I am aware of the contentious issue of Reciprocal Switching between Class I railroads and captive shippers. However, I do not understand how this helps or hinders shippers or the Class I railroads. If someone could provide a simple explanation, perhaps with an example, it would be most appreciated.
One upshot is that it apparently will lead to cheaper shipping rates, and so it is not surprising that the Class I railroads are opposed. The railroads have counter-proposed to add a surcharge to any such switching to compensate for the loss of revenue, which to my mind negates any benefit to the shippers.
Do I have the following correctly? Shipper A can send his freight with CSX and specify a particular interchange with NS to Customer B. Shipper B can send his freight to Customer A with NS and specify a particular interchange with CSX. Both NS and CSX will apply surcharges to offset any revenue loss. So who gains and why?
“A mutual interchange of inbound and outbound carload freight which is switched too or from a siding of another carrier under a regular switching charge. The charge is usually absorbed by the carrier receiving the line haul.”
(Switched by two railroads, billed by one railroad at a standard rate - no matter how it got there.)
Most cases of reciprocal switching I’ve seen both railroads served the customer, but the railroads decided that one railroad would do the switching and charge the other railroad a fee for providing that service.
So both railroad A and railroad B serve a customer. It is inefficient for both to switch the customer. For a fee of $200 per car railroad A will switch the customer and then give the cars to railroad B. The customer bills the cars with railroad B just as if railroad B served the customer.
There is a grocery store and a Post Office in town. But the Post Office doesn’t do a lot of business. To save money the Post office contracts with the grocery store to sell stamps and collect parcel post for a fee.
I have a feeling what is being asked for is not traditional reciprocal switching. I think what customers are wanting is in places where railroad B has never served the customer to have a reciprocal switching agreement to allow the customer to “ship” on railroad B but have railroad A switch the customer.
The customer doesn’t have a Target in town, but has a Walmart. They want to be able to “shop” at Target, have Target ship the stuff to Walmart, the customers&
Being served by two railroads does not suggest a captive shipper. My concept of a captive shipper is service provided by one and only one operating railroad in the immediate area, that is, no other railroad for miles around. Frankly, that term could apply to just about any shipper. How many plants or shippers border on tracks owned and serviced by two or more operating Class I railroads?
Your concept of a captive shipper is not what the “law” defines as a captive shipper. Neither is your concept of a captive shipper a concept that a rational person would have. A captive shipper is a rail customer served by only one railroad THAT DOES NOT HAVE ANY OTHER REASONABLE TRANSPORTATION ALTERNATIVE. That’s a big difference**.**
One major bellyacher is a company in W. Virginia that ships bulk product and is located on the Ohio River. They have a private dock on the river. If that company’'s logistics people can’t figure out how to use the Ohio River barges to move their bulk product the company needs to outsource it logistics. They’ve got a reasonable transportation alternative so they’re not “Captive”.
Let me see if I can help a little bit. And let’s start by ignoring the current STB proceeding on reciprocal switching, which involves “forced” reciprocal switching to supposedly captive shippers (in other words, under the proposal being considered , STB would force a railroad that solely serves a “captive” shipper to offer reciprocal switching service). That proceeding merely muddies the waters, since most existing reciprocal switching arrangements in the industry are voluntary.
“Reciprocal switching” is an arcane term (there are lots of these in the rail industry). A better term is “line haul switching”. It refers to an business arrangement where the railroad that physically serves a particular shipper will hold itself out to provide “switching” service between that industry and another line haul carrier, usually in the same switching district. For example, if a BNSF industry in Chicago is “open” to reciprocal switching", that means that BNSF is willing to move traffic between that industry and another line haul railroad in the Chicago Switching District.
The compensation BNSF gets for this service is the switching rate it unilaterally sets or (in the case of UP) agrees to with the line haul carrier. In this kind of arrangement, BNSF has no say in what the line haul rate will be. All BNSF gets is its switching rate, which is normally paid to it by the lin