Our Transportation Policy Is No Transporation Policy
It is said of the mythical figure Damocles that he was forced to take his meals, his head bent precariously over his plate, with a sharp sword suspended above his head—that cruel instrument held aloft by a thread the width of a single hair.
Sad to say, America's inland and coastal water carriers, now mired in the fourth year of a deep and widening depression cast off, when they are fortunate enough to get their hands on enough freight to justify the excursion, under a latter-day sword of Damocles. This weapon is wielded by the very government which should, but does not, have a coherent transporation policy to promote competition through equitable, consistent and non-disciminatory treatment toward all the transporation modes. In theory, special preference is to be given to none; likewise, no special handicaps are to be imposed. But, it is not so.
Government policy toward America's transporation system is fickle, lacking in cohesion or direction and manifestly inconsistent in the manner in which it dispenses and withholds its largesse.
The National Transporation Policy, codified at 49 USC 10101, states in part that ". . . it is the policy of the United States government to provide for the impartial regulation of the modes of transporation." Unfortunately, this simple policy has been supplanted by an incoherent and disjointed system. By extension, this muddled policy disrupts the essential. . . to the American consumer . . . competition between the various modes. Competition is the moral shield of the free enterprise system: It produces lower prices, better service and ongoing innovation which in turn generates higher productivity. In the end, lack of a singular vision regarding transporation policy is a thief with his hands • in the pocketbook of the American consumer.
Let's examine the various modes.
Consider the case of the airline industry. In that industry there is a user tax. But airline user taxes take the form of a direct tax on the real user of airline services—the customer.
The airline user tax manifests itself as a tax on individual tickets.
It is a tax which is inescapable—all direct, or real, users of the service provided must pay this tax. In the barge industry, it is the carrier who pays the tax. And, in the devastated barge industry, that tax cannot be shared with the shipper. There is no way to pass on the tax.
Consider also the case of the trucking industry. A few years ago, members of the Administration took a look around for some revenue enhancements—called "taxes" by most folks—and hit upon the idea of levying a huge user tax on the trucking industry. The tax took the form of the Surface Transporation Assistant Act which was passed by the Congress and was signed into law in 1982.
After all the applause had died down, somewhat more sober elements in the Administration and in the Congress began to look at the real condition of the trucking industry as opposed to its outdated reputation as a bloated, protected special interest, and a fair amount of the tax enacted a few years ago was rescinded. Why? Because responsible people in government looked at their handiwork and realized that they had made a grievous error. In this case, government acted responsibly, recognized its error and took laudable steps to correct it. The point of course, is that the government dispenses its largesse selectively.
Sometimes properly, sometimes not.
It is worthwhile also to consider the case of the railroad industry.
Consider specifically, CONRAIL— which has emerged from the protective warmth of mother government's apron and—with a little push from mom—has decided to go out into the world and seek his fortune on his own.
The next time someone tells you how much it will cost to send Johnny to college, remember and be thankful that you were not called upon to raise baby CONRAIL to his maturity. Or perhaps more accurately, try to forget that you actually help raise the little railroad to manhood— despite the fact that mother government—ever protective of her brood—claims full credit for baby CONRAIL's remarkable performance— so remarkable is baby CONRAIL that he is up for sale—at the firesale price of 1.2 billion dollars.
Mother government originally considered only selected bids for baby. The winner (so far), the Norfolk and Southern Railroad, I should just mention as an aside, is considered by the same mother goverment..
. different branch . . . as a "revenue" inadequate" railroad.
Transporation Secretary Elizabeth Dole chose Norfolk Southern in the baby CONRAIL sweepstakes and recommended to Congress that the railroad be awarded custody of the perky lad.
Mother government is really pulling a fast one on the American public in the whole baby CONRAIL episode.
The total federal bailout of the previously strapped railroad cost 7.2 billion dollars—you paid. What's more, in 1984 and'last year, baby CONRAIL showed a profit of about onehalf billion dollars each year, which was not returned to you.
The Staggers Rail' Act of 1980 deregulated the nation's railroads on the correct premise that the railroads needed help. The Congress determined that the railroads were an indispensible adjunct of the national carrier network and needed temporary protection.
Why? For the public good. Such determinations are the proper role of government as a caretaker of the national interest.
