Freight Railways Working All The Live Long Day To Overcharge You

Hey, collective American society — did you ever wonder why that $3 billion in change sitting on your dresser went missing? The answer is rail companies made off with it. A May Consumer Federation of America study found that freight rail monopolies cost Americans that much because they were able to charge unfair prices due to the convenient lack of competition. The Journal of Commerce reports:

“With only a handful of companies providing freight rail service, many rail customers have access to just one railroad and are, therefore, ëcaptive’ to that railroad,” the study said. “This enables the railroads to set prices well above costs, essentially extracting monopoly rents from shippers, and creates little incentive for railroads to provide consistent and reliable service.”

This explains why the Monopoly choo-choo train game piece always seemed so smug.

Study: Bulk Commodities and the Rails: Still Crazy After All These Years (PDF)
Study: Rails Overcharge Consumers by $3 Billion [The Journal of Commerce] (Photo:gosheshe)

Comments

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  1. woolygator says:

    The overcharging = clogged highways.

    • swicklund says:

      @woolygator: Anyplace that freight traffic can move by truck has competing against trucks for market share!

      • DanielleTexodus says:

        @swicklund: It’s considerably more expensive to move freight by truck (per ton) than it is to move by train. Trucks don’t offer the type of competition a second freight rail company would offer.

  2. Blueskylaw says:

    “Rail monopolies cost Americans that much because they were able to charge unfair prices due to the convenient lack of competition.”

    Comcast and credit card companies, can you hear me now?

  3. AllanG54 says:

    It’s not easy to build railroads and where would you put competing lines? I guess no one here has heard of “supply and demand” pricing.

    • Blueskylaw says:

      @AllanG54:

      So in essence, if you are a monopoly, its ok to charge as much as you can because the the demand side has no choice. Right?

      Sounds like the perfect reason for government regulation.

      • Jaynor says:

        @Blueskylaw: I suppose no-one would ever consider moving things by plane, truck, boat, lighter than air craft or Sherpa.

        It’s not a monopoly because other shipment alternatives exist, even out in the middle of nowhere. The reason people like the rails so much is because the cost to ship is so much lower than the alternatives… so even if they’re charging well above costs to make *gasp* profit they’re still a cheaper alternative than sending it all in trucks.

      • Anonymous says:

        @Blueskylaw: I love this kind of statement. Following economic theory, a monopoly will not charge as much as they can but instead charge a price at the point they make the most profit which isn’t always the highest price where demand still exists.

    • nakedscience says:

      @AllanG54: ….Isn’t that the very definition of a monopoly?

    • Tim says:

      @AllanG54: Just because you don’t own the rail infrastructure doesn’t mean you can’t use it. Other companies can set up agreements to share the infrastructure.

    • captadam says:

      @AllanG54: There WERE competing lines all over the places, and then they got ripped out. To see one, go to your local bike trail.

    • KCChiefsFan says:

      @kc2idf:

      There are speed restrictions all over the place that make shipping by rail slower than most people would assume. Going faster doesn’t mean a savings in money either, since it takes more fuel to go at a higher speed.

      You are right though. Shipping by rail is much more efficient, and keeps the congestion on the roadways as low as possible. It would be nice if more companies would ship via train, and get even more trucks off of the road.

      As for anyone that thinks competition is the answer, there already is competition in the form of shipping via truck. Railroads are a duopoly if anything, not a monopoly. I think what needs to be understood more than anything else is that the barrier to entry for starting a rail shipping company is so high, that no company would dare, even if they had access to the rails.

  4. Murph1908 says:

    Sure. Play a game of Rail Baron, and you’ll see exactly how it works. If your rail line is the only one that goes into Santa Fe, you make big dough.

    But couldn’t one say that shipping by truck is a competitor?

    • ARP says:

      @Murph1908: Sort of like cable and satellite? That’s a tough call. I’d say no because the number of government easements and other benefits the rail company’s get (much bigger compared to the trucking company’s use of highways and roads), and the fact that trucking is inherently much less efficient than rail, so not a good comparison.

