodal wrote: 10,000 tons of coal are not going to move by highway. 250 containers bi-weekly are not going to move by highway. A million bushels of grain bought on the market is not going to move by highway. Not entirely accurate. Back in the 60's/70's, many grain elevators switched from rail transportation to truck transportation. The rail service could not compete with trucking rates. No, they didn't just "switch" per free market incentives. The railroads stopped providing timely service (kind of hard to compete in real time markets when the railroad can't get the hoppers you ordered until three weeks later), or they abandoned the line serving the rail shipper altogether. When rail shippers can get timely rail service at reasonable rates, they use it, because there is no other mode that can compete with railroads when railroads are running on all cylinders, metaphorically speaking. Well, the grain elevators that I know of, switched because of "free market incentives". The railroad did not stop anything - their service continued normally. The railroads agents were fairly ticked off at the elevator operators for switching to truck transportation.
futuremodal wrote: Datafever wrote: futuremodal wrote: 10,000 tons of coal are not going to move by highway. 250 containers bi-weekly are not going to move by highway. A million bushels of grain bought on the market is not going to move by highway. Not entirely accurate. Back in the 60's/70's, many grain elevators switched from rail transportation to truck transportation. The rail service could not compete with trucking rates. No, they didn't just "switch" per free market incentives. The railroads stopped providing timely service (kind of hard to compete in real time markets when the railroad can't get the hoppers you ordered until three weeks later), or they abandoned the line serving the rail shipper altogether. When rail shippers can get timely rail service at reasonable rates, they use it, because there is no other mode that can compete with railroads when railroads are running on all cylinders, metaphorically speaking.
Datafever wrote: futuremodal wrote: 10,000 tons of coal are not going to move by highway. 250 containers bi-weekly are not going to move by highway. A million bushels of grain bought on the market is not going to move by highway. Not entirely accurate. Back in the 60's/70's, many grain elevators switched from rail transportation to truck transportation. The rail service could not compete with trucking rates.
futuremodal wrote: 10,000 tons of coal are not going to move by highway. 250 containers bi-weekly are not going to move by highway. A million bushels of grain bought on the market is not going to move by highway.
10,000 tons of coal are not going to move by highway. 250 containers bi-weekly are not going to move by highway. A million bushels of grain bought on the market is not going to move by highway.
No, they didn't just "switch" per free market incentives. The railroads stopped providing timely service (kind of hard to compete in real time markets when the railroad can't get the hoppers you ordered until three weeks later), or they abandoned the line serving the rail shipper altogether.
When rail shippers can get timely rail service at reasonable rates, they use it, because there is no other mode that can compete with railroads when railroads are running on all cylinders, metaphorically speaking.
Unless you're talking about a relatively short haul for the truck transport, you're missing something. Could it be that the elevator in question was given incentive to truck their grain to another railroad's facility, or a barge facility?
One thing that happened frequently during the abandonment years was that some line hauls became longer as the direct line was cut off by abandonment. This caused more circuituous routings, and subsequently higher rates to cover those higher direct costs. Other lines could not handle the "new" 264k cars, so you get incentives to truck to 264k compiant railheads. You may call that "free market", but I call it government sanctioned market skewing.
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.
Okay, that does it..... I am going to read that GAO report, and see what the heck it is all about.... With the same antagonists going at it yet again, I guess I am going to have to reach my own conclusions about the document.
jeaton wrote: FM You are so squirrely that your comments go beyond funny. Your knowledge of the history of and the reasons for the shift of business from railroads to other modes is non-existent. The simple truth of the matter is that a huge portion of the modal shift came because rail carload based distribution had higher costs even though the rail rates were often well below the rates of the competing modes. A competent distribution manager doesn't see himself as buying some form of container-rail freight car, truck van, barge or air cargo hold. Rather he is buying space to hold his freight and move from one point to another at a speed and for a price that meets his needs. That is why your notion that there is no competition between modes is so bizarre.
