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For topics on Class I and II passenger and freight operations more general in nature and not specifically related to a specific railroad with its own forum.

Moderator: Jeff Smith

 #1538448  by Tadman
 
John_Perkowski wrote: Thu Apr 02, 2020 11:15 am I hope you all realize if our government nationalizes the railroads, they will compete for scarce resources (appropriation dollars) WITH EVERY OTHER AGENCY AND DEPARTMENT in the USG.
This is the most basic and best explanation. To expand:

Fact A: Right now, for all its faults, the national network is the best in the world. Second place is a very, stunningly, light years distant second.

Fact B: Assuming price is not a problem, and we nationalize the network, the maintenance, upkeep, etc... will compete with the armed forces, post office, social programs, etc... for resources. In time of national emergency such as a war or COVID, the money dries up, whereas it does not today. Case in point: NEC is not up to par. Despite being of serious national importance, the track is D-minus compared to Germany or Japan. If we can't keep up the most important passenger main in the USA, how are we expected to maintain the lines through Montana or Arizona that BNSF does a good job of maintaining?

Fact C: The market value of the railroads is really pretty cheap right now in comparison to companies like Uber or Tesla, with market caps of $87b or 43b considering their vast physical plant and profitability. Union Pacific has a $95b market cap, and they have beaucoup assets and long stretches of profitability.

Right now, the US gov't and US citizens are getting the best possible deal. COVID crap aside, we usually have a terrific economy underpinned by an essentially free and highly capable rail system (IE doesnt' require gov't money or attention) moving the goods we use and make.

Why do we want to mess with this? If the object of this exercise is to improve passenger transport by rails, just pay market price for access!
 #1538467  by Wash
 
Tadman wrote: Thu Apr 02, 2020 11:27 am
Why do we want to mess with this? If the object of this exercise is to improve passenger transport by rails, just pay market price for access!
Okay, let's do that. In fact, let's go above and beyond that, and in addition to paying for access, also pay for all of the signal improvements, siding extensions, grade crossing eliminations and miles of double track we need to run our passenger trains as quickly and efficiently as the ROW theoretically allows. These improvements (all of which help freight service as well) add more value to the freight railroads' assets then the difference between what we're paying for a slot and 'market rates'. In return for our investment, we taxpayers expect the private railroads to give public trains priority, or at the very least not actively inhibit them, and let the state possibly add some more infrastructure that complicates freight operations somewhat (electrification with proper clearances, high-level platforms with gauntlet tracks, etc.)

This is what state DOT's have been doing, essentially, for the past decade. If you're the taxpayer, what do you get for your investment? If you're in the states of Michigan or Illinois, you get trains that are still late and still running slowly despite billions of dollars in investment. If you're in Los Angeles or DC, you're not allowed to even think about electrifying or double-tracking your commuter operations, even at freight clearances, because the the railroad doesn't want to figure out how to use new infrastructure. In the end, the private railroad is who decides what runs how fast on what tracks on their private property, no matter how much money you throw at them to try and influence their decisions.

If you're a state (or federal) DOT, what do you do? Your trains still need to run fast and on time as that's what your voters have mandated, and freight railroads have demonstrated over and over again that they cannot be trusted to help you accomplish this goal. What you do, as the states of Massachusetts and Virginia have done, is to buy ROW outright; that way, the public gets to decide what trains run how and how fast. It only costs slightly more than funding improvements to a private ROW, and has an infinitely higher ROI.

In an ideal world, we could just trust the freight railroads to keep their word when we asked them to not interfere with our passenger operations. However, it's been demonstrated for decades that we can't, and just paying them a bit more money won't change that.
Last edited by Wash on Thu Apr 02, 2020 3:06 pm, edited 7 times in total.
 #1538472  by GWoodle
 
bdawe wrote: Tue Mar 31, 2020 10:13 am I don't think there's an actual claim here in the board that anyone is suggesting simply seizing the railroads. Why wouldn't shareholders be bought out?

As of right now,
* UP - market capitalization $97.4B
* BNSF - privately held, but has a book value of $63.5B. Let's just guesstimate that it's roughly the same market value as UP
* NS - market capitalization $41.05B
* CSX - market capitalization $44.33B
* KCS - market capitalization $12.15B

That totals to $292B. Add in a 20% premium for their trouble and we're at $350B for all the US Class 1 track less that owned by CN & CP. This is a lot of money for us mortals, but in the grand scheme of things isn't all that much for the Government, especially when purchasing a money making asset at rock-bottom interest rates for public debt
The amount of market capitalization or book value could mean nothing compared to the amount of debt on the books. I hope the days of weak lines such as Rock Island or Milwaukee Road that barely scraped by in good times or the first to file BK in bad times is past? When you look at 19th century roads it was always a matter of time. Too much debt means unable to pay mortgage loans or equipment loans then the creditors get together to get new management or else. Too much debt means the company becomes a ward of the court. Maybe they can get out of debt & reorganize quick or at other times it takes years to resolve. Either way there are new owners of the property. Shareholders may get nothing. Farmers that lent their farm to invest in the railroad could lose their property.
 #1538486  by David Benton
 
