Third-party LD operation RFPs

Discussion related to Amtrak also known as the National Railroad Passenger Corp.

Moderators: GirlOnTheTrain, gprimr1, Amtrak67 of America, Tadman

Re: Third-party LD operation RFPs

Postby Tadman » Sun Aug 06, 2017 9:49 am

SouthernRailway wrote:
John_Perkowski wrote:I hold positions in UNP and BH. IFthe managers even THINK to try a bid, I will start a shareholders class action suit for diluting value so fast it will make your head swim.


The business judgment rule protects railroad boards when making these types of decisions.
-SouthernRailway, J.D.


Agreed with respect to the BJR. You'd get thrown out of court pretty quickly.

I also agree partially with JP regarding dilution of value. Partially. Were the class 1's to just reopen a passenger office, it would open them up to significant losses and, more importantly, the specter of having passenger service legally and permanently foisted back upon them. Bad news.

But were a class 1 to open a Keolis-like entity (imagine Keolis without the baggage that folks complain about). Perhaps a wholly or partially owned subsidiary with independently trading stock. Before FEC was split up, that's how Brightline was set up. That's also how the third party commuter operators are set up. Heck that's how Amtrak is set up - it's wholly owned by four class 1's. The precedent is set that this is a safe way to work.

And I know a lot of guys worry about third party LD's. I think it's a good thing. It's likely to drive up employment and service in the sectors, not down. It's a good way to pilot new services. It's also a good way to innovate. Amtrak has pros and cons. Pros - things like economy of scale. Cons - it's a big company and risk averse. Innovation is not easy. Virtually all innovations in rolling stock have been by private or commuter carriers. Amtrak needs to innovate but can't. How do you solve that? Third party operators. If a good idea fails, no congressman can lambaste Amtrak. If a good idea wins, Amtrak can buy the rights. I think we'd shed a lot of the rolling stock procurement problems.
Tadman
 
Posts: 8386
Joined: Wed Sep 01, 2004 10:21 am
Location: Michigan

Re: Third-party LD operation RFPs

Postby Alcochaser » Sun Aug 06, 2017 12:03 pm

John_Perkowski wrote:
BandA wrote:Most LD trains cross multiple railroads. So one railroad would have to have agreements with their competitors. Private railroads would only try this if they know they can get out of it if it fails, say with a year's notice.


HUH?

1/2. Mostly UP rails

3/4. Where is it not BNSF?

5/6. Ok, mix, but I can solve that moving it all to UP.

7/8. Almost all BNSF

11/14. All UP except a small amount of historic shared passenger trackage rights between UP and BNSF predecessors.


Yes but look at the east. Because of the Conrail carve up, Amtrak actively rerouting other trains, and the NEC purchase and resulting extension over the NEC of LD.

Except the Auto Train. That train may be the most vulnerable to this
A . It's actually a money maker.
B. It's an isolated island operation.
C. It is a one railroad train.
D. You only have two terminals to worry about.
User avatar
Alcochaser
 
Posts: 847
Joined: Sat Jul 24, 2004 4:20 am

Re: Third-party LD operation RFPs

Postby STrRedWolf » Sun Aug 06, 2017 2:37 pm

John_Perkowski wrote:1/2. Mostly UP rails

3/4. Where is it not BNSF?

5/6. Ok, mix, but I can solve that moving it all to UP.

7/8. Almost all BNSF

11/14. All UP except a small amount of historic shared passenger trackage rights between UP and BNSF predecessors.


Huh... okay, it's technically possible for west of Mississippi operations. Is it financially feasible?

Lets take Amtrak's 5/6 on it's current route, and round up to keep the math nice. The route is roughly 2500 miles, powered by two P42DC engines having a 2200 gallon capacity each (from what I could find online). Only by looking at the schedule, I'm assuming it has to refuel both engines once. 8800 gallons of diesel at worst case... hauling 8 cars and about 1130 passengers. If the average for diesel hovers at $2.50/gal, that's $22K per trip.

You got three shifts of staff, 8 hours, $28/hour. During each shift you have to have two engineers, two porters for the sleeping cars, and for the rest I'm assuming two kitchen staff, and maybe four conductors. That's 30 people total. $6720 per trip.

You got food and water. Assuming $60/day/person, including crew, and that's a rough guestimate. That's $208.8K per trip.

Grand total per trip, $237.52K per trip. Double that, round trip. Per day. The yearly comes out to $174M. Ticket/room sales are only $51M in 2016 per Wikipedia.

You can probably get that cost figure down, given more accurate costs for diesel, food, and staffing. But can third party LFO's actually cut it down to below Amtrak's level?
I ride the (MTA Maryland) Penn Line (between Odenton and Baltimore). I used to work for MTA Maryland's IT department, and out of professional courtesy my responses may be limited. Wikimapia is wonderful (for track/interlocking locations)!
User avatar
STrRedWolf
 
Posts: 650
Joined: Sat Oct 24, 2015 5:18 pm
Location: Baltimore, MD

Re: Third-party LD operation RFPs

Postby Greg Moore » Sun Aug 06, 2017 2:58 pm

My one quibble with your numbers would be the food/water numbers.
You have to pay for OSB (though not sure about crew) and sleeping car passengers, but not all coach passengers eat in the dining car, and the ones that do (or eat in the cafe) pay for their food.

