Hey guys, anyone recall the Conrail in TRAINS article that I mentioned earlier?
Good God, I feel like a major league slugger with a hanging curve on the way.
No brag, just fact. I hold a Masters in Transportation from Northwestern U. The title of my thesis was (and is) “The Transportation of lcl/ltl Freight by Railroad.” You can look it up.
My thesis advisor (Dr. Swanson) said I had to find out why this freight went over to trucks if I was going to write about getting it back on the rail. The basic finding, which was approved by the NU commitee o’professors was - Federal Economic Regulation of railroads prevented them from responding to the new truck competition and diverted the freight from rail to road.
It had little or nothing to do with which mode could best handle the shipments - the market wasn’t allowed to sort things out. NO. The Gubernmint had to get in there and screw things up big time.
Basically some railroads, lead by the New York Central, were responding effectively to the new motor carrier competiion by using a container based intermodal system and middlemen called “freight forwarders”. In 1931 the gubernmint put a stop to this response. You can look it up. The ICC case was 173 ICC 377. The NYC had developed an effective response to truck competition about as soon as trucks became competition.
And the government stopped it. One of the perfessers asked me if I ever found out who was being paid off. I didn’t think to look back then, but back then I was younger.
“The Gubernmint” did basically the same thing with fruits and vegetables, meat, etc.
I actually concluded in the thesis that the railroads have a natural advantage for handling ltl because they are less sensitive to tare and cube constraints than truckers. They could develop a container system for ltl using small containers which would allow automation and eliminate much of the labor costs now driving union ltl cariers under — but that be another story.
A whole lot of ltl still moves by rail today. It just
Don’t sell companies like UPS short I watched this giant of the transportation industry since its infancy. I watched them and a team of lawyers fight for every route ad state they operate in and it was no easy battle. Where they could they bought existing trucking companies for their rights to operate certain routes in some states while they applied and fought off all who attempted to block them in getting rights to operate in other states. Deregulation of the trucking industry by the Peanut farmer President finally permitted UPS to become the transportation giant they are today. Them and other trucking companies had just as difficult a time with government and regulations as the Railroad Industry and being a one time owner operator myself I can attest to the difficulties dealing with government to obtain permits and operating authorities. I congratulate UPS and the others who spent millions on lawyers making the trucking industry a better place for everyone. The railroads were never efficient at package delivery and companies like UPS took the ball and ran with it. I ordered an item in Chicago on Monday of this week and and it was shipped tuesday via UPS and I received the item in California today. The railroads could never match service like that and i had many dealings with REA and Later Greyhond express and they both deserved to be out of business.
The major railroads are making money, not enough perhaps, but still, and they are recapturing some of the business they lost, and it is really a question of priorities. I think NS and BNSF and possibly CN are setting the pace, but I expect CS X and UP to learn fast enough to make the whole industry far more successful than it was before derugulation. But I think Gunn can be trusted to have made the right decision with regard to express and mail. Even though I was one of those who suggested this sort of business about nine years ago.
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QUOTE: Originally posted by greyhounds
Good God, I feel like a major league slugger with a hanging curve on the way.
No brag, just fact. I hold a Masters in Transportation from Northwestern U. The title of my thesis was (and is) “The Transportation of lcl/ltl Freight by Railroad.” You can look it up.
My thesis advisor (Dr. Swanson) said I had to find out why this freight went over to trucks if I was going to write about getting it back on the rail. The basic finding, which was approved by the NU commitee o’professors was - Federal Economic Regulation of railroads prevented them from responding to the new truck competition and diverted the freight from rail to road.
It had little or nothing to do with which mode could best handle the shipments - the market wasn’t allowed to sort things out. NO. The Gubernmint had to get in there and screw things up big time.
