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

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Posted by Overmod on Friday, July 9, 2021 10:45 AM

What Hunter S. Thompson said about 'that sickening here-we-go feeling'... Smile

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

He thinks there is.  Are you going to argue it with him?

It's an initial shot; I think it's the lowest-hanging fruit to be 'proactive' about if he intends to change some of the ways the freight-railroad industry does things.  (I expect it will not be the last, but that's not material to the present discussion...)

What can a shipper accomplish by challenging inflated rates?

They might, you know, have to pay less for what they get?  They might feel they've helped strike a blow to get excessive charges or perceived 'gouging' addressed?

What is an inflated rate?

There is a rate that constitutes fair profit.  That is the thing that fair competition helps a market economy converge on: the costs of providing the service plus a fair profit above all overhead cost and allowance for risk.

"Inflated" is a charge above that, solely due to uncompetitive factors.  Biden and many others consider single-access customers to often suffer this.

One of the concerns does represent the stranded cost of what may be expensive 'premise access' or the opportunity costs associating with allowing another railroad to execute reciprocal switching.  Just as with other considerations of infrastructure, those things may be in some cases objectively very large.  But that to me is something that can be objectively discussed as part of determination of a fair policy, or even included in an executive order as a factor.

What is a monopoly railroad?
In this context: a railroad that controls the only access to a particular shipper.  Note that 'monopoly' here doesn't refer to all shipping options, just to the ability to get railcars in and out if the premise.  In the context of Biden's order, it's pretty clear what was meant.

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Posted by Euclid on Friday, July 9, 2021 10:23 AM

 

Is there a need for an executive order to increase competition and combat aggressive pricing by co-called “monopoly railroads”?  What can a shipper accomplish by challenging inflated rates?  What is an inflated rate?  What is a monopoly railroad?

 

https://thehill.com/homenews/administration/562032-biden-to-issue-executive-order-on-consolidation-in-railroads-ocean

 

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Posted by Overmod on Friday, July 9, 2021 9:47 AM

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

The issue, though, being in part, as Weber didn't discuss but Keynes did, the imposition of correct 'regulation' of pure capitalist and 'market-based' activity.   Where I think the discussion might point is that there is regulation that is Pareto-optimal, establishing more of a 'level playing field' for the competent, vs. regulation that is an exercise of punitive or restrictive power.  In this sense, reducing the 'natural monopolist's' tendency to charge what the traffic will bear "because they can" is not an interference with the idea that a 'market price' is based on fair marginal profit over factor costs.  (As someone noted in a different context, all the putative advantages of PSR ought to be bringing rates down, and increasing the potential market for additional business, in an undistorted free-market economy...)

Capitalism and mixed economies seem to work better,  more efficiently with competition and the avoidance of centralized control, whether from DC or Wall Street and s few board rooms.

But again, only when run without 'gaming the system', or exploiting transient advantage merely for short-term perceived gain, or for playing dog-in-the-manger to reduce structural competition or enhance effective barriers to entry.

Lacking that, regulation can at least partially substitute.

It certainly can... in many cases, should... and arguably in a great many contexts must.

But I would argue that it be objective, non-ideological, and to the greatest extent possible Pareto-optimal.

(And that it address 'getting things done' for the industry as a functioning part of the economy, not assuring the greatest nominal fiduciary-responsibility return to the 'shareholders' of stakeholders who "matter".

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Posted by charlie hebdo on Friday, July 9, 2021 9:41 AM

You make my point.  Double standard. I said nothing offensive but you lump me in the same pocket as MAC who used political insults. Very different.

I realize that progressives are a minority on here,  partly because of the double standard and many have chosen to depart and let the rightists prevail in at least this one pipsqueak arena as a majority. 

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Posted by SD60MAC9500 on Friday, July 9, 2021 9:31 AM
 

charlie hebdo

 

 
SD60MAC9500
 

 

 
PNWRMNM

The idiot sock puppet needs something to distract people from son Hunter's $500,000 paintings.

 

Mac

 

 

 

 

 

 

 

 
charlie hebdo

Why is it that the right wingers/Trumpers on here think their highly political and often offensive posts are just fine but they go running to the moderator as soon as someone progressive responds? 

 

 

 

 

Let's have some civil discourse in this conversation..This above me is why threads get locked... I'd like people to refrain from personal political attacks and name calling. How you feel about the political arena is obviously your choice, and we are not going to agree with certain actions by the government. We're discussing why the govt. need not get involved in rates as it does not have OPEX (operation expenses) to make the judgement on how rates should be set in the free market.. Stay on the subject..

