(erielack) John Kneiling and EL

[Wdburt1_@_aol.com]

    *   Subject: Re: (erielack) John Kneiling  
    *   From: "Paul Brezicki" <_doctorpb__@__bellsouth.net_ 
(mailto:doctorpb__@__bellsouth.net) >  
    *   Date: Wed, 30 May 2007 05:19:59 -0400 
 
____________________________________
Of course he was a railfan, why else would he write so passionately on the 
subject year after year? IIRC he was on the High Iron trip in 1970 or'71
that went up the Erie side and down the Lackawanna, and wrote a column about 
it (List content). Jim is correct, he was not popular at Trains; the mail was 
perhaps 4 to 1 anti-Kneiling. However like DP Morgan he was a true believer, 
and that's why he gave him the forum despite the possible adverse effect on 
circulation.



This is easy to understand in the context of the state of railroading in the 
late 1960's. The industry was in the final throes of a catastrophic postwar 
loss of market share, and after the PC bankruptcy appeared to be headed for 
nationalization or worse. The reasons appeared obvious. Technologically, the 
industry in essence hadn't changed in 75 years, organized around loose cars 
and
yards which produced slow and unreliable transit times, dreadful car 
utilization
and damaged cargo. This was driving merchandise traffic onto the highways. 
What
worked reasonably well in 1890 with 20-car trains and the 
charge-what-the-traffic-will-bear
pricing made possible by an absense of competition, no longer worked. Survival
was at stake, and the True Believer also envisioned at least a partial 
restoration of market share.
A radically different approach was needed.



The "integral train" solved all the technological problems, but in the 
regulatory/labor environment of that time, it was naive of Kneiling to think
that technology could save the industry. In fact, absent regulation, it's 
likely
the integral train would have already existed. By 1960 the industry would have
reconfigured itself into 3 or 4 go-everywhere systems, which were free to 
pursue
new technologies without having to make them compatible with those of every 
other
carrier; the loose-car configuration of the 19th century would have already 
been
largely replaced. Yes, a rail shipment can travel from Maine to Mexico without
changing cars, but the other side of the compatibility coin is stifling of 
innovation.
A good example is NYC's Flexivan. The system had its technological 
shortcomings
, but was junked largely because interchange partners didn't use it.
The industry survived by throwing in the towel and retrenching to niche 
markets
: coal, grain, chemicals and transcontinental merchandise, most of it moving 
in
dedicated trains. It has been banished from the main stage of transportation:
merchandise in the under 1500-mile market, and perishables. Trucking gets 
about
85% of transportation revenue, rails under 10%. The industry appears to be 
uninterested in regaining significant market share. It's earning a decent 
return
on current business and due to capacity restraints, has its hands full 
anyway. I've come to suspect that it's impossible for rails to compete in that 
market in any modern economy with a publicly-funded highway system. 



Paul B



Comments:
I overlooked this penetrating comment until now.  It is correct that the 
regulatory system strongly discouraged innovation.  For some of us who worked 
to deregulate the rail industry in the mid-1970s, this was motivation for, 
and the practical (if not the theoretical) measure of, a better way:  Any 
regulatory regime that systematically defeated innovation had to be replaced 
with something better.  Specifically, the Nation Commission on Productivity 
Report of 1973 identified the need for compatibility as a major impediment to 
rail industry innovation (George Hilton was one of its authors.)  We did not
necessarily buy what JGK was selling, but we came to realize that he was 
often right.
Naively, we believed that technologies like Flexi-Van should duke it out with
TOFC and the market would decide, but instead of the market there was 
Ben Biaggini making phone calls behind the scenes trying to protect SP's 
market share against Super C's incursions--SP! whose business consisted of 
running West Coast-East Coast lumber and perishables the long way around via 
Texas.  
 
Because of its traffic density, the Midwest-East Coast market might well have 
supported a trunk line railroad such as Erie Lackawanna focused on expediting
through freight traffic while nurturing the limited on-line business that it 
had.
To me, it's simply a question of whether, in a deregulated environment, the 
dominant routes (ex-NYC and ex-PRR) could have handled all that traffic or 
whether
some portion would have been dominated by EL.  Ultimately, the ground rules 
would 
have changed, particularly with respect to the growing value of 
inter-regional 
single-system service, leading to the Conrail split as we know it.
WDB
 



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