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Re: Another Assault on the Common Carrier Status of Railroads
Author: OldPoleBurner
Date: 10-22-2014 - 15:33
I do not believe that the case has been made, that there actually is a wide spread capacity problem. Railroad managements have long been claiming that for more years than I have been alive, especially in the area of grain haulage. But they are as capable of bluff and Bull Bleep as is anyone else at the card table.
That is not to say that there are not areas of capacity shortages, such as in Chicago; but most of the country is not so jammed up with close order at-grade rail crossings, which is the real problem in Chicago. Elsewhere; most of the problems are caused by nothing more than Damnable Stubborn Stupidity in the way trains are operated; track capacity that is still being sold for salvage or embargoed; insufficient labor employed to actually get uber large unwieldy trains over the road in a timely manner; and on and on and on.
Moreover, all this whining about lack of capacity in the face of supposed shortages of capital, is as dark brown as Bull Bleep can ever get. Especially when the STB has declared virtually all the class ones to be "Revenue Adequate", meaning that they are earning more than the cost of capital, currently exceeding an average R.O.I. of 11%. Note that most went right on through the great recession with barely a blip on this 11%, while most other industries ate mudd. Of course, that is exactly what Uncle Carter intended when he pushed rail deregulation in the first place; establishing the STB with a specified mission to see to it, that rail earnings always do indeed remain revenue adequate.
A great idea, right? Especially if all you care about in life is railroads - or big business. But not so great if you care about the public interest; or about that great American Ideal of universal access for all, to national markets. Which was the whole point of common carriage.
You might notice that we also ensure revenue adequacy for most utilities. However, they are then under a strict financial regulation in return, including that they must serve equally all customers that present themselves. The public gets its due in return. Not so with railroads. They get all the benefit of being a utility (guaranteed ROI), without the common carriage concept being effectively enforced. Hence they are allowed to pick only the low hanging fruit, leaving the rest to rot; which is exactly why railroad market share has shrunk to one third of what is was prior to Staggers.
So did Staggers really repeal common carriage? Never heard that one before! It Would never have passed if it did, by either party. But that is what railroad managers would like you to think, so that they can continue to do as they dam well please, while still making a guaranteed ROI.
So who else in this so-called free market of ours, gets a guaranteed lunch whether or not they actually do something someone else wants done? - NOBODY! Except certain welfare recipients. So why the he!! should railroads get paid for not doing the job which they were chartered to do? Which they so clearly ARE NOT actually doing!
The inescapable fact is that they are not doing it; when their national market share is still diving, currently a bit above 10%; when trucks are choking the highways; when virtually every railroad customer group is loosing national business, because they cannot reliably get their products to a national market; when large percentages of the world's food supply perennially rots on the ground waiting for transportation; and on and on and......
Staggers never repealed "Common Carriage", at least not in so many words. But it's net effect is just that, intended or not. Also intended or not, it has defacto repealed healthy railroad competition in many areas of the USA; unless you call having the UP still operating your train, even though you hired BNSF (or visa versa). But worst of all, it has plainly repealed any requirement that businesses (at least railroads) actually earn their keep, in return for doing something useful for the public.
So why be surprised when railroads actually fail to perform? Why should they, when they don't have to, to get that guaranteed adequate R.O.I.? But then again, why should the public (read that as the guv'mint) support their existence, or defend their so-called "corporate rights"? What's in it for the public - besides nothing?
Plainly, as I have said before, The Staggers Act went way too far. And it is indeed a very unhealthy situation for the railroads, as well as for the public. Congressional action is vital to the future health of the rail industry, as well as the public interest.
Otherwise, when will we say that railroading is dead, or at least is irrelevant? 10% market share? 5%? 1%? 0.75%?. It's headed that way. Railroads are already quite irrelevant in most American minds. But if railroads won't do the job, someone else will.