 
 
 
 
 
 

 

 

Exactly my point,  illustrated in spades by the rightist above with his pejorative. 

 

Charlie you're inlcuded in my last comment. I was speaking specifically to your and Mac's comment.. Stop it!

 
 
Rahhhhhhhhh!!!!
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Posted by charlie hebdo on Friday, July 9, 2021 9:29 AM

Overmod

 

 
charlie hebdo
Why is it that the right wingers/Trumpers on here think their highly political and often offensive posts are just fine but they go running to the moderator as soon as someone progressive responds? 

 

As long as the progressives stick to facts they'll have little to fear from me, at least.  Certainly no one intellectually honest can accuse me of being a 'Trumper' for a New York millisecond, and I haven't been able to stomach most of the right wing for decades (most prominently after they flubbed the post-1994 Congressional possibilities, but in sme respects well before that, and from about 2014 on, increasingly so).

 

On the other hand, I know propaganda when I see it, from any side, and I am very familiar with the usual ridicule-the-straw-man's-politics tactic.  It is beneath someone of your intellectual standing and accomplishments to perpetrate it.

Whether we like it or not, this is an explicitly political topic, and it may be an indication of priorities to be applied to the freight railroad industry.  I do not think President Biden is nearly as pro-freight-railroading as he is pro-passenger, and (as I think I said) I am not averse to his using public policy to deal with some... more rather than less... of the distortions caused by abuse of the idea of "PSR".  That is the focus that I think we should concentrate on, or at least take up seriously, in this sort of thread going forward.

 

You are attacking me for my post?  Straw man?   Apparently you have no clue what you are talking about. Several posters on the right (I was not specifically referring to you, but you think "the song is about you,  don't you?") made blatantly political remarks. I commented that typically it seems they think that is just fine but if a progressive has the temerity to challenge these "revealed truths" an adequate hominem attack follows.  That is exactly what you have done.  

Regulation issues should not be political as it is really about economics.  Capitalism and mixed economies seem to work better,  more efficiently with competition and the avoidance of centralized control, whether from DC or Wall Street and s few board rooms.  Lacking that, regulation can at least partially substitute. 

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Posted by Overmod on Friday, July 9, 2021 9:29 AM

I see we cross-posted.  Amended accordingly.  As you have quoted the original for reference, I have no hesitation in removing the 'personal' from the post in question.

I look forward to further reading your opinions on the actual topic of civil railroad-related discourse.

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Posted by charlie hebdo on Friday, July 9, 2021 9:20 AM

SD60MAC9500
 

 

 
PNWRMNM

The idiot sock puppet needs something to distract people from son Hunter's $500,000 paintings.

 

Mac

 

 

 

 

 

 

 

 
charlie hebdo

Why is it that the right wingers/Trumpers on here think their highly political and often offensive posts are just fine but they go running to the moderator as soon as someone progressive responds? 

 

 

 

 

Let's have some civil discourse in this conversation..This above me is why threads get locked... I'd like people to refrain from personal political attacks and name calling. How you feel about the political arena is obviously your choice, and we are not going to agree with certain actions by the government. We're discussing why the govt. need not get involved in rates as it does not have OPEX (operation expenses) to make the judgement on how rates should be set in the free market.. Stay on the subject..

 
 
 
 
 
 

Exactly my point,  illustrated in spades by the rightist above with his pejorative. 

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Posted by SD60MAC9500 on Friday, July 9, 2021 9:07 AM
 

PNWRMNM

The idiot sock puppet needs something to distract people from son Hunter's $500,000 paintings.

 

Mac

 

 

 

 

charlie hebdo

Why is it that the right wingers/Trumpers on here think their highly political and often offensive posts are just fine but they go running to the moderator as soon as someone progressive responds? 

 

 

Let's have some civil discourse in this conversation..These two comments above me are why threads get locked... I'm asking you all to refrain from personal political attacks and name calling. How you feel about the political arena is obviously your choice, and we are not going to agree with certain actions by the government. We're discussing why the govt. need not get involved in rates as it does not have OPEX (operation expenses) to make the judgement on how rates should be set in the free market.. Please stay on the subject..

 
 
 
 
 
 
 
 
Rahhhhhhhhh!!!!
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Posted by Overmod on Friday, July 9, 2021 8:50 AM

charlie hebdo
Why is it that the right wingers/Trumpers on here think their highly political and often offensive posts are just fine but they go running to the moderator as soon as someone progressive responds? 