Basically some railroads, lead by the New York Central, were responding effectively to the new motor carrier competiion by using a container based intermodal system and middlemen called “freight forwarders”. In 1931 the gubernmint put a stop to this response. You can look it up. The ICC case was 173 ICC 377. The NYC had developed an effective response to truck competition about as soon as trucks became competition.
And the government stopped it. One of the perfessers asked me if I ever found out who was being paid off. I didn’t think to look back then, but back then I was younger.
“The Gubernmint” did basically the same thing with fruits and vegetables, meat, etc.
I actually concluded in the thesis that the railroads have a natural advantage for handling ltl because they are less sensitive to tare and cube constraints than truckers. They could develop a container system for ltl using small containers which would allow automation and eliminate much of the labor costs now driving union ltl cariers under — but that be another story.
This case was only one of a batch of ICC rulings that set our to protect water, air and highway carriers. Their was a paradox-the government wanted to regulate railroads as a monopoly while at the same time destroying the monopoly by promoting other forms of transportation with ICC rulings, money and legislation. The rate protecting did not end for thirty years with the Big John cases in the mid 1960s.
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QUOTE: Originally posted by gabe
[quote]
QUOTE: Originally posted by greyhounds
Good God, I feel like a major league slugger with a hanging curve on the way.
No brag, just fact. I hold a Masters in Transportation from Northwestern U. The title of my thesis was (and is) “The Transportation of lcl/ltl Freight by Railroad.” You can look it up.
My thesis advisor (Dr. Swanson) said I had to find out why this freight went over to trucks if I was going to write about getting it back on the rail. The basic finding, which was approved by the NU commitee o’professors was - Federal Economic Regulation of railroads prevented them from responding to the new truck competition and diverted the freight from rail to road.
It had little or nothing to do with which mode could best handle the shipments - the market wasn’t allowed to sort things out. NO. The Gubernmint had to get in there and screw things up big time.
Basically some railroads, lead by the New York Central, were responding effectively to the new motor carrier competiion by using a container based intermodal system and middlemen called “freight forwarders”. In 1931 the gubernmint put a stop to this response. You can look it up. The ICC case was 173 ICC 377. The NYC had developed an effective response to truck competition about as soon as trucks became competition.
And the government stopped it. One of the perfessers asked me if I ever found out who was being paid off. I didn’t think to look back then, but back then I was younger.
“The Gubernmint” did basically the same thing with fruits and vegetables, meat, etc.
I actually concluded in the thesis that the railroads have a natural advantage for handling ltl because they are less sensitive to tare and cube constraints than truckers. They could develop a container system for ltl using small containers which would allow automation and eliminate much of the labor costs now driving
Whoa there “major leaguer,” you might want to choke up on that bat before you pull your “hanging curve ball” foul.
If you have “facts” to support your premise that none of the traffic handled by NYC’s LCL container industry had migrated to trucking by 1931, that would certainly strengthen your argument. But, until you show me such facts,I am going to be a bit skeptical.
Why am I a bit skeptical? No . . . not just because your previous discourse strikes me as bombastic and pedantic–but I like the way you think.
Why I am skeptical, is if the NYC had this business to begin with, I doubt they would have spent the money investing in the containers and the new freight operations to secure business it already had—especially during the Depression.
You are right; I have no facts to show that truckers rather than the NYC had this business before their innovation–although I wouldn’t throw stones for that reason thus far if I were you. However, my conclusion makes sense to me, because it doesn’t seem to make a lot of sense for an industry to invest money to secure traffic it already has.
As for protecting jobs by enforcing inefficiency being just “nuts,” protecting jobs at the expense of efficiency has, and will, always be a factor in economic development.
In terms of the here and now, I would agree with your conclusion that it doesn’t make a lot of sense. However, in the 30s, the very survival of capitalism was an issue. Revolution was a real threat. If unemployment rose more than it did, American capitalism and the private enterprise system as a whole may have faltered. I don’t see how putting off innovations that diminish jobs when the workforce and economy is shrinking is “nuts.” The one step backward to avoid 50 steps backward makes perfect sense to me.