But one goal of the Act—the concept of revenue adequancy for the freight rail industry—needs to be briefly considered here because it has ramifications which impact the waterways industry and other modes of transporation as well.
Put succinctly, revenue adequacy means making your basic costs as well as a reasonable profit margin on employed capital. In deregulating the railroads, the Congress recognized that the precipitous decline in rail profitability justified the concept of revenue adequency. Put another way, if a particular railroad is not revenue adequate, it can increase prices to shippers beyond the threshold which would otherwise be permissible until, under the complex formulas employed in the Staggers Act, the carrier has achieved an acceptable level of profitability.
The Staggers Rail Act has been abused by the Interstate Commerce Commission (ICC). According to the ICC, which has administrative oversight in the area, there are no revenue adequate railroads after nearly six years of degregulation. This is indeed curious because Wall Street touts railroad issues as exceptionally good investments. Though receiving the great benefits of "revenue inadequacy," various railroads buy other railroads and barge lines for well in excess of a billion dollars a pop.
By any objective, unbiased criteria, the water carrier industry is not now revenue adequate. We ask that the government, when it embarks upon policies such as grain embargoes and payment-in-kind programs, which drastically reduce the movement of grain and agrichemicals, recognize the severe financial impact of these programs on our industry. Revenue adequacy is a philosophical concept, and a good one in the abstract. But in practice for this concept to be a benefit and not a hinderance to the nation's transportation system it must be equitably and universally applied. It must not be a special prequisite for a single carrier mode.
Look at CSX and Norfolk Southern railroads. They are the bidders on a big barge line and baby CONRAIL, respectively. Both are deemed by the federal government as revenue inadequate. Financial data on these companies is readily available—they are publicly held.
What that data reveals makes for a hard case for those who suggest that these railroads are not revenue adequate.
The data reveal them to be highly profitable enterprises by any conventional business yardstick.
In taxable years 1981 to 1983, CSX Corporation not only paid no federal tax whatsoever, on profits of 1.75 billion dollars, but received re- bates of taxes paid in earlier years or sold "excess" tax benefits to the extent that the Corporation actually got money back from the federal government. Even more difficult to substantiate in light of the government's position on the revenue inadequacy of CSX Corporation, is that supposedly strapped Corporation's near magical ability to come up with 1.06 billion dollars to purchase Texas Gas Resources, parent company of one of the nation's largest independent barge companies with which CSX Corporation directly competes.
The Norfolk Southern Corporation, which is blessed by mother government as the purchaser of CONRAIL, is, of course, revenue inadequate. This despite profits in taxable years 1981 to 1983 of a respectable 574 million dollars.
The question one unfamiliar with the rarified practices of government might ask is: If I correctly understand the determination of revenue inadequacy to mean an inability to make basic costs, how come these supposedly revenue inadequate companies are at the same time so profitable and flush with cash that they are buying barge lines, bidding on CONRAIL and generally behaving like robust, healthy businesses?
A more pertinent question might be: If I correctly understand the ruinous financial condition of the inland barge industry, how come these companines are not, at least for a time, put behind the benevolent apron of mother government rather than made subject to still higher user taxes in their time of need?
Above all, where is the fairness in all this?
We in the waterways business insist these inbalances be brought to light and be righted. What we do not advocate is the establishment of another "Super Commission" to oversee and treat fairly all of the various transportation sectors. The institutions already exist to do that.
They just aren't doing their job.
The primary institution charged with the administrative implementation of Congressional mandates regarding transportation issues is the Department of Transportation (DOT). As an institution, the DOT has failings but the most glaring from our standpoint is its exaggerted tilt toward the rail industry— to the detriment of the other modes, in particular the barge mode which constitutes the primary competition to the railroads for hauling bulk commodities.
Ostensibly, the DOT is impartial.
Some might argue that the Department is impartial by calling attention to the Maritime Administration (MarAd) now under the DOT roof—as the institutional advocate for maritime interests. You see my point about imbalance.
Leaving the administrators of the law aside, what of the lawmakers themselves? On Capitol Hill, confusion reigns regarding maritime matters as it does in virtually all other aspects of the legislative process. In both Houses of Congress, committees and subcommittees are split along the different carrier fault lines and they act in virtual isolation from one another—rather than in concert as they should if we are to have a coherent national transportation policy.
