"How, exactly, would you put BNSF out of business?"
Just look to our government if you want a job like that done right. Most concerns are more smoke (if that) than fire, but there are plenty of candidates for sources of pain to US freight carriers.
a. The farm lobby's annual attempt to regulate rates
b. A significant but sometimes unloved customer (coal)
c. Shifting trends in shipping routes/ports of entry vs fixed track (Panama Canal enlargement. Alternative ports)
d. Unionized workforce
e. Worker health litigation (diesel-related)
f. High-speed rail initiative impact (see below)
The Economist article: "High-speed railroading. America’s system of rail freight is the world’s best. High-speed passenger trains could ruin it"
"...high-speed rail....risks messing up the successful freight railways....the plans will demand expensive train-control technology that freight traffic could do without....reduction in the capacity available to freight...spending of federal money on upgrading their tracks will lead the Federal Railroad Administration (FRA), the industry watchdog....to reintroduce regulation of their operations. Attempts at re-regulation have been made in Congress in recent years, in response to rising freight rates. “The freight railroads feel they are under attack"......
"....America’s freight railways are one of the unsung transport successes of the past 30 years. They are universally recognised..as the best in the world.
"Their good run started with deregulation....gave railways freedom to charge market rates, enter confidential contracts with shippers and run trains as they liked. They could close passenger and branch lines, as long as they preserved access for Amtrak services. They were allowed to sell lossmaking lines to new short-haul railroads.....Before deregulation America’s railways were going bust. The return on capital fell from a meagre 4.1% in the 1940s to less than 3% in the 1960s...By 1980 a fifth of rail mileage was owned by bankrupt firms.....
"...Giving the railroads the freedom to run their business as they saw fit led to dramatic improvements. The first result was a sharp rise in traffic and productivity and fall in freight costs. Since 1981 productivity has risen by 172%, after years of stagnation....
"The $34 billion purchase last year by Warren Buffett’s Berkshire Hathaway of Burlington Northern Santa Fe (BNSF), one of the seven main freight railways opened many Americans’ eyes to the industry’s significance. That America’s shrewdest investor should place his biggest bet on BNSF.....Coal is the biggest single cargo, accounting for 45% by volume and 23% by value. More than 70% of coal transport is by rail. ....
"...But the fastest-growing part of rail freight has been “intermodal” traffic: containers or truck trailers loaded on to flat railcars. The number of such shipments rose from 3m in 1980 to 12.3m in 2006, before the downturn caused a slight falling back. Behind this lies the tide of imports coming into the West Coast ports of Long Beach and Los Angeles. A special rail expressway for freight, the Alameda Corridor, was opened in 2002 ...
"...But the past ten years have seen another source of growth, as interstate highways have become clogged in places and have shown the effects of a lack of investment.....Freight railways’ very success is starting to create difficulties for them. The Department of Transportation estimates that many are already exceeding their theoretical capacity and are congested. It estimates that lots more investment will be needed.... The investment bill could rise yet more because of a change in the pattern of trade: in 2014 the Panama Canal opens a second lane, doubling its capacity....
"In addition the freight railroads face a $15 billion bill for a new safety system to control trains on lines that also carry passengers or dangerous chemical cargoes. This system, Positive Train Control (PTC), is intended to stop or slow a train automatically....
"Another looming threat is re-regulation. Fed up with increasing rates, customers, notably chemical, coal, agribusiness and utility companies, are complaining that these are evidence that the railroads are abusing their market power. The railroads retort that despite record traffic and profits, their return on investment since 2000 has been only 8%... Politicians from West Virginia have been pushing a bill in Congress that threatens to re-regulate the railways. The industry seems confident it will not get through, but risks will remain.... Mr Buffett said that BNSF, like Berkshire Hathaway’s electric utilities, required “wise regulators who will provide certainty about allowable returns so that we can confidently make the huge investments required to maintain, replace and expand the plant.”
"The emergence of express intercity rail services may cause the freight railways the biggest problem of all. ...The problem is not the creation of new corridors with trains rattling along at 150mph....The trouble for the freight railways is that almost all the planned new fast intercity services will run on their tracks. Combining slow freight and fast passenger trains is complicated......Add the fact that freight trains do not stick to a regular timetable, but run variable services at short notice to meet demand, and the scope for congestion grows....
