“A recent American Association of State Highway and Transportation Officials study determined railroads would need to invest $175 billion to $195 billion in infrastructure to maintain current market share, but railroads could pay only $142 billion of that amount from earnings and borrowed funds.”
I wonder what the OA opponents have to say about that little tidbit of information? Seems the current system does not allow for sufficient capital recovery to maintain the good times.
#1, Where in this article does the AAR state that the “condition of the US rail infrastructure” is “great?” (quotes from YOUR title) Or even mention an opinion on condition? All they state is a few references to how much is being spent by the railroads to maintain and upgrade infrastructure.
#2, As usual, what does “open access” have to do with this? Neither the AAR or STB is quoted as even mentioning such a hairbrained concept.
Makes us wonder if you even read the linked article before you posted this.
“Considerably worse” quothe mudchicken, with nary a reference. Keep in mind, I am not advocating that OA is the solution for cost of capital recovery. I am only pointing out the fact that the current system has proven beyond a reasonable doubt that it can’t even come close, and this occurs during an ostensible railroad heyday period. What’s it gonna take, all you integrated supporters? A “Ma Bell”-style Class I behemoth? Do you really think in your wildest dreams the regulators will allow that?
“What? Where” quothe Tom Diehl. As if discussions of rail issues are limited to a news item’s content verbatum! Tom misses the question being begged by the news item, a question revealed in my choice of thread title - if railroads can’t sufficiently recover the cost of capital during these hot economic times, doesn’t that suggest that they never will under the integrated system? In another thread, Michael Sol points out that the current system now seems to favor better ROI’s if we get another recession, since that will take care of the capacity crunch via reduced business. What other industry has such a convoluted perch on such a branch of economics?
Also missed by MC and TD is the blatant reference in the news item of the need for public financing to make up for the deficit. If the private integrated system is so great, why the need to pony up to the public trough just to maintain substandard “adaquacy”?
And of course, that leads us to the inevitable conundrum - with public money comes public demands. Who knows, maybe the Class I’s can have their cake and eat it too - get public financing without the public input. The response of rail shippers probably would counter this, as they want any public money to go specifically for new capacity, not fo
You’re really out to prove you have limited reading and comprehension ability.
#1, I didn’t “miss” anything. I did question where you saw the reference that the AAR said the condition of the rail infrastructure was great. Something you completely “missed.” Add to that the fact that you completely misquoted the AAR.
#2, the only reference to “open access” is in your statement. As usual, you’ve failed to even state anything that would even suggest how the concept would make anything better. You seem to squak up this hairbrained idea like the pirate’s parrot, just words, no substance. Also, how does Michael’s statement on ROI twist into
You’re really out to prove you have limited reading and comprehension ability.
#1, I didn’t “miss” anything. I did question where you saw the reference that the AAR said the condition of the rail infrastructure was great. Something you completely “missed.” Add to that the fact that you completely misquoted the AAR.
#2, the only reference to “open access” is in your statement. As usual, you’ve failed to even state anything that would even suggest how the concept would make anything better. You seem to squak up this hairbrained idea like the pirate’s parrot, just words, no substance. Also, how does Michael’s state
If it weren’t for the fact that the words “railroad infrastructure” could probably be replaced by “highway infrastructure”, which, by it’s nature is open access, and which is publicly funded, I’d tend to agree…
In light of the recent flap over CSX derailments, does anybody really think that the STB is going to suggest that rail infrastructure is in excellent shape?
You’re really out to prove you have limited reading and comprehension ability.
#1, I didn’t “miss” anything. I did question where you saw the reference that the AAR said the condition of the rail infrastructure was great. Something you completely “missed.” Add to that the fact that you completely misquoted the AAR.
#2, the only reference to “open access” is in your statement. As usual, you’ve failed to even state anything that would even suggest how the concept would make anything better. You seem to squak up this hairbrained idea like the pirate’s parrot, just words, no substance. Also, ho
Don’t be too hard on futuremodal. He got some bad news Thursday.
The article says that the railroads need $175-195 billion and will only be able to get $142 from operations and borrowing “to maintain current market share”. The article doesn’t give a time frame for the minimum $35 billion shortfall but considering current investment levels, it could be 20 years. Given the result of the modeling work mentioned by Michael Sol in the Buffett thread maybe a drop in market share isn’t that bad if it means less congestion and the concurrent pressure on unit cost caused by the well above optimum traffic levels.
Anyway, no one could argue with futuremodal that the competition resulting from open access would result in lower freight rates. Unless the new operators coming on with OA are as dumb as a bunch of us rail fans, they are going to target the high margin traffic as the best business oppurtunities. And, as demonstrated by the immediate post Staggers period, rates will probably head for the floor. If I follow it correctly, with that each shipment will be producing less of the cash needed to fund capital expenditures.
Of course, that isn’t necessarily a bad thing, because as rates go down, there should be an increase in the total volume of traffic, and perhaps the aggregate of lower margins will meet the capex needs. Oh, I forgot, there is no capacity for more business and even if there is room for some growth, the density models indicate that traffic is already above optimum levels for unit cost.
It would appear that OA would cause a dramatic squeeze on margins and while I can only guess on this, probably reduce the cash available to get to the total $175 billion needed. I see a couple of options. Warren Buffett seems to have the kind of money needed and maybe he would give it to the infrastructure companies. Then there is the alternate universe where the money tree is free for th
If I had bad news on Thursday, that’s news to me![;)]
Not quite accurate. The article states that, in order “to maintain current market share” the railroads will need $195 billion, thus the $142 billion will result in a reduction from current market share.
What Michael was refering to was the oddball way integrated railroads react to market ups and downs, thus they may benefit from an economic slowdown. My take on his point is that a more market oriented rail system would result in better earnings concurrent with greater demand for services. You know, like normal businesses.
[quote]
Anyway, no one could argue with futuremodal that the competition resulting from open access would result in lower freight rates. Unless the new operators coming on with OA are as dumb as a bunch of us rail fans, they are going to target the high margin traffic as the best business oppurtunities. And, as demonstrated by the immediate post Staggers period, rates will probably head for the floor. If I follow it correctly, with that each shipment will be producing less of the cash needed to fund capital e
So Dave claims this “isn’t an open access thread?” From the first entry that initiated the thread (by, guess who):
And he still hasn’t told us where the AAR said the “condition of US rail infrastructure” is “great,” like his title says. Since he can’t even quote himself accurately…