286K Infrastructure, Investments & Procedures in New England

cowford- you misread the tariff. first and most importantly, railroad pricing is either railroad equipment or private equipment. in general, the difference allows private equipment to be paid-off in 2 years. further you assumed the difference in cwt reflects the equipment gwr.a logical assumption except when you deal with railroads. a 220k car can carry 70-90 tons, a 263 can carry 90-105 tons and 286 - 101-116 tons depending on car ltwt. the pricing you claim saves 5% actually costs 14% more ( $2175 v $2466 per car). frankly, there are no railroad mechanisms to determine cwt weights so this relies on shipper statement. look at the pas tariff 4127.2-a to see rail v private equipment car differences. ken patrick

KEN PATRICK wrote:cowford- you misread the tariff.

I would be careful before I told someone in the industry that they were misreading a tariff. I can only hope that at least something of what you have just written is partly true.

KEN PATRICK wrote: there are no railroad mechanisms to determine cwt weights

Oh really? there's NOT?!?!
Oh,... ok.

With all due respect Ken, you are incorrect on virtually every point made. Let me break it down.

"first and most importantly, railroad pricing is either railroad equipment or private equipment."

First, maybe. Most importantly, no. Actually, car cost is a relatively small portion of the total cost to move rail freight from A to B. As such pricing differentials between railroad equipment and private equipment are certainly not the biggest cost factor to consider*.

"in general, the difference allows private equipment to be paid-off in 2 years"

Wrong. Dead wrong. The rate differential has NOTHING to do with expected pay-off. It reflects the differential between what it costs the railroad to provide the equipment vs. the cost to the railroad to operate a shipper's owned or leased car. To show how preposterous this statement is, a new tank car costs ~$100,000. Not counting interest, a two-year payback would be $4,167 per month.** It's surprising you would believe this, as you're an accountant, no? Do you depreciate 50-year assets over two years?

"further you assumed the difference in cwt reflects the equipment gwr.a logical assumption except when you deal with railroads. A 220k car can carry 70-90 tons, a 263 can carry 90-105 tons and 286 - 101-116 tons depending on car ltwt. the pricing you claim saves 5% actually costs 14% more ( $2175 v $2466 per car).

I'm afraid it's logical because it's correct... even when dealing with railroads! You are confusing gross cost with unit cost. This is no different than buying milk. I'm thinking most folks probably don't buy milk for the family by the pint. Though a gallon of milk costs more than a pint, the gallon is MUCH cheaper on a per-pint (unit) basis.

By the way, there aren't many (any?) 220K cars that can carry 90 tons. The range is more like 70-80 tons. Your 263K/286K capacity ratings are closer to the mark.

"frankly, there are no railroad mechanisms to determine cwt weights so this relies on shipper statement."

Correct, most scales are a thing of the past. And many of today's rail rates are in dollars per car. In many industries, however, it's easy to corroborate shipping weight estimates using weight per cubic ft or gallon coefficients against a cars cubic capacity.

"look at the pas tariff 4127.2-a to see rail v private equipment car differences"

Exactly. This confirms my earlier comments re railroad vs private car cost differentials. The average differential (to Maine points, at least) is ~$250. Considering that the car would cycle from interchange to destination and back to interchange in about 2-3 weeks, that differential closely matches what a lease rate would be for a high-cube covered hopper.

* in the case of PAR 4127.2, railroad-supplied car cost component is about 11% of the rate.

** in the case of PAR 4127.2, $100,000 new covered hopper car cost divided by the $250 savings per trip would require 400 trips to recoup car cost... at 12 trips per year, that's 33 years. In actual fact, shippers typically lease cars to match the asset obligation with the business opportunity.

steamer69 wrote:
Exactly. The railroad should be able to sustain itself, fix itself, and do the majority of it's work without depending on the public for all if the major upgrades.

I would agree, however I emphasize the phrase " for all " its upgrades. The fact that railways pay taxes on fuel and property right of way, plus maintain that right of way at their costs, is most often overlooked. I think it only fair that Governments return a portion of funds to the railways for upgrades. After All, in some ways railways are probably cross subsidizing the trucking industry, in light of the fact the Federal Highway Trust Fund as of 2011, is $ 11 Billion in the red. States are starting to dip into the General Funds to pay for road upkeep and maintenance.