Gabe
P.S. I think a lot of the university you attend. As a humbled graduate of Indiana University, however, I would ask for the sake of Northwestern, not t
OK, I don’t “attend” NU anymore. I graduated. A while ago.
I wasn’t an English major, but I don’t understand why U.S. Federal Government is redundant. There are other federal governments.
I’ll get the exact wording from my thesis on why the NYC was leading the response to the diversion of lcl to highway. Hey, somebody has to lead. They were loosing freight to the truckers and they came up with an effective response. And there effective response was stopped by the U.S. Federal Government.
The opressive, ignorant rulling came down during the depression. But, the NYC had begun it’s container operation in the 1920’s - in good economic times.
Fair enough. I didn’t know the NYC LCL was started during the 20s. I thought its birth and demise were not that far from one another. That certainly adds to your thesis, as investment was much more aggressive during the 20s.
I guess we will have to agree to disagree as to the reasonableness of the decision. I am empathetic to your ultimate contention, but do not think it applies in all times and in all places–especially in Depression America.
Gabe
P.S. The reason I think U.S. Federal Government is redundant is because (1) when dealing with the regulation of American railroads, there is only one federal government, and (2) Federal Government in that sense has a rather unique meaning in the context of American dual sovereignty.
I’d like to read this thesis – is there any online source, or can it be scanned or OCR converted for e-mail attachment?
IIRC, there are pictures and a short description of the NYC container scheme in a National Geographic article on railroading – for some reason I remember 1922 or 1926 as the date given.
I think PRR had a similar setup of containers at about the same time, and I wouldn’t be surprised to find that other railroads were looking at the idea, particularly including Southern Pacific (which had an ICC-permitted trucking subsidiary well past the date mentioned). I suspect that the use of specialized systems for LCL handling were not particularly cost-effective in the regulated-tariff environment of that period – which would not allow recovery of any additional revenue from the use of the special equipment, and would ban any ‘dedicated’ arrangements requiring forwarder use of particular carriers…
One would suspect that the logic described in
http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=us&vol=310&invol=344
would apply to the discussion of ‘forwarders’ connected with multimodal rail/truck operations when the operating savings were tied to use of a particular carrier’s proprietary equipment or system. I’d be interested to see the actual text of the ICC decision greyhounds has cited, but I have no way to find it quickly (being rather far away from any library with the compiled ICC records!)
To what extent were the early experiments with TOFC aligned with LTL services (rather than simply being a quicker way to perform ‘road hauls’ with loaded vans)?
Was there anybody else at that time that tried to compete against NYC with that kind of rail service? I keep wanting to think Erie Lackawana and the C&O.
Finally a Intelegent debate here![:)]
We need more LTL and Parcel mail to go by rail for enviromental reasons. We could even have
Railroads handle Parcel mail to hub into airports so that smaller airports are not jammed by Parcel mail and free up equipment much like trains take people tp the airport today.Trains could sort mail enroute to the airport were then it is flown out from stations that are 200 miles away from the airport. Commuter trains could get USPS contracts to haul Roadrailers to hubs. There are short haul USPS trucking contracts out there and that could help fund short haul rail.
IIRC there has been an article in “Trains” about the NYC handling LCL-business. The article said opposition against the “freight forwarders” came from some competing railroads, not from trucking companies.
Clevelandrocks
Hate to be the bearer of bad new but the USPS has long distance trucking contracts that haul mail coast to coast as well. The trucks run through from San Francisco to Chicago on one route faster than the trains can get it their. The trucks change drivers every eight to ten hours and stop long enough for fuel and food otherwise the wheels are turning. They are scheduled to complete the trip in 45 hours running I-80 and generally better the time by a couple of hours in the summer and sometimes run up to eight hours late in the winter but not that often. Can the BNSF or UP match the time to Chicago, I rather doubt it. Probably their are a couple of other highway services that meet or beat the time of the USPS contract truck carriers. I would think that UPS probably beats the time by highway from Tracy to Chicago.
