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Government Sticking Too Much of Its Nose Into Transportation .. Again!

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Posted by Ulrich on Monday, July 12, 2021 11:58 AM

Was the problem PSR or too much focus on PSR? Likely the latter... The first  railroad to apply PSR has long since evolved toward a more balance model that gives more weight to customer service, sales, MOW etc.. If the focus is too much in one direction or the other the organization will suffer. I think that would be the takeaway.. don't focus too much on one metric (like the OR) to the exclusion of everything else. 

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Posted by zugmann on Monday, July 12, 2021 11:56 AM

greyhounds
It’s easier to fix problems in the private sector than in government.  And it’s much quicker too.

Well, I'm waiting.  Not holding my breath, though. 

Although the "good idea - poor implementation" seems like a cop-out to me. 

   The opinions expressed here represent my own and not those of my employer or any other railroad, company, or person.

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Posted by tree68 on Monday, July 12, 2021 11:56 AM

greyhounds
I see PSR as a good concept that has had some poor implementations. 

I would opine that it was a great idea until the investors got hold of it...

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Posted by greyhounds on Monday, July 12, 2021 11:50 AM

zugmann
No worries - I believe PSR will be seen as one of the Great Failures of the 21st Century. 

I’ll disagree.  I see PSR as a good concept that has had some poor implementations.  It will get fixed, or people will be fired.
 
It’s easier to fix problems in the private sector than in government.  And it’s much quicker too.
"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.
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Posted by zugmann on Monday, July 12, 2021 11:18 AM

No worries - I believe PSR will be seen as one of the Great Failures of the 21st Century. 

   The opinions expressed here represent my own and not those of my employer or any other railroad, company, or person.

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Posted by greyhounds on Monday, July 12, 2021 11:14 AM
Government economic regulation of the railroads was one of the Great Failures of the 20th Century.  I just hope we don’t repeat it.
"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.
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Posted by Steven Otte on Monday, July 12, 2021 9:25 AM

I know that it's impossible to divorce railroading from politics when discussing regulation, but let's at least try to keep this discussion on that topic, rather than veering into party politics and electoral speculation. Otherwise I'll have to do more than delete a handful of posts to keep this thread on topic.

--
Steven Otte, Model Railroader associate editor
sotte@kalmbach.com

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Posted by Ulrich on Monday, July 12, 2021 8:44 AM

charlie hebdo

 

 
MidlandMike

 

 
Ulrich

Often optics and perception outweigh the facts. There are excellent arguments to be made both for and against the merger based strictly on facts. Facts are facts.. but politics, personal biases, and other factors always come into play, and often the straight facts don't figure in at all.

 

 

 

Boards are not legislative bodies that make political decisions, but are administrative bodies that hold hearings, and any facts they consider should stand like evidence, otherwise they can be picked apart in appeals.  If the "straight facts" didnt figure at all, then they are malfeasant.

 

 

 

Very true.  A major question becomes the benefit analysis of more consolidation vs competition. I also wonder what our Canadian members would be saying if BNSF bought CP and UP bought CN? 

 

Bingo.. my point exactly.. Often the facts have very little to do with the decision. Any salesman will tell you the same.. facts don't sell.. emotions (especially fear of loss) do. 

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Posted by charlie hebdo on Monday, July 12, 2021 8:34 AM

MidlandMike

 

 
Ulrich

Often optics and perception outweigh the facts. There are excellent arguments to be made both for and against the merger based strictly on facts. Facts are facts.. but politics, personal biases, and other factors always come into play, and often the straight facts don't figure in at all.

 

 

 

Boards are not legislative bodies that make political decisions, but are administrative bodies that hold hearings, and any facts they consider should stand like evidence, otherwise they can be picked apart in appeals.  If the "straight facts" didnt figure at all, then they are malfeasant.

 

Very true.  A major question becomes the benefit analysis of more consolidation vs competition. I also wonder what our Canadian members would be saying if BNSF bought CP and UP bought CN? 

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Posted by Ulrich on Monday, July 12, 2021 8:11 AM

Straight facts will figure into this decision, but  likely other factors will dominate and lead to a decision apart from what the facts show. Biden, like Trump, is protectionist.. will that influence the decision? Even if the facts unequivocally show that the CN KCS combo is wonderful and efficient for all concerned parties we live in a "buy American.. America first" world, and against that backdrop, how does the proposed merger look? Boards are not legislative bodies, but they are politically driven just the same, and decisions they make will reflect the prevailing sentiment of the day, even when the bare facts might point in a different direction. 