    • ngoandy says:

      @Murph1908: That’s the fun part.

      It is so much cheaper to ship by train that the railroad can get away with gouging the customers.

    • kc2idf says:

      @Murph1908: No, on fuel and staffing costs.

      One train is equivalent to over 100 trucks, with each of those trucks needing a staff of one. Multiply that by 100 trucks, and you pay 100 salaries. The train that is equivalent to those trucks needs a staff of four, tops.

      Additionally, the train gets around 400-450 ton-miles per gallon. The truck will be closer to 50-60, assuming an 18 ton load and around 3 MPG.

      The train has the potential to move freight faster, though it seems this is under-exploited. If done right, the train would be able to travel at higher cruising speeds (90 MPH or so) without any special risks, and does not need to stop as often for traffic, refueling, etc.

      As for one train using another railroad’s tracks, think about the relationship between the IBOCs and the CLECs. The IBOC will rent wires to the CLEC, but you’d better know that those rental rates are set to make the CLEC compete on the IBOC’s terms. Likewise, I would suspect, would be the case with railroads.

      It is known that the rails that run east-west across most of upstate New York are insufficient. Anyone who has ridden Amtrak along that corridor knows that trains going in those directions are late, no exceptions, full stop. If you are using the train to get from Albany to NYC, you want to make sure it is one that either originates in Albany or is coming from the North, because the ones coming from the west are late, usually by at least an hour, and the root cause of this is traffic congestion.

    • Starfury says:

      @Murph1908:

      I own a copy of Rail Baron and the map with all of the “old” companies is pretty impressive. Now if you look there are only a few major rail lines left.

      I’d rather see more freight moved by rail to get trucks off of the freeways.

      • rpm773 says:

        @Starfury: I don’t know if that would have any effect. You might see less trucks running across I-80 in middle-of-nowhere Nebraska, but something’s got to get the product to and from the rail depots at each end.

    • Xerloq says:

      @Murph1908: It is, but even with “overcharging” rails are far less expensive than trucks. You could also say that rails “undercharge” compared to trucks, or that trucks “overcharge.”

      There’s competition in rails – it’s just spread out. The Journal of Commerce believe that more competition would “save” $3B.

  5. pecan 3.14159265 says:

    I guess they didn’t stop to consider that maybe there are so few railroads because flying is easier and almost always cheaper? And it takes a lot longer to take a train than it does to fly? And railroads aren’t easy to build? And cities have to modify areas to accommodate railroads and stations?

    • captadam says:

      @pecan 3.14159265: You’re referring to passenger rail. The article is referring to freight rail.

    • kc2idf says:

      @pecan 3.14159265: While they are talking about freight, and not passenger, I’ll take this on . . .

      It really depends on the trip. Traveling between NYC and points upstate is far easier by train than plane, because the train will get you there before you’ve even passed security at the airport.

      Okay, that’s a little bit of an exaggeration, but still, if you show up at Penn Station five minutes before the train to Albany boards, you’re good, and will be in Albany roughly 2.5 hours later. If you show up at JFK/LaGuardia/Newark in a sufficiently timely manner to catch a flight, you are already down two hours, and your flight, assuming it wasn’t delayed, would get you to Albany roughly three hours after you darkened the airport’s doorstep.

      So no, flying is not a fit-all answer.

      Back on topic, flying freight is not cheaper than putting it on a train.

    • korybing says:

      @pecan 3.14159265: But traveling by train is so much nicer, easier, and far less stressful. Too bad the trains never run on time or go anywhere you need to go. If more people rode trains, there’d be more incentive to make trains more reliable and go more places faster. But because modern train travel is none of those things, people do not ride them regularly. Rinse, repeat. Many cities had train stations, but they’ve either been torn down or turned into malls or bus stations or antique malls.

      I’m just bitter because my favorite mode of transportation is by train and sometimes I feel like I’m the only person in this country that feels that way.

