Do you believe that if you keep saying that long enough, more than a handful of people will believe you? BTW a majority of the Domestic traffic out of California is just resorted and repackage import goods, except for agricultural products.
Proof please, at least of a nature that would satisfy gabe and the other attorneys on this forum.
You mean proof of the perception? It’s all right there in #1 and #2. BNSF’s own financial statements show that import intermodal only brings in half the revenue per carload compared to everything else, including domestic intermodal. And BNSF has done nothing but trumpet it’s desire to double track the entire LA-Chicago transcon, despite the fact that the real high margin stuff like grain and coal is moving over the northern transcon and the midwest core, which is still bottlenecked to the hilt.
We’ve discussed this ad nauseum, and there’s no contradiction being provided by you and other BNSF defenders. One can only conclude that a US corporation that irrationally favors low margin importers over high margin domestic shippers is being controlled by the low margin shippers.
Dave, are you saying BNSF spent more on increasing capacity on the Transcon than on the PRB during 2005 and 2006 ?
Does anyone have those numbers at hand ?
To FM: I’m asking you to provide concrete proof that Chinese investors (of any type) have a controlling interest in BNSF.
There’s your problem FM, you have trouble reading, the 2006 Financial Statement clearly states that Intermodal is per unit not per carload, since a doublestack car can handle at least 2 units, the revenue is at least twice per car, unless BNSF can’t load both positions. BNSF revenues for International Intermodal was approx $2,582million last year which is more than Agricultural Products, and not a lot less than Coal.
Well John, I’m suprised you’ve made a bit of an error in defining “unit”. There is a difference between a unit and a platform, and for a single well car the proper definition is 1 unit and 2 platforms - a bottom platform and a top platform. Therefore, if BNSF’s FS for intermodal lists revenues per unit, that would include both platforms (aka, two containers) as one unit.
The revenues for import intermodal is the volume number, not the revenue per unit number which is more descriptive of rate comparisons. For example, you’ll see the revenues per import intermodal unit is half that for domestic intermodal per unit.
Also, the R/VC ratios (from a few years ago - the STB no longer requires that information to be made public, for obvious reasons) clearly show the bulk of import intermodal in the low range, aka <180%, while domestic traffic has a healthy share sitting above that 180% threshhold.&nbs
Paul, I made it perfectly clear in my previous post that the “proof” is circumstantial, based on the perceptions provided by BNSF’s own financial statements and infrastructure investment expenditures. What I would ask you is why you would think BNSF doesn’t give favorable treatment to it’s Asian importers - import intermodal revenues per unit are half the domestic intermodal revenues per unit - so what does that tell you?
Also, take a look at the R/VC ratio’s, and show me evidence that an equal percentage of import traffic is charged at the so-called “captive rate” as is charged for domestic traffic. Or, I can just save you the time and tell you flat out - no ocean import traffic is subjected to the captive rates.
[:)]
I’m not going to try to verify this statement, “Import intermodal revenues per unit are half the domestic intermodal revenues per unit.” Assuming it is true and there is no logical explanation that I can interpret as “fair and reasonable,” I take great offense at the practice.
Similarly, before I retired I traveled frequently between Washington, DC, and Syracuse, NY. The government rate fare for round trip air was about $600, while the roundtrip fare for Washington, DC, to Los Angeles was about $375. The Syracuse flights were usually nearly full. There is no way that can be fair and reasonable. I took great offense at that kind of pricing, again assuming no logical explanation.
If the RR unfair (unfair IMHO) pricing comes from Chinese (government or industry) ownership of the RR, then I take great offense again.
This is why in my previous post I mentioned that Chinese will buy our properties with the dollars we give them if we don’t offer them products/services that they want to buy. To me, that is a very negative outcome of letting our industry deteriorate. I’m OK with selling them products/services; I’m not OK with selling them pieces of the U. S. A.
[:)] [:)]
So your saying that a well with only one box in it is 1/2 a unit? or is it one unit at only half the revenue. What about a well with 2 20 ft. in the bottom and a 40 ft on top, Still just one unit? How would you figure cost/price if one was empty? Big revenue difference. Also what you are in effect saying is that there is no difference between a unit and a car. The other interesting thing is that Consumer Products is nearly equal to coal in revenues per car/unit in 2006.
BNSF 2006 Annual Report gives the total revenues for the category Consumer Products as $5,613 million, this is on page 18. On page 19 it lists the split as 46 percent of the total revenue for International Intermodal and 46 percent for Domestic Intermodal, the balance is Automotive. Please cite the report where you find the different per unit rates.
[quote]
Also, the R/VC ratios (from a few years ago - the STB no longer requires that information to be made public, for obvious reasons) clearly show the bulk of import intermodal in the low range, aka <180%, while domestic traffic has a healthy share sitting above that 180% threshhold. If that isn’t cross-subsidization…
Again, old news, been hashed and rehashed ad nauseum.