Tadman wrote: Thu Apr 02, 2020 11:27 am
Right now, the US gov't and US citizens are getting the best possible deal. COVID crap aside, we usually have a terrific economy underpinned by an essentially free and highly capable rail system (IE doesnt' require gov't money or attention) moving the goods we use and make.
Maybe we should stick to trains.
https://www.stuff.co.nz/national/health ... ans-for-nz
 #1538529  by wigwagfan
 
Tadman wrote: Thu Apr 02, 2020 11:27 am Right now, the US gov't and US citizens are getting the best possible deal. COVID crap aside, we usually have a terrific economy underpinned by an essentially free and highly capable rail system (IE doesnt' require gov't money or attention) moving the goods we use and make.
Another point is right now the railroads contribute a ton of money in the former of corporate income, sales and property taxes. ALL of that evaporates the second the railroads are nationalized. Every. Single. Penny.

Explain to the tens of thousands of school districts, cities, counties and other service districts that they will each, individually, stand to lose tens of thousands up to millions of dollars each year - money that in most cases, is essentially "free" to them as they don't have to actually provide a service in exchange for those dollars. A school district doesn't have to provide any additional service because of the presence of a railroad in town. A Parks & Rec District doesn't do anything more because of a railroad. A city might have to respond to a handful of police or fire calls but that's hardly significant compared to the money a railroad provides absent some kind of a major disaster a la Lac-Mégantic. But take that property tax revenue away and those districts will have to provide the exact same service as the day before, just without that money.

So not only will the railroads have to compete with other federal instrumentalities like Defense, but now you'll have to explain to taxpayers that their sales, property or income taxes will have to increase, or they'll have to lose their valued local services...and for many of these people, they don't see much real benefit from the railroad that otherwise is seen as a mild inconvenience for traffic jams and noise pollution in small town America.
 #1538540  by Gilbert B Norman
 
Mr. Wash, first may I note that you have set forth your passenger train advocacy positions in a mature and respectful manner.

Like other advocates, you appear to hold that there need be some kind of right of public access, such as with a taxpayer funded highway, to railroad rights of way. As such, a passenger train would have equal, if not greater, priority in its movement with freight traffic.

It has been clearly established here that nationalization initiatives have moved forth only in times of crisis for the railroad industry. During WWI, there was a "meltdown" in the movement of both passenger and freight traffic. During WWII, there was not, so there was no initiative.

During the later 50's, as Interstate Highways took the "cream" of railroad traffic, the industry fell on hard times in a prospering economy, resulting in the "Dark Ages" when I was employed within in the industry - and with a morbid and eventually bankrupt road. The '58 Act afforded railroads access to government guaranteed loans and some relief from rate regulation, but simply a drop in the pail. The crisis only hit home during the 70's as over one third of the mileage ended up under Bankruptcy.protection. First enacted legislation to relieve the industry was RPSA70 which nationalized intercity passenger trains with the intent of preserving what was needed - meaning Corridors and getting rid of the rest - namely the Long Distsnce routes. The latter has gotten a little waylaid by the advocates and their friends in Congress seeing a relatively inexpensive "rolling pork barrel".

The two RRR Acts that essentially nationalized the Northeast roads obviously worked well, as they enabled
these properties to be rationalized and, after a few false starts resulting Conrail to be referred to as "Con-Game", built a profitable system that was returned to private owbership - and even a private sector bidding war.

But the rail renaissance owed so much to the Staggers Act which deregulated the industry with regards to rates and services. We also owe great thanks to Rail Labor recognizing need for groundbreaking reforms with work rules.

Put all this together, and there is the viable railroad industry of today. Just my view, but if the passenger train advocacy community holds different views because they no longer can have Dinner in the Dome Diner through Weber Canyon, sorry 'bout that.
 #1538569  by Wash
 
Gilbert B Norman wrote: Fri Apr 03, 2020 8:01 am Mr. Wash, first may I note that you have set forth your passenger train advocacy positions in a mature and respectful manner.

Like other advocates, you appear to hold that there need be some kind of right of public access, such as with a taxpayer funded highway, to railroad rights of way. As such, a passenger train would have equal, if not greater, priority in its movement with freight traffic.

It has been clearly established here that nationalization initiatives have moved forth only in times of crisis for the railroad industry. During WWI, there was a "meltdown" in the movement of both passenger and freight traffic. During WWII, there was not, so there was no initiative.

During the later 50's, as Interstate Highways took the "cream" of railroad traffic, the industry fell on hard times in a prospering economy, resulting in the "Dark Ages" when I was employed within in the industry - and with a morbid and eventually bankrupt road. The '58 Act afforded railroads access to government guaranteed loans and some relief from rate regulation, but simply a drop in the pail. The crisis only hit home during the 70's as over one third of the mileage ended up under Bankruptcy.protection. First enacted legislation to relieve the industry was RPSA70 which nationalized intercity passenger trains with the intent of preserving what was needed - meaning Corridors and getting rid of the rest - namely the Long Distsnce routes. The latter has gotten a little waylaid by the advocates and their friends in Congress seeing a relatively inexpensive "rolling pork barrel".