  6. TEW says:

    That damn Amtrak. Oh what it is legal for the government to have a monopoly. The freight trains does not bother me because they still have to compete with the trucks and cargo ships.

    • lilyHaze says:

      @TEW: The thing is that Amtrak isn’t the fastest or cheapest [as Pecan said above]. I know that the one between DC and NYC is at least $70 one way (full fare during rush hour). It’s supposed to take 2-3 hours, but they’re often delayed. It may be faster (and definitely much cheaper) to take the bus (Greyhound or the Chinatown ones).

      • edwardso says:

        @lilyHaze: My brother was able to take the train from DC to Richmond for $50, whereas greyhoud would have been $65. But it was delayed on both legs. But as far as Boston/New York/Philly goes it’s much cheaper to take a bus, like the chinatown ones

      • veg-o-matic says:

        @lilyHaze: When Amtrak is slow or delayed, it is almost always due to freight rail shipments. Amtrak is obligated to yield to freight trains on most of its routes because it actually owns very very little track.

        Check out Amtrak’s on time performance data, which also includes maps showing who owns what portions of each route: [www.amtrak.com]

        For example, the Lakeshore Limited is notoriously slow, but not because Amtrak itself is “slow.” Rather, almost all of their delays are caused by having to cede to CSX, Norfolk Southern, and Pan Am trains or dealing with those companies’ technical or operational issues.

        There are sections of track that, if Amtrak were allowed to use them, would be much more efficient. Some frieght line owners, however, refuse to allow Amtrak access because doing so would mean they would actually have to maintain safe rail lines. Pan Am, formerly Guilford, in New England, for example, won’t let Amtrak on its lines, forcing Amtrak to go backwards and out of the way for a few miles in Western Mass just to get where it needs to be.

        • Powerlurker says:

          @veg-o-matic:

          That having been said, if you’re going from NYC to DC and the train is delayed, that is certainly not the freight lines’ fault as the Northeast Corridor (DC to Boston) is one of the few parts of the network that Amtrak actually owns outright and thus doesn’t have to yield to freight trains on.

        • captadam says:

          @veg-o-matic: By law, as a condition of Amtrak taking the burdensome (and, at the time, required by law) passenger operations of the private railroads, the railroads are required to give priority to Amtrak trains. Of course, in reality, when the dispatcher working for the private railroad makes the Amtrak train pull over to let the two-mile-long freight go ahead, there’s really not much than can be done to remedy that, law or no law.

        • egoods says:

          @veg-o-matic: I just took the Lake Shore Limited yesterday. Aside from the fact that I didn’t sleep for the whole 15 hour journey (out of Toledo) we were 30 minutes early, and the ride was as expected. I’ll never take Amtrak again (in fact I’m flying back home), but it was nice to do it once.

  7. hankrearden says:

    Uh oh! Better call the Wahhhmbulance.

    Perhaps The Journal of Commerce should review the recent article in Trains magazine about the grain industry.

    1) The outlay cost to develop branch lines to small shippers has grown prohibitive.
    2) Despite the perceived cheaper shipping cost of trucking, truckers still can’t beat the economy of scale that railroads offer. Per ton transported, railroads are still significantly cheaper than trucking.
    3) Ummmm…how else are you planning on transporting colossal amounts of coal, grain and consumer goods? Mmmmm by air…no….mmmmm….by truck….mmmm waterways?
    4) The costs required to care for the maintenance of way, land taxes, etc. are massive.
    5) There are numreous Class I railroads out there, so there IS competition. Classical example is the Powder River Basin – split between BNSF and UP. There are multiple others though, including CSXT and NS.
    6) The railroads are running a business, not another Obamunist communal hug-fest.

