Western Railroad Discussion > So you want to run a railroad????

1)  Mother Nature - floods, snow storms, fires, heat, cold, did I miss anything
2)  General Population  - vandalism, theft, reckless drivers, suicides, Nimby's did I miss anything
3)  Local Governments - How many govenment units does a RR have to deal with, City, township, county, states on a 1000 mile route
4)  Competition -  Trucks on public highways yes they pay taxes but they get a complete national network of highways
                              Barges - they pay fees but they are probably getting a deal
5) Commuter Railroads -  sometimes benign, sometimes a big burden beyond the revenue derived
6)  Amtrak - Ok 50 years ago they got out of unprofitable passenger service but now they have to deal with a  ????? organization\
7)  Employees - On dangerous grounds here - everyone has their won take but an us vs them has been there way before the current time
8)   Customers -  Some get a bad deal on service for sure but some have strong political connections -  anothe thing to deal with
9)   Federal Government - besides the alphabet soup every business deals with they special agencies subject of course to pressures
10)  Political pressure from special interests
11)  criticism - they made mistakes - yes they did but????

Others can fill in the blanks for the myriad of mistakes, some realted to government misdirected response to covid.

One of their faults - they are making too much money?

My take on business -  you can't tread water, marching in placedoesn't work.   You are either moving forward or you are going backward.
Why, because that is what your competition is doing.  The world is changing, Markets are changing.
Oh, you invested so much in the coal business.  Now,oh well.

Bob

Back in 2011-2013, the oil business was going great guns. Shortage of oil cars was filled by outside leasing interests. The railroads invested very little of their own money.

When the boom went bust, and thousands of oil cars were stored, railroads dodged that financial hit.

Posted from Android

robj Wrote:
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> My take on business -  you can't tread water,
> marching in placedoesn't work.   You are either
> moving forward or you are going backward.
> Why, because that is what your competition is
> doing.  The world is changing, Markets are
> changing.
>
> Bob

100% spot-on Bob - it doesn't make any difference what type of business, that rule ALWAYS applies. Not a believer? - ask former shareholders of Sears, Kresge, A & P - the list is endless.. You're also right about making TOO MUCH $$$$ - breeds complacency and lack of innovation.

PCBill

Lots of those things you list are faced by all businesses, and many are self-created problems--esp nos. 7 and 8. Yet the railroads are raking in record profits, so tell us the deck ain't stacked in their favor. No need at all to feel sorry for them or their execs. Workers and customers, yes, execs absolutely no...

JG



Edited 1 time(s). Last edit at 08/05/22 09:29 by jgilmore.

There's a term of art called "regulatory capture". It happens when regulated companies gain control of their regulator.

You get a slap on the wrist now and then, but nothing serious. The railroads, big banks, power companies vs states, etc have had this advantage for decades.

Posted from Android

Lackawanna484 Wrote:
-------------------------------------------------------
> Back in 2011-2013, the oil business was going
> great guns. Shortage of oil cars was filled by
> outside leasing interests. The railroads invested
> very little of their own money.
>
> When the boom went bust, and thousands of oil cars
> were stored, railroads dodged that financial hit.
>
> Posted from Android

The railroads have historically not owned most of the tankcars used by the petroleum industry. The vast majority of them are/were owned by the leasing companies.
It's been this way since about World War I.

PHall Wrote:
-------------------------------------------------------
> Lackawanna484 Wrote:
> --------------------------------------------------
> -----
> > Back in 2011-2013, the oil business was going
> > great guns. Shortage of oil cars was filled by
> > outside leasing interests. The railroads
> invested
> > very little of their own money.
> >
> > When the boom went bust, and thousands of oil
> cars
> > were stored, railroads dodged that financial
> hit.
> >
> > Posted from Android
>
> The railroads have historically not owned most of
> the tankcars used by the petroleum industry. The
> vast majority of them are/were owned by the
> leasing companies.
> It's been this way since about World War I.

Yup. But there were demands for the rails to supply cars at the start of the fracking boom. We discussed it here on TO

Lackawanna484 Wrote:
-------------------------------------------------------
> There's a term of art called "regulatory capture".
> It happens when regulated companies gain control
> of their regulator.
>
> You get a slap on the wrist now and then, but
> nothing serious. The railroads, big banks, power
> companies vs states, etc have had this advantage
> for decades.
>
> Posted from Android


Yep the story of Comed bribes here in Illinois but sometimes and then there are competing interests with the regulators, not only from the industry.
IE subsidy of Nuke plants after Illinois subsidized all the competion and all of suddden closed plants would result in great loss of tax revenues
and jobs.

Bob


 

Since the railroads were the first industry to be regulated they invented regulatory capture.

Lackawanna484 Wrote:
-------------------------------------------------------
> There's a term of art called "regulatory capture".
> It happens when regulated companies gain control
> of their regulator.
>
> You get a slap on the wrist now and then, but
> nothing serious. The railroads, big banks, power
> companies vs states, etc have had this advantage
> for decades.
>
> Posted from Android

Bob Wilcox
Charlottesville, VA
My Flickr Shots

bobwilcox Wrote:
-------------------------------------------------------
> Since the railroads were the first industry to be
> regulated they invented regulatory capture.
>

Yes. Although I might expand  that C.P. Huntington, J. P. Morgan, John D. Rockefeller, Jay Gould, Commodore Vanderbilt, etc wrote a pretty good playbook for bribing the politicians. Railroads and banking, key to American development

The railroads and the interurban / street car companies often had relationships with the power companies and real estate developers to control franchises to develop new towns, etc.  Sam Insull, the McCarter brothers, Key System, Pacific Electric, etc.

(The McCarter brothers were a dominant force in NJ for many decades. One was Governor and power broker, another controlled the electric  power company and street railways, while the third headed Prudential Insurance, which financed many of the wrap ups.)

That capture worked real well when UP tried to buy RI and could probably,lol, find a few other examples.


Bob

Posted from Android

robj Wrote:
-------------------------------------------------------
> That capture worked real well when UP tried to buy
> RI and could probably,lol, find a few other
> examples.
>
>
> Bob
>
> Posted from Android

Maybe they didn't capture the right regulators?

The New York Times has a contemporaneous report on the last minute discussions among the US DOT, the Union Pacific, Southern Pacific, Chicago & NorthWestern, and representatives of the Rock Island, its employees, and its creditors. In this  March 13, 1975 view, the feds did not see the demise of the Rock as a serious problem. They believed that 80% of customers had close access to another rail line.  And, unlike today, the vigorous competition among several railroads would assure continued economic viability for the shippers.


Paywall possible:  https://www.nytimes.com/1975/03/14/archives/rock-island-appears-on-the-verge-of-bankruptcy-amid-indications.html