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

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Posted by Juniata Man on Saturday, July 10, 2021 8:47 AM

I will admit to being a beneficiary in this regard too.

CW

PS to Convicted One; Brain Salad Surgery - a favorite ELP album!!!


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.

 

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Posted by greyhounds on Saturday, July 10, 2021 8:43 AM

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.

"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 Convicted One on Saturday, July 10, 2021 8:14 AM

tree68
They need to put the shippers and the railroad stockholders in the same room and let them argue about it. As we've discussed here before, the shippers would prefer that their goods be moved free, while the stockholders want the maximum possible return on their investment. The actual railroads are kind of stuck in the middle.

Perhaps the entire ordeal is mis-cast? Rather than insisting this is an assault against creosoted ties and welded steel rails, perhaps it more accurately might be cast as a struggle between the stockholders of the railroads, and the stockholders of the shippers?

You have an industry that has spent decades rationalizing it's plant, often at the expense of jobs and local taxes,  that is now loudly obsessed with current ratio, at the expense of more jobs  and often snubbed customers......and NONE  of this has been going on in a vacuum. So, IMO, it should be no surprise at all that some denizens of Wall street might have noticed the commotion surrounding the railroads as of late and said "I'll have some of what they are having'...literally.

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

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Posted by Juniata Man on Saturday, July 10, 2021 7:19 AM

Jeff:

While having to compete generally creates winners and losers, my point with regard to three decades of interswitching in Canada is that simply hasn't occurred up there. CP may be something of a "weak sister" to CN but, I believe that has more to do with CN's network and their customer engagement rather than chasing CP business and driving rates down. Despite their differences, both CP and CN have thrived in a highly competitive environment and their shareholders have benefited as well.

I will concede your point that railroads in the US, when forced to compete, may become more aggressive at implementing cost reductions and efficiencies (God, I hate that word!) but, I suspect there is already a certain inevitability of that occurring even in the absence of competitive switching. Cost cutting is, after all, what most companies do focus on these days, whether railroads or industrial manufacturers.

Lastly, I remember the regulated environment too and would not want to return to that either. Over the past 10-15 years however, the playing field between railroads and shippers has taken a decided tilt in the railroads favor. Changes need to be implemented that return doing business with a railroad to more of a 50/50, "give and take" business relationship.

CW

 

jeffhergert

 

I stand by my opinion that forced reciprocal switching will result in "cherry picking" of the more lucrative customers while most of the others won't get much relief.  It's not necessarily that they are going to drive each other over the brink.  It's that many customers are going to find out that other carriers aren't going to go out of their way for their business.  Those customers are also members, maybe the majority of shipper's groups and aren't going to see much benefit for their efforts.

If rates do go down as railroads sharpen their pencils to grab or retain some contracts, it will put more pressure for them to further cut the work force or negotiate more give backs.  You know senior management and stock holders aren't going to take a cut.

Jeff

PS. Many if not most field level railroad employees believe the railroads need to be reregulated.  I don't, although I do think there should be some kind of penalty for not living up to their common carrier requirements, because I remember what the regulated environment was like.  Most of my coworkers don't.  Time as thinned the ranks of those who worked back then. 

 

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Posted by MidlandMike on Friday, July 9, 2021 10:29 PM

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.

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Posted by jeffhergert on Friday, July 9, 2021 10:19 PM

Juniata Man

Jeff:

Insofar as interswitching in Canada; my experience with it was that CN, CP and even CSX near Montreal, tended to submit serious bids for business only when it made sense to them from both a financial and network perspective. Put another way, they didn't go after business simply to grab another carrier by the shorts.

With regard to inclusion of short line and regional carriers in any reciprocal switching proposal here in the US; I can tell you that when we developed the NITL competitive switching proposal, we specifically excluded these smaller railroads. One reason was the hope (naive, I will admit) that by excluding them they would either support or, at the very least, not oppose the proposal. Too; many short lines and most regional railroads connect with more than one Class 1. Since the smaller railroads are generally exponentially easier to work with than a Class 1; elimination of paper barriers that prevent these smaller railroads from actually interchanging with another Class 1 would address the option of using a competing Class 1 without causing financial harm to the smaller railroad.

Personally; my preference would still be to see the US adopt Canadian style interswitching and competitive line rates with the STB establishing the various zone switching charges much like the Transport Board does in Canada. I'm doubtful this is politically possible here in the US though.

