Shippers vs. Amtrak

[gokeefe]

The railroad "monopoly" ended with the development of the internal-combustion engine, the pneumatic tire, and the paved road. By virtue of its fixed right-of-way a railroad might be said to have a monopoly of rail transport, but a list of commodities that can only be transported by rail would be very short.

This is not how the regulators see it. There are many commodities which can "in theory" be transported by truck however the mode is complete uncompetitive. Coal is a very good example. Perfectly legal to transport by truck but absurd to do so in volume. Paper, especially mill rolls, is another. Clay slurry for paper making would be another good example. Same with bulk propane.

Rail has a lock on many many types of commodities and consequently it is very significant that the railroads have the franchise that they do.

[SouthernRailway]

Cable TV companies are in fact regulated as monopolies and pay franchise fees to their respective localities.

Downtown Department stores and Microsoft have open competition from others.

However, an example in consumer commodities I have heard of in Maine is grocery stores. Not sure if it was rumor or not but the story I heard was that a major local grocery chain had to divest certain assets in order to permit buyouts of smaller chains.

It will soon be ridiculous to treat cable TV companies as monopolies because streaming services are eating up their market share.

Downtown department stores could be treated as monopolies because they're the sole providers of various items in many urban areas. To the extent that there are any of the left.

Microsoft's Internet browser has been viewed as a monopoly, particularly in the late 1990s.

My point is that if railroads are viewed as monopolies, people who do so are confusing the forest for the trees. Yes, any business can be viewed as a monopoly if you view the specific industry or specific market narrowly enough. But technological change will wipe out any monopoly, or at least give its customers other choices, over time, and so railroads and any business that's viewed as a monopoly should be viewed as part of the bigger picture. Just as some people might not have much choice other than the local freight spur, the local downtown department store, the local cable company or the Microsoft browser, technological change has actually given those people lots more options, and if you look at the market as being transportation of freight, the clothing market, the video entertainment market or Internet access, none of those businesses that I list are--to the contrary, they're being wiped out by new technologies.

There are monopolies in industries where the barriers to entry have not been torn down by technological change or other reasons: airlines, for example. But there are almost no barriers to entry to freight transportation, and in the few parts of the market where there are barriers to entry, they'll be torn down by a thoughtful entrepreneur in due course.

[mtuandrew]

The flip side of being a public utility company (regulated monopoly, generally a power generation and transmission company, for non-Americans) is that the government is invested in making sure it succeeds too. Sometimes that means the government needs to raise rates, restrict competition, allow new technology, and sometimes invest public monies directly into those PUC expansion or state-of-good-repair projects. It benefits the public, the company, and the company’s investors.

Railroads aren’t PUCs generally, unless they’re wholly-owned subsidiaries of another PUC. I’m not sure that the existing public utility company framework is appropriate for the Class 1s since they have such heavy competition from roads and water (less from air.) Maybe there should be a hybrid category of company that includes public service as a part (but by no means all) of their corporate mission, and provides for government guidance and lower-interest borrowing as a part of that promise of public service i.e. hosting Amtrak and commuter lines.

[SouthernRailway]

I've done work with Class Is and other industry participants, including mass transit lines. I haven't worked with Amtrak, though.

I think that private railroads would rather just get paid in full by Amtrak rather than dealing with becoming intertwined into some new government program/oversight, even if the benefits of the program/oversight are valuable.

[CTRailfan]

The anti-subsidy sentiment for specifically for passenger, and even freight rail in the United States is bizarre, irrational, and not grounded in reality.

One could take a legitimate position that transportation should not be subsidized, but in this case, then highways shouldn't be subsidized, and airports shouldn't be subsidized. Airlines would probably do fine, they'd close a lot of rural and small-city routes, not just EAS, since there are a lot of government subsidies in the airports and terminals themselves, but the larger cities would keep commercial aviation without too much of a price increase to fully privatize those costs.

Where the manure really hits the fan is with highways. If the actual cost of transportation were priced to the vehicles traveling on the highways, and they were required to be self-supporting, commerce in this country would be completely reshaped, as would commutation patterns, land use, etc. That may be a good or bad thing, but it is simply a fact that it would have drastic and wide-reaching consequences for how we move both people and goods around this country. It would also likely be a boom for railroads, although explosive growth could have downsides as well.

