Railroads, the Free Enterprise Alternative

By Daniel L. Overbey | Go to book overview
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restrictions of the traditional rail industry structure could be given an unencumbered trial in the marketplace. With the freedom of the new structure, rail carrier innovation should proceed at a rapid pace.


SUMMARY

The Free Enterprise Alternative offers a means for eliminating exclusive carrier service and replacing it with constructive competition. Carrier companies would respond to the needs and demands of the marketplace. Carriers would be given a great degree of freedom in the commercial direction of their operations: services, route structure, market entry and exit. Although this freedom is taken for granted in the other modes, the railroads have never had such latitude because of their exclusive fixed ways and the resultant monopolistic characteristics. By separating carrier and roadway functions, the benefits of both joint use and carrier competition can be obtained.


NOTES
1.
In recent years the ICC has given common carrier railroads the approval to implement contract rates for specific situations. Contract rates usually require a minimum annual traffic volume and may place daily, weekly, or monthly maximum volumes in order to improve car utilization. Loading and unloading times may be limited.

The ICC recently exempted fresh fruits and vegetables from economic regulation when shipped by rail. The railroad remains a common carrier with certain obligations, but rates are not subject to regulatory approval.

When handling contract shipments or exempt commodities, the railroad company still has the basic common carrier obligations unless modified by specific contracts. The contract and exempt innovations usually relate to price (rate-making) and not service. Exempt and contract shipments can be handled in trains with other regulated common carrier traffic; they share the same yards and tracks. It is the same carrier--the railroad company--which performs the transportation service for all rail shipments.

2.
U.S., Department of Transportation, The Railroad Situation, pp. 46-48.
3.
At some locations, two or more railroads "open" industries to reciprocal switching. The railroad serving an industry will switch cars to and from a nearby connecting railroad(s) for a flat fee rather than a share of revenue as is the case with normal interchange. The connecting railroad(s) at the location reciprocate by switching cars to their industries. If an industry is not open to reciprocal switching, the originating carrier might be able to demand inclusion in the routing to some intermediate interchange point depending on tariff restrictions. In either case, the originating carrier must physically handle the shipment to the connecting railroad.

-161-

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