    • Tim says:

      @hankrearden:

      1) Yes, that’s why no one does it anymore. They use drayage trucks instead.
      2) That depends on a whole ton of factors, but no, it’s quite incorrect to say that “railroads are still significantly cheaper than trucking.” I grew up in a town of 3,000 with no rails, for example.
      3) Yes, air, truck and waterways can all be viable options, depending on the freight, the origin/destination, etc.
      4) Yes, so what’s the point? The point of the study is that these are OVERCHARGES. That is to say, way above cost. Care of equipment, infrastructure, etc., is part of cost.
      5) There are five Class I railroads in the entire country. Many lanes only have one railroad. One counterexample does not disprove the entire conclusion.
      6) Obamunist communal hug-fest? I’m not sure what to say about that. But running a business does not entitle one to immunity from anti-trust laws. Actually, I take that back. For railroads, it does, because the law says so. Hopefully we can change that.

    • ARP says:

      @hankrearden: So competition in isolated areas means that the whole system is untouchable? Also, I don’t understand how saying that rail is extremely value for interstate commerce improves your argument. In fact, it works against it under the Interstate Commerce Clause.

      Fine, if you want the government out of the railroad’s grill, I’m sure we’re happy to take back the easements and reverse the instances of eminent domain, when we installed the lines. Oh and give us back all the government subsidies and funding we’ve ever given you, with interest. Anything else would be communist!

    • Canino says:

      @hankrearden: The railroads are running a business, not another Obamunist communal hug-fest.

      The brownshirts will be collecting you shortly so you can begin your re-education process at the nearest patrio-center.

    • captadam says:

      @hankrearden: You have a lot of good points, but there are not “numerous” Class Is. Just seven, actually, serving all of the U.S. and Canada: CSX and Norfolk Southern in the east; BNSF, Union Pacific, and Kansas City Southern in the west and midwest, CN running down the spine of the Mississippi, and Canadian Pacific up in the great frozen north.

    • Archteryx says:

      @hankrearden: I love the smell of disgruntled right wing dittohead trolls in the evening. It smells like…victory.

    • Anonymous says:

      @hankrearden: @hankrearden: Your las point is exactly what pisses me off about right-wingers. Yes, a business, but a business does not have a god-given right to make as much money as possible. In a competitive environment, a business is lucky to make 30% profit. With no competition, it wouldn’t be hard to make 100% or better. That’s why there are anti-trust laws. I assume you won’t be drawing Social Security or Medicare? Or really, that you aren’t contributing to its inherent commieness right now?

  8. Tim says:

    Memo to everyone (and maybe Phil can run an ETA?):

    This study is about freight rail, not passenger rail. Intercity passenger rail, aka Amtrak, runs below cost.

    • HiPwr says:

      @TCama: By “below cost” you mean at a loss. Amtrak is the poster child for the argument against the government running a business.

      • captadam says:

        @HiPwr: Do you know anything about the conditions Amtrak faces? And, if you are complaining about Amtrak not turning a profit, do you extend the same criticisms to highways and airports?

        • HIV 2 Elway says:

          @captadam: Many airports are profitable, so much so that private companies are looking to lease some from the cities. Kansas City just rejected a private companies offer to lease MCI.

        • HiPwr says:

          @captadam: Highways & airports are not businesses competing for freight/passenger traffic. Airlines and trucking companies do that. Highways are not supposed to be profitable (although I suspect they are in the state of IL with all of the damned tolls). Amtrak is supposed to be at the very least self-sufficient.

          • Powerlurker says:

            @HiPwr:

            The bigger problem that Amtrak faces is that despite the constant calls to become a self-sufficient entity, Congress still treats it more like a public service than a profit-making enterprise. Every time they propose cutting back on long-distance interstate routes that hemorrhage money, you get congressmen from small midwestern states complaining. Amtrak could probably become a self-sufficient company if they were allowed to downsize their network to a handful of regional systems instead of being forced to provide costly interstate service to sparsely populated areas.

            • korybing says:

              @Powerlurker: Small midwestern states want train travel too. If you know of another way to get from Jefferson City, Missouri to Chicago for $60 bucks, let me know because right now the train is the best option.

