Opening Remarks as Chair of USA Rail 2009 Conference

Conference Update: Michael Sussman's Opening Remarks

Michael Sussman’s Opening Remarks - 

Michael Sussman’s Opening Remarks (Day 2) -

Michael Sussman’s Opening Remarks -

Good morning, ladies and gentlemen. First of all, I want to wish you an enjoyable, satisfying time here at USA Rail 2009. I imagine that like me, you are hoping to contribute and to learn and to connect with others in support of your commitments. Since being asked by Terrapinn to chair their conference I have been impressed with their commitment to facilitate dialogue and new thinking beyond typical panel presentations. I invite you to consider yourselves the primary contributors to the proceedings. Your questions and your input will make all the difference here.

The railroad industry is not just another area of commercial activity. Rail transportation is the lifeblood of any society that expects to thrive sustainably amidst industrial development and population growth. Rail transportation has proven to be the most energy-, capital-, and space efficient means of moving heavy weight across land. Even as we implement new solutions to the challenges presented by global climate change, there are no technological replacements on the horizon for railroads to move goods and people efficiently.

We have, therefore, a greater responsibility than if we were gathering for a conference in any other commercial arena. Today, more than ever, we need straight talk, not happy talk. We must allow constructive observations and brainstorming for new possibilities to coexist with congratulating our successes. Yes, there is much to appreciate as railroad management successfully negotiates our current economic challenges. But our problems – increasing greenhouse gas emissions, a steadily shrinking rail network, more and more trucks to move goods to and from freight terminals – make the status quo unsustainable.

I am sorry to say that major segments of our rail system are being rendered less viable by business plans in the transportation and distribution sectors designed to generate profit through consolidation, aggregation and standardization. We have lost half a percent of our route miles in the past year, half a percent of our route miles the year before… twenty percent all together since 1990. Vitally important small line segments of 3, 8, or 10 miles here and there are abandoned, leaving more and more parts of the rail system and our continent disconnected.

Intermodalism, as currently being advanced in North America is moving us farther away from, not closer to, our goal of transportation efficiency. Advocacy for expanding the network of large intermodal rail to truck facilities is silent on the increasing use of trucks where we can least afford them, on the local roads of small towns, small cities, and indeed our large metropolitan regions across the continent that are increasingly suffering from congestion and air pollution. Pennsylvania, my state, has now become a hotbed of distribution, warehouse, and intermodal facilities that are alarmingly being built, not only truck out, to cover the Baltimore to Boston market, but also truck in, forcing more truck traffic on our crowded highways and local roads. So even those goods that are carried long haul by the railroads are unloaded in the midst of large intermodal terminals in small town America, instead of being delivered directly to the customer.

My perspectives on this issue have been informed by my work arranging capital for some of the leading Class III rail developers in the country: Ed Ellis, Dan Sabin, and Dave Fellon for instance. These men and others, including some of you here today, buck many odds to not only save large portions of our rail network, but turn them into major contributions to their regions’ economy. We have to ask—what does their ability to profit from cast-off line segments say about the prevailing wisdom of transportation economics that justified letting these branch lines go fallow. Our responsibility to future generations requires us to apply their level of tenacity, leadership, and vision, to end rail line abandonment and to rebuild direct rail service.

We know that much of the strength of the U.S. rail industry is due to its long history of service to our country. Our nation’s commerce and the rail industry developed in concert for many years. For our long-term best interests can we now establish a new level of cooperation among railroads, transportation and logistics providers, distribution companies, government, shippers, labor, the financial community and the public? We can no longer create solutions to these problems through marketplace competition alone; we must confront them together.

But we have real Jekyll and Hyde issues in the United States with industrial collaboration. Rail management cannot simply light up the largest peace pipe in history and invite everyone with whom they are in relationship – or conflict – to sit down together. We don’t often trust business people to act in all our best interests, so we limit their collaboration through extensive anti-trust regulations. We are left to hope that somehow competition, rather than coordination, will deliver the optimal transportation system. Unfortunately, competition for individual gain naturally leads to domination, and we all lose out in the process, as the political and regulatory process itself succumbs to vested interests run amok.

Private sector commercial enterprise can fuel our societal well being if we now integrate productive competition with thoughtful collaboration. At a time when climate change is steering us toward a cliff, can we turn competition for individual gain into competition to improve the system as a whole? That is why I founded OnTrackAmerica, a nonprofit transportation consultancy, to provide a think tank wherein we all can participate in designing new ways for industry, government, and the community to work together. Given the critical relationship of transportation to the environment and our use of land, we must work together toward an optimal transportation system, if we are to retain any hope of long-term prosperity in North America.

