Private operation of long distance trains?

[BlackDiamond]

I think we have to be careful about (1) using British privatization as the primary example of what happens when you privatize a passenger railroad as it had many flaws in its implementation and (2) considering the performance of US freight railroads under "precision scheduled railroading" as an indictment of privately run freight railroading in general, as PSR seems to be mainly driven by the needs of Wall Street rather than the shipping market. I realize that the emphasis on short term profitability, along with the tendency towards monopolistic practices, are among the principal shortcomings of our capitalist system, but so far no one has come up with a better way to run an economy.

 

[joelkfla]

I think we have to be careful about (1) using British privatization as the primary example of what happens when you privatize a passenger railroad as it had many flaws in its implementation and (2) considering the performance of US freight railroads under "precision scheduled railroading" as an indictment of privately run freight railroading in general, as PSR seems to be mainly driven by the needs of Wall Street rather than the shipping market. I realize that the emphasis on short term profitability, along with the tendency towards monopolistic practices, are among the principal shortcomings of our capitalist system, but so far no one has come up with a better way to run an economy.

But being driven by the needs of Wall St, and short-term profitability are precisely why privately run passenger railroads would be problematic in this country.

 

[MARC Rider]

I realize that the emphasis on short term profitability, along with the tendency towards monopolistic practices, are among the principal shortcomings of our capitalist system, but so far no one has come up with a better way to run an economy.

We had a better way 50-60 years ago when the tax system penalized (at least somewhat) short-term profitability, and antitrust laws were more strictly enforced. Even then, they could have gone further without implementing some sort of centralized economy. Also, personal income taxation was much more progressive, that is, higher incomes were taxed at a higher rate, with the top marginal tax rates hovering around 90%. Thus, top managers and business owners had more incentives to run a company for long-term sustainability rather than run it into the ground and grab as much money as they can as quickly as possible. The 1950s are sometimes thought to be a period of conservative conformity, but it had the most egalitarian economy in our history (or at least more egalitarian than we have now).

 

[jis]

But being driven by the needs of Wall St, and short-term profitability are precisely why privately run passenger railroads would be problematic in this country.

That is exactly what caused it to crash and burn in the first place with some amount of help from the ICC. But one of the proximate reasons for PC to blow up was its insistence to keep paying dividends when they really did not have the money.

 

[TheCrescent]

But being driven by the needs of Wall St, and short-term profitability are precisely why privately run passenger railroads would be problematic in this country.

A company is “driven by the needs of Wall St, and short-term profitability” only if it is publicly-traded (i.e., its shares are listed on a stock market and available to small investors who are not accredited investors).

There are plenty of private companies that are not publicly traded. BNSF, owned by Berkshire Hathaway/Warren Buffet, and Brightline, owned by Fortress Investments, are two primary examples.

Brightline does an amazing job with its trains and it certainly ignores short-term profitability, spending lots of money now with no hope of short-term profits.

So if you don’t like a focus on short-term profits (which is reasonable to dislike), your argument should be against having a railroad be publicly-traded, not against private ownership, since there are many examples of private ownership that allow a long-term emphasis.

 

[cirdan]

Wouldn't a private operator essentially work like a shared trackage agreement? They'd need to negotiate and pay for access?

As an aside, I think something people are forgetting with the UK examples (and EU generally) is that a) the tracks and rolling stock were typically already government owned and b) much less freight and heavier passenger service. It's not something that can directly translate to our situation.

There are lines in Europe that see very heavy freight usage and there are even situations where there is a direct conflict between passenger and freight interests and for example passenger service improvements are blocked because of objections by freight companies. That’s not fundamentally different to the situation in the US .

What is different is that the rail network is largely developed with passengers in mind primarily and freight usage often being catered to as an afterthought (exceptions existing , for example Betuwelijn in The Netherlands )

Privatization rarely works and almost always costs more. The British fiasco is one of the worst. It’s so bad, they’re renationalizing although, sadly, the Tories are insisting on operating contracts with private operators instead of just bringing back British Rail. The most successful railroads in the world are state owned like Deutsche Bahn.

Im Germany too all contracts for local and regional lines are put out to tender which is why Deutsche Bahn sometimes loses such contracts to private or foreign competitors

No, ridership wouldn’t have necessarily increased in the same way. Private operators introduced new equipment and fancier on-board services, for example, which may have helped. Ridership increased more quickly after privatization than before.

The UK is reducing the private sector’s role, but operation of most train lines will still be by private operators. That’s a greater private-sector role than in the US.