              A lot of the Midwestern lines are hemorrhaging money because there aren’t ENOUGH lines to service the states, and a large number of Midwestern states don’t even have an Amtrak line, or any sort of passenger train line. In Missouri, unless you conveniently live in a straight line between Kansas City and St. Louis you are S.O.L. when it comes to traveling by train, and as a result, nobody does it. I think if traintravel was a more viable option for long-distance travel then more people would use it, and the Midwestern lines wouldn’t be dumping money.

              It seems like I’m in the minority when it comes to this, though, since they keep killing Midwest lines instead of expanding them in any sort of useful way. If I could travel by train I would do it almost exclusively. I love train travel.

              • HIV 2 Elway says:

                @korybing: In Missoura is you don’t live in St. Louis or Kansas City, you are SOL. Seriously, the rest of this state is hell on earth.

                • korybing says:

                  @HIV 2 Elway: I’m apt to agree with you most of the time and it’s one of the reasons I’m trying very hard to move the hell out of here, but I think a few things could help NOT make this place hell on earth, like maybe easy access to St. Louis or Kansas City. Springfield has been talking about running a line to St. Louis for a ages now, but that’s never materialized.

              • Powerlurker says:

                @korybing:

                Small midwestern states may want train travel too, but it makes little economic sense to supply it. Train travel works best when traveling from a densely populated urban center to a densely populated urban center and stopping only at the places immediately in between that have some sort of reasonably population density. Heck, it may very well make sense to run trains between Kansas City and Chicago, but it almost certainly doesn’t to run trains from Kansas City to points westward. Oh, and the only two states in lower 48 that have absolutely NO Amtrak service are Wyoming and South Dakota. The Northeast Corridor works because there are enough urban centers that are close enough to each other that it rail is economically viable and competitive both time and pricewise with air travel.

      • nakedscience says:

        @HiPwr: But most public transporation runs “at a loss”….

      • I Love New Jersey says:

        @HiPwr: Especially because of their the service, quality and upkeep.

    • ARP says:

      @TCama: I’m a big supporter of rail, but I disagree that it runs below costs. Highways, airports, airlines, cars, oil all rely on a direct or indirect subsidy. I agree that a regional high speed rail system, would have lower overall cost than highways + flying, but I don’t know that it’s revenue positive. Can you show me where you get that information?

  9. HiPwr says:

    Monopolies are bad news. I’m against anything that stifles competition. It allows an industry to charge exorbitant rates and stagnates innovation. I’m not opposed government intervention under this scenario.

    The rub is that I have a hard time trusting government to decide when profit stops and overcharging begins.

  10. swicklund says:

    This study is put out by rail customers looking to re-regulate the railroads to try and save themselves a buck. If anyone ever had to deal with the railroads in the 1980′s as the lines and equipment deteriorated due to lack of funds, they would fight over regulation.

  11. RideMyDiscoStick?_GitEmSteveDave says:

    The USA w/ 3 Billion dollars is like a mule with a spinning wheel. He doesn’t know how he got it and damned if he knows how to use it. Perhaps we should install monorails. Aw, it’s not for you. It’s more of a Canada idea.

  12. Canino says:

    many rail customers have access to just one railroad and are, therefore, ‘captive’ to that railroad

    I don’t think it works that way. Other rail companies can lease track rights from the company that owns the track. They also might or might not get priority traffic routing.

    • swicklund says:

      @Canino: Correct

    • zibby says:

      @Canino: True enough – I’m guessing that’s one reason you can drive to Montreal from New York City and usually beat Amtrak by a few hours. There are long stretches where you could walk faster.

      • veg-o-matic says:

        @zibby: The border crossing holds up the Adirondack by quite alot, actually. I’ve taken that train into Montreal, and it was going just fine until the Canadians stopped us for about 2 hours.

        • zibby says:

          @veg-o-matic: Yup, that’s another reason. Had one trip last 11 hours, though – even net of the customs hold up that’s not acceptable. And I’ve never come close to the scheduled arrival (which itself is about 1.5 hours longer than it takes to drive with average traffic, IIRC) on any occasion.

