23.9.07

TROT OUT THOSE TRANSLOGS. The empirical case for deregulating the railroads received support in Caves, Christensen and Swanson, "Productivity Growth, Scale Economies, and Capacity Utilization in U.S. Railroads, 1955-1974," and in Caves and Christensen, "The Relative Efficiency of Public and Private Firms in a Competitive Environment: The Case of Canadian Railroads." Some of that team will take the field again with an opportunity to extend the research.

The Surface Transportation Board (STB) announced last week that it has awarded a contract to Christensen Associates (Christensen), headquartered in Madison, Wisconsin, to conduct an independent study that will assess the current state of competition in the freight railroad industry in the United States.

The study will cost approximately $1 million and will be completed and made public in the Fall of 2008, the STB said

Christensen, an economic and engineering consulting firm “…with extensive experience analyzing the transportation sector and other markets,” will conduct the independent study entitled Report to the U.S. STB on Competition and Related Issues in the U.S. Freight Railroad Industry. The study will focus on providing a comprehensive analysis of a wide range of issues including competition, capacity, and the interplay between the two. The study will also include an examination of various regulatory policy alternatives.

In October 2006, the Government Accountability Office (GAO) expressed concerns over competition and shipper captivity in the rail industry.

The GAO recommended that “the Surface Transportation Board conduct a rigorous analysis of competition in the industry and consider actions to address problems associated with abuses of market power.”

Canada is a much smaller country with two truly transcontinental railroad systems, and yet the early evidence suggested a competitive duopoly. The updated research might contain some surprises.

Read the full Destination:Freedom report and enjoy the crying by the highway lobby.
The [Houston] Port Authority said in a statement that studies sponsored by the Texas legislature recently authorized the creation of the Gulf Coast Freight Rail District to address mobility issues caused by the proliferation of rails in the region, Railway Age reported.
I was under the impression that Houston is the point of origin for Union Pacific service meltdowns thanks to insufficient capacity and some latent power struggles between the Octopus (the old Southern Pacific way) and Omaha. Proliferation of rails? Try proliferation of grade crossings, and 53 foot trailers on the roads.

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