Reciprocal Switching?

If the Surf Board pushes it, I think the Supreme Court is going to get the case.   The Railroads would argue it would violate the concept of government taking without paying.

 

Maybe if the shippers want lower rates, they could BUY one of the railroads......

I have no idea what you guys are talking about.

Flash,

best I can explain it,

Railroad "A" serves an industry at Timbuck 2, railroad "B" has trackage 20 miles away, but the customer in Timbuck 2 can get a better rate from railroad "B" so they want them to switch the plant. The customers are pushing to allow railroads, even if they don't have trackage to serve their plants, to serve them if they have trackage within a certain radius of the plant. Hence, give railroad "B" trackage rights over railroad "A".

Of course the railroadss are fighting this.

 

At a number of power plants over the years, the railroad that did not serve the plant, "B",  would build new trackage to reach it if it was fesable. What sometimes happened was railroad "A" would drop its rates  and keep the business anyway, the customer was happy. 

Dan  

Isn't the concept the same as buying electricity from any one of a number of suppliers, but it is delivered over the same wires as all the other suppliers? Is that the same as a highway going to a destination, and one can then use any number of trucking firms? 

How about if the government would "own" all the tracks, and a firm could choose any RR shipper to pick up and deliver the goods?

 

Dan Weinhold

Well, as far as truckers are concerned, the road is usually provided by the government.

 

Power lines:  If power company A owns line in Timbuck 2, and you buy power from company B, I think power B pays A for use of the lines.

 

Anyway, I thought rail lines were PRIVATE PROPERTY.  Now if there was some sort of fee railroad B pays to A for use of the tracks, including dispatching, and added congestion, this might reduce objections.

I believe this is now the situation in Great Britain. One entity owns the tracks and infrastructure and other companies are able to use them, obviously for a fee.

I think the government is currently still subsidising the track but hopes to phase these supports out.

Can you imagine what would happen here if the government stopped it subsidy for highways?

Scotie

Scotie, all our highways and byways would become Toll Roads, built and maintained by private enterprise. That would upset the apple cart, wouldn't it? 

 

Dan Weinhold

Am I correct that there are subsidies for highways, airports, even river dredging, but very few for railroads?

 

Dan Weinhold

The people who would negatively shout the most about this are those who support free enterprise for everything else!

this entire concept reeks of the looting government mentality described in the novel Atlas Shrugged.

 

Mike:

Reciprocal switching has been around for many, many years so, what I believe you are asking about is in fact the National Industrial Transportation League's competitive switching proposal (CSP).

The League's CSP is similar to the interswitching concept that has been in use in Canada since the mid '80's.  In Canada, every physical interchange between railroads sits in the bullseye of what essentially is a three concentric ring target.  The rings each represent an interswitching zone that stretches out to 35 kilometers.  Shippers with a plant site in any of those three zones may choose to route their freight over a railroad other than the one physically switching their plant site.  The railroad physically switching the shipper site receives a switching fee determined by Transport Canada annually.  The switch fees escalate as you move out to zone 3 which ends at 35 kilometers.  The shipper needn't even talk with the railroad that switches their plant.  They can go straight to the competing railroad and request a rate and that railroad simply includes the appropriate inter-switching charge based on the zone.

I have made extensive use of this at one of our plant sites in the Montreal area that is served by CN but, which ships quite a bit back into the southeastern US to CSX points.  CN provides the interswitching to a CSX interchange located about a mile or so from the plant site.  Without interswitching, we would have to use CN to a distant interchange point, say either Buffalo or Detroit, with the higher cost associated with the extra distance and line haul performed by two railroads.  Interswitching has allowed us the option of using the more direct, efficient and cost effective CSX single line haul.

The interswitching program has worked remarkably well over the last three decades and has certainly not proved harmful to any of the Canadian or US railroads operating north of the border.  In fact, CN and CP have long been the darlings of the Wall Street transportation analysts, a good indication that both have thrived despite competing for traffic at about 85% of the rail served points in Canada.

What the League is proposing for the U.S. is similar in that captive shippers located within 30 miles of an existing, working interchange may ask their switching railroad to quote a switch charge to the interchange where the other line haul railroad will pick it up.  Shippers will have to prove the serving railroad has market dominance over their traffic before they can qualify to avail themselves of the CSP.