In the big picture, U.S Railways are earmarking $ 12 Billion toward 2012 rail maintenance / upgrades. Nowadays, private / public partnered funding projects are becoming more common and I think that works well for the parties concerned.

cowford- the car payback is the cost differential per move per month. no one accepts 1 turn per month. i got 4 on a $36k re-habbed 89' flat. the contract differential was $400 or $19.2k yr . hence about 2 years on a cash basis. do not confuse the assumed 'life' of equipment with cash flow. a $200 differential for a railroad-supplied car is a marketing tool not an indication of asset recovery. most new shippers would never go through what i did to develop a low-cost car and hammer 'hook & haul' rates from the railroads. it was the only way to make rail work in the waste business. remember, most rail rates are
what-the-traffic-will-bear' not costs plus margin. its instructive to see all the stb rate cases wherein the railroads want to seal their costs. unfortunately for them, no amount of smoke will conceal their historical costs of about $.35 per car per mile. anyways, thank you for your thoughtful comments. ken patrick

What is the minimum rail size that can take 286k loads? Much of the rail network in New England has 85lb and 100lb rail, would these two rail sizes have to be replaced 10 115lb to be 286k compliant?

CPF363 wrote:What is the minimum rail size that can take 286k loads? Much of the rail network in New England has 85lb and 100lb rail, would these two rail sizes have to be replaced 10 115lb to be 286k compliant?

It doesn't have much to do with rail spec so much as track condition. Housatonic is 286K-rated and has lots of hundred-year old 85lb. north of New Milford on the state-owned portion. But it's in decrepit condition, so it's dubious whether the functional capacity actually lives up to the "official" FRA weight rating today. 115 is a lot more solid for heavyweight freight and takes less of a pounding, so that's the obvious choice for replacement rail. I don't think anyone uses 85 anywhere these days for new installs. Not even on passenger track and branchlines. And it's easier to standardize on 1 type of rail for a track dept.'s purchase economy of scale, so even on 263K lines 100 isn't used nearly as often as it used to.

Ken, you are illustrating your personal experience (nothing wrong with that) and applying them as industry norms (that's where the problem starts). Saying "no-one accepts one turn/mo" is... well, I don't know what to say to that, quite honestly. Turns/month (or turns/year) is influenced by a host of factors. I know plenty of plastics shippers that get ~4 turns per year on their covered hoppers. I also know chemical folks that turn their tanks every 25 days. I believe the average turn on a gondola is ~40 days, and a boxcar is inside a month. I was going to say that if you really want to see REALLY fast cycles, look at intermodal equipment! If you got four turns per month out of your equipment, it must have been very short-haul and I congratulate you for being able to turn your equipment at origin/destination so quickly.

"Do not confuse the assumed 'life' of equipment with cash flow. a $200 differential for a railroad-supplied car is a marketing tool not an indication of asset recovery"

Again, it's NOT a marketing tool, it's a reflection of asset cost recovery. This statement also contradicts your earlier comment in which "in general, the difference allows private equipment to be paid-off in 2 years"

In the example of the PAR grain tariff, how do you reckon they came up with that rr/private rate differential? They either just made it up, or there's some logic behind it. I submit the latter, and the rate reflects what were prevailing CH lease rates at the time of tariff publication.

coword-your industry 'norms' are the reason railroads don't capture more business. they are sad. i found that tracking 24/7 on our 205 car fleet thru 3 railroads, 6 origins, 2 destinations, local jobs,blocking in merchandise trains, thru selkirk, oak island , lynchburg, acca, petersburg required that i knew where every car is, going the right direction and empty/loaded. railroad personnel relied on me to 'correct' their data. i found that 'railroad tracking data is largely wrong' and 'it you see a train, 1/2 the cars are going in the wrong direction'. the error rate in railroad tracking is huge. one job i was proud of was from the mass burn in newark to our private sidings in virginia( via acca) or amelia ( via hagerstown). 100 loads each week with 122 cars for 2 years.railroad management needs to sharpen up.they are lucky most shippers are equally oblivious to what can actually happen. ken patrick

I don't disagree with you, Ken, that car utilization could improve, but to put things in perspective: Plastics cars turn 4x/yr by SHIPPER choice. They intentionally use the cars as rolling warehouses. And some railroad equipment is intentionally used for storage purposes, again by railroads. There's also a fair bit of slop within certain car markets to meet seasonal peaks, e.g., propane, fertilizer, grain... and those peaks can vary wildly from year-to-year. Anyway, if you did got 4x/mo on a NJ-VA turn, that's pretty impressive. Kudos to you (and the railroads!) for making it happen.