This .

i think people tend to develop a glassy eyed nostalgic view of the past .
My memories of British Rail in the 1980s are far from the paradise of affordable, punctual and clean trains that many people think there must have been . On the contrary , it was an underfunded and underperforming system that was in many respects on its last legs . I think some things have clearly got worse since then but many things are clearly better .

 

[Cal]

There are plenty of private companies that are not publicly traded. BNSF, owned by Berkshire Hathaway/Warren Buffet,

No wonder, contrary to PSR, they are continuing to triple and even quadruple some lines

 

[jis]

No wonder, contrary to PSR, they are continuing to triple and even quadruple some lines

Why is tripling and quadrupling lines contrary to PSR?

 

[Cal]

Why is tripling and quadrupling lines contrary to PSR?

Correct me if I am wrong, but I thought part of PSR was cutting down on infrastructure, which includes/especially tracks? Or is that removing sidings and not mains?

 

[jis]

Correct me if I am wrong, but I thought part of PSR was cutting down on infrastructure, which includes/especially tracks? Or is that removing sidings and not mains?

I don't think PSR per se has anything to do with cutting down infrastructure. That is motivated by the desire to meet other expectations.

Here is what PSR is according to UP:

https://www.up.com/customers/track-record/tr091019-precision-scheduled-railroading.htm
Indeed in the past passenger trains were operated along the same basic idea wherein cars were picked up and dropped off on the way on schedule and transfered from train to train as needed.

 

[Cal]

I don't think PSR per se has anything to do with cutting down infrastructure. That is motivated by the desire to meet other expectations.

Here is what PSR is according to UP:

https://www.up.com/customers/track-record/tr091019-precision-scheduled-railroading.htm
Indeed in the past passenger trains were operated along the same basic idea wherein cars were picked up and dropped off on the way on schedule and transfered from train to train as needed.

Thank you Jis.

 

[joelkfla]

I don't think PSR per se has anything to do with cutting down infrastructure. That is motivated by the desire to meet other expectations.

Here is what PSR is according to UP:

https://www.up.com/customers/track-record/tr091019-precision-scheduled-railroading.htm
Indeed in the past passenger trains were operated along the same basic idea wherein cars were picked up and dropped off on the way on schedule and transfered from train to train as needed.

I'm skeptical. The article feels like a spin job to rationalize a cost-saving concept, with lots of fuzzy qualifiers: "some", "may", "not always".

 

[jis]

How can one be skeptical about the definition of a concept? As for how it is implemented, that is a separate matter and that is where the railroads have been guilty of sweeping all sorts of nonsense under the banner causing a lot of confusion. What is worse is sometimes things that are swept under the banner are actually antithetical to achieving the goals implied by the definition. Indeed I am pretty skeptical about many things that railroads do including some of the aspects of what they claim they are doing for PSR. They are not honest in their execution and they are worthy of getting their feet held to fire for that.

When I at least have a chance to have a conversation on the subject I first ask what definition are they using for the term and then ask how a particular act is conformant with the definition. Sometimes they can explain and sometimes they equivocate. In the latter case you know that they are the purveyors of bovine scatology.

 

[joelkfla]

How can one be skeptical about the definition of a concept? As for how it is implemented, that is a separate matter and that is where the railroads have been guilty of sweeping all sorts of nonsense under the banner causing a lot of confusion. What is worse is sometimes things that are swept under the banner are actually antithetical to achieving the goals implied by the definition. Indeed I am pretty skeptical about many things that railroads do including some of the aspects of what they claim they are doing for PSR. They are not honest in their execution and they are worthy of getting their feet held to fire for that.

When I at east have a chance to have a conversation on the subject I first ask what definition are they using for the term and then ask how a particular act is conformant with the definition. Sometimes they can explain and sometimes they equivocate. In the latter case you know that they are the purveyors of bovine scatology.

I guess I can accept the base definition, being a focus on cars rather than trains. I'm skeptical of the rosy picture painted by the article, that the way it's being implemented is beneficial to the majority of shippers, and that it reduces the amount of freight sitting in yards.

 

[Gary Behling]

I think we have to be careful about (1) using British privatization as the primary example of what happens when you privatize a passenger railroad as it had many flaws in its implementation and (2) considering the performance of US freight railroads under "precision scheduled railroading" as an indictment of privately run freight railroading in general, as PSR seems to be mainly driven by the needs of Wall Street rather than the shipping market. I realize that the emphasis on short term profitability, along with the tendency towards monopolistic practices, are among the principal shortcomings of our capitalist system, but so far no one has come up with a better way to run an economy.