Does anyone know what the Post Office pays for trucking? I have heard it is for bottom feeders only; even below back haul freight.
OK, I have returned to my abode and consulted my thesis (BTW, I commute to and from work on the old Soo Line. You know that Deval Tower Place, the place where two UP lines and a CN line cross, with the CN crossing one of the UP lines on a wooden trestle, and where the CP has rights, you know that place. I ride a passenger train through there twice a day.)
Anyway,
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The New York Central started its intermodal container service in 1921 with an operation between Chicago and Cleveland. This pretty much proves that they weren’t trying to take business from trucks using the inovation, there was virtually no, none, nada, zip, zero long haul motor freight business (Chicago - Cleveland being long haul) in 1921.
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I wrote 5 1/2 pages (starting on #24) as to “Reasons for the New York Central’s Inovations”. I included maps and tables. I won’t reproduce all of it here but -
a) The NYC was more dependant on lcl revenue (12.04% of their gross) than any other major railroad.
b) Because of this, loss of lcl revenue was more threatening to the NYC than any other railroad, making them more inclined to protect it.
c) Handling lcl in boxcars was gosh darned expensive. The container system reduced the cost. Since NYC had a lot of this cost - they would be looking for a way to reduce said cost
and be receptive to the container system.
Yes, other railroads objected. They “didn’t like competition”. In a free market their objections would have been for naught. They would have had to meet the best interest of the shipping public or loose out. But the existance of the evil monster known as US Federal Economic regulation gave the non-inovators a chance to stop the inovator. And that’s what happend.
There were other stuipid, ignorant, oppressive government rules - such as all kinds of restrictions on intermodal freight movement that made absolutely no sense at all. These regulations remained in effect for 50 years and greatly hu
In 1959 I moved a 1,500 pound LCL shipment from Stirling, NJ to Cleveland via the DL&W and NKP. They had to spot an XM box car on the team track, we had to load a truck and take the load to it. There were other loads of other shippers already in the car. The transit time to Cleveland was three weeks (for about 400 miles). Trucks were able to get it there on the second or (worst) third morning).
The piggyback rules by the ICC at the time only allowed the railroad to provide truck service to those towns where they had rail lines. If you were in the next town just a mile away, you would have to take your shipment to their team track box car. They couldn’t pick up or drop off to you.
The Pennsy had quite a truck company operation right up until passage of the Motor Carrier Act of 1935. That law required it to cease operation of it. Railroads could not own other modes of transport then. It took someone creative in the 60s to figure out the best way around that was to create a corporate parent that acted as a conglomerate. Then swap your stock with this new parent. That parent could then own the railroad as well as a trucking company, pipeline, etc… I think it was the UP that was the first to get around that regulation.
Overnight was owned by UP but they sold it after the Teamsters and UP could not get to the bargining table. I am not sure what was Conrail mercury servive about but I did see there trailers. ACME fast freight was a Freight forwarder that probaly was the last people to do LTL and LCL via rail. They had a Station and Cross/Dock In Cleveland near the Terminal Tower.(Now Jacobs Field) Since space was limited much of the LCL and Railway Express was switched outside of the Cleveland Terminal Tower complex. Cleveland Produce Terminals on Woodland and the REA on E26th is a example of this.
“This case was only one of a batch of ICC rulings that set our to protect water, air and highway carriers. Their was a paradox-the government wanted to regulate railroads as a monopoly while at the same time destroying the monopoly by promoting other forms of transportation with ICC rulings, money and legislation. The rate protecting did not end for thirty years with the Big John cases in the mid 1960s.”
Oh yeah the Big John Case…Those ICC [}:)][:o)][}:)][:p][:o)]!
And as a result of that the Erie Barge Canal in NY state see a grand total of 12 barges a year