CW

 

 

 
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 stand by my opinion that forced reciprocal switching will result in "cherry picking" of the more lucrative customers while most of the others won't get much relief.  It's not necessarily that they are going to drive each other over the brink.  It's that many customers are going to find out that other carriers aren't going to go out of their way for their business.  Those customers are also members, maybe the majority of shipper's groups and aren't going to see much benefit for their efforts.

If rates do go down as railroads sharpen their pencils to grab or retain some contracts, it will put more pressure for them to further cut the work force or negotiate more give backs.  You know senior management and stock holders aren't going to take a cut.

Jeff

PS. Many if not most field level railroad employees believe the railroads need to be reregulated.  I don't, although I do think there should be some kind of penalty for not living up to their common carrier requirements, because I remember what the regulated environment was like.  Most of my coworkers don't.  Time as thinned the ranks of those who worked back then. 

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Posted by Gramp on Friday, July 9, 2021 6:09 PM

Along the same line, sometimes the business is poorly located, and tries to use government to make up for poor decisionmaking or basic economic change. 

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Posted by Ulrich on Friday, July 9, 2021 4:03 PM

Juniata Man

Ulrich:

I'll politely disagree with your very first comment that reciprocal switching doesn't work where it's needed most. 

The whole idea behind interswitching in Canada or competitive (reciprocal) switching here in the US is it gives a shipper served by one railroad economic access to a second railroad. In Canada, as I mentioned earlier in this thread, any shipper within 35 kilometers of an interchange can solicit bids from a competing railroad or railroads that interchange with their serving carrier  at that interchange. The competing carriers even include the applicable zone interswitching charge in their rate quote. In Canada, something like 75% of rail served shippers fall within one of the three interswitching zones and can avail themselves of this alternative.The 25% who can't use interswitching can go the competitive line rate route. This latter is definitely a more difficult process than interswitching but, in either case the shipper has options that today generally do not exist in the US. 

The NITL competitive switching proposal that, to my knowledge, is the only one the STB has in their hopper isn't perfect but, it is a start at giving some captive shippers options they do not currently have; options that competing manufacturers in Canada have had now for about 35 years.

CW

 

 

 
Ulrich

Reciprocal switching doesn't work when its needed the most i.e. where a shipper really only has one rail provider and no other alternatives. The current administration is attempting to put the genie back into the bottle.. decades of poor regulations that prevented  railroads from joining the 20th century as late as the 1970s  almost killed them off entirely. And now we've come full circle..after decades of deregulation they're once again looking at reregulation.. I wonder how much longer it will be before the government once again approves rates and terms.  

 

 

 

 

 

That's interesting ..thanks for clarifying this for me. Perhaps not such a bad idea then..

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Posted by Juniata Man on Friday, July 9, 2021 3:49 PM

Ulrich:

I'll politely disagree with your very first comment that reciprocal switching doesn't work where it's needed most. 

The whole idea behind interswitching in Canada or competitive (reciprocal) switching here in the US is it gives a shipper served by one railroad economic access to a second railroad. In Canada, as I mentioned earlier in this thread, any shipper within 35 kilometers of an interchange can solicit bids from a competing railroad or railroads that interchange with their serving carrier  at that interchange. The competing carriers even include the applicable zone interswitching charge in their rate quote. In Canada, something like 75% of rail served shippers fall within one of the three interswitching zones and can avail themselves of this alternative.The 25% who can't use interswitching can go the competitive line rate route. This latter is definitely a more difficult process than interswitching but, in either case the shipper has options that today generally do not exist in the US. 

The NITL competitive switching proposal that, to my knowledge, is the only one the STB has in their hopper isn't perfect but, it is a start at giving some captive shippers options they do not currently have; options that competing manufacturers in Canada have had now for about 35 years.

CW

 

Ulrich

Reciprocal switching doesn't work when its needed the most i.e. where a shipper really only has one rail provider and no other alternatives. The current administration is attempting to put the genie back into the bottle.. decades of poor regulations that prevented  railroads from joining the 20th century as late as the 1970s  almost killed them off entirely. And now we've come full circle..after decades of deregulation they're once again looking at reregulation.. I wonder how much longer it will be before the government once again approves rates and terms.  

 

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Posted by PNWRMNM on Friday, July 9, 2021 3:33 PM

charlie hebdo
Regulation issues should not be political as it is really about economics.

This statement is completely backwards. It is always political when agents of the state force you to give some of your property to someone else, which is what rate regulation does and is the entire point of this executive order.

Rate regulation is always political interference in the workings of the market place. 

