• Staggers Act - A Revisit

  • 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.
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

  by JohnFromJersey
I'd argue that most of these issues are coming from hedge funds running railroads, not just railroads having a free hand. Plenty of railroads not run by the hedge funds are doing better than those that are. It's just how hedge funds do business, the railroads aren't the only industry they have run into the ground. Regulating railroads specifically, when we should be targeting hedge funds (and Wall Street) as a whole instead, could cause more issues IMO.
  by scratchyX1
Yup, It's the hedge funds, who have a history of running industries into the ground for short term gains, which should should be getting the scrutiny. I've not heard that many complaints about the Class 2 business practices, even from the big boys like GWI, or Watco.
  by JohnFromJersey
I'm sure re-regulating railroads would mean well but I think it would bring on a fiasco in a generation or two - the ICC was well-intentioned and "worked" but quickly choked the life out of railroads as roads and cars started to appear.

Unfortunately no one will go after the Hedge Fund guys since they "donate" to the campaigns of the policitians who do the regulating
  by eolesen
The only way you regulate hedge funds is to not allow railroads to be publicly traded companies... funds are simply another investor.

Good luck changing that...

But that's just a red herring.

BNSF is privately held. No hedge funds. How do you explain their embracing of some PSR principles and policies like HiViz?...

Sent from my SM-G981U using Tapatalk

  by scratchyX1
I honestly don't know why BNSF adopted those policies, I'd think they would like to retain decent employees.
It's not like they were hurting for money.
  by Engineer Spike
I agree that BNSF being privately held shouldn't be subject to this. I remember reading about how Uncle Warren said that he wanted his holdings run for the long term, thinking about 100 years from now. Maybe he hast to follow suit to remain competitive?

I'm not a big fan of regulation and for once concur with Mr. Olsen. Having been in the rail industry for the last quarter century, it seems as if they still have the same corporate culture of 170 years ago. The rover barons couldn't control themselves, and the government established the ICC. Then by the 1950s it became too restrictive, and the industry almost went broke by the 1970s. In the last 40 years the railroads have had a free hand in rates and service. Now they have gone back to the robber baron tactics. It's really sad that they could not control themselves, make a decent return, and continue to provide adequate service.

A while back someone made the comment about t he grain producers getting with the union about the problems associated with PSR. There was a comment about how the union must have conned the grain industry to join them. Since then several other industries have jumped onboard.
  by JohnFromJersey
What oversight is needed specigically? Obviously, something needs to be done, but if the government plays too hard of a hand, there will be regulations installed that will become draconian over time as markets and trends change, and we could end up with another 1960's-esque collapse of the industry. Especially if they go into this with no clear objective

IMO the best solution would be to break up the Class I's - the Class II's and Class III's don't seem to be causing many problems, so why do something that could punish them?
  by Engineer Spike
John From Jersey, you hit the nail on the head. This is a debacle which has many factors involved. Lots of careful consideration is definitely needed to come to a meaningful resolution. I have seen how the new NS president is trying to play nice with the workers. Maybe it's window dressing, but maybe it is the realization that with present technology that the railroad can not function without adequate staffing.

I think that a second solution is just holding the railroads to their common carrier obligations. I don't exactly know how this could be enforced. I know that even before deregulation that unprofitable customers were purposely given poor service. The hope was that the customer would get frustrated and go way. I'm not really a fan of more government, but lets look at the meatpacking business. Near to me is a small packing plant which has government food inspectors there. The company wanted to expand, but could not unless they could afford to pay for additional inspectors. Maybe instead of having people in Washington who may or may not keep their eyes on the ball, inspectors are placed on site to make sure that trains are moved efficiently, and customers get served timely.
  by eolesen
What's the government really going to be able to do to the Class 1's? Fine them because they can't find enough employees able to pass a drug test?... Force people to work for the railroad?
  by woodeen
They could always nationalize them, it has been done before
  by ExCon90
Some countries that had nationalized railways almost from the beginning, as well as at least one (UK) that nationalized them in 1948, found toward the end of the 20th century that costs were getting out of control and moved toward privatization, with varying results. The general experience seems to be that while nationalized railways can have many advantages, cost control is not one of them. Canada had one of each after 1923, and after many decades' experience decided to privatize CN.