What is not a justifiable or legitimate position is to support the current status quo, where massive government subsidies go to highways, but not to rail, putting freight carriers at an inherent disadvantage in competing for traffic.

I believe that these subsidies should be evened out, both by reducing support for highways, while increasing money spent on highways, bridging the gap with toll revenue and a new legal framework for where tolls can be collected, as well as for massively increasing support for rail subsidies, including building infrastructure for freight railroads, which would continue to be privately operated, but with more government support for building electrified rail superhighways out of the existing freight system, restoring freight rail routes, adding capacity.

Specifically in the case of Amtrak, I'd like to see expansion of Amtrak services, and the government providing additional capital for improvements to the freight railroads that could be used to improve both freight and passenger in lieu of increasing usage fees, at least where that is practical. That would also mean, however, that freight railroads would need to make a good-faith effort to actually use these facilities, which it sounds like isn't the case with some facilities that CSX has built with government support, supposedly to improve the flow of Amtrak traffic.

What is really frustrating is that in the US, there are few examples of freight and passenger trains co-existing peacefully and relatively equally. Most of the NEC lines are basically passenger-only with an occasional freight relegated to off-peak hours and charged exorbitant fees to use Amtrak trackage, and most of the rest of the country is basically a bunch of freight railroads with an occasional Amtrak train that is often mistreated and ends up way late. One of the notable exceptions is Chicagoland, where the freight roads operate trains for Metra, and Metra, Amtrak, and various freight operations all seem to generally peacefully co-exist in a dense, busy, and congested environment. I think there are a lot of possibilities for improved freight as well as passenger service in various parts of the country if freight and passenger services can be run peacefully together, without one stomping over the needs of the other.

It will soon be ridiculous to treat cable TV companies as monopolies because streaming services are eating up their market share.

Quite to the contrary, since they often control the only broadband connections available in a location.

[SouthernRailway]

Thanks, everyone. I’d better hold off on posting more for a while. I’m not looking to get into an online debate or argument, and my posts might come across as argumentative. I appreciate everyone’s perspective and involvement and don’t want to be “that guy” who argues online.

[mtuandrew]

Thanks, everyone. I’d better hold off on posting more for a while. I’m not looking to get into an online debate or argument, and my posts might come across as argumentative. I appreciate everyone’s perspective and involvement and don’t want to be “that guy” who argues online.

Surprisingly, I haven’t felt like you’re overly argumentative. You’ve been backing up your opinions with facts, which always helps

[electricron]

Thanks, everyone. I’d better hold off on posting more for a while. I’m not looking to get into an online debate or argument, and my posts might come across as argumentative. I appreciate everyone’s perspective and involvement and don’t want to be “that guy” who argues online.

A fair argument is always welcome. The key word being fair. Keep the name calling and derogatory words out of an argument it usually is fair. It seems most everyone was fair with this one, so far.

[Tadman]

What is not a justifiable or legitimate position is to support the current status quo, where massive government subsidies go to highways, but not to rail, putting freight carriers at an inherent disadvantage in competing for traffic.

This isn't an unreasonable position, but if a larger subsidy is to feed rail, it can't be to today's rail. If the US had a 3x/day national long distance network like it once did for routes like Sunset, Chief, or Builder, we wouldn't be able to fill those trains without very cheap tickets.

If the rail subsidy is to be increased, it has to be to a useful network that has regional and corridor trains that is well-integrated with long distance air and commuter/transit operations. It's very easy in Germany or the UK to fly into a major airport from 6+ hours away (by air), grab a swift train downtown or a HST to another mid-size city, then find a commuter train to your destination. I've had really good luck with this at Frankfurt, London, Berlin, Amsterdam, and Barcelona. At JFK you have to ride the stupid air train, transfer to the E, then walk to NYP. And that's a good example. In Charlotte (major AMR hub) you just get off and rent a car or taxi downtown, where a 3x/day regional might meet you, or might not.

[CTRailfan]

This isn't an unreasonable position, but if a larger subsidy is to feed rail, it can't be to today's rail. If the US had a 3x/day national long distance network like it once did for routes like Sunset, Chief, or Builder, we wouldn't be able to fill those trains without very cheap tickets.