Whether we like it or not, this is an explicitly political topic, and it may be an indication of priorities to be applied to the freight railroad industry.  I do not think President Biden is nearly as pro-freight-railroading as he is pro-passenger, and (as I think I said) I am not averse to his using public policy to deal with some... more rather than less... of the distortions caused by abuse of the idea of "PSR".  That is the focus that I think we should concentrate on, or at least take up seriously, in this sort of thread going forward.

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Posted by charlie hebdo on Friday, July 9, 2021 8:41 AM

Why is it that the right wingers/Trumpers on here think their highly political and often offensive posts are just fine but they go running to the moderator as soon as someone progressive responds? 

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Posted by Overmod on Friday, July 9, 2021 7:59 AM

Backshop
He's not a government official, unlike some who have been accused or charged for working for other governments.

But he is the child of a government official, definitely more than accused or charged of working for another government, perhaps with some influence more than 'implied' to get what he wanted.  Every excuse in a storm!

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.

Now back to railroading of the actual sort!

I see nothing 'awful' here -- the issues of equity and fairness for all shippers being a major 'incentive' for past regulation, and reciprocal-switching rights even if artificially controlled being far less intrusive than the arrogant misregulation of the bloated post-1920 ICC.  I don't think the sky is falling and an evil 'leftist-socialist cabal' sees this as the camel's nose to the happy world of soak-the-railroads that was played in not-so-recent but still-vivid memory.

That said: something the Biden and Harris administrations are going to need, badly, in a couple of years will be strong corporations and enough rich of the 'wrong' sort to soak for all the programs they'd like to run, and PSR railroads and their 'principals' are an increasingly attractive target... and to be honest I'm coming not to see that as a bad thing.

The likely problem as I see it is the same as in the Eastman years: the people making the stranded-fair-shipping-rate policies are more likely to be lawyers than logistics people.  And to think that Procrustean solutions (like Tier 4 final as applied to locomotive engines) are the expedient way to achieve what they want.

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Posted by Backshop on Friday, July 9, 2021 7:48 AM

PNWRMNM

The idiot sock puppet needs something to distract people from son Hunter's $500,000 paintings.

There is much more to fear from big government than from the railroads and steamship lines.

Mac

 

Nobody cares about his son other than the "what abouters".  He's not a government official, unlike some who have been accused or charged for working for other governments.

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Posted by CMStPnP on Thursday, July 8, 2021 11:07 PM

BEAUSABRE
What would be the show stoppers would be the impossibility of convincing Wall Street to provide the money ("You want to lay down tracks so you can get involved in a rate war with a Class I?") and the political impossibility of providing taxpayer money to fund private corporations (Yes, yes, I know all about the support the truckers and airlines get, but try and get traction with the voters. To use the trendy expression it's all about the "optics") 

WSOR gets anything it wants in Wisconsin.   Laying new track?   No problem the state says, "how much do you need?".    Though WSOR is very careful it has a long-term (10+ years or more) haulage contract on new track that also has other potential.    I am pretty certain we will see further expansion of WSOR via new rail in the next 10 years but not sure how much.

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Posted by DSchmitt on Thursday, July 8, 2021 10:05 PM

BEAUSABRE
Biden has declared war on "bigness" in all business.

The "business" that really needs scaling down is the govermnent.

I tried to sell my two cents worth, but no one would give me a plug nickel for it.

I don't have a leg to stand on.

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Posted by PNWRMNM on Thursday, July 8, 2021 9:49 PM

The idiot sock puppet needs something to distract people from son Hunter's $500,000 paintings.

There is much more to fear from big government than from the railroads and steamship lines.

Mac

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Posted by Murphy Siding on Thursday, July 8, 2021 9:30 PM

BEAUSABRE

 

 
CMStPnP
to make sure some lines were never built.

 

What would be the show stoppers would be the impossibility of convincing Wall Street to provide the money ("You want to lay down tracks so you can get involved in a rate war with a Class I?") and the political impossibility of providing taxpayer money to fund private corporations (Yes, yes, I know all about the support the truckers and airlines get, but try and get traction with the voters. To use the trendy expression it's all about the "optics") 

 

I think you just summarized the DM&E fiasco.

Thanks to Chris / CopCarSS for my avatar.

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Posted by Convicted One on Thursday, July 8, 2021 8:57 PM

Just me, but I feel that the current admin sincerely wants to do whatever it can to curb inevitable inflation. 

So many businesses are taking advantage of the pandemic to gouge consumers, that I think the gov't is gonna squeeze hard to try and wrestle control.

That's what I think is fueling this story.

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Posted by flourish96 on Thursday, July 8, 2021 7:24 PM

Convicted One

 

 
flourish96
while the STB forces higher rates on railroads to give trucks an even bigger advantage over rail

 

Isn't the linked article about the government forcing the railroads to lower their rates? Shouldn't that make  the RRs more price-competitive with trucks? 

