The Small Shipper (was: (erielack) Water bottles...)

["Paul Brezicki" <doctorpb_@_bellsouth.net>]

Walt, you make a good point, but other factors counterbalance economies of 
scale. One is the simple fact that the larger an organization becomes, the 
more likely it is that small details will be overlooked or at least, not 
given adequate attention. It's like they can't see the trees for the forest. 
For example, EL was small enough to cater to small shippers. A good example 
was the Carnation move we discussed several months ago. EL not only provided 
COFC with containers positioned a certain way, they ran a special switch run 
to the mainline junction. While the profitability of such a move is highly 
questionable, it illustrates the point. Once these smaller lines were merged 
into larger systems, this sort of attention tends to disappear. The second 
is that with a plentiful supply of high-volume customers, the big systems 
don't really need to deal directly with the small fry. In fact, with the 
capacity constraints of the past 20 years, they couldn't handle it anyway. 
In contrast, for many shortlines the small shipper may comprise most or all 
the traffic base. They have to serve them or they'd be out of business. So 
the current model is the shortline deals with the small shipper, and the 
Class 1 deals with the shortline. The third factor is reduction of 
personnel. Over the past 30 years there has been significant attrition of 
sales people and freight agents. Personnel costs have been rising, and labor 
laws make it increasingly difficult to get rid of poor performers. When you 
hire someone these days, you have to drug test them, then pay huge benefits. 
So you have a salesman that gets a coal mine contract which generates more 
revenue than 10 salespeople chasing small accounts.

Henry, several copies of Walt's post  appeared in the digest; what's up with 
that?

Paul B

I've heard what ur saying many times and it always seems to me that they 
(Conrail) are standiing Henry Ford principles on their head. I. E. the 
economies of size don't work for the Class 1s acct they can't make money 
from small shippers. Meanwhile, the shortlines (& some not so short) can, 
without the economies of scale, make money from small shippers and indeed, 
prosper.  Am I missing something here????

Regards,

  Walt Smith 


	The Erie Lackawanna Mailing List
	Sponsored by the ELH&TS
	http://www.elhts.org
	To Unsubscribe: http://lists.elhts.org/erielackunsub.html

------------------------------