FM
You are so squirrely that your comments go beyond funny. Your knowledge of the history of and the reasons for the shift of business from railroads to other modes is non-existent. The simple truth of the matter is that a huge portion of the modal shift came because rail carload based distribution had higher costs even though the rail rates were often well below the rates of the competing modes. A competent distribution manager doesn't see himself as buying some form of container-rail freight car, truck van, barge or air cargo hold. Rather he is buying space to hold his freight and move from one point to another at a speed and for a price that meets his needs. That is why your notion that there is no competition between modes is so bizarre.
Well, I'm talking to a liberal, so I guess such simple concepts will go right over your head.
Each mode has a particular advantage over the others, to which certain types of shipping needs will gravitate. We've gone over this countless times, yet when all is said and done there are certain folks on this forum that cannot mentally concieve of the need for this modal differentiation. You think that if a railroad stops service to a grain elevator, that elevator is just as well off by switching to trucks. It's not, and you should know that implicitly. Elevators that have lost rail service usually scrap by to survive, but eventually they shut down. That's because there are more costs involved in having to truck grain from an elevator to a shuttle facility and transload the grain from truck to bin to hoppers, than there is in moving that grain by carload to the same aggregation point as part of the shuttle consist.
Now, if trucks were true competition for rail service, wouldn't those elevators be thriving right now?
I suppose you will now tell me that with the tremendously enhanced competition that would come from open access rail would produce such great advancements in efficiency that rail service could match truck service. When you have it figured out just how one or several freight cars can make a passing move around another car or set of cars at any point along the rail line, let me know. I'll put up my farm to get the cash to invest in the system.
So how are those lines hosting multiple users (via trackage rights, et al) doing it now? Ever heard of sidings? CTC?
It is the ultimate in abject stupidity to say that an integrated rail system can support multiple users, but an OA rail system cannot.
greyhounds wrote: doghouse wrote: Open Access / Captive Shippers ... as long as the trains run! Doghouse, Although I do appreciate your aparent offer of a house, I am troubled by your attitude. That's not the objective. I think trains are one of the most interesting things on the planet. But one of the things that makes them interesting to me is their wonderful efficiency. I don't want trains for trains sake. When I look at a stack train or a shuttle grain train I admire its usefulness and productivity. There are people who want to turn trains into vehicles of subsidization for farmers and other elements of our society. I'd then look at them they way I look at any other government waste of our hard earned money.
doghouse wrote: Open Access / Captive Shippers ... as long as the trains run!
Open Access / Captive Shippers
... as long as the trains run!
Doghouse,
Although I do appreciate your aparent offer of a house, I am troubled by your attitude.
That's not the objective. I think trains are one of the most interesting things on the planet. But one of the things that makes them interesting to me is their wonderful efficiency. I don't want trains for trains sake.
When I look at a stack train or a shuttle grain train I admire its usefulness and productivity. There are people who want to turn trains into vehicles of subsidization for farmers and other elements of our society. I'd then look at them they way I look at any other government waste of our hard earned money.
Don,t worry, Grey. I,m a capitalist. Pure and simple. I live in a socialist state(Maine) and I see the damage it causes. But if we digress into a socialist nation, somehow or someway the trains will run.
Datafever wrote: wrote:...greyhounds has been intentionally misreading and misrepresenting the GAO report and its conclusions. He has done nothing else in his career but misrepresent facts.Can we please refrain from personal attacks and insults in this forum? Such statements are highly unprofessional and never add to the discussion at hand.
wrote:...greyhounds has been intentionally misreading and misrepresenting the GAO report and its conclusions. He has done nothing else in his career but misrepresent facts.
Well, I miised that one.
I've done "nothing else in my career but misrepresent facts?"
I deny that. Obviously. I have the traditional Christian belief that lying is a sin. But if I disagree with Mr. Sol "I have done nothing else in my career but misrepresent facts?"
What kind of mentality does he have to say that about another person?
So here's my decision. I'll not respond to any personal attacks by Mr. Sol. I'll just respond with facts and logic. And I'm confident where the chips will fall.
