The Surface Transportation Board must evaluate how the proposed Great Lakes Basin Transportation, LLC would affect the existing rail companies in the Chicago land market.
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| (The Blue FLAG is the universal rail industry sign that means STOP GO NO FURTHER!) |
Chicago has a handful of shortline railroads handling the interconnection between the 6 major railroads like the Indiana Harbor Belt and the Belt Railway Company, along with several other short lines servicing industry in Chicago. With that, Canadian Pacific, Norfolk Southern, Union Pacific, Burlington Northern Santa Fe, CSX, and Canadian National all come to Chicago where cars are handed off from one railroad to another through these shortline railroads. With few exceptions, Chicago is the end of the line for the railroads. These two existing shortline railroads and the hundreds, if not thousands of existing jobs are the competition to a proposed GLBT in a very real sense.
One
has to wonder………….
can these Chicago railroads handle the loss
of business and remain sufficiently profitable to stay in
business?
Hypothetically,
suppose the GLBT takes away 50% of the rail transfer business from the two
existing short lines. While these two short lines don't exactly compete with
each other, a GLBT would directly
compete with both of them.
There are many
questions needing answered about the proposed ramifications of doubling the
needed infrastructure.
- Would increased operation costs from more rail miles increase rail rates?
- Would displaced Chicago employees leave or go on unemployment?
- How much revenue would Chicago communities loose?
- With less freight traffic to carry the burden for rail repairs, would the taxpayers or increased passenger tickets rail be accessed to cover the bills?
- Would these short lines and interchange railroads operate with less freight income or would they go bankrupt?
- Would then abandoned tracks in Chicago create a greater blight on Chicago communities with no property taxes being paid and their deterioration?
Because
tracks need maintenance and crews need to be paid regardless of the amount
of rail traffic, railroads require sufficient freight traffic to pay the fixed
costs. In Chicago passenger and freight share the same tracks and
crossings often. Chicago rail companies generally make money off freight and
loose money with passengers. The government subsidizes passenger rail.
In
addition, without sufficient freight traffic, the cost to transfer each car
increases and rail shipping rates go up. Consumers would pay more for
transferring rail cars through Chicago because that cost is distributed
through GLBT and their billions of dollars of infrastructure plus paying the
cost to maintain the existing infrastructure in Chicago. Adding the
Chicago bypass and forcing railroads to utilize it could easily make all the
Chicago market unprofitable, increase risk, and create an unstable
rail industry.
Will
the Surface Transportation Board find itself in a position to mandate the use
of a certain interchange railroad to maintain profitability of all the
interchange railroads?
The
rail industry is a fragile business. While the industry has done well
over the last several decades with deregulation, one of the duties of the
Surface Transportation Board is to make sure proposed projects such as GLBT don't
upset the industry, cause harm to an existing railroad, or create an adverse
situation that increases rail tariffs resulting in consumers paying more for
goods.
Creating
a new shortline interchange railroad in the Chicagoland market could do
just that. The Chicagoland rail market is a perfect example why America
has regulated monopolies. There are times when adding a duplicate
high fixed cost infrastructure will increase the cost of business, reduce
profitability, and potentially create a corporate bailout problem.
- Recreating infrastructure, like GLBT is proposing, can improve efficiency, but sometimes the cost is more than the benefit.
- What benefit is there to close shortline railroads only to create another at a higher cost for consumers?
- What benefit is there to take rail jobs away from Chicago yards and relocate those jobs south of Chicago?
- Will the proposed GLBT accept the responsibility of creating a depressed economy and increasing urban blight with abandoned rail tracks in Chicago?
- What benefit is there if the final outcome will be higher rail rates?
The
companies realize taking business away from the existing interchange
railroads will only lead to lower profitability for their company and
shareholders. Utilizing the existing infrastructure maximizes profitability. It
would be interesting to hear Union Pacific explain how dividing trains between
the existing interchange railways and GLBT would affect all rail tariff rates
through Chicago. Even if Canadian Pacific or another railroad used GLBT,
the loss of business to GLBT would affect the costs of all the other railroads.
If
building GLBT increases efficiency but at a higher cost to the consumers and
risks railroad profitability, then no one but Great Lakes Basin Transportation
investors benefit. (Whoever the investors behind GLBT might be.)
Then again, if the investors in Great Lakes Basin Transportation envision
a North American railroad with all the benefits of globalism for the
owner, GLBT is the missing link. A merger with Great Lakes Basin
Transportation, LLC and Norfolk Southern would make a powerhouse with GLBT
added.
Until
The Surface Transportation Board (and not Frank Patton) proves Great Lakes
Basin Transportation will do no harm to the existing Chicagoland rail
companies with GLBT's duplicate of the Chicagoland infrastructure, this project should not be built. There
is no doubt Frank Patton will take a Pollyanna position that this project will
do no harm to the industry but really? There have been a long line of
braggadocios dreamers like Patton claiming to bring economic expansion but the only
profit seen is in their wallet.
We
don't need more abandoned railways through our fields. We have enough abandoned
rail sewer lines though our farms.
If
this proposed project is just forced transfer of wealth from the agribusiness
owners and the existing shortline interchange railroad owners to GLBT investors by
eminent domain are we really better off as a society?
Are
we just creating a new Robber Baron Railroad with GLBT?