"Their main complaint, however, is that one Amtrak passenger train at 110mph will remove the capacity to run six freight trains in any corridor. ...Federal and state grants will flow to the freight railroads to help them upgrade their lines for more and faster passenger trains. But already rows are breaking out over the strict guidelines the FRA will lay down about operations on the upgraded lines, such as guarantees of on-time performance with draconian penalties if they are breached and the payment of indemnities for accidents involving passenger trains. The railroads are also concerned that the federal government will be the final arbiter of how new capacity created with the federal funds will be allocated between passenger and freight traffic...freight railroads, in the form of passengers and regulation, “are getting back things that caused trouble”.
http://www.economist.com/node/16636101
---------
Just look to our government if you want a job like that done right. Most concerns are more smoke (if that) than fire, but there are plenty of candidates for sources of pain to US freight carriers.
a. The farm lobby's annual attempt to regulate rates
b. A significant but sometimes unloved customer (coal)
c. Shifting trends in shipping routes/ports of entry vs fixed track (Panama Canal enlargement. Alternative ports)
d. Unionized workforce
e. Worker health litigation (diesel-related)
f. High-speed rail initiative impact (see below)
The Economist article: "High-speed railroading. America’s system of rail freight is the world’s best. High-speed passenger trains could ruin it"
"...high-speed rail....risks messing up the successful freight railways....the plans will demand expensive train-control technology that freight traffic could do without....reduction in the capacity available to freight...spending of federal money on upgrading their tracks will lead the Federal Railroad Administration (FRA), the industry watchdog....to reintroduce regulation of their operations. Attempts at re-regulation have been made in Congress in recent years, in response to rising freight rates. “The freight railroads feel they are under attack"......
"....America’s freight railways are one of the unsung transport successes of the past 30 years. They are universally recognised..as the best in the world.
"Their good run started with deregulation....gave railways freedom to charge market rates, enter confidential contracts with shippers and run trains as they liked. They could close passenger and branch lines, as long as they preserved access for Amtrak services. They were allowed to sell lossmaking lines to new short-haul railroads.....Before deregulation America’s railways were going bust. The return on capital fell from a meagre 4.1% in the 1940s to less than 3% in the 1960s...By 1980 a fifth of rail mileage was owned by bankrupt firms.....
"...Giving the railroads the freedom to run their business as they saw fit led to dramatic improvements. The first result was a sharp rise in traffic and productivity and fall in freight costs. Since 1981 productivity has risen by 172%, after years of stagnation....
"The $34 billion purchase last year by Warren Buffett’s Berkshire Hathaway of Burlington Northern Santa Fe (BNSF), one of the seven main freight railways opened many Americans’ eyes to the industry’s significance. That America’s shrewdest investor should place his biggest bet on BNSF.....Coal is the biggest single cargo, accounting for 45% by volume and 23% by value. More than 70% of coal transport is by rail. ....
"...But the fastest-growing part of rail freight has been “intermodal” traffic: containers or truck trailers loaded on to flat railcars. The number of such shipments rose from 3m in 1980 to 12.3m in 2006, before the downturn caused a slight falling back. Behind this lies the tide of imports coming into the West Coast ports of Long Beach and Los Angeles. A special rail expressway for freight, the Alameda Corridor, was opened in 2002 ...
"...But the past ten years have seen another source of growth, as interstate highways have become clogged in places and have shown the effects of a lack of investment.....Freight railways’ very success is starting to create difficulties for them. The Department of Transportation estimates that many are already exceeding their theoretical capacity and are congested. It estimates that lots more investment will be needed.... The investment bill could rise yet more because of a change in the pattern of trade: in 2014 the Panama Canal opens a second lane, doubling its capacity....
"In addition the freight railroads face a $15 billion bill for a new safety system to control trains on lines that also carry passengers or dangerous chemical cargoes. This system, Positive Train Control (PTC), is intended to stop or slow a train automatically....
"Another looming threat is re-regulation. Fed up with increasing rates, customers, notably chemical, coal, agribusiness and utility companies, are complaining that these are evidence that the railroads are abusing their market power. The railroads retort that despite record traffic and profits, their return on investment since 2000 has been only 8%... Politicians from West Virginia have been pushing a bill in Congress that threatens to re-regulate the railways. The industry seems confident it will not get through, but risks will remain.... Mr Buffett said that BNSF, like Berkshire Hathaway’s electric utilities, required “wise regulators who will provide certainty about allowable returns so that we can confidently make the huge investments required to maintain, replace and expand the plant.”
"The emergence of express intercity rail services may cause the freight railways the biggest problem of all. ...The problem is not the creation of new corridors with trains rattling along at 150mph....The trouble for the freight railways is that almost all the planned new fast intercity services will run on their tracks. Combining slow freight and fast passenger trains is complicated......Add the fact that freight trains do not stick to a regular timetable, but run variable services at short notice to meet demand, and the scope for congestion grows....
"Their main complaint, however, is that one Amtrak passenger train at 110mph will remove the capacity to run six freight trains in any corridor. ...Federal and state grants will flow to the freight railroads to help them upgrade their lines for more and faster passenger trains. But already rows are breaking out over the strict guidelines the FRA will lay down about operations on the upgraded lines, such as guarantees of on-time performance with draconian penalties if they are breached and the payment of indemnities for accidents involving passenger trains. The railroads are also concerned that the federal government will be the final arbiter of how new capacity created with the federal funds will be allocated between passenger and freight traffic...freight railroads, in the form of passengers and regulation, “are getting back things that caused trouble”.
http://www.economist.com/node/16636101
---------
Maybe it will amount to nothing, but if we want to fantasize about some ways we could come up with to kill a railroad, maybe this can get the ball rolling.