Car location reporting is also not infallable. But I have to say (and can state from personal experience) that "largely wrong", "error rate is huge", and "1/2 the cars are going in the wrong direction" are unfair exaggerations. Are the systems perfect? Definitely not? Do they continue to improve? Definitely! Dang, I even have a railroad app on my phone that I can use to pull up just about anything on any rail operations, car tracking, mechanical info, etc.... actually, I just pulled it out and went from clicking on the app to pulling up a car's location data inside of eight seconds. Anyway, I ranting and we're going way off-topic, but I'll close with this: Railroad car reporting and interline accounting systems are, by necessity, insanely complex... anyone who thinks otherwise should spend a day at Railinc in NC.

CPF363 wrote:What is the minimum rail size that can take 286k loads? Much of the rail network in New England has 85lb and 100lb rail, would these two rail sizes have to be replaced 10 115lb to be 286k compliant?

New Brunswick Southern Railway upgraded their mainline ( about 90 miles from St. John N.B. - the Maine border ) to 286 K over 2009 / 2010. They replaced 25 miles of existing 100 lb rail with 115 lb ( remainder is still 100 lbs ) and strengthened several bridges. Also, major tie replacement and new ballast took place.

NBSR and two levels of government shared costs in the upgrade project.

At the risk of poking the various hornet nests with a short stick, the Grain Train of 03-30-2012 was informative. Starting upgrade from a dead stop after a Gardner recrew, the train gave ample opportunity to observe the stencils. Each and all of the 108 cars -- a mix of BNSF, other lines, and leasers -- were 286K. The springs were -- naturally -- compressed, but whether the loading had stopped at 263K I have no idea. The LCTs that similarly run east do carry a mix of 263K and 286K cars, but again actual loading is something I will not estimate. Any serious delay to implementing 286K throughout New England puts later rail-based economic development at risk. 56.5" between the heads of the rails is the nominal standard gauge that permits seamless interchange of railcars on this continent. The new standard for that standard is 286K. Not readily adapting to that new standard risks marginalizing reluctant areas.
(Poster now exits Stage Left to don metaphorical Kevlar bunny suit.)

jaymac- you've made my point. again, our existing infrastructure needs no change to accomodate 286k. i believe the '286 illusion' to be a marketing tool to entice governments to spend tax dollars on an illusion. think about all the people who feed at this trough. of course they will chorus that sums must be spent to increase our freight rail. has anyone mentioned that rail rates do not reflect heavier cars. gasp. how can this be? simple. railroads only measure car profits that are based on contract rates that give a 'wink and a nod' to weights. the rate is 'what-the-traffic-will-bear' ( value of what's in the car) and what a truck could carry as competition. ( maybe). my problem is mbta mandating a 263 when everything can accomodate a 1.4 ton increase per wheel. ken patrick

Undoubtedly, 286K over 263K provides competitive advantage improvements vs. highway (or intermodal) to the tune of almost an additional 1/2 truckload's worth in ratio to a railcar for those commodities that weigh-out before cubing-out in a contemporary railcar at 263K. Existing movements of grains, wheat, beans, and feeds; coal, gravel and sand; rock salt (bulk or bagged); corn syrup, food oils and lard/tallow; packaged or bulk flour and sugar; printing paper; plywood; acids, gasses, chemicals, petroleum products and latex; and, steel plates, structural steel and copper ingots/slabs would likely benefit in the short/medium term. Existing movements of most fresh, packaged, canned, dried or frozen foods; beer and wine; woodpulp and pulpboard; and many wood products would likely not. In my humble opinion, I think one can take away: 1). why NS was able to economically justify raising PAS Mechanicville-Ayer to 286K without public funds (wheat, coal, traffic density, competitive position vs. CSX); 2). that 286K likely won't lead to wholesale traffic gains, but instead improve existing business and perhaps provide some lesser opportunities, and; 3) the one movement that might most warrant targeted public investment support would be Maine's printing paper traffic (large concentrated flows, important economic engine, affects rail's larger competitive advantage in New England).