World Trade - January 2009 - (Page 33)

TRANSPORTATION BNSF most readily achievable productivity changes and the cost of fuel began to rise. Others suggest the upward pressure on prices was more directly the result of import surge from China that began in the mid-1990s. As capacity began more constrained by the largely unanticipated bounty of goods pouring through U.S. ports, railroads were forced to ration capacity in reaction to a growing scarcity of rail cars and free track space. Less capacity meant higher prices paid for the precious capacity that was left. Still others contend the rapidly escalating cost of transporting foods and materials by rail over the past decade has simply been an exercise in market power. Rail has always had a marked advantage over longhaul trucking in terms of fuel efﬁciency—trains get well in excess of 400 miles per gallon of diesel on average, three times more fuel efﬁcient than trucks. “People have described the last few years as a rail renaissance, and I think that’s an apt description,’ White said. But the railroad association spokesman hastened to add that the current “economic dislocation” is having an effect. Jim Damman, the former railroad man who is now president of 3PL Exel Transportation Services agrees. “Railroads have been pretty aggressive on raising prices for the past ﬁve years, but [last year] was a little different,” said Damman, who spent 19 years with the Union Paciﬁc railroad before joining Exel. Three or four years ago, he said, capacity was a problem because the railroads were struggling to put “more traffic on rail than they had demonstrated they had a capacity to move.” “Right now, that isn’t as much of an issue for us,” Damman said. “That’s largely due to the freight recession we’ve been in since 2006, with freight slowing as the economy slowed.” “I think that’s deﬁnitely tempered their aggressiveness on prices; on the other hand, they haven’t backed off on the prices they had in place before the slowdown began,” he said. Nor do they plan to. During CSX’s recent conference call with industry analysts, Clarence Gooden, the company’s chief sales and marketing ofﬁcer, was ﬁrm. “We intend to maintain our pricing discipline,” he said. “We’re not going to give up the discipline that we’ve established over the last four years on an economic whim.” Bob Szabo, executive director of Consumers United for Rail Equity, a coalition of freight rail customers seeking more competition among the nation’s railroads, said the problem with the Class 1’s is that they’ve been allowed to largely operate as monopolies for more than a quarter century. “Where we have competition, we’re happy,” said Szabo, whose group is comprised of large trade organizations representing more than 3,500 electric, utility, chemical, manufacturing and forest and paper companies. “But where we don’t…Well, that’s another story,” he said. “The problem is they then went on and established regional monopolies,” he added. The crux of his complaint is that the government’s primary concern has always been watching out for predatory acts between railroads. WWW.WORLDTRADEMAG.COM 33 http://WWW.WORLDTRADEMAG.COM

Table of Contents Feed for the Digital Edition of World Trade - January 2009

World Trade - January 2009 Contents Supply Chain Finance Conference: The Right Stuff at the Right Time! Is the Dollar's 'Exorbitant Privelege' as the Global Standard at Risk? Supply Chain Watch Tradewinds The Rise of the 4PL An Evolving Tech Backbone Makes 4PL Service More Effective The Changing Landscape of U.S. Railroads Intermodal Grows Up Port of Hamburg Grows as Distribution Point to Eastern Europe Outsourcing Without Fear Measuring the Carbon Footprint

World Trade - January 2009

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