I have found people in the railroad industry and government to be the most hardworking, intelligent, and experienced of any industry. That’s you. All of you. Here and now, at this conference we have an extraordinary opportunity. We can take up the challenge, to coordinate our intelligence… to collaborate across companies… industries… and sectors… We can move the entire industry forward with our thinking here. Thank you so much for your participation. I am looking forward to getting to know as many of you as possible over the next two days. I hope you leave here informed, inspired, and happy.

Michael Sussman’s Opening Remarks (Day 2) -

For much of our past, railroads have been demonized, romanticized, or politicized. Railroads, however, remain one of the core elements of any modern, well-functioning society, as vital as clean water and power distribution. We must establish a more clear-eyed, and therefore productive, relationship to rail transportation.

In promoting the value of rail transportation, though, we cannot afford to pit highway, waterway, or railway transport modes against each other, either in public policy or the marketplace. Integration and coordination for maximum efficiency must now guide our planning and investment. That is why OnTrackAmerica is promoting a set of metrics for freight transportation as a whole—to accommodate an objective analysis of the comparative costs, impacts and contributions of the various transport modes. With this new platform, we can have a responsible discussion about trains and trucks, without automatically being considered partial to one mode or the other.

It is time for long-term thinking and action. Our attention to higher-volume shipping lanes and overall capacity does not have to mean less rural, urban, and direct rail service with its consequent increase in local truck traffic. Projects of “national significance” are important but so are the many smaller projects that contribute to a networked freight transportation system.

We do have the most productive freight rail system in the world. But our society’s tendency to pit groups against each other has led to a North American transportation system that underutilizes railroads in spite of this success. We need railroads more than ever, and, we need a growing, high-tech, freight rail system as a strong foundation for the build out of our passenger rail system.

Fortunately, freight railroads do not need a government bailout; they are currently outperforming other industries. That stability, along with rail technology’s inherent energy and capital efficiency, can deliver a high return on investment if we focus our national economic revitalization plans on a comprehensive build-out of our entire rail transportation system. Truck and rail transportation both have their places within an efficient freight system. But we have abdicated the design of that interaction to the economic drivers of the marketplace. And the marketplace does not act holistically or sustainably.

As you may have heard from my remarks yesterday, at the heart of my work is the possibility of coordination transcending competition as our primary business and regulatory principle. But before I could establish my confidence in man’s ability to collaborate and work in the best interests of the community I had to ponder, as many of us do, what is the true nature of man. Are we community-minded or are we self-minded?

Our American culture teaches us to strive for individual success as that is what is best for everyone because the authority on the subject Charles Darwin said that evolution depended on it. The “Survival of the Fittest”, as in humans by nature are selfish, may have made more of an impression on our development as a society of business people than any other concept.

So it occurred to me to read Origin of the Species to see what Darwin actually said, not what I have been told he said. And what I found was that Charles Darwin never uses the term “survival of the fittest.” Instead, he wrote that species, ecosystems, communities, and individuals organize themselves around the long term interests of the community and the next generation. In nature, the community provides the best perches, the best food, and the best resources to those amongst them that are strongest and therefore produce the healthiest offspring. He was inspired by the sacrifice and commitment of individuals to place their communities’ best interests before their own. Harmony with the community, not domination of the community is what he observed. Charles Darwin said that individuals in nature are inherently social and communal and that is what provides sustainability.

So how did we come to misapply what Darwin wrote in Origin of the Species? We remember that this was the mid-19th century when American industrialists desperately wanted a belief system to justify their accumulation of large amounts of control and cash in their hands, particularly relative to their brethren. So they sponsored members of a new intellectual field called Social Philosophy, Herbert Spencer among them, to promote a misreading of Origin of the Species and give their domination cover.

I will never forget what I discovered from my readings of Charles Darwin’s own writings outside of Origin of the Species. He relates that as he observed the complex interworkings of plants and animals, in tidepools and hatcheries, he was struck by the intricacy, beauty, and selflessness. He said that after all explananations are posed, one runs out of explanations for how it all could be so and he finds himself appreciating the presence of God.

Working collaboratively, we can move beyond incremental progress to place rail transportation at the dynamic center of a revitalized North American economy.

We continue an informative, dynamic conference with a top-notch panel on High-Speed Rail Transportation, moderated by Edzard Luebben. Edzard is Vice President of High Speed Rail for Siemens Mobility. Please welcome Edzard.