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Posted by MidlandMike on Sunday, July 11, 2021 9:55 PM

Ulrich

Often optics and perception outweigh the facts. There are excellent arguments to be made both for and against the merger based strictly on facts. Facts are facts.. but politics, personal biases, and other factors always come into play, and often the straight facts don't figure in at all.

 

Boards are not legislative bodies that make political decisions, but are administrative bodies that hold hearings, and any facts they consider should stand like evidence, otherwise they can be picked apart in appeals.  If the "straight facts" didnt figure at all, then they are malfeasant.

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Posted by BaltACD on Saturday, July 10, 2021 9:22 PM

MidlandMike
 
BaltACD 
MidlandMike 
Ulrich
... CN and KCS are patiently awaiting the decision of the STB on whether their merger proposal will go ahead or not. Its up to five people to decide that.. they can give the thumbs up or the thumbs down. That's alot of power vested in five people..  

Those five people of the STB don't just go on a whim.  They still must follow the law, back their decission with facts, and are subject to legal challange. 

Are you referring to GOP style 'facts' or Democrat style 'facts'.  Between those two parties the 'facts' are mutually exclusive. 

I am referring to actual facts that will stand up to legal challanges.

Ah! Legal Challenges - someone has a even worse record in court than the Baltimore Orioles have on the baseball field, yet the facts are still challenged.

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Posted by Ulrich on Saturday, July 10, 2021 9:16 PM

Often optics and perception outweigh the facts. There are excellent arguments to be made both for and against the merger based strictly on facts. Facts are facts.. but politics, personal biases, and other factors always come into play, and often the straight facts don't figure in at all.

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Posted by Euclid on Saturday, July 10, 2021 5:12 PM

Nothing wrong with capitalism except that it has lost all its competition.  Time for Government to level the playing field by forcing the return of completion. 

That according to this news video on the news story linked to the OP of this thread:

Biden signs sweeping executive order 'attacking' free markets

https://www.youtube.com/watch?v=1jqur2ZCiFA

 

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Posted by Juniata Man on Saturday, July 10, 2021 4:59 PM

Euclid:

I can't speak for the millennial logisticians but, for us gray haired guys who dealt with railroads for 40 years, we have a pretty doggone good idea of what a fair rate looks like.

Many rail shippers use rail costing software that incorporates the revenue and costs the railroads must report to the STB as part of their waybill sampling. After you've worked in the field for awhile, you know what a common revenue to variable cost ratio is for the products you ship and these rate modeling tools help to establish what level of rate you should be asking for from the railroad. Getting that rate is the high hurdle, of course. With a little research, these modeling tools also provide a good idea of what railroads are charging other shippers of the same type product.

With regards to SD60MAC9500's post about Canada only having two Class 1's, not entirely the case. CSX and BNSF both have lines in Canada and I utilized interswitching to get from a CN served site to CSX. In fact certain regional railroads in Canada such as the late CMQ also were included in interswitching. I would also note that if you look at a rail map of the US, what you'll see is two carriers serving a very large chunk of territory in the west and two serving a large chunk in the east. Sure, CP, KCS and CN cover the central portion of the country and there you do have multiple carriers but, competitive switching doesn't cover hundreds of miles to reach an interchange. My recollection of the NITL proposal was the interchange had to be within 15-20 air miles of the captive shipper site. That certainly narrows the application.

As to the suggestion a captive shipper partner with a short line to gain access to another Class 1, if you're only rail connection is to a Class 1, how do you propose getting the short line involved? Further, when most short lines are carved out of a Class 1, the carrier selling or leasing the track to the short line includes a paper barrier preventing the short line from interchanging with any Class 1 other than the original owner.

I'll add one last thought; under competitive switching there is nothing that prevents the railroad serving the captive shipper from offering a more competitive rate and retaining the business. Whether the psr mindset at most Class 1's would allow them to do so remains to be seen.

CW

 

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Posted by charlie hebdo on Saturday, July 10, 2021 4:29 PM

There is a big difference.  A feature of what makes a dress market work efficiently is competition.  Apparently this was either never learned or else forgotten by some. 

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Posted by Euclid on Saturday, July 10, 2021 4:10 PM

SD60MAC9500
 
 
Euclid

Why not just use the obvious and direct solution and have the Government simply mandate the price of transportation and be done with it?  Why would that be worse than mandating competing dual service to hold prices down?

 

 

 

?

... I seem to recall Staggers was to eliminate gov't regulation of rail rates.....

How would you accomplish this? Are you going to regulate all sectors of transport; ground, air, and sea as well?

 

 
 
 
 
 

The mood for regulation changes back and forth over time with the mood of Government.  So while railroads were deregulated, they can just as easily be reregulated.  I think we are now in a strong mood preferring regulation, so yes they will want to regulate all sectors of transport, and indeed, all sectors of business.   There will always be the boosters of regulation in the name of fairness and the critics of regulation in the name of free market capitalism. 