So that would greatly reduce your costs there.

On the other hand, I think your cost per employee is probably too low (you have to consider the cost of benefits, etc.)

That said, I do agree, making it profitable would be real tough.

I do think nothing will come of this.
Though it will either appease those that want privatization "see, we tried" or make it worse, "See, if a private company can't do it, why are we?"
Check out QuiCR, Quick, Crowdsourced Responses for businesses.
Greg Moore
 
Posts: 4904
Joined: Sat Mar 13, 2004 12:15 am

Re: Third-party LD operation RFPs

Postby Gilbert B Norman » Sun Aug 06, 2017 4:40 pm

Alcochaser wrote:Except the Auto Train. That train may be the most vulnerable to this
A . It's actually a money maker.
B. It's an isolated island operation.
C. It is a one railroad train.
D. You only have two terminals to worry about.


Mr. Chaser, you do have a point with all of the above; add to that, AT has an operating agreement separate from other Amtrak trains operating over CSX. Further, it was within the private sector until 1981 and reported earnings, although I have it on authority that those books were "cooked well done".

But if some responsible party came in and bid on the AT, very safe assumption that Amtrak would be calling in a few chips that have up "on the Hill".
Gilbert B Norman
 
Posts: 12816
Joined: Fri Mar 12, 2004 6:52 am
Location: Clarendon Hills, IL (BNSF Aurora Sub; MP 18.71)

Re: Third-party LD operation RFPs

Postby east point » Sun Aug 06, 2017 6:51 pm

OrangeGrove wrote:
BandA wrote:Could help short term with Amtrak's equipment shortage.


Qualified bidders - if there actually were any - potentially have access to Amtrak equipment.


That is a 64 million dollar question. That might be enough for one train set ? Locos, cars, & spares ? Then depending on the route from 3 - 6 train sets ? Does anyone have a cite on whether Amtrak has to provide equipment or not ? Someone who has the time to read the whole RFP might find a cite one way or another ?
east point
 
Posts: 642
Joined: Tue Feb 16, 2016 1:50 pm

Re: Third-party LD operation RFPs

Postby mtuandrew » Sun Aug 06, 2017 7:51 pm

east point wrote:That is a 64 million dollar question. That might be enough for one train set ? Locos, cars, & spares ? Then depending on the route from 3 - 6 train sets ? Does anyone have a cite on whether Amtrak has to provide equipment or not ? Someone who has the time to read the whole RFP might find a cite one way or another ?

It'd actually be worth Amtrak's while to supply equipment to a private enterprise. Running on their own account, they lose money on each LD. If operated by a third party, Amtrak gets to rent out its cars at market rate. By default, Amtrak sets that rate.

Food for thought.
User avatar
mtuandrew
 
Posts: 4001
Joined: Tue Feb 20, 2007 2:59 am
Location: the Manassas Gap Independent Line

Re: Third-party LD operation RFPs

Postby mdvle » Sun Aug 06, 2017 11:11 pm

east point wrote:
OrangeGrove wrote:
BandA wrote:Could help short term with Amtrak's equipment shortage.


Qualified bidders - if there actually were any - potentially have access to Amtrak equipment.


That is a 64 million dollar question. That might be enough for one train set ? Locos, cars, & spares ? Then depending on the route from 3 - 6 train sets ? Does anyone have a cite on whether Amtrak has to provide equipment or not ? Someone who has the time to read the whole RFP might find a cite one way or another ?


The one document linked says that the issue of equipment would have to go to the STB as the act says " “Amtrak-owned reservation system, stations, and facilities,” but it does not reference rolling stock" (from section H of the website).
mdvle
 
Posts: 20
Joined: Sun Jul 23, 2017 1:48 pm

Re: Third-party LD operation RFPs

Postby mdvle » Sun Aug 06, 2017 11:47 pm

Tadman wrote:And I know a lot of guys worry about third party LD's. I think it's a good thing. It's likely to drive up employment and service in the sectors, not down. It's a good way to pilot new services. It's also a good way to innovate. Amtrak has pros and cons. Pros - things like economy of scale. Cons - it's a big company and risk averse. Innovation is not easy. Virtually all innovations in rolling stock have been by private or commuter carriers. Amtrak needs to innovate but can't. How do you solve that? Third party operators. If a good idea fails, no congressman can lambaste Amtrak. If a good idea wins, Amtrak can buy the rights. I think we'd shed a lot of the rolling stock procurement problems.


It's hard to innovate when you don't have the money to innovate with.