The one thing you can count on with privatizing a passenger railroad is this-- the employee pension fund will be drained and the equipment will be sold in bankruptcy. And it will be just a fond memory afterwards

 

[TheCrescent]

The one thing you can count on with privatizing a passenger railroad is this-- the employee pension fund will be drained and the equipment will be sold in bankruptcy. And it will be just a fond memory afterwards

How many UK train operating companies have filed for bankruptcy or insolvency and terminated or taken funds out of employee pension plans?

 

[Gary Behling]

How many UK train operating companies have filed for bankruptcy or insolvency and terminated or taken funds out of employee pension plans?

Different country, different values

 

[TheCrescent]

Different country, different values

Please list the specific private passenger rail companies that have liquidated pension plans and sold equipment in bankruptcy.

 

[SwedeC]

Dare I mention Australia's private trains on public tracks? It was a pleasure to ride the Indian Pacific in a style reminiscent of our 1950's grand trains. Great Southern (the operator) seems to be doing well but I don't know to what extent the government corporation's track maintenance is a sort of subsidy. Comments solicited.

 

[cirdan]

How can one be skeptical about the definition of a concept?

I think one can.

Many buzzwords are thrown around in ways that have little to nothing to do with the way they were actually defined. Six-sigma was a big one a few years back, used to justify all sorts of questionable business decisions that if you went back to the original definition had no actual connection.

So it is entirely viable to say that a definition as applied has become disaligned with what was originally intended, or communicated.

 

[jis]

I think one can.

Many buzzwords are thrown around in ways that have little to nothing to do with the way they were actually defined. Six-sigma was a big one a few years back, used to justify all sorts of questionable business decisions that if you went back to the original definition had no actual connection.

So it is entirely viable to say that a definition as applied has become disaligned with what was originally intended, or communicated.

Exactly. That is what I said in my OP, or I guess, tried to say and failed miserably. Just to be pedantic, what you have described is being skeptical about the usage of a term as I explained in my post. Sorry for my lack of ability to communicate adequately.

 

[Gary Behling]

Please list the specific private passenger rail companies that have liquidated pension plans and sold equipment in bankruptcy.

I guess you must have forgotten the entire passenger rail history just before the creation of Amtrak. I guess also that you must have overlooked the history of American Capitalist takeover of so many American companies like the kind Mitt Romney ran (Bain Capital) where the business model is to drain all the operating capital under the guise of consulting fees, draining the employees pension fund and then telling the management to go run the company with what is left. and ultimately selling off the real estate and equipment in bankruptcy. THIS is American Capitalism today. And you can apply this business model to passenger railroads because it needs government support due to a lack of passenger traffic. Tourist railroads can stand alone, but not a nation-wide passenger system.

 

[TheCrescent]

I guess you must have forgotten the entire passenger rail history just before the creation of Amtrak. I guess also that you must have overlooked the history of American Capitalist takeover of so many American companies like the kind Mitt Romney ran (Bain Capital) where the business model is to drain all the operating capital under the guise of consulting fees, draining the employees pension fund and then telling the management to go run the company with what is left. and ultimately selling off the real estate and equipment in bankruptcy. THIS is American Capitalism today. And you can apply this business model to passenger railroads because it needs government support due to a lack of passenger traffic. Tourist railroads can stand alone, but not a nation-wide passenger system.

Please name passenger rail operators that liquidated pension plans and sold off equipment in bankruptcy.

Penn Central didn’t, even after it went bankrupt.

 

[BlackDiamond]

draining the employees pension fund

Under current law a company cannot just drain a pension fund. The best it can do is request a distress termination which requires them to prove to the PBGC their financial status is such that they cannot remain in business without terminating the plan, then the PBGC takes over the pension. In any case the pensioners are still paid their benefits.

 

[MARC Rider]

Under current law a company cannot just drain a pension fund. The best it can do is request a distress termination which requires them to prove to the PBGC their financial status is such that they cannot remain in business without terminating the plan, then the PBGC takes over the pension. In any case the pensioners are still paid their benefits.

Except that in many situations, a sharp operator can manipulate a company into bankruptcy by loading it with debt, and other ways to creatively siphon off the company's assets, and under the current Bankruptcy code, PBGC may not be able to collect funds from the company that has terminated the pension plan. See the wikipedia article about PBGC, Pension Benefit Guaranty Corporation - Wikipedia .