The customers of Uber are rated by the drivers who transport them. Rude, unruly customers are fired. Stop and think about that. It’s not just Uber’s way of protecting its most valuable asset (its drivers), it’s also a way of establishing that as a private entity, Uber will choose whom it serves.
Uber came to mind while reading about a recent 3-2 vote by the Surface Transportation Board (STB) that quite literally "orders" railroad company BNSF to handle 23 trains per month from Navaho Transitional Energy Co.’s Spring Creek Mine. Where it gets even more interesting is that the order from the STB expands to an additional six trains per month “once there is sufficient crew and train set capacity.” Something’s wrong with this picture. How does a federal agency possess the kind of power allowing it order a private business to take on business?
Oh well, the how behind this decree is the “common carrier obligation,” a rule that requires rail carriers to meet the needs of the shipping public “on reasonable request.” Up front, and as this column has written before, the “obligation” reads as superfluous given the desire of businesses to earn more by doing more for customers. But to focus on the presumed superfluity of such an obligation is to arguably miss the point.
The more pertinent point here is that railroad companies, by virtue of being railroad companies, don’t require force to transport market goods. That’s particularly true in a dynamic economic setting like that of the United States, where the very notion of “shipping” continues to evolve. Drones anyone? Which is a short way of saying that with or without “orders” from the STB, BNSF’s management has to recognize that every day is a fight for survival given soaring production in the U.S. and around the world, not to mention evolving competition eager to move that production to where it’s needed. Assuming the movement of Navaho Transitional Energy’s product makes economic sense for BNSF, why the need for an order?
Importantly, and as readers can likely imagine, shipping company BNSF has no quibble with serving Navaho Transitional. What troubles it is the demand that BNSF add additional capacity to handle six extra cars per month. Leaving aside the obvious costs of expanded capacity, orders like this from federal agencies smack of central planning in a U.S. known for economic vitality precisely due to a lack of planning from the proverbial Commanding Heights.
From there, it’s difficult to imagine that decrees like this will end well. Agencies that can “order” commercial arrangements and expansion required to execute said arrangements likely won’t stop there. Translated, it’s no reach to suggest that orders wrapped in common carrier legalese will empower shippers to further expand their shipping demands through regulatory force, and without regard to market realities.
All of the above is troubling on its own for what it implies about government-planned exchange, after which it’s even more unsettling considering the state of the railway industry more broadly. Indeed, it wasn’t terribly long ago that the industry itself was struggling, and perhaps showing its age. Now it’s not. Profits in the railroad space are at record levels, only for regulators to pivot toward central plans? No thanks.
The aforementioned profits are the sign of an industry sector on the ascent, and one for which rules about shipping aren’t required. The STB’s actions would suffocate what’s positive, all the while setting the stage for more of the very command-and-control that has long crushed customer-focused innovation.
