At a time when the UP and SP experienced a lull or temporary breakdown in their merger talks, some in the RR business press were speculating that SP might simply become a “toll railroad”. Since I have never heard of such a thing before, how exactly would that operate, and have there been other toll railroads in the past? If it were a viable option, why, for example, could any of the lines making up Conrail (NYC, PRR, etc.) not have used the same option rather than submit to the govt. merger?
Are trackage rights from one competing Class I to another free? Such as BNSF having trackage rights that allow their trains to run on UP tracks and vice aversa?
This is an error. Mears built toll roads, not toll railroads.
You’re talking about “Open Access”, a favorite of one or two members of this forum.
Open Access has not been shown to have any advantages over the more traditional integrated system where the same organization owns the trains and tracks.
Toll roads will work while toll railroads won’t work principally because of the need to aggregate freight into trainload lots on a railroad. If you split the train operation between several entitites you wil make this aggreagation much more difficult and make rail transportation more costly.
With truckload shipments there is no need to aggregate at all. With less than truckload you do have to aggregate, but to a much less degeree than a train would require.
OA is a relatively new concept, still in the growing pains stage in Europe, perhaps more successfully entrenched in Australia. The closest North American examples in spirit would be those rail lines which host two or more Class I’s, and certain shortlines/regionals that act as feeders for two or more Class I’s (Ed Blysard’s railroad being a prime example). The purpose of OA or toll railroads is to facilitate intramodal competition among Class I carriers. Most economists agree competition is a good thing for a free market economy, as it keeps prices down and services up for the consumers.
Greyhounds is absolutely correct in this statement…
[:O]
…if we are talking about rail lines that only host one or two trains per day. Then there wouldn’t be enough traffic available to sustain two or more rail transporting companies with decent sized trains, e.g. economies of scale. (Or course, we are assuming that price competition of two or more railroads would not draw business off of over the road trucks, the long haul mode of last resort.)
However, most major rail terminals in the US and Canada host double digit numbers of trains per day, so it would be quite easy for even a single track CTC rail line to host sustainable consist sizes and train frequencies for each rail transporting company to optimize the economies of scale in terms of labor utilization, marketing reach, et al. As stated above, this is actually ha
Since railroads in this country are already privately owned and enjoy the protections of the Fifth and Fourteenth Amendments, I’m not sure that FM really knows how involved the process would be in establishing OA in the United States.
Antitrust law would have to be amended to order the separation of railroads into operating and right-of-way companies. This would require an Act of Congress and there is no guarantee that this step will occur anytime in the foreseeable future given the current political climate. Said change in the law would also have to pass Constitutional muster.
Assuming that such a law is passed, the Justice Department would have to file suit against EVERY existing railroad company to enforce its provisions. These would be civil suits, which have a way of dragging on for a long time before reaching a conclusion. Since a multiplicity of lawsuits would be involved, it is quite possible that conflicting judicial decisions would be reached on various issues, which would need to be resolved by the various Circuit Courts of Appeals and possibly the Supreme Court. At no time is there a guarantee that the OA provisions would not be stricken as unconstitutional.
I will admit that this is a simplification and I welcome the attorneys to frequent this forum to fill in the details or shoot me down as appropriate.
The reason this statement is unrealistic is that the toll railroad concept is already in place in certain areas. Montana Rail Link is for all intents and purposes a toll railroad for BNSF - BNSF pays a set fee for each of it’s trains that crosses over MRL. Although BNSF has attempted to keep UP off MRL, there may be a time in the not so distant future where UP finally finds a way to utilize MRL as it’s toll railroad.
Ah, Bert, missed again. Every craft on the MRL is represented by one of the national labor organizations. That includes section men, signal maintainers, machinists, electricians, clerks and train crews. It has been that way on the MRL since day 1. This has been mentioned in every published article on the railroad in the railfan press. Try to get the facts straight before you push the send key.
MRL is hardly a toll road in the accepted sense of the word since the tracks are not open to all comers. MRL has offerred the mainlins to UP detours in the past but this happens on a case by case situation. Remember, the BNSF still OWNS the MRL mainlines and all the stipulations placed on MRL’s use of these lines are only known to those at high levels in both organizations. Unless futuremodal has some information not in common knowledge, I would say it is very unlikely UP trains will be soon operating on the MRL.
If some other railroad wants to route over the MRL they would have to do the same at points east of Billings and west of Spokane with the BNSF. That sort of thing is generally handled in a rate making process. If such joint rate making meets the definition of a toll road then all common carrier railroads in the US are by your definition “toll roads”.
Well said arbfbe. Some others ought to read-up up on Otto Mears before attributing bad quotes to him. (He was a smart entrepeneur and hard working opportunist. Nothing was given to him and he wasn’t always successful. )
OA is a relatively new concept, still in the growing pains stage in Europe, perhaps more successfully entrenched in Australia. The closest North American examples in spirit would be those rail lines which host two or more Class I’s, and certain shortlines/regionals that act as feeders for two or more Class I’s (Ed Blysard’s railroad being a prime example). The purpose of OA or toll railroads is to facilitate intramodal competition among Class I carriers. Most economists agree competition is a good thing for a free market economy, as it keeps prices down and services up for the consumers.
Greyhounds is absolutely correct in this statement…
[:O]
…if we are talking about rail lines that only host one or two trains per day. Then there wouldn’t be enough traffic available to sustain two or more rail transporting companies with decent sized trains, e.g. economies of scale. (Or course, we are assuming that price competition of two or more railroads would not draw business off of over the road trucks, the long haul mode of last resort.)
However, most major rail terminals in the US and Canada host double digit numbers of trains per day, so it would be quite easy for even a single track CTC rail line to host sustainable consist sizes and train frequencies for each rail transporting company to optimize the economies of scale in terms of labor utilization, marketing reach, et al. As stat
No, I didn’t suggest that MRL is a de facto toll road (okay, the “for all intents and purposes” description is probably off base!), but that the effect of the BNSF overhead traffic shows that the toll concept works for the stated purpose of generating revenue otherwise missed. Not sure if you’d agree with the following or not, but it seems to me that without the BNSF overhead traffic, MRL would have a hard time making it as a stand alone regional railroad.
As for other potential MRL clients, only UP is close enough connection-wise to be able to achieve overhead rights at two ends. And that would probably only be for Eastport-Poca
OA is a relatively new concept, still in the growing pains stage in Europe, perhaps more successfully entrenched in Australia. The closest North American examples in spirit would be those rail lines which host two or more Class I’s, and certain shortlines/regionals that act as feeders for two or more Class I’s (Ed Blysard’s railroad being a prime example). The purpose of OA or toll railroads is to facilitate intramodal competition among Class I carriers. Most economists agree competition is a good thing for a free market economy, as it keeps prices down and services up for the consumers.
Greyhounds is absolutely correct in this statement…
[:O]
…if we are talking about rail lines that only host one or two trains per day. Then there wouldn’t be enough traffic available to sustain two or more rail transporting companies with decent sized trains, e.g. economies of scale. (Or course, we are assuming that price competition of two or more railroads would not draw business off of over the road trucks, the long haul mode of last resort.)
However, most major rail terminals in the US and Canada host double digit numbers of trains per day, so it would be quite easy for even a single track CTC rail line to host sustainable consist sizes and train frequencies for each rail transporting company to optimize the economies of scale in terms of labor utilization, marketing re
So after the big boys cherry-pick all of the profitable unit train and other fixed-consist moves, who’s left to do all of this aggregation? At what cost? Will it end up being more expensive to the “captive” shipper than the current arrangement?