 

 

Ever since trucks became a viable alternative to rail in the 1920s/30s the ICC has shown to set rates higher than what trucking can offer; it wasn't until deregulation in the late 70s and 80s where rail rates started dropping after the ICC gave them their ability to negotiate with shippers directly instead of having to base their rates off of predetermined charts.

So we've been here before, can't say I trust the STB when they say they're going to lower rates; I'm in favor of letting markets figuring out what fair rates are on a case by case basis

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Posted by Convicted One on Thursday, July 8, 2021 7:09 PM

flourish96
while the STB forces higher rates on railroads to give trucks an even bigger advantage over rail

Isn't the linked article about the government forcing the railroads to lower their rates? Shouldn't that make  the RRs more price-competitive with trucks? 

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Posted by Ulrich on Thursday, July 8, 2021 7:04 PM

Reciprocal switching is really only an option for those shippers who already "almost" have two rail shipping options. In many parts of Canada only one carrier is available, and the only realistic option is to use that carrier or another mode like road or ship. But it does seem to work.. the truckers keep a lid on how high rates can go. The railroads can't really charge more than the truckers can charge, and the trucking rates are kept competitive because (unlike rail) there are lots of trucking companies.. hundreds of them specializing in any given lane, thereby keeping rates competitive. 

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Posted by BEAUSABRE on Thursday, July 8, 2021 6:37 PM

flourish96
I thought this administration was rail friendly and environmentally friendly...

SUCKER !!

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Posted by BEAUSABRE on Thursday, July 8, 2021 6:32 PM

CMStPnP
to make sure some lines were never built.

What would be the show stoppers would be the impossibility of convincing Wall Street to provide the money ("You want to lay down tracks so you can get involved in a rate war with a Class I?") and the political impossibility of providing taxpayer money to fund private corporations (Yes, yes, I know all about the support the truckers and airlines get, but try and get traction with the voters. To use the trendy expression it's all about the "optics") 

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Posted by flourish96 on Thursday, July 8, 2021 6:29 PM

I'm sure the trucking industry will see no changes while the STB forces higher rates on railroads to give trucks an even bigger advantage over rail just like the pre-Staggers ICC days. I thought this administration was rail friendly and environmentally friendly...

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Posted by Juniata Man on Thursday, July 8, 2021 6:29 PM

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 

   

 

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Posted by BEAUSABRE on Thursday, July 8, 2021 6:23 PM

You mean the PRR, CNJ, WP et al aren't coming back? DARN! Sixty years on from the beginning of the modern merger movment (N&W and VGN in 1959), there's no way to unscramble the egg. Lots of parallel routes have been torn up (talk to your local Sierra Club about laying down tracks on the neighborhood rail-trail), truncated or otherwise downgraded and/or mutilated to allow traffic to be concentrated on the high density "lanes". And, if you spot something, try getting roadbeds back from the nimbys. 

But, it isn't just rails and ships - Biden has declared war on "bigness" in all business. Economies of scale? What's that? It's being done in the name of "the consumer", of course. I'm all for consumer choice, but that ought to be on the basis of somebody having a better way of serving their needs, not on government fiat. 

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Posted by CMStPnP on Thursday, July 8, 2021 5:45 PM

Ulrich
I like that idea, but critics would point out it would cost billions upon billions in this day and age. Maybe if someone like Elon Musk came along it could happen.. someone with the ability to think huge and with the wherewithal to raise the required capitial.   

Oh think of the negotiations that would go on between an existing Class I and a shortline about to parallel it's line for a distance in a customer intense area.    I think money would be exchanged or some other sweatheart deal to make sure some lines were never built.   In some circumstances the startup would have a lot of cards in their hands.

Yeah it would cost Billions but maybe limit it to private money or use federal funding only if in the National Interest to reduce congestion.

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Posted by jeffhergert on Thursday, July 8, 2021 4:36 PM

Juniata Man

The psr induced higher cycle times were usually accompanied by higher rates. At least with reciprocal switching, the extra couple of days should be cheaper.

CW

 

Hey, the "enhanced" service that PSR brings customers doesn't come cheap. Laugh

Jeff 

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Posted by Juniata Man on Thursday, July 8, 2021 4:31 PM

The psr induced higher cycle times were usually accompanied by higher rates. At least with reciprocal switching, the extra couple of days should be cheaper.

CW

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Posted by jeffhergert on Thursday, July 8, 2021 4:30 PM

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 

   

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