The study the League conducted using STB waybill sample data indicated about $1-2 billion in freight spend may qualify to use the CSP.  The AAR data, which doesn't appear to consider the exclusions built into the CSP, indicated something considerably higher.

I would submit that for captive rail shippers to have a second or third option here in the US will prove no more injurious to our Class 1's than it has in Canada.  Never lose site of the fact that many of these industrial sites were built before the sweeping merger movement that shrank Class 1 railroads from about 41 in 1980 to the 7 we have today.  And these 7 have so much market power they can determine where you ship and, in effect, to whom you may sell.

I have worked with the railroads for over 35 years now.  In all that time I have concluded that if you believe all the hyperbole put out by the AAR and the railroads themselves, anything even remotely beneficial to shippers is automatically bad for the railroads.  Conversely, they believe anything good for railroads is presumptively good for shippers.  I can assure you that ain't the case!

Curt

Interesting,  Thank you, Curt

Mike CT

Added note:   Recent trip back to Western PA from Boston, A good bit of the trip on I 80.  Comment: Not only the size of the trucks but the number, especially after dark. If Railroads can't compete for all that freight powered at 4 to 5 miles per gallon, then something is not right. IMO.  Mike CT 

If they do it, it will turn out to be a grand step backward.  If you have ever seen railroads negotiate, you'll know what I mean.  Every trackage rights agreement and every haulage agreement between railroads is individually negotiated and they fight each other to the last nickel.  When it comes to service, foreign line trains are at the mercy of the owner railroad, as long as the owner road does not carry the punishment to such excess that intervention becomes necessary.  Believe me, it's easy to document why it was necessary to stab a foreign line train.  I do not know of a single instance in which any meaningful action was taken against a railroad for this.

 

And then there's the customer . . . After all his whining and complaining and posturing in the hope of obtaining a lower freight rate, his cars still need to be picked up, transported, and delivered.  The "service" he gets will make him very sorry he opened this Pandora's box.

Thanks Curt.  Doesn't sound too negative from your description.

 

However I can saw that government ownership of all rail infrastructure would be a bad thing.  In the UK freight is pushed aside for passenger.  And contrary to popular opinion the UK and others have some very antiquated aspects in their rail network.  I think up until recently they still used manned crossings and switch towers.  And why would we want to mess with a system that is self reliant without tax funding?  However of course taxes are used where needed when the public benefits...like double tracking to add passenger service for a state or something.

this was my thought, too.  It seems the same principle, and you just never now with regulation and laws how an agency or the courts will go until it is done.  I could see the RR's losing this one.  I hope not, but . . . 

Then the next thing we will see is this.  Company A makes something cheaper at their plant than B.  Both A and B make the same thing.  Company B will want to use Company A's plant to make its stuff....

 

Plus what about "Bigness" in other industries:  Banking, Chemicals.......

Dominic spoke thusly; "Then the next thing we will see is this.  Company A makes something cheaper at their plant than B.  Both A and B make the same thing.  Company B will want to use Company A's plant to make its stuff...."

 

Doesn't that already happen in other industries? Samsung and Apple are at each other's throats with completed products, while Apple persists in buying certain parts from Samsung.

 

Dan Weinhold

Not the same thing.

 

In this case it would be akin to Company B forcing its way into Company A's factory and taking over production.

 

That's what it sounds like they're trying to do here: allow Railroad B to force its way onto Railroad A's tracks. "I am going to haul freight on your rails and you have no say in the matter."

 

The assumption is that someone's screwing someone, which is probably true, but that's business.

You guys are overlooking one important difference between shipping by rail and purchasing just about any other good or service and that is choice. 

A captive shipper in the US currently has no option for rail transport other than the railroad physically serving their plant site. If you don't like Kroger, you can shop at Publix or Giant.  If you don't like Ford, you can purchase a Chevy, Dodge or Honda.  In just about every other good or service available to you, including toy trains, you can choose.

With a captive shipper, it doesn't matter if the railroad missed switches or delays your shipments to the point you lose business because you have no choice.

We were forced to declare force majeure at one of our manufacturing sites earlier this year because of poor rail service.  We lost untold tens of thousands of dollars in business and still had to suffer the added outrage of a rate increase to boot.  I'd hazard a guess that if any of you had to put up with that in your personal lives you would be emailing your congressman in a New York minute.

Curt

Curt, sounds like another monopoly we know, namely the Cable companies. Where do you go if you don't get good service?

 

Dan Weinhold