MichaelSol wrote: greyhounds wrote: This response is so "Sol". First, he slings mud and makes a false statement.... MichaelSol wrote: Unfortunately, this 2004 "study" has been upended both as out of date, and probably poorly researched, by the recent GAO report: There's nothing in the GAO report that "Upends" the Northwestern paper. It doesn't say that Open Acess is desireable or would be benificial. And to accuse the authors of "probably poorly researching" the study is frankly, disgusting. They didn't get to where they were by doing poor research. Then he goes off in another direction trying to misdirect the discussion: MichaelSol wrote: Furthermore, the report found that some areas with access to only one Class I railroad have higher percentages of traffic traveling at rates that exceed the statutory threshold for rate relief. "This situation may reflect reasonable economic practices by the railroads in an environment of excess demand, or it may represent an abuse of market power," GAO said. Alas, Sol did not go "off in another direction" -- the quote is from someone else. The quote is, to greyhounds' ultimate dismay, from other objective readers of the GAO report, which show, in fact, that greyhounds has been intentionally misreading and misrepresenting the GAO report and its conclusions. He has done nothing else in his career but misrepresent facts. If he were correct, then no hearings would be set for November 2, and the GAO would not have issued its report.
greyhounds wrote: This response is so "Sol". First, he slings mud and makes a false statement.... MichaelSol wrote: Unfortunately, this 2004 "study" has been upended both as out of date, and probably poorly researched, by the recent GAO report: There's nothing in the GAO report that "Upends" the Northwestern paper. It doesn't say that Open Acess is desireable or would be benificial. And to accuse the authors of "probably poorly researching" the study is frankly, disgusting. They didn't get to where they were by doing poor research. Then he goes off in another direction trying to misdirect the discussion: MichaelSol wrote: Furthermore, the report found that some areas with access to only one Class I railroad have higher percentages of traffic traveling at rates that exceed the statutory threshold for rate relief. "This situation may reflect reasonable economic practices by the railroads in an environment of excess demand, or it may represent an abuse of market power," GAO said.
This response is so "Sol".
First, he slings mud and makes a false statement....
MichaelSol wrote: Unfortunately, this 2004 "study" has been upended both as out of date, and probably poorly researched, by the recent GAO report:
Unfortunately, this 2004 "study" has been upended both as out of date, and probably poorly researched, by the recent GAO report:
There's nothing in the GAO report that "Upends" the Northwestern paper. It doesn't say that Open Acess is desireable or would be benificial. And to accuse the authors of "probably poorly researching" the study is frankly, disgusting. They didn't get to where they were by doing poor research.
Then he goes off in another direction trying to misdirect the discussion:
MichaelSol wrote: Furthermore, the report found that some areas with access to only one Class I railroad have higher percentages of traffic traveling at rates that exceed the statutory threshold for rate relief. "This situation may reflect reasonable economic practices by the railroads in an environment of excess demand, or it may represent an abuse of market power," GAO said.
Furthermore, the report found that some areas with access to only one Class I railroad have higher percentages of traffic traveling at rates that exceed the statutory threshold for rate relief. "This situation may reflect reasonable economic practices by the railroads in an environment of excess demand, or it may represent an abuse of market power," GAO said.
Alas, Sol did not go "off in another direction" -- the quote is from someone else.
The quote is, to greyhounds' ultimate dismay, from other objective readers of the GAO report, which show, in fact, that greyhounds has been intentionally misreading and misrepresenting the GAO report and its conclusions. He has done nothing else in his career but misrepresent facts.
If he were correct, then no hearings would be set for November 2, and the GAO would not have issued its report.
Not quite Mikey. The STB hearings are a product of political pressure created by shippers seeking lower rates at the railroad's expense. Ditto the GAO report. Such reports are requested by Congressional Committees or staff or both. The report merely codifies the political view it supports. Far from an objective academic study which tends to be much more balanced. What a surprise that the academics don't support your thesis...LOL...
LC
MichaelSol wrote: greyhounds wrote: And I don't know what makes you think they're "objective" other than that anyone who agrees with you will be considered "objective" by you. Of course, the fact that the GAO suggests exactly what captive shippers have been arguing makes it only subjectively "objective." GAO is transparently not "objective". And when does this charade end?
greyhounds wrote: And I don't know what makes you think they're "objective" other than that anyone who agrees with you will be considered "objective" by you.