It's much larger than simply passenger rail. Trucking companies see massive subsidies of the highways that they drive on, while freight railroads see relatively little subsidy. I think more needs to be done on the truck tolling side of things to make them pay a larger portion of their own way, but also on the freight rail side to subsidize freight rail electrification and capacity improvements in terms of building iron interstates with limited grade crossings and more tracks to handle not only current freight, but increased carload freight, transload freight, as well as open intermodal. Some local shortlines may also need subsidies in order to increase carload freight, and this, done at scale, is surely cheaper than subsidizing more lanes for more trucks. Obviously, not all businesses and supply chains can convert trucks to rail, in fact many cannot, but converting what can be converted, especially at longer distances, frees up more capacity for other businesses who are truck dependent to grow and reduces congestion and delays.

If the rail subsidy is to be increased, it has to be to a useful network that has regional and corridor trains that is well-integrated with long distance air and commuter/transit operations. It's very easy in Germany or the UK to fly into a major airport from 6+ hours away (by air), grab a swift train downtown or a HST to another mid-size city, then find a commuter train to your destination. I've had really good luck with this at Frankfurt, London, Berlin, Amsterdam, and Barcelona. At JFK you have to ride the stupid air train, transfer to the E, then walk to NYP. And that's a good example. In Charlotte (major AMR hub) you just get off and rent a car or taxi downtown, where a 3x/day regional might meet you, or might not.

Agreed. We have to look at multi-modal transit, not failed rail-air connections like Providence or elsewhere. High-frequency electric or DMU trains from airports to city centers, as well as multi-modal transit hubs would be massively helpful in increasing rail ridership. Even the ones that are good are a mess. Many airports don't have people movers or light rail to their own rental car facilities, and even where there is an air-rail connection, like BWI, it's a pain in the toucus to get to the rental cars from there. These things should all either be directly on-site at the terminal, or connected via people movers or light rail, with parking, rental cars, the airport, and rail all accessible from each other. There are huge missed opportunities, like with SEA, where the light rail goes right by the rental car facility, and there is no coherent connection to Amtrak to share rental car facilities. In some cases, it's just a matter of having a shuttle bus.

As we build high speed rail, we need to make sure even more that it all connects together, and shares airport facilities where possible. High speed rail, long distance rail, and airports should all be able to access a metro or light rail type of system to get to downtown. The topology is going to look different for every city, but many today don't even seem to have a plan.

[Arborwayfan]

What they said: integrated air-rail-road routing for passengers (companies already do this for freight). Of course, when the main players are a railroad company, a few airlines, and some bus companies, that integrated routing doesn't look that likely, because each company is also a mode and wants all the pax all the way.

[mtuandrew]

This isn't an unreasonable position, but if a larger subsidy is to feed rail, it can't be to today's rail. If the US had a 3x/day national long distance network like it once did for routes like Sunset, Chief, or Builder, we wouldn't be able to fill those trains without very cheap tickets.

Very cheap tickets might be a good way to go, actually. Like how a small freight rate reduction attracts an outsize amount of freight versus other modes, a ticket 2/3 of the price of the low bucket would pull people out of their cars even if the speed-sensitive ones stay on planes. (It’s kind of like how you don’t need to outrun the bear, you only have to outrun the other guy )

[Tadman]

Agreed. We have to look at multi-modal transit, not failed rail-air connections like Providence or elsewhere.

Ooof, don't get me started on the incompetence of that setup. That is a handy little airport and it's like they don't want you to make a connection to the train.

[rcthompson04]

Agreed. We have to look at multi-modal transit, not failed rail-air connections like Providence or elsewhere.

Ooof, don't get me started on the incompetence of that setup. That is a handy little airport and it's like they don't want you to make a connection to the train.

Yes. This is like the decision to not move the Middletown PA station to the Harrisburg airport.

[electricron]

It's much larger than simply passenger rail. Trucking companies see massive subsidies of the highways that they drive on, while freight railroads see relatively little subsidy. I think more needs to be done on the truck tolling side of things to make them pay a larger portion of their own way, but also on the freight rail side to subsidize freight rail electrification and capacity improvements in terms of building iron interstates with limited grade crossings and more tracks to handle not only current freight, but increased carload freight, transload freight, as well as open intermodal.

