Railroading and nationalization

Representative Mary Peltola,

The current state of railroads in the United States is dominated by four companies, BNSF and Union Pacific in the west with Norfolk Southern and CSX in the east. [1][2] These four companies barely compete with each other, with many cities being only served by one company, especially in the west. Examples include Seattle, Reno, Las Vegas, Salt Lake City, Tuscon, Albuquerque, San Antonio. And all of Nevada, Utah, Montana, North Dakota, and South Dakota, Massachusetts, and Delaware. Almost all of Montana, Florida, Washington, Idaho, Arkansas, and possibly more. The only cities with actual "competition" between all four Class I operators is Chicago, St. Louis, Memphis, and New Orleans.

Even at these major cities, you still only get your choice of two operators, depending on if the goods are traveling east or west. For an example, let's say we're shipping a container that just came off a ship in the Port of Vancouver, WA that need to go to a warehouse in Duluth (for some reason). Well, we only really have one option, we have to choose BNSF as they're the only operator serving both cities, unless we wanted it to take longer to transfer operators in Minneapolis. For another example, let's say we're shipping something from the Port of Oakland to Chicago. Fantastic, we don't have a monopoly on this route! But we really don't, we probably will put our goods on a Union Pacific train because that's by far the most direct route.

Imagine if all the highways in the US were toll roads with only two major operators on each side of the country and ever time you went from one operator to another you had to pay more and see increased delays. However, because we really only have one owner, the government, people are free to take the most direct route between any cities they choose, and indeed do so.

Why on earth is this an issue? As every economics lecture will share, more competition leads to reduced prices and increased service quality. If you are forced to pick CSX to take your cargo from the Port of New York New Jersey, to Syracuse, NY then CSX will have no incentive to improve its service (more proactive maintenance, scheduling more frequent, shorter trains, or even double-tracking lines) and you are irritated as the shipper of goods and as the consumer whose goods are stuck in transit. Shipping transit delays, that sounds familiar, I wonder where I've seen that before?

In the news for the last two years and more has been eternal shipping and supply chain issues. While "supply chain" might make it seem like it's everything from factories to last-mile delivery that's suffering, it's really the onward movement from the (west coast) ports to their final destination. But before we can get into the solution, let's see how we got to our current state.

Historically, this was performed using railroads and as a nation we got quite good at it. But as time passed and railroads consolidated there was less and less competition. At the same time, the interstate highway system was being built-out, offering essentially free (to the user) transportation routes from place to place. (This is also where the suburbs expanded massively, for the same reason.) Purportedly to "save costs" (most likely to increase short-term profits), the major Class I railroads began their current pattern of as few capital improvements as they could, not creating any new routes and as little expansion on existing ones as possible. Currently, the four major railroads only do major improvements when bridges fail or lines are incredibly congested for five years or more. Even such things as switches are sometimes still manually thrown. None of them have electric locomotives, even though the cost savings once the infrastructure exists would be great, as the upfront cost is very high. Or even just more efficient locomotives (the last major purchase was in 2008). Perhaps the pinnacle of reducing short-term expenses is not renewing and replacing rail, instead imposing slow orders on large sections of the lines. Imagine if your 70mph highway was needing to be resurfaced but instead of doing that the speed limit was just changed to be 60, then 50, and only when it got to 40 would the DoT begin work on roadway renewal. To say the least, this would be political suicide for any elected official to allow this, even on I-15 in the middle of nowhere Montana (the speed limit is even 80 there [3]).

These decisions do not just affect freight movement, but passengers as well. Because Amtrak and commuter rail lines do not own much, if any, of their rail network, they must lease track capacity from other operators. These operators naturally schedule their own freight traffic first, leading to frequently delayed trains for long-distance trips that use major freight lines. After all, freight doesn't really care if it arrives at the depot half an hour late. Passengers, however, really care about the timeliness of services. On lines that are owned by passenger railroads or that aren't used by freight much, trains are incredibly reliable, with few deviations from a timetable, much more so than any aircraft or road traffic. Combined with the slow speed as noted above, it's really no wonder passenger rail isn't incredibly popular in the US.

So, if we don't do that on the road, why is that done on the railroads? Except for the very short stretches of track owned by Amtrak as well as the few commuter rail operations (such as NJ Transit's PATH trains), all the mainline rail lines in the contiguous lower 48 are privately run and whose interests are in profit at the lowest cost as opposed to the best service for the sum they generate. This can be best expressed as "If I could run trains more slowly, decreasing my maintenance costs more than people who will switch to another service, I'll make more money!" Back to the bit about the clogged ports, this is precisely the math that was done. Sure, they could move more goods out of the ports, but they'd need to massively improve their infrastructure to do so (in particular their yard space at the ports), and that won't see a return for years, so the Class I operators don't. Instead, we have trucking as the dominant form of moving goods now, a detriment from an environmental perspective and only possible through the free-to-the-user highway network. As drivers leave the industry for a multitude of reasons (bad pay, long hours, no benefits or retirement, unstable employment, constantly moving across the country, and more), we see the current dearth of drivers moving goods around. Comparatively, railroads employ very few to actually drive the trains (a train can be tens or hundreds of cars long and only needs two drivers), the drivers only really serve the radial lines out of their home city, they have good pay, and much more stable employment.

So, now we've gotten ourselves into this problem gradually through short-sighed decisions made over the past several decades, how do we fix it? I propose we do like almost every other country in the world does and nationalize the rail network. It doesn't even have to be taking over the rolling stock and operations too (though should be), as even nationalizing the rails themselves, leasing time to private operators or Amtrak, doing proper maintenance, and spending money appropriately on capital improvements would lead to a vastly improved experience with much more competition. Government ownership of all track separate and time leased to operators (even when the government operates the railroads) is actually mandated in the EU, leading to increased competition between companies, as no longer are operators able to exclude others from using track in their "territory". See, for example, Deutsche Bahn (German) or Renfe (Spanish) services in to Paris.

The US did formally nationalize part of the rail network in Pennsylvania and New York with Conrail, beginning with what Wikipedia describes as "rebuilding of the dilapidated infrastructure and rolling stock it inherited." [4] Instead of just acquiring ownership of these four companies, spending a lot of money to put them in a state of good repair, then selling off the network again, why not just continue with government ownership of the railroads as a public good? The same was done in the past with the earliest highway systems (initially private toll roads) which were taken over by the government a long time ago and which nobody would even consider privatizing today. Subsidizing private operations is less effective than government-run operations, as private operations always seek to turn a profit for their investors. We should think of rail like we do the roads, ports, and waterways: something the government should own and maintain not because it generates revenue for the government directly but because it is a public service upon which everyone relies and for which planning must be done not just for the immediate future of next year but for the needs more than a decade out.


Thank you for your consideration.
Sincerely,

Eli Faso-Formoso
PO Box 672269
Chugiak AK 99567-2269


Links:

1. https://external-preview.redd.it/7P49ysvdqB6XZ54zdHv2f8oZetcj1owPw57wbs40a1s.png?s=ba9d27b3c0cb903cc998e5f80b5f28b8713a6030
2. https://en.wikipedia.org/wiki/File:Class1rr.png

3. https://www.google.com/maps/@44.5627007,-112.328064,3a,15y,317.18h,87.62t/data=!3m6!1e1!3m4!1sz1fFJ-LEiF-fhwTEI0U6PQ!2e0!7i16384!8i8192

4. https://en.wikipedia.org/wiki/Conrail