advent and evolution of new freight alternatives to rail

[NRGeep]

In the 1920's-1950's when freight transport via trucking and planes became a major alternative to the former dominance of rail, did the railroads adjust their freight pricing to attempt to compete with the emergence of trucks and air transport?

[Sir Ray]

Well, the railroads did try...The ICC & The Railroads.

Moreover, ICC regulations restricted rates and encouraged price collusion.

[ExCon90]

Yes, to the extent permitted by the regulatory system of the time, which remained in effect until the Staggers Act of 1980, and the regulators' view was that trucking was a fledgling industry in need of protection from the predatory railroads. An important regulatory principle at the time was that freight charges on a shipment should be kept low in proportion to the intrinsic value of the commodity; this meant that low-value commodities had low rates, even if below cost, while high-value commodities could have rates comfortably in excess of costs while still remaining low compared to value. This seemed to work well as long as everything moved by rail, since what the railroads lost on handling low-rated freight was made up for by the high-rated freight. With the advent of the internal-combustion engine, the pneumatic tire (the first ones were solid rubber), and a network of paved highways, trucking over long distances became practical and the truckers, not having been born yesterday, could easily offer reduced rates on high-value commodities while leaving the low-rated stuff to the railroads. The railroads were left with the choice of reducing rates on high-value commodities and having less left over to pay for the low-rated traffic, or not reducing them and losing all the revenue. It was almost a lose-lose situation whatever they did as long as truckers weren't--and still aren't--required to haul the sand, gravel, and broken glass (there were freight rates on broken glass before the word recycling entered the language).

In 1935, interstate trucking was brought under regulation by legislation made a part of the existing Act to Regulate Commerce; the Interstate Commerce Commission, created in 1887, being charged with regulating the industry. The main concern was to prevent having too many trucks chasing too little business, so the right of truckers to haul freight had to be sought from and granted by the ICC*, truckers being forbidden to haul anything between any points without specific authority from the ICC. Thus, if there was any low-rated traffic a trucker didn't want to handle he simply didn't apply for authority to carry it, which meant he was legally prohibited from doing so.

Under the 1935 legislation, carriage of agricultural products was exempt from regulation when moving by truck but not when moving by rail since there was no intent to regulate traffic moving from farm to railhead. However, that intent was not incorporated into the language of the Act, with the result that, among other things, frozen French fries shipped from Idaho to New York were exempt from rate regulation when moving by truck, but not when moving by rail. Under the law it took at least 30 days for a railroad to change a freight rate, and only then if there were no objections--it could take up to 9 months and more if challenged before the ICC. (And it was not necessary for a party to have "standing" to initiate a protest; anybody could object.) It was not until the Staggers Act and the Motor Carrier Act, both of 1980, that both truck and rail transportation was largely freed from the conditions of the 1920's and -30's.

* The seeking and granting of motor-carrier operating rights became a whole subset of law practice after 1935.

[QB 52.32]

With the emergence of new early 20th century road and air technology, there's evidence that railroads sought to embrace and integrate it for their benefit intermodally and even as fledgling multimodal companies. But, within the context of the politics of the day, regulatory barriers were thrown up against railroad ownership of other transportation modes with profound impact on not only the rail industry, but also our entire transportation system as we know it. Perhaps the greatest consequence of all is the private vs. public infrastructure ownership dichotomy between rail and all other modes.

To what extent the railroad industry would have squelched or embraced modal technological innovations had the barriers not been erected might be argued, but the possibilities are intriguing and there were early signs indicating the possibility of railroad evolution into modern multimodal enterprises. And, it's interesting to consider what has happened since deregulation within the shadow of those early decisions or how railroads might behave with the coming modal technological advances.

[ExCon90]

Two examples:

It took years of litigation (after 1945!) to establish that railroads had the right to haul semitrailers and containers on flatcars over their own rails.
It took years of litigation (after 1945!) to establish that railroads had the right to publish flat per-trailer and per-container rates irrespective of commodity rather than specific rates on specific commodities.