What I would question is why you and Paul would even
Well, the report is 4.79MB, and I’m on a 56k modem, so I’m not going to waste a whole hour to download it, but I do remember that you or Michael had posted the report on this forum a while back, and I remember that the intermodal numbers, when divided between import and domestic, showed that the per unit revenues were lowest for the import intermodal, roughly half that of everything else, something like $800 per uni
There is a very logical explanation, that is both fair and reasonable. Most airlines have either a freight or a mail contract for flights between large cities. The income from these contracts help cover the cost of the flight, allowing the airline to charge the passengers less. The flights to smaller cities rarley have freight or mail contracts so the airline has to have the passenger try to cover the price of the flight and make a profit also. I am sure if all the facts were put on the table, the BNSF capital expenditers would make perfect sense, no matter what some of the conspiracy theorists on this site might think.
Bert
I think it more of the case of too much electrical power required. And not enough power plants. Some areas have rolling blackouts. China is already scheduling to build nuclear power plants. As far as “radiation”. It’s better to blame someone other then themselves.
Conspiracy theories aside, China’s peg to our currency leads them to purchase extremely large amounts of dollar denominated assets. This practice actually props up the value of the dollar not devalue it. Recently the chinese have tired of treasuries (one could argue that the chinese-and saudi arabia-appetite for treasuries has allowed our government to spend far too freely and financed asset bubbles like the housing bubble) and are moving on to companies and other assets. back in the 1980’s people were worried about the japanese buying america…those fears turned out to be unwarranted. japan is another contry that keeps its currency “artificially” low. I put that in quotes because the united states also manipulates its currency. thus, currency speculators are only private sector equivalents of the governments that issue and back the currency. there is no such thing as a fixed currency. it has to be based on some value, be it the value of gold or the value that the government says its worth (and is willing to arrest you if you don’t take it). however, internationally, the government’s ability to force others to accept the currency at a fixe rate is limited. thus, our current devaluation is forcing the chinese to buy more dollars. our largest problem is mainly arrogance. we think that we are the most powerful country and that we don’t need to worry about being competitive. why is it that we have one of the higest corp tax rates in the developed world?
As for BNSF, I don’t buy the conspiracy theories. my guess is that management made a strategic decision that they felt woudl translate into profits. right or wrong. however, are any of the other railroads aggressively doing anything? I mean, other than allowing their railroad to rot away while they wait for uncle sam to give them money?
Back to the topic at hand, it’s my understanding that China’s priorities have shifted. they intend on extending rail access to large swaths of the country that are still poor an
[:)]
Why would the Chinese be buying dollars when we already are giving them more than they can use?
[:)] [:)]
to keep the value of their currency reasonably in line with their targets. When currencies are freely convertable, what happens is that we purchase goods from, say, Spain. those goods are priced and paid for in euros (either we pay in euros or the company changes the payment to their home currency, euros). thus, when we buy foreign goods, we are demanding their currency. Now, in China, the currency is not freely convertible and the major holder of foreign currency is the government. The government accepts payment in dollars. the problem is, their currency is the yuan. Either they hold in dollars or they hold in yuan. the problem is, holding dollars is a bad investment. It has lost a significant amount of value the past several years and shows no signs of abating. They can’t change it to yuan because that’s linked to the dollar. Changing it to the yuan woudl increase the supply of dollars relative to the yuan…in other words, it would increase the value of the yuan…exactly what they don’t want. Caught between a bad investment (the dollar) and their own fixed exchange rate they are forced to buy dollar denominated assets which are not eroded in value by inflation…hence they are buying US assets. by purchasing US assets they are demanding dollars propping up the demand for dollars. moreover, they have been buying massive amounts of treasuries to prop up the value of the dollar (which they are a large holder of) to keep pressure off the yuan to appreciate. This has led to artificially low borrowing costs which has led our government and our home buyers to borrow more than they otherwise would. (note: saudi arabia, I believe, is actually the largest buyer of treasuries). that’s how I understand it.
Sounds like the Chinese markets had a bit of a ‘correction’ today. Funny the US markets didn’t really reflect it.
[:)]
Thanks for the explanation. I guess I have a simpler view. We give them dollars for Chinese products. They have pockets full of dollars, which they need to use (spend) or invest. When they come to the U.S. to buy things, they find that our companies have quit producing things they may want to buy. What to do? Invest in U.S treasuries is one thing. Invest in RRs is another. Etc. In short, we are trading off our properties for Chinese manufactured goods.
I liked it better when our industries made more products and sold them successfully all around the world.
[:)] [:)]
[/QUOTE]
not exactly, because they could trade dollars for other currencies including their own. since they need to hold dollars to depress their currency, they buy dollar denominated assets. that’s the most simple explanation I think.
me too. unfortunately we haven’t been competitive since pre-FDR. The 1950’s was a time when there was NO competition to speak of. Until we realize that being competitive matters, we’ll continue to get beat by other countries. If I’m a manufacturer and labor takes up 10% of my budget (which I believe is typical), I can still pay 1/4 of the cost for power in, say, Brazil than here. In Ireland I pay a 12% tax rate but here I pay 35%. amtrak pays 2.5 times more for power in New England than it does on the south end. The United States costs too much (both to live and do business). Our advantages are generally in efficient capital market, a generous risk reward system, and a culture of risk taking. (IMO). However, someone’s got to pay for foreign wars, bases, programs for everything and everybody, payments to keep friends, and the general inefficiency and corruption of washington.
[:)]
Thank you. I think I understand it better.
That doesn’t mean I like it any better.
[:)] [:)]