Or would the Carter's of the world just try to mandate the use of rails. If so they'll fail at that too. Much better to amend Staggers, to the extent that rail to rail competition is restored, common carriage is enforced, utility like cross-subsidization where necessary is provided for, and yes, overall revenue adequacy is also provided for (when the job has actually been done adequately).
That is not to say that there are not areas of capacity shortages, such as in Chicago; but most of the country is not so jammed up with close order at-grade rail crossings, which is the real problem in Chicago. Elsewhere; most of the problems are caused by nothing more than Damnable Stubborn Stupidity in the way trains are operated; track capacity that is still being sold for salvage or embargoed; insufficient labor employed to actually get uber large unwieldy trains over the road in a timely manner; and on and on and on.
Moreover, all this whining about lack of capacity in the face of supposed shortages of capital, is as dark brown as Bull Bleep can ever get. Especially when the STB has declared virtually all the class ones to be "Revenue Adequate", meaning that they are earning more than the cost of capital, currently exceeding an average R.O.I. of 11%. Note that most went right on through the great recession with barely a blip on this 11%, while most other industries ate mudd. Of course, that is exactly what Uncle Carter intended when he pushed rail deregulation in the first place; establishing the STB with a specified mission to see to it, that rail earnings always do indeed remain revenue adequate.
A great idea, right? Especially if all you care about in life is railroads - or big business. But not so great if you care about the public interest; or about that great American Ideal of universal access for all, to national markets. Which was the whole point of common carriage.
You might notice that we also ensure revenue adequacy for most utilities. However, they are then under a strict financial regulation in return, including that they must serve equally all customers that present themselves. The public gets its due in return. Not so with railroads. They get all the benefit of being a utility (guaranteed ROI), without the common carriage concept being effectively enforced. Hence they are allowed to pick only the low hanging fruit, leaving the rest to rot; which is exactly why railroad market share has shrunk to one third of what is was prior to Staggers.
So did Staggers really repeal common carriage? Never heard that one before! It Would never have passed if it did, by either party. But that is what railroad managers would like you to think, so that they can continue to do as they dam well please, while still making a guaranteed ROI.
So who else in this so-called free market of ours, gets a guaranteed lunch whether or not they actually do something someone else wants done? - NOBODY! Except certain welfare recipients. So why the he!! should railroads get paid for not doing the job which they were chartered to do? Which they so clearly ARE NOT actually doing!
The inescapable fact is that they are not doing it; when their national market share is still diving, currently a bit above 10%; when trucks are choking the highways; when virtually every railroad customer group is loosing national business, because they cannot reliably get their products to a national market; when large percentages of the world's food supply perennially rots on the ground waiting for transportation; and on and on and......
Staggers never repealed "Common Carriage", at least not in so many words. But it's net effect is just that, intended or not. Also intended or not, it has defacto repealed healthy railroad competition in many areas of the USA; unless you call having the UP still operating your train, even though you hired BNSF (or visa versa). But worst of all, it has plainly repealed any requirement that businesses (at least railroads) actually earn their keep, in return for doing something useful for the public.
So why be surprised when railroads actually fail to perform? Why should they, when they don't have to, to get that guaranteed adequate R.O.I.? But then again, why should the public (read that as the guv'mint) support their existence, or defend their so-called "corporate rights"? What's in it for the public - besides nothing?
Plainly, as I have said before, The Staggers Act went way too far. And it is indeed a very unhealthy situation for the railroads, as well as for the public. Congressional action is vital to the future health of the rail industry, as well as the public interest.
Otherwise, when will we say that railroading is dead, or at least is irrelevant? 10% market share? 5%? 1%? 0.75%?. It's headed that way. Railroads are already quite irrelevant in most American minds. But if railroads won't do the job, someone else will.
Or would the Carter's of the world just try to mandate the use of rails. If so they'll fail at that too. Much better to amend Staggers, to the extent that rail to rail competition is restored, common carriage is enforced, utility like cross-subsidization where necessary is provided for, and yes, overall revenue adequacy is also provided for (when the job has actually been done adequately).