[Ranger762]

I was wondering, how much of the overall internal freight is transported by train in the USA? Because in France, for example, there was some serious lobbying from the automotive industry to transport every possible thing by truck, and it's now the norm; trains still carry things like grain, fuel or bricks, but they represent a small fraction of the internal freight. It's a shame, since it's much more ecological than transport by truck; there's all the infrastructure France needs to convey most of the freight on trains or on barges, but since Renault, the country's biggest truck producer, is still partly owned publicly, this isn't going to change, and instead, the number of train lines (both freight and passenger lines) are being increasingly reduced and replaced by (slower, unreliable) buses and trucks.

[XBNSFer]

I was wondering, how much of the overall internal freight is transported by train in the USA? Because in France, for example, there was some serious lobbying from the automotive industry to transport every possible thing by truck, and it's now the norm; trains still carry things like grain, fuel or bricks, but they represent a small fraction of the internal freight. It's a shame, since it's much more ecological than transport by truck; there's all the infrastructure France needs to convey most of the freight on trains or on barges, but since Renault, the country's biggest truck producer, is still partly owned publicly, this isn't going to change, and instead, the number of train lines (both freight and passenger lines) are being increasingly reduced and replaced by (slower, unreliable) buses and trucks.

That's truly ironic, considering France's wholehearted embrace of the "climate change" propaganda. One would think they would be aggressively pushing things the opposite way, that is, to insist that everything and anything that could possibly be moved by rail is to be moved by rail and NOT by truck.

[NRGeep]

The "propaganda" has clearly come from climate change
deniers. Global weirding is here to stay and rail CAN adapt. Yes, interesting the Renault trucking lobby seems
to have significantly cut into rail freight traffic in France. $$$

[Engineer Spike]

Yes, to the extent permitted by the regulatory system of the time, which remained in effect until the Staggers Act of 1980, and the regulators' view was that trucking was a fledgling industry in need of protection from the predatory railroads. An important regulatory principle at the time was that freight charges on a shipment should be kept low in proportion to the intrinsic value of the commodity; this meant that low-value commodities had low rates, even if below cost, while high-value commodities could have rates comfortably in excess of costs while still remaining low compared to value. This seemed to work well as long as everything moved by rail, since what the railroads lost on handling low-rated freight was made up for by the high-rated freight. With the advent of the internal-combustion engine, the pneumatic tire (the first ones were solid rubber), and a network of paved highways, trucking over long distances became practical and the truckers, not having been born yesterday, could easily offer reduced rates on high-value commodities while leaving the low-rated stuff to the railroads. The railroads were left with the choice of reducing rates on high-value commodities and having less left over to pay for the low-rated traffic, or not reducing them and losing all the revenue. It was almost a lose-lose situation whatever they did as long as truckers weren't--and still aren't--required to haul the sand, gravel, and broken glass (there were freight rates on broken glass before the word recycling entered the language).

In 1935, interstate trucking was brought under regulation by legislation made a part of the existing Act to Regulate Commerce; the Interstate Commerce Commission, created in 1887, being charged with regulating the industry. The main concern was to prevent having too many trucks chasing too little business, so the right of truckers to haul freight had to be sought from and granted by the ICC*, truckers being forbidden to haul anything between any points without specific authority from the ICC. Thus, if there was any low-rated traffic a trucker didn't want to handle he simply didn't apply for authority to carry it, which meant he was legally prohibited from doing so.