Of course, the fact that the GAO suggests exactly what captive shippers have been arguing makes it only subjectively "objective." GAO is transparently not "objective".
And when does this charade end?
The GAO doesn't "suggest". It just presents facts and opinions from both sides. Trying to lay it all on the table so to speak.
It certainly doesn't contradict the Gallamore/Panzar paper as you falsely claimed.
Well, you did use the quote. To take us off in a different direction. And I don't know what makes you think they're "objective" other than that anyone who agrees with you will be considered "objective" by you.
As far as the hearing...Anybody can get a hearing. It's how lawyers get rich and politicians get publicity/votes.
MichaelSol wrote: Furthermore, the report found that some areas with access to only one Class I railroad have higher percentages of traffic traveling at rates that exceed the statutory threshold for rate relief. "This situation may reflect reasonable economic practices by the railroads in an environment of excess demand, or it may represent an abuse of market power," GAO said. The report found that a reduction in competitive options can have a significant effect on the rates railroads charge shippers. Comparing two routes for shipping the same commodity, but using a different number of rail carriers, can illustrate this effect. For example, GAO looked at two long-distance grain routes (from Minot, N.D., and Sioux Falls, S.D.) that both terminate at Portland, Ore., and found that both routes carry comparable tonnage, but the route originating in the Sioux Falls area is served by two Class I railroads, whereas the route from the Minot area is served by one Class I railroad. "The rates for the Minot route are roughly double the rates for the Sioux Falls route," said GAO.While competition between rail carriers is particularly important in some cases, in other cases, competition between rail and other transportation modes, such as trucks and barges, may be more important. Particularly for bulk commodities such as grain, when shipper locations can be served by barge transportation, rail rates will be lower relative to rail costs than on routes that are not conducive to barge competition, the study found. To test this theory, GAO examined the costs and revenues for two routes, one (from Champaign, Ill., to New Orleans) with rail and barge options, and the other (from Champaign to Atlanta) with just a rail option. The agency found that although both routes have the same origin, for shipping the same commodity over a comparable distance, the route with the barge option has consistently lower rates than the route with just rail service.
The report found that a reduction in competitive options can have a significant effect on the rates railroads charge shippers. Comparing two routes for shipping the same commodity, but using a different number of rail carriers, can illustrate this effect. For example, GAO looked at two long-distance grain routes (from Minot, N.D., and Sioux Falls, S.D.) that both terminate at Portland, Ore., and found that both routes carry comparable tonnage, but the route originating in the Sioux Falls area is served by two Class I railroads, whereas the route from the Minot area is served by one Class I railroad. "The rates for the Minot route are roughly double the rates for the Sioux Falls route," said GAO.While competition between rail carriers is particularly important in some cases, in other cases, competition between rail and other transportation modes, such as trucks and barges, may be more important. Particularly for bulk commodities such as grain, when shipper locations can be served by barge transportation, rail rates will be lower relative to rail costs than on routes that are not conducive to barge competition, the study found.
To test this theory, GAO examined the costs and revenues for two routes, one (from Champaign, Ill., to New Orleans) with rail and barge options, and the other (from Champaign to Atlanta) with just a rail option. The agency found that although both routes have the same origin, for shipping the same commodity over a comparable distance, the route with the barge option has consistently lower rates than the route with just rail service.
Well, Duh!
The Norhtwestern paper went into the desireability and need for such rail pricing in detail.
What would Sol have the government do?
Prohibit the railroad from competing with the barges to New Orleans? This would deny railroad service to the shippers and harm society.
Or, would he require the railroads serving the market to Atlanta (not the same company) reduce their rates because a different company made a different pricing decision?
What Gallamore and Panzar of Northwestern University clearly point out is that the railroads need to price some of their business at below average costs, but can not price all their business at below average costs. This is benificial to our society.