In my previous post, I asked why the boosters of regulation would prefer mandating reciprocal switching to make shipping costs fair when they could just as easily accomplish that objective by mandating the rates to accomplish the goal directly rather than fiddle around trying to incentivize fairness by mandating reciprocal switching.

Both types of mandates are regulatory in that they both force business to do something they may not want to do.  In my opinion these boosters of fairness are unable to determine what constitutes a fair rate, so they cite a lack of competition as being the essence of unfairness.  And then they call for reciprocal switching as the means to add competition. 

So, to these champions of fairness, that very remedy of forcing reciprocal switching feels fairer than simply dictating rates.  In other works, forcing reciprocal switching has better optics.  It is a lot easier to feel for fairness than to measure it. 

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Posted by BEAUSABRE on Saturday, July 10, 2021 3:09 PM

ronrunner
Railroads should do what their peers do ...hire a Lobbyist

Isn't that what the AAR is supposed to do?

 

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Posted by SD60MAC9500 on Saturday, July 10, 2021 3:07 PM
 

jeffhergert

One proposed reciprocal switching zone in the US was 31 miles from an interchange point.  You can bet that distance wasn't just pulled out of thin air.  I would guess it's the distance that would encompass most, if not all, facilities of the major industries that use rail service.  It would still leave the smaller rail users out in the cold.  Probably even those within the zone.

I see reciprocal switching resulting in only "cherry picking" of those major customers between the class one carriers. 

I would think that to impose such a switching zone, it would have to also apply to short lines and regionals.  I don't think just imposing it on class ones would survive a court challenge.  This could be detrimental to those railroads in that the class one might be able to "cherry pick" some of their best revenue producing clients.  Thus leaving some of them to survive on a switching charge and whatever's left of their other customers.

It also leaves the track owner as "first/last mile" carrier.  I wonder how well UP will switch out a customer who's freight will be turned over to BNSF for only a switchng charge and vice-versa.

I think in the long run the class ones should spin off more branch and secondary lines.  Allow short lines/regionals to do the "first/last mile" service and have the class ones become mostly line haul carriers between major points.  (I think that's what CSX was looking at on some of their lines.)  The smaller companies do a better job of going after new business and then serving that, and existing, business.

Jeff 

   

 

I agree. Plus this isn't Canada where they have just two transcontinental C1's and a few shortlines. US is a much larger rail market with many more players and reciprocal switching would cause more damage to the system. Shortlines are the reciprocal switching. If customers want access to more than one C1. Partner with a shortline toss some dollars in the pot. Last time I checked access came at a cost not for free.

 
 
 
Rahhhhhhhhh!!!!
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Posted by SD60MAC9500 on Saturday, July 10, 2021 2:56 PM
 

Euclid

Why not just use the obvious and direct solution and have the Government simply mandate the price of transportation and be done with it?  Why would that be worse than mandating competing dual service to hold prices down?

 

?

... I seem to recall Staggers was to eliminate gov't regulation of rail rates.....

How would you accomplish this? Are you going to regulate all sectors of transport; ground, air, and sea as well?

 

 
 
 
 
Rahhhhhhhhh!!!!
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Posted by ronrunner on Saturday, July 10, 2021 1:45 PM

ronrunner

Railroads should do what their peers do ...hire a Lobbyist and astroturf citizens group and give political contributions to the right politicos and party and there regulatory problems will just go away overnight....otherwise they will  swimming over there heads with the fishes in  a regiulotoy sea for the next 8 years

 

I am sure that the SFSP merger would have gone thru if the owner of both railroads took my advice and paid off the right politicos..predatory regulations are a legal shakedown tactic

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Posted by Juniata Man on Saturday, July 10, 2021 1:11 PM

That sure as heck wasn't my experience in my twenty years in the chemical industry. There wasn't a thing we produced that wasn't also being produced by at least half a dozen competitors just here in North America. 

I'd hazard a guess the majority of chemicals moving by rail fall into the commodity chemical category, stuff like sulfuric acid, caustic soda, hydrogen peroxide, molten sulfur, various surfactants and so on.

CW

 

 

BaltACD

 

 
Juniata Man
I'll argue with you on that point Balt.

Chemical companies are among the shippers generally considered captive and I can think of very few chemical products that aren't being produced by multiple companies in North America or in multiple countries around the world. I believe many steel and fertilizer manufacturers would also be captive and God knows there's a multitude of them in North America and around the world.

In fact, I suspect you'd be hard pressed to come up with many examples in the industrial and manufacturing sectors that enjoy anything close to a monopoly.