Mac

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Posted by Ulrich on Friday, July 9, 2021 3:07 PM

Reciprocal switching doesn't work when its needed the most i.e. where a shipper really only has one rail provider and no other alternatives. The current administration is attempting to put the genie back into the bottle.. decades of poor regulations that prevented  railroads from joining the 20th century as late as the 1970s  almost killed them off entirely. And now we've come full circle..after decades of deregulation they're once again looking at reregulation.. I wonder how much longer it will be before the government once again approves rates and terms.  

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Posted by Euclid on Friday, July 9, 2021 2:44 PM

Whatever price and terms are brought about by reciprocal switching, the shipper will always complain that the deal is not fair.

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Posted by Ulrich on Friday, July 9, 2021 2:25 PM

BaltACD

 

 
Ulrich
 
Convicted One 
Ulrich
. I would prefer a freer "invisible hand" that is guided by supply and demand market forces over the "father knows best" mechanism 

Would you consider the way CSX butchered the former B&O  Illinois Sub,.. or "hemmed in" the western end of the former PRR.... to be "supply and demand" driven? I wouldn't. Seems like they were more intent upon making sure the line would never  pose any potential to compete with them, ever. 

Absolutely. but I never said it works perfectly. People are at the heart of all decisions, whether they're command economy driven or driven by market forces. I'm free to make good and bad decisions, and I'm free to reap the rewards and penalties of both. Free market does not mean all decisions are good all of the time.. 

 

Considering the economic power of the players in today's 'free market' most of the 'decisions' that are getting made are intended to monopolize and single source whatever is the product or service and therefore put the users at the mercy of the providers.

 

Maybe intended to.. but generally that's not how it works out unless you're product or service is unique. Most shippers have many competitors... and have many potential transportation vendors to pick from. Sure there are exceptions, like Boeing and Airbus, but for the most part we all have competitors who are aggessvely going after our accounts. 

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Posted by BaltACD on Friday, July 9, 2021 2:12 PM

Ulrich
 
Convicted One 
Ulrich
. I would prefer a freer "invisible hand" that is guided by supply and demand market forces over the "father knows best" mechanism 

Would you consider the way CSX butchered the former B&O  Illinois Sub,.. or "hemmed in" the western end of the former PRR.... to be "supply and demand" driven? I wouldn't. Seems like they were more intent upon making sure the line would never  pose any potential to compete with them, ever. 

Absolutely. but I never said it works perfectly. People are at the heart of all decisions, whether they're command economy driven or driven by market forces. I'm free to make good and bad decisions, and I'm free to reap the rewards and penalties of both. Free market does not mean all decisions are good all of the time.. 

Considering the economic power of the players in today's 'free market' most of the 'decisions' that are getting made are intended to monopolize and single source whatever is the product or service and therefore put the users at the mercy of the providers.

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Posted by Backshop on Friday, July 9, 2021 2:12 PM

Overmod
Backshop
I see that you're a disciple of QAnon. 

 

If you see that, you need better corrective lenses.

 

Frankly, I like Harris and wouldn't mind seeing her have more than two statutory terms.  I'm just upset at the presumptive machination -- hopefully it will not develop according to "plan".

 

OOOH!  "The Plan".  This is getting more comical all the time.

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Posted by Ulrich on Friday, July 9, 2021 1:57 PM

Convicted One

 

 
Ulrich
. I would prefer a freer "invisible hand" that is guided by supply and demand market forces over the "father knows best" mechanism

 

Would you consider the way CSX butchered the former B&O  Illinois Sub,.. or "hemmed in" the western end of the former PRR.... to be "supply and demand" driven? I wouldn't. Seems like they were more intent upon making sure the line would never  pose any potential to compete with them, ever.

 

 

Absolutely. but I never said it works perfectly. People are at the heart of all decisions, whether they're command economy driven or driven by market forces. I'm free to make good and bad decisions, and I'm free to reap the rewards and penalties of both. Free market does not mean all decisions are good all of the time.. 

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Posted by Convicted One on Friday, July 9, 2021 1:49 PM

Ulrich
. I would prefer a freer "invisible hand" that is guided by supply and demand market forces over the "father knows best" mechanism

Would you consider the way CSX butchered the former B&O  Illinois Sub,.. or "hemmed in" the western end of the former PRR.... to be "supply and demand" driven? I wouldn't. Seems like they were more intent upon making sure the line would never  pose any potential to compete with them, ever.

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Posted by rdamon on Friday, July 9, 2021 1:31 PM

First a $10B defense contract to Microsoft cancelled and now this.  Hmmm to the benefit of AZNU?