The two RRR Acts that essentially nationalized the Northeast roads obviously worked well, as they enabled
these properties to be rationalized and, after a few false starts resulting Conrail to be referred to as "Con-Game", built a profitable system that was returned to private owbership - and even a private sector bidding war.

But the rail renaissance owed so much to the Staggers Act which deregulated the industry with regards to rates and services. We also owe great thanks to Rail Labor recognizing need for groundbreaking reforms with work rules.

Put all this together, and there is the viable railroad industry of today. Just my view, but if the passenger train advocacy community holds different views because they no longer can have Dinner in the Dome Diner through Weber Canyon, sorry 'bout that.
Riding a dining car through Weber Canyon would be nice, not going to lie. But, even in the "good old days", those trips were enormous money loosers that were essentially just advertisements for the other services the railroad offered. Nationalizing the railroads to bring back dome cars would be like nationalizing McDonald's to bring back the hamburglar. No one is arguing for that.

However people can, and I do, argue that "Arriving at your destination quickly and on time" is not an anmenity in the same class as linen tablecloths and on-board barbershops. In my personal opinion, reasonable speeds and decent OTP are essential part of passenger service, passenger service that has a federal mandate to run. If we the public sector can't say that our trains will run on time on private rails, we need to run them on public ones.

Of course, this argument only really makes sense when a significant chunk of the citizenry rides state-supported passenger trains. That's why the state of New York owning the Empire Corridor makes sense, but Amtrak owning the whole water-level route does not.

This isn't just about passenger service either. As you note, rail nationalization has only been done in this country when the government sees the need to "prop up" with federal dollars a mode of transportation essential to the functioning of the economy, war or otherwise. While we're not at war, as I noted in the first post in this thread, our rail network is still in need of major investment. You probably know more about the intricacies of freight economics than I do, but it's my understanding that railroads a) need to start taking back the "cream traffic" they lost in the 50's to trucks and airplanes soon because oil and coal traffic is already starting to dry up, b) in a majority of markets, the freight railroads don't have the infrastructure to do that, and c) they need public-sector support to fix problem b (see: the LOSSAN corridor).

This is all before we factor in climate change. Once the government needs to shove as much traffic as possible onto the most fuel-efficient form of overland transportation, and once increasingly powerful floods, fires, etc. put a substantial chunk of track in the US out of service at any one time, the inadequacies of the current rail network become even more apparent. Also certain projects, like electrification, only make sense on a truly national scale. That's why we need an efficient way to plow federal money into the rail network.

Of course, the freight railroads have some very smart people working for them that are definitely aware of all this. If those people can sit down with the public sector and make a deal like they did during WWII, then that's probably the best solution to the problems we're all going to face over the next few decades, whether we are shippers, railroad executives, labor, or just plain old citizens. But, some passenger rail projects over the past few years have indicated that we can't rely on the freight roads to act in the public interest. Whether the railroads' remain private or not, they need to start acting more in the public interest and soon, for all our sakes.

Re: property taxes: that's why you nationalize the whole railroad, not just the tracks the trains run on. Then, operating revenue can replace some of the lost tax revenue. We'd have to work out a way to fairly distribute that money back to state and local governments before we did anything, but if a railroad can figure out how to pay taxes in a zillion different jurisdictions then a government can figure out how to do basically the same thing.
 #1538615  by rr503
 
A few quick points:

- The freight railroads...make money right now. If acquired by the government, it would stand to reason that they wouldn't be competing with other agencies for appropriation, especially if the revenue from shipments is put into some sort of lockbox only usable for rail investment. There's certainly a (credible) case to be made that over the long term regulatory capture may take place, depressing railroads' pricing power and thus profits, but as pretty much all other countries in the world show, there are many ways to increase state involvement in rail network funding/management without having to go for full bore nationalization/without suffering those sorts of negative functional consequences.

- The larger prerogatives of solving climate change and enabling rationalization of our country's deeply broken land use paradigm (sprawl is bad; COVID doesn't change that. Tokyo, Singapore, Seoul, HK all have weathered the virus eminently better than have we, and are all orders of magnitude more dense than any US city) will likely require access to key rail corridors in urban areas to facilitate cost-effective transit and freight system development. Current freight operators are loath to allow transit operators access to their ROWs, and are, thanks to the incentive structure surrounding rail in the US today, unfriendly to the types of freight that encourage densified freight geographies (loose carload). Fixing that means, at the very least, a massive restructuring of incentives around freight rail.

- The current, arbitrary ownership structure of the railroads creates plenty of network inefficiencies. I'm sure we can all think of plenty of high-quality line segments underutilized by one railroad that would be very useful to another...if they could only gain access.

- Regardless of where you stand on this issue, there exist some objective facts about the unpriced externalities of rail that should raise questions about the efficacy of the current surface transit management structure in optimizing transport in the US. This report is a good starting point: https://www.gao.gov/new.items/d11134.pdf