In the Senate for example, there is the Committee on Commerce, Science and Transporation. There is also an Aviation Subcommittee, a Merchant Marine Subcommitte, and a Surface Transportation Subcommittee, In the House, there is an Energy and Commerce Committee, a Merchant Marine and Fisheries Committee, a Public Works and Transportation Committee—under the auspices of which fall subcommittees on Aviation, Water Resources and Surface Transportation.
Small wonder that laws are passed which result in such incoherency.
In the end, it is the American consumer who loses due to lessened competition.
One of the frustrations one encounters in reading the myth of Damocles is that there is no final, fundamental resolution to the tale.
The sword is left hanging—so is the reader.
Please make no mistake—all Americans, not merely those whose livings depend on the transportation network, sit under the capricious sword of the latter-day Damocles, whose name is the United States government.
Our condition, too, remains unresolved.
But there is no question that we—like Damocles—live in a perpetual state of dread. This is not a pleasant condition. Much more to the point; it is wrong in its disservice to the American people.
Other stories from June 1986 issue
- Zapata Gulf Acquires All Assets Of Seahorse page: 5
- Rody Selects AWSC Committee Chairmen page: 5
- Danos & Curole Continue Long-Range Expansion In Marine Department page: 5
- Contract With $25-Million Potential Awarded Rockwell page: 6
- Nelson Electric Names Sanchez Sales Manager page: 6
- Bailey Refrigeration Goes On Site For Work Aboard Navy Aircraft Carrier page: 7
- Navy Awards $73.7-Million Crane Contract To Craft Machine page: 7
- ABS Elects New Members To Board Of Managers page: 8
- ASNE Symposium-1986 Set For October 2-4 In Biloxi, Miss. page: 8
- Ulstein Delivers Two Tug/Supply Vessels To Norwegian Owners page: 10
- Derecktor Delivers First Of Two Ferries To New York City page: 11
- AWO Elects Officers For 1986 At Annual Convention In Washington page: 11
- Pentagon Approves $216-Million Sale To Portugese Navy page: 12
- Sophisticated Catcher/Processor Delivered By Halter Marine page: 12
- ODECO Wins 1986 NOIA Safety In Seas Award page: 12
- Pickands Mather Promotes Three In Marine Department page: 13
- Monsanto Offers Free 12-Page Bulletin On Fluid Resistance Of Santoprene® page: 14
- Port Of Portland Budget Includes Funds For Marine Improvements page: 15
- American Bureau Names Twenty-Five New Members page: 15
- Port Authority In Malaysia Orders Voith Water Tractor page: 16
- Gastech 85 "Proceedings' Now Available page: 16
- Metos Marine Offers New Cabin Fitting Concept page: 17
- Meyer Werft Launches Two Sister Passenger Ships For Indonesia page: 18
- Fairbanks Morse Invests In Future— Expands Parts/Service Operations, Increases Production And R&D page: 20
- Borg-Warner Changes Name To York International page: 23
- Passenger Catamaran To Operate Between Seattle And Victoria page: 24
- U.S. SHIPBUILDING $Billions In Navy Work Plus Repairs Brighten The Picture page: 26
- STATUS OF NAVY SHIP PROCUREMENT page: 32
- U.S. SHIPBUILDING OUTLOOK Maritime Policy—1980-1985 page: 40
- U.S. SHIPBUILDING INDUSTRY HAS MADE GREAT STRIDES IN IMPROVING EFFICIENCY AND REDUCING COSTS page: 44
- Our Transportation Policy Is No Transporation Policy page: 46
- REGULATORY OVERKILL PERSERVERES page: 48
- AWSC And The Industry: Working For The Future page: 50
- Offshore Service Vessels, Tugboat And Inland Towboat Fleets page: 52
- CANADIAN SHIPBUILDING REVIEW AND OUTLOOK page: 63
- World Shipping And Shipbuilding page: 65
- Port of Iberia Inaugurates New Public Dock Facility page: 72
- Amhoist Announces $33 Million In Crane And Puller Orders page: 72
- Hancock Succeeds Loftus As Comptroller And Deputy Commander Of NAVSEA page: 73
