Railroads and their Future

They fight competition. They fight technology. They fight unions. They fight regulations. They fight safety requirements. They fight taxation. 

They do seek help from the federal government in legislation, regulation, weakened oversight, protection from law suits. They seek local support from cities and counties when they think it is advantageous, and seek cover from those same authorities when it isn’t in their interest. They don’t seem to care about their pollution: noise, sight, air and soil. They say they gave too much to the nation and got too little. 

Let’s see: in the 1830’s they got land grants from the Mississippi River to the Pacific Ocean for the transcontinental railroad. One mile in each direction of the track route. How many acres do you suppose that totals? And did they use the land? No. They sold the land, or developed it and made countless dollars over the last 190 years. 

They also were given federal government authority over the Wild Wild West because the federal government lacked funds and staff to govern the territory. So the railroads were given the job. Indians were fought and moved to reservations, in part to make way for the railway. Cavalry support was granted freely as well. The railroads had a huge job to do. They did it. They were compensated for it hugely. But now? 

Competition among railroads is minor. Only a few major railways exist. Small regionals still ply their freight routes, but the national and international trade routes belong to two or three majors. No, their competition is from technology, trucks, and a huge shift in consumer tastes.  

Railroads gave us one of the most basic business school lessons. They forgot what business they were in. They stubbornly insisted they were in the railroad business. In fact they were in the freight business, and to a lesser degree passenger transportation business. The latter is all but gone. The former remains but far different because railroads forgot their mission and never had much of a vision in the first place. 

And now we pay a huge national price for this lack of vision. Lack of leadership. Both from the railroads and from government policy makers. 

Canadian rail industry has made incursions to the American rail industry. How? By buying defunct regional railroads, unifying them under one brand, and upgrading the track, track bed and infrastructure for higher speed trains. 

One such project was Canadian National Railway buying the sleepy Erie Elgin & Joliet Railroad, mostly in suburban Chicago. It ran from Gary, Indiana to Waukegan, Illinois in a lazy loop that included Joliet to the south and Elgin to the west. This loop was the missing piece in a network for CN which now provides a bypass of Chicago as it wends its freight line from Canada to points south to New Orleans, and to eastern routes through Indiana to the Eastern seaboard. They knew what they wanted and needed. They bought it dirt cheap. And without much interference from federal authorities or regulation. 

Canadian National and the Canadian government is watching over its nation’s future, and it belongs in China (Western seaboard ports fed by their trains) and Halifax (European seaboard ports fed by their trains) and now Gulf ports and eastern American port networks fed by their trains on what used to be our trackage. Go figure. Canada can work with long range strategic goals. America cannot because it is too interested in playing political games of little substance.

 

Shame on us. Seems other nations recognize the value and strategic significance of railroads. We don’t. We let the railroads get away with murder. And yet they ask for more largesse from shippers and government authorities. Whatever happened to cooperation and collaboration for the benefit of all?

January 21, 2012