Trucking firms pay the same fuel taxes as freight railroads. Diesel is taxed at a higher rate than gasoline in most of the USA.
Trucking firms pay property taxes on warehouses, operations and maintenance facilities, etc. They do not have to pay property taxes of right-of-ways open for public use, that railroads do. But trucking firms pay the same licensing fees for both tractors and trailers that railroads do not. Trucking firms also pay high excise taxes on rubber tires that railroads do not.
The government does not tax either railroads or trucking firms a toll to use most highways, but trucks pay a higher toll where there are tolls than passenger vehicles.
Let's get specific on rubber tires. When you buy tires for your passenger vehicle, the excise tax is around $0.00 per tire.
https://www.petestirestore.com/What-is- ... _b_56.html
FET is an acronym for federal excise tax. It refers to the tax imposed by the federal government on tires used on the road with a maximum load capacity greater then 3500 pounds. Generally this applies to medium truck tires and heavy duty trailer tires. The FET is calculated based on how much weight the tire can carry. For every 10lbs of carrying capacity over 3500 pounds a tax of $0.945 is charged. ($0.4725 for bias ply tires and super single tires).
So, what does that mean for your average run of the mill 18 wheeler tractor trailer rig?
Each tractor usually has 10 tires, and your typical trailer has 8 tires.
https://www.answers.com/Q/Standard_size ... nd_trailer
A single axle can have 12,000 lbs max (a single tire on each side as in the steering axle)
A single axle with 4 tires (2 each side) is rated at 20,000 lbs.
Tandem axles, two axles within 5 ft of each other 36,000 lbs

As a list:
So if a tractor has a steering axle 12K (6,000 lbs per wheel at a minimum)
tandem driver axles 36k (4,500 lbs per wheel at a minimum)
tandem trailer axles 36k (4,500 lbs per wheel at a minimum)

4,500 - 3,500 / 10 = 100 lbs taxable per tire
100 tax lbs x $0.945 tax = $94.50 tax per tire
16 x $94.50 tax per tire = $1,512 tax per rig not including steering tires (subtotal)

6000 - 3500 / 10 = 250 lbs taxable per tire
250 tax lbs x $0.945 tax = $236.25 tax per tire
2 x $236.25 tax per tire = $472.50 tax for steering tires (subtotal)
Total excise tax for typical 18 wheeler tractor trailer rig = $1984.50
That's using minimum possible tire capacity.
I'll assume most tires have larger carrying capacity and therefore a larger tax.

So how long do these tires last?
https://www.answers.com/Q/How_many_mile ... or_trailer
However under normal conditions where air pressure is never checked curbs are hit and tires are never balanced you'll get between 50k and 75k.
So, around every 75,000 miles most tractor trailer rigs pay almost $2,000 in taxes just on tires.
https://www.answers.com/Q/Average_miles ... n_per_year
100,000 - 200,000 miles.
Let's average that to 150,000 miles.
So, your average interstate truck pays $4,000 in tire taxes every year. That's assuming they don't have a blow out.
How many tire gators do you see on interstates or other highways yearly?

https://hdstruckdrivinginstitute.com/se ... s-numbers/
There are nearly 2 million semi trucks in operation in the U.S., and around 5.6 million semi trailers.
That should generate between $4 billion and $8 billion annually in tire taxes.
Meanwhile, your typical suburban commuter in his personal vehicle pays zero tire taxes.

How much does the US collect in excise taxes?
https://www.taxpolicycenter.org/briefin ... they-raise
Highway-related excise tax revenue totaled $37.6 billion in 2017, 45 percent of all excise tax revenue. Gasoline and diesel taxes, which are 18.4 and 24.4 cents per gallon, respectively, make up over 90 percent of total highway tax revenue, with the remaining from taxes on other fuels, trucks, trailers, and tires.
Let's suggest 9% of $37.6 billion, which calculates out to $3.8 billion.

Take a closer look at the other excise taxes the US government taxes. You might be surprised what you are paying unknowingly.
Revenue from excise taxes dedicated to the Airport and Airway Trust Fund totaled $15.1 billion in 2017, accounting for 18 percent of all excise tax receipts.
Revenue from tobacco taxes totaled $13.8 billion in 2017, accounting for 16 percent of all excise tax revenue.
Excise tax revenue from alcoholic beverages amounted to $9.9 billion in 2017, 12 percent of total excise receipts.
Health-related excise tax revenue totaled $4.1 billion in 2017, 5 percent of total excise receipts, down from $14.8 billion and 16 percent of excise receipts in 2016. ($10 billion tax cut via Trump?)