TTC: reordering the rail industry in Texas?
The Chronicle reports (2nd article here) that Cintra, the private company chosen by the state to develop a toll road from Laredo to Dallas, also wants to add a rail line:
In a letter Wednesday to Texas Transportation Commission Chairman Ric Williamson, Cintra Zachry proposed “a new grade-separated freight railway from the Dallas-Fort Worth Metroplex to the U.S./Mexico border.”
In a lot of ways, this is a good idea. There’s already a busy freight rail line in that corridor, and it runs through the downtowns of a series of cities and towns along the way; they would welcome the relief. The TTC as a whole is hugely controversial — it would use eminent domain, and it would have few overpasses and fewer interchanges, disrupting rural areas without bringing them any benefits. But I don’t see how adding rail would make that worse, so this is unlikely to change anyone’s mind. In any case. freight rail has been mentioned as part of the TCC from the beginning of the plan, though it was not seen as a short-term option for this corridor.
The rail industry, though, would care a lot. Freight rail still matters; railroads carry huge quantities of raw materials (1/3 of the electricity used in the US is generated from rail-carried coal) and consumer products (UPS is the nation’s largest rail customer). Right now, 6 railroads dominate the United States and Canada: 2 east of the Missississippi, 2 west of the Mississippi, and 2 in Canada. (map) This results in a series of duopolies; every city has 2 railroads, but only a few gateways have more.
In Texas, the incumbents are Union Pacific and BNSF. But there’s an interloper, too: Kansas City Southern, a Kansas City to Port Arthur and New Orleans line, cobbled together a key Dallas-Meridian, MS route, bought the largest railroad in Mexico (which connects to the US system at Laredo), bought a Laredo-Corpus Christi line, and got rights to operate on UP track from Beaumont to Corpus. Thus, KCS connects Mexico to the Eastern railroads, but it does so in a circuitous route on another railroad’s track.
Cintra seems to be saying that anyone who pays could use their track. Practically, though, the users would be the railroads that connect to it, since others would lack the track connections to the rest of the country and to individual industries.
If a new Dallas-Laredo line is built, UP, which currently owns the line in that corridor, would benefit some. BNSF, which doesn’t currently have its own line to Laredo, would benefit more. But KCS could derive a huge benefit by combing the new system with its own routes to create a viable third option to connect eastern railroads to Mexico.
The new line could reorder the rail industry even more if Cintra were able to extend it east to Memphis (a tall order, but this is already a mega-project). That would means that 5 of the 6 majors could use this line. That might be UP’s worst nightmare. Since nobody’s built a new rail line in the U.S. in almost a century, a railroad’s biggest asset is its routes; once UP lost route advantage in this corridor it would lose a lot of traffic.
Note a key line in the agreement that UP signed with the state in March 2005 in regard to the relocation of freight rail lines:
The State will not expend public funds for any rail relocation project that would alter the existing competitive relationships between and among the railroads.
An open access rail line in the TTC is truly a radical notion: a private company backed by the full power and credit of the State of Texas could fundamentally reorder the competitive balance of the privately owned railroad industry.
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