          Still, in the DC to Boston corridor Amtrak usually does pretty well.

  13. swicklund says:

    Disclosure: I work for a railroad.
    But the fact is that freight costs today are in most cases the same or lower than when the railroads were regulated: [www.google.com]
    And by the same, I mean NOT ADJUSTED FOR INFLATION. Inflation adjusted the price is half what it was! Rail prices are LOWER today!! When these guys compute costs, maybe they account for locomotive, crew, fuel. Do they consider the infrastructure maintenance costs? The costs to schedule that freight alongside everyone else’s? I don’t have their sources, so I don’t know – but the fact is the railroads themselves can’t figure out the true cost of shipping a single shipment – they simply have an overall operating cost that is shared by all customers. And price carefully, as they know that gouging captive customers will lead to re-regulation.

    • Nighthawke says:

      @swicklund: It took you guys a little over 100 years to find loopholes in the Sherman Antitrust act. That takes stones you know, gouging your customers with fees and “extra service charges”.

      (Teddy) Roosevelt was right; you guys were way overdue for a whipping, and still are due one.

      Greenspan better shut his yap since his department did little to stop-punch the mortgaging business early in their run from ruining us.

      Take a good stare at the deregulation that the states have attempted with the utilities and tell me our rates have fallen. Over 75% of those states that deregulated have since then reinstated regulations if not tightened them.

      The Sherman Act is Granite; and companies had better adjust, or die.

      [en.wikipedia.org]
      Do me a favor and look at the SEE ALSO links and tell me if any of them have not been in trouble with the Fed or consumers over price fixing or “Extra fees” being imposed.

      • HIV 2 Elway says:

        @Nighthawke: Where is the collusion between rail lines to set a standard “extra fee”? I don’t see that anywhere in the linked article. Charging additional fees is not a price fixing activity unless there is collusion between companies, I see no evidence of that. In all likelihood any fees are highly negotiable based on the tonnages being moved.

        • KCChiefsFan says:

          @Nighthawke:

          Large scale truck shipping didn’t exist when the act you mention was enacted. Railroad companies had a monopoly then, but they don’t now. There is real competition, and they’d have more competitive prices at scale even if regulate-now-think-later policy makers were to increase oversight.

          Regulation is NOT always a good thing. Regulating institutions that are essential to the very health of our nation (like the financial industry) is a good idea, but regulating an industry that is currently operating efficiently and prospering would just be idiotic.

          God forbid a company actually makes a profit during this economic climate. If a company is profiting, you need to regulate them apparently. Like the company wouldn’t immediately do everything in its power to keep profits the same once it was over regulated.

          • swicklund says:

            @KCChiefsFan:
            The Class I’s are actually hurting right now. They are all running at a loss due to volumes plummeting. Luckily the losses are controllable – cutting back on expanding rail lines and laying off some workers enable them to to live off the reserves…

    • Quake 'n' Shake says:

      @swicklund: There’s a fundamental lack of understanding on the public’s part with respect to freight transportation. Thus a possibly skewed blurb such as this link can whip the ignorant types into a frenzy.

  14. vladthepaler says:

    I think the best reaction to this story is, OMG there’s actually an industry that’s doing so well that the taxpayers don’t have to bail it out! Yay freight railroad! If only the banking, insurance, and auto industries could follow your shining example!

  15. balthisar says:

    Monopoly? There’s very little that can ship by railroad that can’t ship by truck. Rail is considered cheap compared to trucks.

  16. tedyc03 says:

    I’m sorry, is this 1857? Rail monopolies? Really? Still?

  17. Quake 'n' Shake says:

    Let’s be careful now, especially if anyone wants to bring up the specter of regulation. Overregulation caused a near meltdown of rail service in the Northeast and parts of the Midwest in the 60′s and 70′s.

    I couldn’t help but notice how lacking in detail that link was. All of 6 paragraphs, half of which are one sentence. Before everyone whips themselves into a frenzy, let’s review the actual numbers, rather than what appears to be someone’s potentiall biased interpretation of statistitcs which he has not seen fit to share.

