The overcharging = clogged highways.

"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?

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.

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?

@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.

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?

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.

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

@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.

@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).

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.

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.

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.

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.

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

@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.

@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.

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.

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.

@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.

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

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

@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!

@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.

@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.

@ngoandy: @ngoandy:

Good points. Thanks

@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?

@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

@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?

@HiPwr: But most public transporation runs "at a loss"....

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.

@Canino: Correct

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

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

@nakedscience: No, mono means one. Oligopoly perhaps.

@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.

@RideMyDiscoStick?_GitEmSteveDave: (insert cascade of Simpsons references/quotes here)....mono-D'oh!

@RideMyDiscoStick?_GitEmSteveDave: The ring came off my pudding can...

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!

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

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

@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.

@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.

@HIV 2 Elway: Take my pen knife, my good man.

@RideMyDiscoStick?_GitEmSteveDave: Conan O'Brien's best episode.

@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.

@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.

@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.

@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.