I have read about reciprocal switching in the railroad trade press, but I don’t really understand it. I know that the AAR is against it and the traffic league wants it, but that is the extint of my knowledge. Can someone give the cliff notes version as to what it is and why it would be bad for the railroad industry.
I would be surprised if somebody could. There has been more than one thread on the topic here. If we had a search function, we could find them.
Overall,
Reciprocal switching is the practice by which two or more railroads serving the same station each “opens” industries on its line to service by the other. The owning line spots the other lines cars to the customer for loading/unloading, pulls the car and interchanges it back to the other carrier. The owning line, or switching line, charges the line haul carrier a switching fee. For competitive reasons the line haul carrier typically absolbs (pays) the switching fee. In general reciprocal switching gives the customer more ability to play the carriers off against each other, or as the customer would say increases competition.
The basic rule is that if railroad A serves a customer then railroad A “owns” that customer and will do all possible to maximize A’s length of haul, and thus revenue for each shipment. Reciprocal switching constrains that natural tendancy.
To illustrate with a real example the Northern Pacific and Union Pacific both served Yakima Washington. The main crop in Yakima has long been apples, so lets talk just about apples. NP and UP each serve specific apple shippers. Apple buyers can buy from any packer. The buyer controlls the destination and has the “right of routing”. We will assume this is pre Staggers Act so rates are regulated so as to be equal from Yakima to any destination. Competitioin is thus a matter of service in terms of car supply and elapsed time, slightly modified by personal relationships between the railroad’s marketing man and the buyer’s transportation guy.
In general, the best service from Yakima will NOT involve reciprocal switching because it introduces the extra step of interchange to the other carrier which takes time which may mean that the car will not make the first available train out. This is a big deal for perishables, like apples, but no so much for non-perishables, AKA dead freight.
A sort of necessary use of reciprocal switching is if the buyer wan
Thanks for the reply Mr McCulloch. That helps me to understand what this is all about.
I would add only one thing to PNWRMNM’s thorough note on reciprocal switching.
One thing that makes this seem more confusing than it should be is the name “reciprocal switching”. After all, if the name refers to a practice where one carrier in a switching district does switching for a line haul carrier that provides service to and from that district, what’s “reciprocal” about it?
What’s “reciprocal” about it is the way this kind of switching was usually established. Carrier A would agree to provide switching for Carrier B in a switching district (i.e,. Carrier A “opened” one of more of its industries to reciprocal switching) in return for Carrier B opening one or more of its industries to Carrier A (either in the same switching district, or in another one). That was the “reciprocity”, in the grand old railroad tradition of “tit for tat”.
There’s also another confusing term often used in connection with reciprocal switching called “absorption”. In my example of Carrier A doing switching for Carrier B, Carrier B (rather than the customer) will normally pay carrier A for the switching service. Here’s where the diffference between “absorbed” and"non-absorbed" charges comes into play. If Carrier B is “absorbing” the switching charges, it will pay Carrier A, but will not pass the charges on to its line haul customer - it eats them (i.e., it “absorbs” them). if the charges are “non-absorbed”. Carrier B will still pay carrier A, but Carrier B will then pass the non-absorbed switching charges onto the customer as an addtional charge on the customer’s freight bill.