Bouquets, brickbats for shippers - Brief Article

Railway Track and Structures, Nov, 2000 by Robert P. DeMarco

Railroads are capital-intensive businesses and m/w budgets demand a significant share of the capital. We've learned a painful lesson that neglecting the tracks in the short run will cost an awful lot more in the long run.

No one in any department will argue that m/w spending is not needed. But where that money will come from and how much of a share each stakeholder will receive is the subject of lengthy debates throughout every company.

Sure, m/w deserves a slice of the budget. But so does the mechanical department as well as transportation and signal and on and on. That doesn't even mention recipients such as stockholders and creditors and the amazing collection of bodies that have the authority to collect taxes from railroads.

I'd like to focus this month on where the money comes from rather than where it goes.

Can you imagine any other industry that battles its customers as much as the rail industry does? Some of our biggest customers are trucking companies, who also compete with us head to head, so there's bound to be some friction there. But, in most cases, railroads get along better with the truckers than they do with other large customers.

Yes, customers have a right to demand good service. All too often in recent years, they have not been getting it from railroads. But they shouldn't have a right to delve far into how a railroad runs its business, nor should they be able to dictate how much a railroad charges for its services.

Not long ago, 270 executives of U.S. companies and trade associations sent a letter to Senators John McCain (R-Ariz.) and Ernest Hollings (D-S.C.) asking that priority be given in the next Congress to rail competition. The executives are asking for the legislators' support in creating a national policy that ensures effective, sustainable competition in the rail industry.

Gee, that sounds great. Competition is as American as apple pie and motherhood. How can anyone possibly disagree with these leaders?

Pardon me if I don't take everything they say as Gospel truth. Call me a cynic (no, that's not someone who works for CN/IC), but I believe what these companies want is lower rates, nothing more and nothing less.

Don't mistake me. I think that's a perfectly legitimate desire. We'd all like to pay less for the products or services we must have to do business. But that's what the market is for. If a price is too high, then people stop buying and prices come down. But whenever the government gets involved, the market is skewed.

I also find it ironic that the people who signed this letter are heading up companies that are making much more money than railroads do. Many of the leaders are with regulated utilities that get a guaranteed profit rate of about 12 percent a year. How many railroads are bringing in a 12 percent return? How many pigs can fly?

If the letter signers were simply negotiating for better rates and service, I would have no complaint. But these are died-in-the-wool, anti-big-government capitalists who are asking government to come in and set up rules for one of their suppliers. You can't be anti-regulation for yourself and pro-regulation for the other guy. It just doesn't work that way. And we all should write to our federal representatives and senators to let them know that's how we feel.

Now that I've berated the customers, I'd like to stick up for railroad customers. Customers are owed good service, and m/w must play a role in providng that service. It could mean shifting work schedules to avoid as much inconvenience as possible for customers. It could mean working closely with a railroad's sales department to find out what m/w can do for specific customers, like being sure to finish by a certain time so deliveries can begin to arrive.

Like everyone else, m/w has to ensure that the railroads' customers are served well.