A successful third party would be limited to 90% of the subsidy Amtrak currently gets for the given route, and a 4 year term means any significant attempts to innovate wouldn't pay for themselves - certainly nobody is going to buy new equipment and expect to pay it off in 4 years even if it could be delivered for day 1. Rolling stock is simply too expensive.

I don't see any of the host railroads offering a 3rd party better terms than Amtrak gets - if anything they might get worse terms if they can actually get any.

Unless their is significant revenue that Amtrak is ignoring then you need to cut costs by 20% (you lose 10% through FAST, and you will want some sort of profit), and I suspect the numbers will be difficult.
mdvle
 
Posts: 20
Joined: Sun Jul 23, 2017 1:48 pm

Re: Third-party LD operation RFPs

Postby BandA » Mon Aug 07, 2017 2:11 am

Are there any Commuter Rail systems that are better run or have lower costs than Amtrak? Not that a CR authority is ever going to ever bid on an Amtrak contract.
User avatar
BandA
 
Posts: 1817
Joined: Thu Oct 11, 2012 11:47 am

Re: Third-party LD operation RFPs

Postby mtuandrew » Mon Aug 07, 2017 2:40 am

For my money, the only routes worth bidding on are the Auto Train, the Capitol Limited, and the City of New Orleans. The Auto Train you folks have mentioned previously. The other two are single-overnight trains and could be run with four sets each. Seven sets if you grab both routes.

Assuming any potential bidder would use depreciated single-level Heritage stock, I'd pin each train at appx 12 cars (bag, 3 sleepers, cafe, diner, 6 coaches). Are there 21 sleepers, 7 each diners, cafes, and baggage cars, and 42 coaches on the market or in a potential bidder's fleet?
User avatar
mtuandrew
 
Posts: 4001
Joined: Tue Feb 20, 2007 2:59 am
Location: the Manassas Gap Independent Line

Re: Third-party LD operation RFPs

Postby Alcochaser » Mon Aug 07, 2017 7:14 am

BandA wrote:Are there any Commuter Rail systems that are better run or have lower costs than Amtrak? Not that a CR authority is ever going to ever bid on an Amtrak contract.


Hmm, Metra make a play for the Hiawatha?

They own a lot of the tracks it runs on. But then you have to get Wisconsin on board with supporting its end. But Metra allready runs up into WI on the ex CNW line.
User avatar
Alcochaser
 
Posts: 847
Joined: Sat Jul 24, 2004 4:20 am

Re: Third-party LD operation RFPs

Postby CHTT1 » Mon Aug 07, 2017 7:48 am

At one time, some legislators proposed that Metra should take over the Illinois-sponsored Amtrak lines, but it never went anywhere. The Hiawathas would require cooperation from Wisconsin. It's a possibility, but given Illinois' current state governing crisis, I don't see anything happening. If the N-S bi-level project was actually proceeding, the state would own its own coaches and locomotives, making a Metra takeover easier, but that's not working either.
CHTT1
 
Posts: 451
Joined: Fri Feb 12, 2010 5:38 pm

Re: Third-party LD operation RFPs

Postby John_Perkowski » Mon Aug 07, 2017 10:17 am

Given the conditions of the RFP, my estimate is there will be an announcement of no bidders after the competition end date.
~John Perkowski: Moderator: General Discussion: Locomotives, Rolling Stock, and Equipment
Assistant Administrator: Railroad.net/forums
Please don't feed the spammers! If you see spam, please notify a Moderator
User avatar
John_Perkowski
 
Posts: 4463
Joined: Wed Mar 17, 2004 5:12 pm
Location: Off the Q main near Parkville MO

Re: Third-party LD operation RFPs

Postby Tadman » Mon Aug 07, 2017 2:41 pm

mtuandrew wrote:
east point wrote:That is a 64 million dollar question. That might be enough for one train set ? Locos, cars, & spares ? Then depending on the route from 3 - 6 train sets ? Does anyone have a cite on whether Amtrak has to provide equipment or not ? Someone who has the time to read the whole RFP might find a cite one way or another ?

It'd actually be worth Amtrak's while to supply equipment to a private enterprise. Running on their own account, they lose money on each LD. If operated by a third party, Amtrak gets to rent out its cars at market rate. By default, Amtrak sets that rate.

Food for thought.


But that's why Indiana went shopping on the Hoosier. Amtrak rents out cars and power and their market rate, which is based on a proportion of the cost of a new train car. Amtrak has no other options other than new cars. Iowa Pacific rented out cars at a proportion of the cost of used train cars. The nature of their operation means they will only likely buy used train cars. Given the age of the midwest corridor fleet, you could say the Horizon and IP cars are in roughly the same shape, but the Horizons probably rent out for double/triple.
Tadman
 
Posts: 8386
Joined: Wed Sep 01, 2004 10:21 am
Location: Michigan

PreviousNext

Return to Amtrak

Who is online

Users browsing this forum: David Benton, Exabot [Bot] and 13 guests