  18. humphrmi says:

    I had a friend who worked for the railroads prior to his (IT) job. I asked him, “What is a live long day, anyway?” He couldn’t answer.

  19. bufftbone says:

    They’re not called the robber barons for nothing you know. I work for a class 1 railroad and they do it because they can. As far as major railroads go, there are only 6 major ones but there are thousands of smaller ones. The class 1 (CN, BNSF, UP, NS, CSX, KCS) railroads decide the routes where they go.

  20. gStein_*|bringing starpipe back|* says:

    that is one OLD monopoly set…
    wooden houses? must be a 70s era board.

    • Cant_stop_the_rock says:

      @gStein:
      Or a re-released version. I know they have released a replica of the “original” 1930s version. I’m sure there are some versions that you can buy today that have wooden houses. There are hundreds of versions of Monopoly.

  21. Cant_stop_the_rock says:

    Of course railroads don’t have a monopoly on shipping, but shipping by railroad is far more efficient than by truck or by plane, and boats are limited to waterways that can accommodate them. So no they don’t have a monopoly on shipping, but a railroad with a local monopoly on rail shipping has a very strong competitive advantage.

  22. KCChiefsFan says:

    I had to laugh. A study released by a group representing companies that use rail shipping? Wonder if they aren’t a little biased. Surely they wouldn’t want to save money on every shipment at the expense of the railroads, despite rail shipping being cheaper than the alternatives.

    The act being proposed isn’t pro-consumer, it’s pro-corporation. As consumers, why should we support one corporation against another, when there are alternative shipping methods available, and when freight shipping is already cheaper (not to mention efficient) than those alternatives?

    I sincerely hope that the act never sees the light of day.

    • KCChiefsFan says:

      @KCChiefsFan:

      *rail shipping rather.

      Yes, I realize that the railroads probably have fairly high margins, but they are a business. Yes they would be “hurt” by this act, and yes it would cause them to cut costs in areas that shouldn’t be cut.

  23. chris_d says:

    This is pure b.s. Regulations made sense when railroads were a monopoly, but they haven’t been a monopoly in a very long time. If shippers are pissed that there aren’t more railroads available to carry the freight, they can blame the U.S. government. It continued to impose strict regulations on shipping rates even when other forms of transportation were being massively subsidized. The gov’t subsidized the crap out of the trucking industry by spending trillions on highways, and subsidizing oil prices (the Iraq invasion and occupation is a perfect example). It massively subsidizes airlines and destroyed the rail companies’ passenger business. There were many mergers and bankruptcies in the 1960′s through the 1980′s. Half the trackage has been abandoned, and much of it has been downgraded, resulting in speed restrictions. There just wasn’t the money to keep it up.

    In the last few years, rail has become very competitive again because of increasing fuel cost. The huge fuel efficiency advantage of rail has started to play a role. Sure, the companies are making handsome profits, but I keep reading about the big capital investments they’re making in new track, bridges, etc. If rates are forced down, then there won’t be any money for maintaining the rails, and then the shippers will be mad about the increased shipping time.

    Here are a couple examples I found of capital investments that are happening.
    [www.uprr.com]
    [www.trainmaster.ch]

  24. Anonymous says:

    Railroads own and maintain their tracks. Trucks get a government subsidy, read “public roads”.

    This is all about companies wanting to force railroads to lease trackage rights to other railroads, so that any railroad can use another’s property/lines.

    That is tantamount to saying that we must provide housing to everyone, and if they don’t have any, you must share your home, as some rate that the homeless determines. (Ok, an exaggeration, but the principle is the same.)

  25. Anonymous says:

    Rail transport companies survived due to anti-trust immunity designed to keep them in business. That was needed when gasoline cost $1/gallon but they’re making money hand over fist – and record profits – now that gas prices have been above that for the better part five years.

    Those days are over and the anti-trust immunities should be revised.