8 Years Since The CR Breakup

This is a frequent, emotional view held by people observing at a distance.

WRT the benefits of competition, I'm not going to waste my time arguing with the opinion that if you're a not a RRer, then you don't know what's going on (sounds a bit arrogant...). I don't work for the RR (although when I got my MEE degree in 1975, I accepted a position with Penn Central's signal/communications department. But my position was eliminated before I reported to Philadelphia). I do spend a lot of time track side taking pictures. And I read a lot about the industry - in fact, operations are the most interesting aspect of RRs to me. I think I have a pretty good idea what's going on in NE RRing.

BTW, I'm not saying Conrail provided bad service to the customers it wanted to keep. But it's pretty clear anecdotally that CR did the minimum to provide service to Southern Tier shippers. And it's not shocking that CR was not interested in allowing D&H/CP to compete even up on its various trackage rights routes.

In the Northeast US, the point about the loading dock shipper being captive to a single RR is becoming more "irrelative" as Buc's coach John Gruden would say. For example, the majority of CSX Boston line traffic is intermodal in nature: pigs, multilevels, containers, and bulk products like gahbage, corn syrup, C&D, lumber, etc that get loaded/unloaded at transfer points. I can only think of a handful of shipper loading docks that have sidings along the 175 mile long CSX Boston line. The break-up of Conrail has strengthened competitive intermodal access to the Northeast.

johnpbarlow wrote: WRT the benefits of competition, I'm not going to waste my time arguing with the opinion that if you're a not a RRer, then you don't know what's going on (sounds a bit arrogant...).

Not my argument at all. Of course anyone who has access to information, in any line of work or avocation, can "know what's going on." My remark was intended toward pat attitudes held by the uninformed...that suddenly, with the dissolution of Conrail, there was "competition."

Shippers along the former Conrail routes are now served by one OR another of the bigger surviving companies. NOT both. That is scarcely competition.

Regarding access to the NY/NJ ports...instead of being served by one railroad, the various ports are served by TWO. Two entries isn't competition - it's a cartel. Was Ford/General Motors true automotive competition in the 1945-1980 period?

And claiming it necessary that those ports MUST have other rail companies' access, ignores the reality that shippers have many other options...trucks, other ports on the Eastern Seabord and the St. Lawrence/Great Lakes...Conrail did not choke shipping in a stranglehold.

johnpbarlow wrote:I don't work for the RR (although when I got my MEE degree in 1975, I accepted a position with Penn Central's signal/communications department. But my position was eliminated before I reported to Philadelphia). I do spend a lot of time track side taking pictures. And I read a lot about the industry - in fact, operations are the most interesting aspect of RRs to me. I think I have a pretty good idea what's going on in NE RRing.

Only you know how much you know, sir. You are free to come here and demonstrate it. We are free to challenge it.

johnpbarlow wrote:BTW, I'm not saying Conrail provided bad service to the customers it wanted to keep. But it's pretty clear anecdotally that CR did the minimum to provide service to Southern Tier shippers. And it's not shocking that CR was not interested in allowing D&H/CP to compete even up on its various trackage rights routes.

The decision was made high up, early on, that the minimal Southern Tier market was costing more than it was producing.

That was the story of Conrail from its first conception. All the service to all the dying Eastern backwaters was making the Penn Central/Conrail hemmorage red ink. Something had to give; the decision was made to abandon marginal service and lines.

It is too bad about the Southern Tier; but a railroad is a business, not a charity. If it costs thousands to provide service that is intended to MAKE money, things will have to be changed.

johnpbarlow wrote:In the Northeast US, the point about the loading dock shipper being captive to a single RR is becoming more "irrelative" as Buc's coach John Gruden would say. For example, the majority of CSX Boston line traffic is intermodal in nature: pigs, multilevels, containers, and bulk products like gahbage, corn syrup, C&D, lumber, etc that get loaded/unloaded at transfer points. I can only think of a handful of shipper loading docks that have sidings along the 175 mile long CSX Boston line. The break-up of Conrail has strengthened competitive intermodal access to the Northeast.

You seem to overlook how Conrail and its predecessors were pioneering the intermodal service. The NYC began offering it, moving it at passenger speeds on timed schedules, in the early 1960s. Conrail aggressively sold its service, long before the axe fell.

CSX, on the other hand, had always focused on bulk commodities: Grain, coal, garbage. Stuff that was under no time constraints. Stuff that would get there when it gets there.

You don't see what goes on inside CSX, its dispatching, its slow-motion operation. I do. Neither their dispatch system nor their signaling system nor their maintenance priorities, are optimal for high-volume, high-speed operation.

Perhaps CSX management, or its successors, will learn with time. But to say that it is the Eastern coal roads which are promoting and bringing about increased intermodal traffic, is absurd. Case in point: Two years ago, CSX lost a crucial UPS contract because they were unable to meet UPS's time demands...service that Conrail had solicited, meeting the shipper's expectations.