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Posted by Ulrich on Friday, July 9, 2021 1:19 PM

Convicted One

I'm not a big proponent of government. But at the same time, I believe that very little happens for no reason. 

The railroads have no qualms about using a big stick, when one is available to them.  Who else is there to respond in like-kind  fashion?

 

Same can be said for government.. I would prefer a freer "invisible hand" that is guided by supply and demand market forces over the "father knows best" mechanism that is the hallmark of every command economy. We're not so far off... 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.. 

 

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Posted by Overmod on Friday, July 9, 2021 1:11 PM

Backshop
I see that you're a disciple of QAnon. 

If you see that, you need better corrective lenses.

Frankly, I like Harris and wouldn't mind seeing her have more than two statutory terms.  I'm just upset at the presumptive machination -- hopefully it will not develop according to "plan".

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Posted by Backshop on Friday, July 9, 2021 12:54 PM

Overmod

 

 
Backshop
The presidential term of office is only two years now?  How interesting...

 

More interesting than you think.

 

A Vice-President taking office less than two years from the end of a term does not have that 'count' toward the two-term restriction.  So a presumptive Harris administration could run 10 years rather than he limited to eight.

What will be amusing is the timing to ease President Biden out just by that point -- not before, and probably not too much after.

Personally, I find it laughable that someone who to date has contributed nothing remotely railroad-related to this discussion thinks they have the standing to criticize... but that doesn't matter either.

 

I see that you're a disciple of QAnon.  How quaint!

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Posted by Overmod on Friday, July 9, 2021 12:33 PM

Backshop
The presidential term of office is only two years now?  How interesting...

More interesting than you think.

A Vice-President taking office less than two years from the end of a term does not have that 'count' toward the two-term restriction.  So a presumptive Harris administration could run 10 years rather than be limited to eight.

What will be amusing is the timing to ease President Biden out just by that point -- not before, and probably not too much after.

Personally, I find it laughable that someone who to date has contributed nothing remotely railroad-related to this discussion thinks they have the standing to criticize... but that doesn't matter either.

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Posted by Convicted One on Friday, July 9, 2021 11:50 AM

Regarding that "big stick":...I'm forced to remember the "blocked crossings" debates, where several here enthusiastically pointed out that the RR's are subordinate only to federal jurisdiction, not state.

"Can you hear me now?"  Whistling

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Posted by Convicted One on Friday, July 9, 2021 11:46 AM

Overmod
See what Wilner say

 

Bingo! That was my point.

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Posted by Convicted One on Friday, July 9, 2021 11:43 AM

I'm not a big proponent of government. But at the same time, I believe that very little happens for no reason. 

The railroads have no qualms about using a big stick, when one is available to them.  Who else is there to respond in like-kind  fashion?

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Posted by Overmod on Friday, July 9, 2021 11:06 AM

Convicted One
I found the link provided by the O.P.  to be especially illuminating in that regard. 

See what Wilner says... and then what Smathers had to say!

Where I'd start looking as of the official issuance of this executive order is the likely influence, going forward, on the KCS-CN approval...

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Posted by Backshop on Friday, July 9, 2021 11:04 AM

Overmod
 

Of course I expect this all to start "coming to light" about a year from now, in time for the first Harris administration to start safely after Jan 24 2023... but not long after that date.

The presidential term of office is only two years now?  How interesting...

I also find it laughable when someone says "let's get back to railroading" while they use that same post to make one more political comment.

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Posted by Convicted One on Friday, July 9, 2021 10:53 AM

Juniata Man
I doubt the executive order does much beyond send a strong message to the STB and FMC

I found the link provided by the O.P.  to be especially illuminating in that regard. 

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Posted by Convicted One on Friday, July 9, 2021 10:50 AM

Euclid
Is there a need for an executive order to increase competition and combat aggressive pricing by co-called “monopoly railroads”?

Personally, I don't believe there is any question that the government err'ed   in allowing some of the anti-competitive mergers of the past. So, it's not unreasonable to expect their "participation" in moderating against abuse by some of the monsters that rose under their watch.

Not completely dissimilar to way the electric utilities that dominate their territories have been forced to enjoy their monoplolies "under supervision". 

When that high barrier to entry begins to work against the general good of the republic, guidance is often necessary (IMO) to keep the overly enthusiastic in check. 

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Posted by Juniata Man on Friday, July 9, 2021 10:46 AM

I doubt the executive order does much beyond send a strong message to the STB and FMC. These two agencies are, after all, the ones actually responsible for keeping an eye on railroads and maritime interests.

CW

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