LETTERS

LETTERS

ONLY TRUE COMPETITION

WILL HELP THE RAILROADSAND THEIR CUSTOMERS

After reading Lawrence H Kaufman's April 12 Surface Reflections column (''Some do worry about service - and managers,'' Page 7), I couldn't help but ask exactly whose ''reality'' it is that ''there isn't enough business available to support a lot of competing railroads.''

The real story is that there would be plenty of new business for railroads if they competed with each other and, as a result, met rail customers' needs.

However, there will never be enough to sustain the business-as-usual railroading system we have today.

Rather than finding ways to improve performance, railroads respond by trying to squeeze more money out of the dwindling number of rail customers. Last year, one rail customer remarked, ''If I could figure out a way to conduct our business without using railroads, I would absolutely, without hesitation, stop doing business with them.''

Why would anyone want to protect a system that produces this kind of attitude among its customers?

Ironically, the trucking industry - which transports approximately 87 percent of the nation's freight - would like nothing more than to become the railroad industry's largest customer through intermodal movements.

Yet again, unreliability of railroad performance, paired with railroaders' misguided belief that they can only win business at the expense of the trucking industry, prevents that from occurring.

In short, there is more than enough business to go around if the railroads were to change their ways.

The rail industry needs to wake up to the fact that it can't give consistently bad and worsening service - no matter the reason - and expect to make more money by simply jacking up rates for the same unacceptably poor quality of service.

Southern Pacific's experience, incorrectly cited as an example of why competition doesn't work, actually confirms this basic business principle.

Furthermore, many rail customers that used SP back then would likely tell you that it was the serious deficiencies with that railroad's operations and management - not competitive factors - that put the SP in its capital-starved position and prevented it from raising additional revenue through greater volume.

Although railroad performance suggests otherwise, railroading is supposed to be a customer-service business. How can we transform the industry so that it in fact becomes customer-service oriented?

We know from experience that customer service is not the product of government regulators, or Wall Street, and that railroads won't change their ways if they don't have to.

Only true competition among railroads will force them to become customer-responsive. And furthermore, only competition will enable railroads to boost earnings and build their customer base.

Competition among railroads is possible, but to get there, changes to today's policies are necessary. Once introduced, rail-to-rail competition will create jobs, increase top- and bottom-line growth, and re-establish railroads as a more significant player in the transport of the nation's freight.

House Judiciary Committee Chairman Henry Hyde wrote an article that appears in the Spring 2000 edition of Antitrust, a publication of the Section of Antitrust Law, American Bar Association, in which he stated:

''Resources are scarce. Because of that, we need some method of allocating them to their best uses. Free markets do that. When competitors are free to offer their best possible deal and consumers are free to choose among those deals without restriction, the invisible hand of the market allocates resources efficiently.

''But when a competitor, or a group of competitors working together, attains monopoly power, misuse of that power may force consumers to make choices that they would not otherwise, and thereby allocate resources less efficiently.''

Ultimately, Mr. Hyde wrote, ''the principle at stake is simple: Competitors ought to be free to offer their best deal and consumers ought to be free to choose among the offers of all competitors.''

When you get past all the propaganda, you find there is no rational or supportable explanation for why such a basic principle should not apply to the rail industry.

TERRY C. WHITESIDE

Chairman

Alliance for Rail Competition

Washington

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