As a partial answer to your question,

Has your business gotten either better service or better rates than the Conrail "monopoly?"

here's an STB report from late 2002 summarizing its findings re: impact on shipping rates in the Buffalo area following the Conrail breakup:

http://www.stb.dot.gov/newsrels.nsf/0/4 ... enDocument

Here's an excerpt:

"...Today's Decision. In the Buffalo Rate Study decision issued today, the Board found, based on evidence submitted by CSX, NS and DOT, that CSX and NS rail freight rates in the Buffalo area have not changed significantly over the past year and that, after adjusting for inflation, these railroads' Buffalo-area rates are generally lower than those rates in effect for comparable movements prior to the June 1, 1999 division of Conrail's assets by CSX and NS. Because these results affirm the Board's original determination in the Conrail merger proceeding that the acquisition and division of Conrail by CSX and NS would not result in significantly higher rates for Buffalo-area shippers, and that the Conrail merger would not reduce rail competition in the Buffalo area, the Board concluded--as scheduled--its formal oversight of Buffalo-area rail rates"

Regarding access to the NY/NJ ports...instead of being served by one railroad, the various ports are served by TWO. Two entries isn't competition - it's a cartel.

From "Wall Street Words:"

A group of companies or countries acting together to control the supply and price of certain goods or services. Cartels are formed to produce higher profits than would ordinarily be earned.

From Wikipedia:

The Sherman Act addresses multi-firm collusion by prohibiting "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce."[5] Conduct falls within the scope of this prohibition only if some form of agreement or concerted action can be proven.

Can you cite evidence tha CSX and NS are colluding to restrain trade and elevate prices to shippers in the port of NY region? It seems to me their visible behavior demonstrates the opposite: CSX is adding track capacity to the River line and NS has done the same between northern NJ and Harrisburg since the Conrail breakup. Colluding partners wouldn't bother investing money in fixed plant to increase the quality/volume of their service. Rather, they would be content to raise rates and pocket the profits.

NS raised clearances on the ex-LV Pattenburg Tunnel to accommodate domestic doublestacks. Here's an interesting excerpt from NS' SEC filing of 2/24/97 motivating the benefits of an NS acquisition of Conrail:

Clear the Pattenburg tunnel to provide for a new double stack
route between Harrisburg and Newark via Allentown. Conrail has
repeatedly refused to make the necessary tunnel improvements
because the Canadian Pacific has rights over that route, and
Conrail has sought to protect its own double-stack stranglehold
on the Port.

http://www.secinfo.com/dsVsj.84r.d.htm

I wouldnt know. I got layed off by CSX in 2001 and went to NS a year later - I'm an engineer for them now. NS has gotten alot better about keeping up power - the older ex CR units have had that obnoxious middle of the cab third seat removed (and better ajustable seats installed), the older GP38's are rapidly being rebuilt in GP38-2R's complete with all new cabs (padded ceilings) with A/C. As far as to what's left - the C39-8's will be dumped soon (junk) , the C40's need work (NS has been adding A/C to bought new units). the C40-8W's need work on their trucks mainly - they are getting rougher and rougher riding. We dumped the useless GP15's, The GP38-2's are GREAT (some a little rusty but NS is painting them) and GP40-2's are ok but getting needed paint. The six axle EMD's are ok now - except the SD50's and SD60I's. I DESPISE the 60I's.
Larry

p.s. another big NS plus - they are replacing those god awful Leslie S3 horns with K5's and on alot of units P5's stripped from retired GE's. Amen to that is all I can say.

johnpbarlow wrote:

Regarding access to the NY/NJ ports...instead of being served by one railroad, the various ports are served by TWO. Two entries isn't competition - it's a cartel.

From "Wall Street Words:"

A group of companies or countries acting together to control the supply and price of certain goods or services. Cartels are formed to produce higher profits than would ordinarily be earned.

From Wikipedia:

The Sherman Act addresses multi-firm collusion by prohibiting "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce."[5] Conduct falls within the scope of this prohibition only if some form of agreement or concerted action can be proven.

Can you cite evidence tha CSX and NS are colluding to restrain trade and elevate prices to shippers in the port of NY region?

No, I can not. I CAN suggest, with examples, that a market with only two entries does not lead to competition but cooperation.

Ford and GM, one example from the past. EMD and GE, another. AT&T and GTE. U-Haul and Ryder.

In all of those cases (except locomotives) prices were not driven down by competition between the two; only when newcomers entered the market.

johnpbarlow wrote:It seems to me their visible behavior demonstrates the opposite: CSX is adding track capacity to the River line and NS has done the same between northern NJ and Harrisburg since the Conrail breakup. Colluding partners wouldn't bother investing money in fixed plant to increase the quality/volume of their service. Rather, they would be content to raise rates and pocket the profits.

Expanding capacity is not proof of anti-competitiveness. John D. Rockefeller was constantly expanding the capacity of his Standard Oil network, also.

I disagree. It's a civilized discussion. Can't we disagree sometimes without the door being slammed shut? Calm discussion of differences of perspectives is healthy, as I see it. No flames or personal attacks, just different points of view between reasonable people.

I am one of the mods here. I happen to agree with LCJ. The thread stands--these guys are having a good discussion. Thanks and have a good day!