Switzerland, as in so many respects, seems to be a special case. I don't know what their secret is -- maybe it's something in the national DNA.
  by eolesen
woodeen wrote: Wed Jun 29, 2022 9:30 pm They could always nationalize them, it has been done before
Nationalizing won't suddenly increase employment... unless you plan to re-institute indentured servitude.
  by QB 52.32
In the last 40 years the railroads have had a free hand in rates and service. Now they have gone back to the robber baron tactics. It's really sad that they could not control themselves, make a decent return, and continue to provide adequate service.
For anyone focused upon or caring about the world-class US freight rail industry and/or its technology, especially in light of any threat that limits its ability to make long-term capital investments or respond to certain accelerating change, it's critically important to get to the reality of the situation and away from misconception and propaganda. Overly punitive regulatory or legislative action or combination of actions in the short-run risks rail's longer term relevance and sustainability.

There's obvious real tension and challenge in this modern era of the past 40 years between the adequacy of financial returns and the adequacy of service. In this light Class 1 management behavior has been more reasoned and reasonable than "uncontrolled robber baron tactics" and no less than that of shippers, labor, and government.

In terms of making a "decent return", as free market public entities in a capital-intensive business uniquely owning its infrastructure amongst competitors, its regulators call that revenue adequacy. Defined as a carrier earning the average rate of return needed to persuade investors to provide capital and the very thing necessary to ensure a healthy rail system, that was only achieved 54% of the time in the past 10 years. With about a quarter of US Class 1 route miles yet deemed revenue inadequate by regulators and the measure itself deemed inadequate amongst the interrelated Class 1's, can we conclude that the industry is even making a "decent return"?

In terms of the adequacy of service, that's also been an on-going modern-era challenge. Hunter Harrison's PSR principals on balance improved service while also improving financial performance. With anticipation then successful execution of these principals at CSX, there has been a pivoting to the spread of uneven and incomplete PSR principals leading up to and during the unanticipated major on-going disruption from Covid. Even with a laser-focus on railroads, the commonality of labor and other issues and their impact with other transportation and supply chain providers, if not across the entire domestic or global economies, can not be ignored. So, how should these short and long range issues be assessed and where might accountability be measured and focused not only including, but also beyond owners and managements: Covid & the Great Resignation; organized labor; government?

As I see it, there's both food for thought and likely merit in CSX CEO Foote's recent assertions that the railroads without PSR would have been in worse shape coming through the pandemic than they are now, that shipper groups are essentially seeking rate relief, that PSR was showing its transformative benefits leading up to Covid, and that there's a need to get things right with labor as had been the case during earlier transformative periods.

For anyone focused upon or caring about our world-class freight rail industry it's important to not take things for granted, to seek the complete picture, to understand that there's a range of options available to its government overseers and amongst all of its constituencies, including labor and shippers, and, that its competitors or competing technology will not be sitting still in the least.
  by JayBee
I have put this in discussions in other forums, but I think people need to understand the implications of demographics in this discussion. First the US working age population has been shrinking since 2007. It started slowly but is now accelerating. The working age (18 - 65) population this year is 400,000 fewer workers than there were last year. The number of workers lost each year will increase through 2034, and in that year there will be 900,000 fewer workers than in 2033. At that point the working age population will start growing slowly. How much it will grow depends upon what happens with the US birth rate. With the exception of a few African countries the situation is the same for the rest of the world. In some countries like Japan, South Korea, and China the situation is worse.

The point of this is that the railroads are going to have to compete very hard for workers in a shrinking workforce. Higher pay and better working conditions may help, but it might not be enough.
  by JohnFromJersey
JayBee, not just that, but also changing attitudes towards the concept of "work" in the population.

I'm what they call a "Zoomer" (Gen Z), and many of us have adopted an attitude that if we can avoid a 9-5 job and/or be our own boss, so we are not working "under" someone, we would much rather do that. Railroads are pretty bad hour-wise, and while you might get some good pay and benefits, say goodbye to free time and family life. Not to mention, I've heard how railroad mid-level management has been (yikes)

There is a lot of propaganda and sensationalism when it comes to economic issues - countless people I know post on Facebook about how a CEO at Mcdonald's makes way more than the average worker at McDonald's. Can it be disgusting that a CEO makes 20-40 million USD a year while the average worker is making 30-50k USD a year, and may be struggling to make ends meet in certain areas? Absolutely, but if we were to take 90% of that CEO's salary and spread it to all the workers, those workers would get at best an extra hundred bucks or so A YEAR... basically maybe a few extra dollars per paycheck, which doesn't make much of a difference. Labor is already the biggest cost companies of all sizes have to deal with.

Point is, we need to avoid making knee-jerk optics-based policy that doesn't make sense in reality, and can cause some long-term issues.