Earn Market Share, Don''t Steal It

Earn Market Share, Don''t Steal It

Copyright 2003, Traffic World, Inc.

I read with interest the March 3 response by Ed Hamberger of the Association of American Railroads ("Railroads Have Enhanced Service") to the Feb. 3 article quoting Chuck Platz of Basell North America ("Living in Captivity". While Mr. Hamberger felt compelled to respond to Mr. Platz, once again we have a response from the rail industry that is so extreme that it is unbelievable to anyone who operates in this marketplace.

He takes issue with the fact that monopolistic power is not retained by the rails when they account for only 19.6 percent of the chemical market. What he isn''t telling is that the reason the trucks have the majority of the market share of the volume is due to the short-haul nature of much of this industry.

The examples that many chemical shippers are transloading in bulk transfer facilities or transferring supply locations to other plants that have competition, Mr. Hamberger, is exactly the point. Thank you. A chemical plant shouldn''t have to transload when they have their own rail sidings. Neither should the transportation price be so exorbitant that transportation costs dictate the location that a product is produced in an intracompany environment. Keep in mind that chemicals are usually on the higher side of product unit pricing. Many captured plants and markets still are paying through the nose for their unfortunate capture.

In the service arena the rails are making great strides and we are seeing significant improvements. More highway freight is moving rail and train speeds are increasing every year. However, we also haven''t seen a merger now for a couple of years. As we get the shipping public convinced once again that rail is a fierce competitor for their business, a strike will hit or a merger will ensue and we will again have to take two steps back.

In the mid- to late 1980s, due to the imbalance of imports through the West Coast ports, we saw very competitive intermodal rates eastbound from California, Oregon and Washington. Today, the imbalance of trade and substituted westbound imported containers have created a balance of equipment in the West. This has resulted in numerous rate increases. It is now cheaper to ship eastbound via highway (at 75 to 85 cents a mile, except during peak season) than via intermodal. When peak season hits, we again have immediate rail increases, auctions of rail equipment and rate surcharges. Did someone say that the rails don''t take pricing advantages when they see an opportunity?

It would be refreshing to improve relationships with shippers by showing that you don''t take advantage of captured shippers or captured markets. Who knows? Improved relationships just may translate into real increased market share the old-fashioned way: earning trust, not stealing it.



Daniel T. Yoest

President

CrossRoad Carriers

Intermodal