It extends the availability of rail service to customers who would otherwise not be able to use it while it generates the revenues the railroads need to keep operating. No one really gets hurt by this. There is no cross subsidization from one rail customer to another. This pricing method maximizes the benifits to our society as a whole.
And Gallamore and Panzar are very clear, we allow this benificial pricing system to continue or we eliminate private secor railroading the the U.S. Is that what Mr. Sol wants?
"We have met the enemy and he is us." Pogo Possum "We have met the anemone... and he is Russ." Bucky Katt "Prediction is very difficult, especially if it's about the future." Niels Bohr, Nobel laureate in physics
futuremodal wrote:10,000 tons of coal are not going to move by highway. 250 containers bi-weekly are not going to move by highway. A million bushels of grain bought on the market is not going to move by highway.
jeaton wrote: futuremodal wrote: jeaton wrote: 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. Ah yes, I see it now. Big fence around the plant with the only gate located where the tracks enter the property, railroad police prohibiting trucks from approaching, phone and data lines going only to the railroad offices, transportation buyer confined to his office. Maybe that is why one can find so many places where the rail siding has been torn out. Just got tired of being held captive by the railroad. Your narrow minded defination of captive shipper, i.e. physical connection to only one railroad, could very well cover the vast majority of rail shippers and receivers. In the matter of making a determination of market dominance, such a defination is about as useless as certain appendages on a boar hog. Kind of reminds me of the days when the Interstate Commerce Commision thought the only possible competition for one railroad was another railroad.
futuremodal wrote: jeaton wrote: 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.
jeaton wrote: Even the GAO report notes an uncertainty about the number of captive shippers. " It is difficult to determine the number of captive shippers,.."
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.
Ah yes, I see it now. Big fence around the plant with the only gate located where the tracks enter the property, railroad police prohibiting trucks from approaching, phone and data lines going only to the railroad offices, transportation buyer confined to his office. Maybe that is why one can find so many places where the rail siding has been torn out. Just got tired of being held captive by the railroad.
Your narrow minded defination of captive shipper, i.e. physical connection to only one railroad, could very well cover the vast majority of rail shippers and receivers. In the matter of making a determination of market dominance, such a defination is about as useless as certain appendages on a boar hog. Kind of reminds me of the days when the Interstate Commerce Commision thought the only possible competition for one railroad was another railroad.
Ah yes, I see it now. If a man can push a wheelbarrow into the plant from an adjacent dirt road, then that represents *competition* for the one Class I connection, thus that plant *is not captive*. Hey, whatever it takes to keep the monopoly justification rolling along, huh?
You always ignore the modal differences that make the rail vs highway vs waterway debate so tangibly unique to each mode. Ergo, the only tangible competition for a railroad is another railroad or two.
Why? Because if one tried to do so, they would be shut out of their market - you can bet their competitor isn't moving such tonnage by truck or wheelbarrow.
Even carload is a tangible requirement for a firm's survival in this day of global competition for products. Do you think the plastics plant can survive on truckload delivery alone while the other plastics plants are using carload service?
That's the real exemplification of what being a captive rail shipper is all about - survival.
It'd be like you running a factory using kerosene lighting while your competitors are using electric lights. Sure, under your ridiculously broad definition of *competition* the kerosene lights are viable competition for electric lights, yet we all know what will happen if you insist on using kerosene lighting. Your plant will shut down, your workers laid off, and you will be bankrupt.
Which brings us to your other statement, that of the removed siding. Got news for ya lefty, that siding was removed because (A) the railroad no longer would provide realistic service, and/or (B) the plant could no longer compete with those plants that have better rail rates and services, and thus shut down production or converted to some other (read: non-rail shipping) production.
Not too may server farms and outlet malls need a rail siding these days!
Take a look at the gist of the Gallamore et al study, namely the example of the "stylized rail network" (p 18). In this example, the authors try to recreate the nuances of a captive shipper using various options for attaining some aspect of competition (e.g. SARR, et al). Their example shows two parallel railroads between Points B and C, and a captive customer of Railroad A on a line connecting Point A with Point B. With this example they make the point of Railroad A "needing" to charge captive rates to cover not only incremental costs of the line from Point A to Point B, but also the fixed cost of maintaining the line from Point A to Point B.
