Amtrak & Politics

What motivates an investor-owned freight railroad to file SEC forms on time? What motivates any business to pay taxes on time, in the full amount? Hint: It's not a contract, and it's not an incentive system.

I'm for balance. More carrots for exceptional performance, but also more sticks to assure acceptable performance. Congress can issue both, and we should all insist that Congress do so. Starting with a durable mandate that reduces the temptation to engage in, er, mischief.

I'm glad to see, Mr. Fels, that we are on the same page regarding UP intentional delays of Amtrak operations.

I'm not completely sure how analogous the Dry Cleaner loosing or damaging your garmets is to the discussion at hand. The "once or twice" it has happened to me in some twenty years with the same one, he has "coughed up" and we simply moved on - no need to go the the "other guy" here in town.

If in fact the performance clauses negotiated with the Amended Agreement during the "mid seventies" "sunsetted" during 1996, the only obligation UP has to move anyone's train, goods, or person (lest we forget, UP holds a "purchase of service" contract here in Chi with METRA)is "resonable dispatch". That is what is called for in any transportation contract.

Somehow, Mr. Fels, if you or I were to spend a shift (like we are really going to get an invitation to do so) at the UP Dispatch office (that photo I mentioned earlier in the Annual suggests "Mission control"), I think either of would walk away with the impression that there were plaubible explanations for any Amtrak delays on the system.

Gilbert,
Since you're a shareholder, have you expressed your feelings about UP's abyssmal Amtrak "timekeeping" known to the company you co-own?

A speaker at the Fort Worth NARP Region IX meeting last weekend urged advocates to become shareholders and speak-up about this important issue of honoring contracts.

I, however, don't know if I'd invest in a company whose CEO tells the press every chance he gets how lousy one of his customers is.

Davidson's speech sounded like his words came right out of the McCain-Utt-Cox playbook.

Yes, an invite to Omaha would be nice, but as the correspondent notes, that ain't gonna happen. Let alone for every passenger who boards or alights from a train made late by host-railroad carelessness.

Those silly passengers--they don't care how "plausible" the "explanation" is, let alone how "thankful" they should be that they weren't waylaid further. They just want to board on time and get there on time. Go figure.

Best to think of a timetable as a conversation between Amtrak and its host railroads. Make that an ongoing conversation--timetables get tweaked all the time, a few minutes here, a few minutes there, occasionally some padding overall. Bottom line: Both parties begin with a reasonable expectation of consistent on-time performance. And as many of us like to point out, outside the Northeast, all Amtrak trains run slower than their investor-owned precedessors. To insist that they be handled properly, no extra charge, is completely reasonable.

No, Mr. Ohlemeier

I do not want the CEO that I elected to be overly concerned about a source of .0001 the pennies coming into the till and contributing nothing to the $6.04 EPS.

If coal, or another of the less growth-oriented or mature-market commodities, accounts for 40-60% of his business, a CEO should devote a proportional amount of his time to that segment?

How about employee relations, media relations, work place safety?
Those don't show up in the % of business pie chart.

UP inherited its obligations to Amtrak like it inherited WP, MP, TP, KATY, et. al.

Davidson should shut-up about how evil Amtrak is. Amtrak IS NOT the cause of UP's problems. The reverse, however, may be true.

The subject of coal illustrates what's wrong with railroading today.

For the Class I railroads, coal represents 44% of the business by weight, but only 21% by revenue. Compare with intermodal: 5.5% by weight, but 13.3% by revenue.

Let's step a little further back. Railroads carry 1/4 of all intercity freight by tonnage but earn only 1/10 of the revenue.

http://www.aar.org/PubCommon/Documents/ ... stics.pdf

The way back to robust financial health is for freight railroads to get back into the business of hauling time-sensitive, high-value cargoes. How're they doing? See how they handle those Amtrak trains.

Mr Ohlemeier notes--

"How about employee relations, media relations, work place safety?
Those don't show up in the % of business pie chart"

No these items do not show up in any kind of revenue measurements, but they do show up in the "bottom line", and accordingly warrant the concern of a CEO.

I fail to see how Amtrak operations could be placed on the same page, and in fact if a CEO was overly concerned about moving Amtrak over the road to such extent that other traffic that was contributing to the bottom line was being adversely affected, that CEO, as far as I'm concerned can join Disney's Mr. Eisner in the (HAHAHA) "breadline".

Here's how you place Amtrak on the page: as the canary in the coal mine.

Anyone can look at the AAR report and see that if you want to grow revenue and profits, you've got to be able to attract time-sensitive shippers. A bellwether of a freight railroad's ability to serve this business properly is how it handles the Amtrak trains it hosts. The real "problem" with Amtrak, from a UP point of view, is that it puts UP's deficiencies on public display.

Getting rid of Amtrak won't fix what's wrong with freight railroading: decades of disinvestment-driven marginlization. That they've painted themselves into a high-weight, low-value corner is not Amtrak's fault.

That's a legitimate critique of the issue.

John

So.... Davidson should not honor contracts? What if one of HIS customers treated him with such utter disrespect???

Gilbert, do you reward a man who never ran a revenue passenger train to behave such recklessly regarding Amtrak? The leader sets the tone.

(You do recall the interviews Davidson has made where he gave a tongue-lashing to Amtrak).

I would expect a little responsible behavior out of a man leading a major corporation.

Doug and all,

I just called the Company. Shareholders can do that! They put me through to the contracts folks.

The current contracts do call for certain priority handling of passenger trains as First Class trains. There are incentive and disincentive clauses.

John

I agree with Matt that UP probably views Amtrak as an all-too public view into their operational problems - there's no other reason that the CEO would make public negative statements about the operation of such a small chunk of the pie.

I find UP's overall behavior troubling - they seem to have lost focus, and careen between crisis and "new initiatives" that have little to do with the day-to-day of running a business. This has been going on since the early 80's when they started on this aquisition binge. They've jerked the city of Omaha around (not a hard thing to do if you are a major employer) and
fostered an environment of job paranoia at "Headquarters" that doesn't help matters. While this has no direct impact on Amtrak, it certainly does impact the operation of the system as a whole.

So then what is the solution? We have a congressional environment that is decidedly anti-regulation, with a presidential administration that is even more anti-regulation plus anti-passenger rail, coupled with a corporation that has publicly stated their contempt for providing a service that should be considered their "public duty". I write my legistlators (who are all solidly pro-rail), I write Istook's office, I do everything recommended - yet I don't see a resolution to this issue in the current climate.

I believe the article I submitted is most appropriate to the Union Pacific Forum, but it does have relevance to our discussion here.

Great to see Don Phillips' byline again at his new home (also, for that matter, MY new home, of "in print and in my Ekornnes ottoman chair").

Here is a link over there.

http://64.78.30.219/forums/viewtopic.php?p=7974#7974.

Wow, great article. By the way, here's where Don Phillips got those statistics quoted in the article:

http://www.railroadpm.org