CW 

BaltACD

Remember - 

Those that cry the loudest about being held hostage to the monopolistic actions of a single railroad that services them are most likely monopolies in the products they provide to their own customers.

 

Most chemical companies are selling Patented products - products that they have a monopoly on account of the Patent protections.

 

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Posted by Ulrich on Saturday, July 10, 2021 12:51 PM

greyhounds

 

 
Convicted One
One so often hears about  the evils and ills of Wall street,  'welcome back my friends, to the show that never ends'...etc.

 

Well, Wall Street is sure helping me have a comfortable retirement.  In fact, it's sure helping a whole lot of folks have a comfortable retirement.

 

Absolutely true. Wall Street and Bay Street are really just mechanisms that allow the average person to particiapte in the success of others and in humanity's great endeavours in general. Every quarter I get dividend checks that I could live off of quite nicely.. by simply making my own hard earned capital available to others. sure there's a bit of risk, but in return I get to share in the success of several businesses, and to a small extent my input is welcomed. In my opinion Wall Street/Bay Street are among the world's greatest creations...they allow anyone who wants to, to  tap into and be part of the success of great ventures and great minds. 

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Posted by Euclid on Saturday, July 10, 2021 12:45 PM

So a company can choose whether or not to be on a site served by rail.  Where is it written that such a site must be served by two rail companies in order to be fair to shippers?  The Government attempting to force this fairness by mandating competition-inducing measures on the railroads seems oddly indirect. 

Why not just use the obvious and direct solution and have the Government simply mandate the price of transportation and be done with it?  Why would that be worse than mandating competing dual service to hold prices down?

Just let the shippers decide whether the Government is fairly mandating the price of shipping and then if they don't think so, they can vote for somebody else. 

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Posted by Backshop on Saturday, July 10, 2021 12:32 PM

ronrunner

This depends on the old mafia Dem shakedown that they use...AAR gives mega bucks to Dem candidates and party and problems go away if they refuse they will be swimming with the fishes in a regulatory sea for the next 4 to 8 yearsConfused

 

While many corporations are identified with one party or the other, the successful ones donate to both sides.

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Posted by BaltACD on Saturday, July 10, 2021 12:24 PM

Juniata Man
I'll argue with you on that point Balt.

Chemical companies are among the shippers generally considered captive and I can think of very few chemical products that aren't being produced by multiple companies in North America or in multiple countries around the world. I believe many steel and fertilizer manufacturers would also be captive and God knows there's a multitude of them in North America and around the world.

In fact, I suspect you'd be hard pressed to come up with many examples in the industrial and manufacturing sectors that enjoy anything close to a monopoly.


CW 

BaltACD

Remember - 

Those that cry the loudest about being held hostage to the monopolistic actions of a single railroad that services them are most likely monopolies in the products they provide to their own customers.

Most chemical companies are selling Patented products - products that they have a monopoly on account of the Patent protections.

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Posted by Juniata Man on Saturday, July 10, 2021 11:22 AM

I'll argue with you on that point Balt.

Chemical companies are among the shippers generally considered captive and I can think of very few chemical products that aren't being produced by multiple companies in North America or in multiple countries around the world. I believe many steel and fertilizer manufacturers would also be captive and God knows there's a multitude of them in North America and around the world.

In fact, I suspect you'd be hard pressed to come up with many examples in the industrial and manufacturing sectors that enjoy anything close to a monopoly.


CW

 

BaltACD

Remember - 

Those that cry the loudest about being held hostage to the monopolistic actions of a single railroad that services them are most likely monopolies in the products they provide to their own customers.

 

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Posted by Convicted One on Saturday, July 10, 2021 11:13 AM

BaltACD
are most likely monopolies

Exacty! Monopolies with stockholders of their own, as well, hence there is no "little red riding hood" in this story.  The government's involvement here is that of a "tool".

We all know that ultimately it is the consumer who pays any increased expenses associated with the cost of the products they buy.  So this episode might best be viewed as a "push back" against the usual tide.

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Posted by BaltACD on Saturday, July 10, 2021 10:52 AM

Remember - 

Those that cry the loudest about being held hostage to the monopolistic actions of a single railroad that services them are most likely monopolies in the products they provide to their own customers.

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Posted by Convicted One on Saturday, July 10, 2021 10:24 AM

I wouldn't want either of you to suffer an unpleasant retirement, but I really wasn't focused on that aspect.  What I was trying to convey is that we so often hear complaints about the ill effects that Wall street machinations have upon the world around them......hedge funds....stockholder greed..etc etc etc

"Wolves gonna be wolves"..... they are just trying to use the government  in this instance as a tool.  I really don't believe there is a "little red ridinghood" in this story.

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