Under the 1935 legislation, carriage of agricultural products was exempt from regulation when moving by truck but not when moving by rail since there was no intent to regulate traffic moving from farm to railhead. However, that intent was not incorporated into the language of the Act, with the result that, among other things, frozen French fries shipped from Idaho to New York were exempt from rate regulation when moving by truck, but not when moving by rail. Under the law it took at least 30 days for a railroad to change a freight rate, and only then if there were no objections--it could take up to 9 months and more if challenged before the ICC. (And it was not necessary for a party to have "standing" to initiate a protest; anybody could object.) It was not until the Staggers Act and the Motor Carrier Act, both of 1980, that both truck and rail transportation was largely freed from the conditions of the 1920's and -30's.

* The seeking and granting of motor-carrier operating rights became a whole subset of law practice after 1935.

That was a good explanation. Back in that era, my family was in the motor freight business. As stated, truckers were regulated, so as to not over saturate the market. At one point we were looking to expand our rights. Since being granted new rights was difficult, the rights were often obtained by buying out another company. At one point we did this. Another carrier was going out of business, and we bought them. I was young, but remember getting a bunch of really old dilapidated equipment, which soon went to scrap. The real value in the company was its ICC rights.

[eolesen]

Global weirding is here to stay

I'll agree on global weirding....

I won't agree that that rail is always the best and only solution consistent with reducing emissions for climate change. There's a weight and distance based tipping point where rail does become more efficient, but on the other side of that point, trucks are still a more efficient method of transport, particularly with low volume and light weight commodities.

Trucks are almost always needed as first and last mile of transport for manufactured items by rail. Bulk non-agricultural commodities are the main exception, where you can usually take them from the point of mining to processor entirely by rail.

For non-bulk going by rail, you have to consider not only the cost of moving from A to B to C to D, but also the cost of handling at the intermediary points, and the cost of packaging. Can railroads easily and safely handle shrink wrapped pallets? Right now, it's not uncommon to be able to take a pallet from a manufacturer to a retail floor for sale (think Costco or Home Depot) with perhaps only one intermediate stop at a regional distribution center owned by either the trucking company or the retailer.

Transloading that same pallet of goods to/from a truck to a warehouse to a boxcar to a warehouse to another truck?

It might survive, but you've changed custody at least twice now, which means having to consider more secure packaging to prevent damage and deter theft... There's an environmental cost to all that extra cardboard, manpower and real estate needed to secure/house goods between hand-offs.

[ExCon90]

If the shipment is loaded into a trailer or container at origin, the boxcar is eliminated and the pallets are essentially undisturbed from A to D -- happens every day, by the trainload. The tipping points seem to be (1) the distance from A to D, since the cost of transferring the container at B and C is the same regardless of the total distance, and (2) the "last mile" distance from A to B and C to D in relation to the total -- the greater the "last mile" distances the more difficult for rail to compete with long-haul truck.

[eolesen]

Entirely true for container loads, but that implies container quantities. Not every truck is carrying a full load, and the costs of shipping a half-empty container by rail are essentially the same as shipping a full container.

Moving everything by container?... That's a non-starter. You'll consume far more fuel, since the tare weight of a shipping container plus carrier is easily double that of a standard freight trailer.

[west point]

What about the one boxcar load that will take 3 or 4 containers ?

[kitchin]

Interesting. Some numbers here: https://www.chrobinson.com/blog/what-do ... -capacity/ But Google "boxcar shortage" for current problems, and a shake-up by CSX. So there are complaints the industry is too conservative in investment, and that it is not conservative enough in changing its practices. Likewise for the shippers, I'd say. With 0% interest rates, you'd think investment would be easier, but the available capital still has other demands. And mindsets.

I'd guess boxcars are never coming back for moving what LTL (less-than-truckload) and LCL (less-than-container-load) shipping does. But for some break bulk, like giant rolls of paper to make Amazon boxes, they're a good fit.

[D Alex]

I used to drive truck OTR, and there were a lot of loads we took which rail would've been a poor choice. Also, we often went straight from the manufacturer to the customer warehouse, something like, say, a trailer load of saltine crackers; if you set them by rail, you would've had each pallet moved 3-4 times before you got it at your warehouse, and most of the crackers would be broken..