Make sense....
Except for the fact that most captive customers are actually located on active mainlines, which have plenty of traffic density to cover the network's fixed costs. A more appropriate example then of a captive shipper would be one located on one of the two railroads' mainlines between Point B and Point C. Therefore, there are no added fixed costs for serving the captive shipper. So why do these apologist economists allow for captive rates if the captive shipper in question does not add anything more in costs other than incrementalism?
That's the gist of the Montana problem - BNSF has two busy mainlines through Montana, yet because of the government sanctioned fiefdom, BNSF is allowed to charge those 300%+ rates without a corresponding justification for covering fixed costs, because there are no added fixed costs of shipping products in and out of Montana. All Montana rail shipments add nothing more than incremental costs to the system, yet those Montana rates seem meant for covering incremental and fixed costs of maintaining the BNSF rail network across Montana. Correspondingly, rates of the import intermodal traffic passing right through Montana are not even covering the incremental costs (e.g. <180% R/VC).
It is this market skewing, unmentioned in any such economic rail study, that is best remedied by introducing competitive access.
jeaton wrote: bobwilcox wrote:Here is a link to the GAO report : http://www.gao.gov/new.items/d0794.pdfSuggest all read this and Bob Galamore's report before plowing ahead. In addition to that one should also pay attention to the posting of FM as he has an undergraduate degree in economics from some school that doesn't even show on the charts and a certified genius IQ.
bobwilcox wrote:Here is a link to the GAO report : http://www.gao.gov/new.items/d0794.pdfSuggest all read this and Bob Galamore's report before plowing ahead.
In addition to that one should also pay attention to the posting of FM as he has an undergraduate degree in economics from some school that doesn't even show on the charts and a certified genius IQ.
You might want to differentiate between the growth in import intermodal and the loss of domestic production when you analyze those "reductions" in the less than 300% R/VC rail rates. Import intermodal has no captivity, and has been the largest volume growth sector for railroads - shouldn't suprise you that the 180% R/VC and below catagory has grown.
But of course, leave it to Jay to start with the flame war, even after an explicit request not to do so.
Quoting Michael Sol: "In fact, captive shippers being charged over 300% R/VC have increased from 4% to 6%. Whatever you want to call it, I call it a "widening gap.""
As I said, if you are going to suggest that some sort of gap is widening, in making your point it is useful to identify the two points which are separated by a gap.
Beyond that, it might be a good idea to drop the suggestion that the increase relates to the number of captive shippers. The 4 to 6 percent numbers actually is reported in Figure 17: Percentage of Tonnage by R/VC, 1984 and 2004. In that the following is presented:
1985
% of total tons moving at R/VC greater than 300: (1985) 4 (2004) 6
% of total tons moving at R/VC between 180 & 300 (1985) 36 (2004) 25
% of total tons moving at R/VC less than 180 (1985) 60 (2004) 69
Now you can make some comparisons between then and now if you want, but first it should be well to note that the table reflects all tonnage, not just tonnage from captive shippers.
In fact, if one moves on to Table 20 of the report there is some indication that some area served by more than one rail carrier may have seen increases in tonnage moving at rates with a R/VC exceeding 300%
Even the GAO report notes an uncertainty about the number of captive shippers. From Page 19 of the report:
"Concerns about competition and captivity in the railroad industry remain because traffic is concentrated in fewer railroads, although there is disagreement on the state of competition in the industry. It is difficult to determine the number of captive shippers, because proxy measures can overstate or understate captivity, but our analysis of available measures indicates that the extent of captivity is dropping. At the same time, the percentage of all industry traffic running substantially over the statutory threshold for rate relief has increased from about 4 percent of tonnage in 1985 to about 6 percent of tonnage in 2004. Furthermore, some economic areas with access to one Class I railroad have higher percentages of traffic traveling at rates that exceed the statutory threshold for rate relief."
Italics are mine.
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
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