Matt sings the praise of rail shipping:
Freight rail is booming primarily because of the 3:1 fuel efficiency superiority of rail over trucks. Ryan Avent notes that "This boom is all the more impressive given that the railroad companies will pay for about 65 percent of the network expansion" while trucking companies do not, of course, pay for the roads.Clearly trucks have a massive inherent advantage as a method of doing the last-mile of shipping, but for long-haul stuff a more rational federal policy environment in terms of carbon pricing and road/rail funding balance would give further momentum to this boom.
What I'm told by my father, the transportation authority, is that the rail companies actually don't want traffic that goes less than 1,000 miles; they lose money on it. Obviously, carbon pricing might change that equation, but I doubt it would enough to work those trips down to, say, 500 miles; the whole problem is that the costs are all fixed. Also, rail hub-and-spoke may not be more energy efficient than truck point-to-point if the rail cars have to travel far out of their way to hook up with a train. My understanding is that the shorter the haul, the more likely it actually is that the car will need to take a circuitous route. Rail companies are not interested in jobs that require constant coupling and uncoupling of single car loads.
Demand for freight rail is still booming, and I hope we'll see the network much expanded over the next ten years. But I don't think we're in for the demise of the long-haul truck trip just yet.
...while trucking companies do not, of course, pay for the roads.
Sure they do -- that's what road taxes are for. It may be that the road taxes they pay aren't high enough, but it's certainly not the case that "trucking companies don't pay anything for roads."
does the network actually need to be expanded? I would have thought it is good now, for the 1000+ mile trip... since the last mile is also the first mile... Trucks move stuff to rail-head from a producer.
The interesting thing is that rail use will HAVE to expand, simply because there isn't a way to make trucks get better mileage, enough to offset the increase in fuel price. Because they are relatively expensive, many smaller companies, and Owner-Operators are going to go under, because it will just not be profitable for the price.
It is a weird snowballing effect, where you would think the price to move freight would just increase as the fuel goes up, but it isn't necessarily priced that way... and the people who do the physical moving are caught between.
So? the next best thing is rail because the comapnies are scaled differently. Producers may finally come to the conclusion that, indeed, a product DOESN'T really need to be there in 4 days by truck, when it takes 2 weeks by train, if the truck isn't available or charges a lot for the service...
Megan,
You're posting frequency has picked up over the last few days -- you're not under any heat to keep up with Yglesias's activity level, are you? I hope not: I think his quality level would go up and his hackery level would go down if he slowed down a little.
Slocum wrote: Sure they do -- that's what road taxes are for. It may be that the road taxes they pay aren't high enough, but it's certainly not the case that "trucking companies don't pay anything for roads."
In fairness, I think you're misinterpreting Matt's point. The cost of rail expansion will always be factored more heavily into the rail companies' budgets because they necessarily make an exclusive claim to the land they lay rails upon and impose infrastructure costs and inconveniences upon communities, who regularly respond by requiring railroad expansions to engage in expensive diversions or mitigation measures.
These barrier-to-entry costs are much lower for long-haul truckers, who can simply pay the basic licensing fees and then begin traversing roads anywhere in the United States at whim. Thus, the fact that rail shipping is expanding anyway is indicative of some significant shift.
Railroads are booming. Oh great news to get now. Warren Buffett has been investing in railroad stocks for over two years.
In interesting problem here in Massachusetts that may apply elsewhere.
Freight traffic and commuter train traffic compete for the same rails lines. Should freight traffic increase, commuter train traffic will suffer. The overlap occurs at the earliest and latest times for commuters coming from and going to the farthest locations (5:30 AM train from Worcester to Boston, for example)
Also, as freight traffic picks up, delays at train crossings increase. So more cars (and trucks) will sit in more traffic for longer amounts of time.
"Also, as freight traffic picks up, delays at train crossings increase. So more cars (and trucks) will sit in more traffic for longer amounts of time."Posted by Xmas |
Static much? Always good to see the Polaroid school of economics, still represented.
Of course, unlike the wheels riding the rails, we can choose which intersections would be worth improving--tangent, to that, car coupling/uncoupling is able to done, today, remotely and on the fly, without human intervention--much of which exists solely to rule & reg, promulgated from a different age..
Listen, I'm a fan, from the long long ago (and I read your comments section rarely, as I have no time for some of the children who lurk there), but you've got to start doing better research on these rail conjectures. I'm sure that Mr. McArdle is a fine and accomplished man, but his word is not gospel: 1,000 miles is no longer the breakeven distance, the cost structure of the rails isn't nearly as fixed as you make it out to be, and the intermodal buildouts that many of the rails are performing changes the equation a good deal.
Call Bob Noorigian of CN (probably the best IR of the Tier I rails), and try to substantiate some of the claims. Or call Ken Hoexter at Merrill. But please, call someone.
Normally I'd avoid calling someone dumb, but you've got to be pretty dumb to think the governmental fees (ie paying for the road) involved in owning and operating a truck are $0.
