I live a hundred yards from a railroad and a major trunk highway, both of which are a near continual source of entertainment and occasional enlightenment. The railroad is a  single track BNSF mainline, formally known as the Marshall Subdivision, running from Willmar, MN to Sioux City, Iowa. It’s a well maintained ‘road, with up to a train an hour running at speeds of up to 50 MPH. And it makes money too, enough to reinvest in regular maintainence and upgrades of the track and trains with little or no borrowing.

Paralleling the BNSF tracks is Minnesota Highway 23, a well designed mostly two lane trunk highway and popular truck route from central and southwest Minnesota to markets as far away as the coast. It hosts over a thousand trucks a day, carrying around 10,000 tons of cargo. Unlike the railroads hourly or so appearances, the trucks provide an every minute or two parade. But those 10,000 tons a day the trucks haul wouldn’t even fill one coal, grain, or fuel train.

Fact is, the railroad is kicking the trucker’s butt- even on a slow day, the railroad hauls more tonnage by sunup that the truckers haul all day and night. And the railroad ain’t messin’ with unprofitable freight- Coal and fuel are their most profitable loads, grain more than pays it’s way, and the refrigerated, machinery, and building materials loads are hauled at prices that barely undercuts the trucker’s cut rates. Wanna ship by rail? Either put it in a trailer or container and truck it to the intermodal transfer terminals in Minneapolis/St.Paul, Omaha, or Moorhead -0r- pay the railroad a six figure amount to put in a siding, assuming you have property next to the railroad. Unless you’re prepared to contract for a year or mores worth of trainload (unit train) shipments, expect rates that are barely cheaper than trucking. The railroads ain’t dumb- They’re not about to invest in increasing capacity to haul freight that they can’t make a good profit on.

Meanwhile, there is no shortage of truckers willing to undercut each other to get loads, often barely making the payments on the truck with no hope of making a profit. Fuel mileage and tires be damned, they fly down MN23 at 70 or better, oblivious to the generous 60 MPH limit.  There’s no shortage of new truckers to drive night and day and trucking companies that will hire them, and the shippers know it. Thus trucking rates are bid down to the point where truckers seldom make enough to maintain trucks properly, get a good nights rest, and earn a living wage. The trucking company’s response is to cut corners further- depriving drivers of pensions, decent health care, pay for the considerable work they do besides driving, etc.. And the trucks? While the railroads pay cash, the truckers go in hock to the hilt, usually financing through the truck manufacturers  because even the banks that made all those home loans that went bad won’t finance them. Case in point: When trucking company Arrow went under a couple years back stranding unpaid drivers all over the country, Daimler was not only financing the trucks but providing working capital to make payroll and buy fuel, etc.. And many of the trucks Daimler financed were Internationals! No wonder Daimler, during it’s couple decade long ownership of Freightliner, probably lost more money on financing deals gone bad then Freightliner had made during it’s entire history. And that’s just the tip of the iceberg headed for the trucking industry- I see one company’s tractors go by several times an hour with no trailers- they’re deadheading nearly 100 miles at the beginning and end of their runs so they can keep their drivers in South Dakota and get lower worker’s comp insurance rates.

Now, didn’t used to be this way. The railroads went through a building frenzy through the 19th century and even into the early 20th, creating far more track and capacity then the market would support. Soon as truckers got that massive government subsidy otherwise known as the Interstate Highway System, railroads became regular visitors to bankruptcy court. But the railroads that survived got a lot smarter- ask a railroad to let you run a passenger train or high speed intermodal train on their tracks and they’ll give you a detailed multi million dollar estimate of the costs, and there’ll be no negotiating on the price. In fact, both BNSF and ultimately UP turned down UPS’s request for a high speed coast to coast intermodal express train because it wasn’t profitable enough, although UP did run it for a while. Offer that freight to the truckers and they’d probably crash the internet outbidding each other for it…

Strangely enough, back when railroads were solicting shippers like cheap hookers, the trucking business was actually run much like the railroads are now. From the 1930s to the 1970s the trucking industry was regulated…. That means you had to do more than fill out the current postage card application to get into the trucking biz, and rates were set that assured a profit and good service. Back then a shipper had a choice of at least a half dozen truckers to haul their freight on MN23, and as their rates we’re all the same they competed to provide the best service. That all ended with deregualtion around 1980, as thousands of people who had no business running a truck drove rates down to unsustainable levels. Any when they go bankrupt, there’s plenty more trucker wannabes to take there place.

Will the truckers suddenly wake up and decide to run a sustainable and profitable business? I doubt it… The repo man will have to pry their cold hands off the wheel of that Pete or KW in the ditch with their “hot load” of thawing junk food littered all over the right of way. ‘Least the fuel tanks will be near empty to reduce the HazMat cleanup. Meanwhile, a BNSF train with a few hundred truckloads of freight on board rolls on by…

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