- Gastech 86 Scheduled For November In Hamburg page: 73
- Technical Report On Liner And Bulk Planning Systems Offered By MarAd page: 74
- Todd's San Pedro Yard Gets Preliminary Approval As Foreign Trade Subzone page: 74
- Beclawat Offers Windows & Doors For Ships And Rigs page: 74
- Wartsila Unit Offers Vacuum Toilet System page: 75
- Ship Structure Committee Releases New Reports On Design And Safety Topics page: 75
- BIRKA LINE CRUISE SHIP DELIVERED BY VALMET page: 76
- American Management Now Provides Services For Commercial Ships page: 77
- Two More Firms Approve Use Of Ameroid® OWS page: 77
- MarAd Invites Proposals To Provide Vessel For Schoolship Conversion page: 77
- Port Authority Urges $56.5-Million In Funds For N.Y. Harbor Improvements page: 78
- Marine Travelift Offers Full-Color Brochure On 250-Ton Mobile Boat Hoist page: 78
- Bailey Controls Offers 18-Page Technical Paper On 0 2 / C 0 Boiler Control page: 78
- William O'Malley Named Executive VP At Sonat page: 79
- Free Literature Available On Long-Life Marine Window Wipers For Ships page: 79
- Jane's Publishing Offers Facsimile Edition Of First World's Fighting Ships page: 80
- Baldt Offers Military Shipbuilding Brochure page: 80
- York International Offers Brochure On Water Chilling And Condensing Units page: 81
- Norsk Pacific Announces Management Changes— Stenstrom Named President page: 81
- Deepwater, Heavy-Duty Jackup Joins Blue Streak Marine Fleet page: 82
- New Brochure Offered By Warren Describes Barge Pump Line page: 82
- M.A.N.-B&W Turbochargers Reduce Fuel Consumption page: 83
- SNAME Announces Standing Special And Technical Committees For 1986 page: 84
- Free 72-Page Catalog Describes New Falk Worm Gear Speed Reducers page: 85
- Free Full-Color Bulletin On AQP Spiral Wire Hose Offered By Aeroquip page: 86
- PRMMI Names Four To Key Sales Positions page: 86
- MHI Develops High-Pressure Gas Injection DFD Engine page: 87
- Free Four-Page Brochure Offered On Acorn Platens page: 87
- 'New' High-Speed Ferry Boosts Boston Area Commuter Service page: 88
- Microphor Offers New Four-Color Brochure On Marine Heads page: 89
- Cat Pumps Introduces Two N e w Stainless Steel Pumps page: 90
- Polarmarine Introduces New Concept In Tank Cleaning page: 91
- Tampa Shipyards Delivers Fifth Products Tanker To Ocean Shipholdings page: 92
- Caterpillar 3600 Series Now Qualified On 1,500 Redwood Fuel page: 92
- Bailey Controls Opens New Demonstration Facility page: 93
- Ulstein Maritime Reports On Z-Drive Success page: 94
- Degree In Small Craft Naval Architecture Offered By YDI Schools page: 95
- Montreal Group Plans To Modernize 150-Year-Old Yard In Nova Scotia page: 96
- Atlas-Danmark Expands Line Of Sludge/Waste Incinerators page: 97
- '86 Ship Production Symposium Scheduled For August in Williamsburg page: 98
- Sulzer Diesels Will Power Townsend Cross-Channel Passenger/Vehicle Ferries page: 99
- Marathon Offers Full-Color Brochure On Metal Fabrication Services page: 102
- Free 12-Page Catalog On Combustion, Pollution And Energy Control Equipment page: 102
- Free 16-Page Full-Color Brochure On Compressors Offered By Atlas Copco page: 103
- MM A Meeting Draws Immediate Return Engagement By DLA's General Morgan page: 104
- SAIT Radio Telex Now Compatible With IBM PC page: 104
- New York City Marine Society Celebrates 216th Annual Dinner page: 106
- Blount Marine Delivers 64-Foot Ferry To Prudence Island Navigation page: 109
- First Two Of Ten Bulkers For Greek Owner Christened At Hyundai page: 115
- The Shipmate RS-2000 Color Track Plotter page: 115
- MacGregor-Navire Link Span Installed At Port Of Plymouth page: 118
- Cathodic/Electrolytic Engineers Offer Replacement Anode Service For Antifouling Systems page: 119
- Record Land And Marine Lifts Set By Amhoist Cranes page: 119