Well, Mr McArdle was, until three months ago, a member of the Senate Commission on transportaton finance; that came from his talks with the presidents of the rail companies. I may have garbled it, but Dad really does know his stuff.
In interesting problem here in Massachusetts that may apply elsewhere.
Freight traffic and commuter train traffic compete for the same rails lines. Should freight traffic increase, commuter train traffic will suffer.
And then there's the New York City problem - the nearest freight crossing of the Hudson River is nearly 150 miles north of the city.
If you want to take one container off a mile-long train, you've got to stop the entire train.
Trains aren't going to be truly big until we get smart multiple units that can decouple and recouple on the go (with attendant maintenance costs of having possibly a couple driven wheels) or rolling cranes that can pluck a container off a moving train (with the complexity of a system that must accelerate, match speeds, pluck, decellerate, and drop)
The larger question is, can there be an absolute or relative reduction in the movement of goods?
The era of cheap energy have created vast movements of goods and services, like vegetables that are trucked from California to the East Coast, fruits from Chile to the US, etc.
Is this extravagance justifiable when transport energy prices go up 5X? 10X?
MEH,
I've lived in Massachusetts long enough to know that any infrastructure improvement will take 3 times longer and cost 10 times more than what we plan for...
Plus, I can't imagine anyplace were you could put an automated train yard in MA.
From The Boston Globe, on the Worcester/Framingham line: http://www.boston.com/news/local/articles/2007/08/12/rail_riding_commuters_want_more_service_soon/?page=1
The work rules on railroads are amazingly Byzantine. I would bet lunch that if you could (magically) rewrite job descriptions so that employees could become more utility players, the breakeven would drop well below 1,000 miles. I also suspect that the CEOs gloss over this fact in an effort to not provoke the unions.
I contract frequently for freight by rail for distances well below the 1000miles threshold you alluded to. It is an imaginary benchmark. I dont doubt that your dad discussed with rail company executives - but I am more interested in their motive attempting to sell this tale to shape public policy
A friend of mine works on the art train, and the congestion on the freight lines is so bad that they have to ship the art train by truck. As the price of diesel goes up, the competitiveness of freight rail increases. Of course this wouldn't be so much of a problem if America's rail lines were treated like the highways. Instead they are privately owned and maintained. If they were run like the highways then freight rail would be even cheaper. And of course that could, depending on political support, lead to a commuter rail dedicated high speed line, for regional trips (think Chicago to St. Louis or Minneapolis or even L.A. to Las Vegas). It would clear up a lot of the congestion at the airports.
It may be that the road taxes they pay aren't high enough, but it's certainly not the case that "trucking companies don't pay anything for roads."
Two things: First, the quote is faulty. What was said above is that trucking companies "do not, of course, pay for the roads", not that they don't pay "anything" for the roads. It's not polite to doctor a quote into a more extreme version and then complain about it.
Secondly, they really don't pay anything for the roads. A ~5mpg semi does pay 5x the fuel tax per mile of a ~25mpg car, but it does something more like 50,000x the damage to the road. By the time one group is being taxed at a rate four orders of magnitude less than the general public I think it's fair to say that they "don't pay anything".
Freddiemac said: If they were run like the highways then freight rail would be even cheaper.
How's that?
Highways are paid for by fuel taxes, and when those are insufficient, general taxes.
Railroads are paid for directly by charging customers.
What savings do you imagine from having the State run railways, that won't just be a tax-fed subsidy?
Are public employees willing to work for less than railway employees (if we assume you mean only the physical railway is to be nationalized, this limits the issue to the maintenance and construction and switching crews, but that's substantial - I suspect in fact a majority of railway "labor" employees)?
Both are unionized, after all, and I doubt there'd be any acceptance of a wage reduction in a transfer of union membership (if the Teamsters would even accept such a thing); and of course if the Teamsters kept controlling employment anyway, no reduction of wages is possible. So no cost reduction from labor price reductions.
That leaves us with efficiency and profit - and the State's track record with efficiency is dubious at best; profit is a great motivator, and the State lacks it. (cf Amtrak, the Great Railbound Boondoggle.)
Nationalization of the railways (even of just the physical rails, if not the trains and cars themselves) seems a non-starter.
Now, if you want to talk about strategic subsidies to improve rail profitability and expand rail lines beyond what normal profit/loss/risk analysis would support, that's another matter...
One major roadblock to a continued shift from truck freight to rail freight is the railroads themselves. They seem to only want unit train business.
If you want to move 100 coal cars from the Powder River Basin to your local power plant, no problem.
If you are a goods shipper wanting to move 1 car of meat from the midwest to a Pacific port for export, good luck to you.
Posted by Xmas |
is this, below, a joke, in response to my post?
"I've lived in Massachusetts long enough to know that any infrastructure improvement will take 3 times longer and cost 10 times more than what we plan for...
Plus, I can't imagine anyplace were you could put an automated train yard in MA." Posted by Xmas |