• Empty Cars - Process for Return or Next Load?

  • General discussion about railroad operations, related facilities, maps, and other resources.
General discussion about railroad operations, related facilities, maps, and other resources.

Moderator: Robert Paniagua

  by bobw59
 
I really need some help understanding what happens with a car after it is released from the receiving party. This car needs to find its way home or to a next load but how does that happen. Let's say a car from a Maine paper mill is unloaded in Los Angeles and that car is owned by Pan Am Railways. Ideally that car would haul some other load home but realistically I assume most cars come home empty. As this car travels across the county back to Maine who pays for it's transport? And if it is lucky enough to find a load back to New England how is that load obtained. It's not like a trucking company with a dispatcher looking for loads. Thanks for any help on understanding this!
  by Cowford
 
Generally speaking, railroad-controlled equipment can either be in assigned service or designated a "free-runner." The primary difference is that assigned cars must be returned to the origin road/station when released empty. Free runners are not restricted and can be repositioned/reloaded to alternate destinations. Obviously, the latter can cut down on empty car-miles, but the assigned car practice is still extensively used to protect a customer's car supply. One pooling group is the North American Boxcar Pool: each road contributes a certain number of cars into the pool, and these cars free run. Empties are interchanged between roads as needed to correct imbalances. The class 1s also own TTX, whose car fleet also operates under a pooling methodology. All railroads have car distribution departments that have visibility into demand by location/car type and on-line car supply and position cars around the network as needed. Roads work closely together on this as well. (At least to the extent that competition allows!)

Regarding the economics of it all, car owners are compensated through two charges when their cars are off-line: Per diem (an hourly rate - used to be daily, hence "diem"), and mileage. The possessor road pays the car owner the entire time the car is on-line, loaded or empty, enroute or sitting on a customer's siding. These rates are negotiated bilaterally between each road, and varies by car type, owner, age, etc. These costs are figured into the rate to the extent that some rates are reporting mark dependent, i.e., the published rate will vary depending on who's boxcar is loaded.

A couple of chapters could be written on this, but I hope this summary helps.
  by bobw59
 
Thanks Cowford for the prompt reply. Very helpful indeed.
  by Jersey_Mike
 
With dealing with assigned service cars you run into the wonderful world of Demurrage charges. As I understand it after a load is delivered there is some number of days for the car to be unloaded and then returned to the originator or Demurrage charges will then begin to be assessed by the owner of the cars. Sort of an interesting flip where normally the owner of the car pays a railroad to transport it, but in the case of Demurrage, the railroad has to pay a penalty for not getting the car back on time.

Anyway, there was an interesting story back in the 70's or 80's when the Class 1's were having trouble keeping boxcars available for carload service. Some enterprising New England shortline bought up a whole mess of boxcars, sent them out to their customers, but never made arrangements for their return. The hard up class 1's immediately appropriated the "free" cars to handle their spot shortages as if the cars were in a pool, but not realizing they were still assigned and now racking up sizable demurrage fees, which was the small New England railroad's intent. Eventually Class 1 accountants began to notice that large sums of money were flowing to some small New England railroad for demurrage at which point bulletins were sent to every yard to immediately pull any empty cars with such and such reporting marks for immediate return. The Class 1's had the last laugh because the short line lacked storage space for all of the cars it had bought and wound up having to store them on its main line :-D
  by SooLineRob
 
Jersey_Mike wrote:
Anyway, there was an interesting story back in the 70's or 80's when the Class 1's were having trouble keeping boxcars available for carload service. Some enterprising New England shortline bought up a whole mess of boxcars...
Middletown & New Jersey?
  by ExCon90
 
Just to clarify, demurrage is not paid by a railroad. It is a penalty charge against a shipper for failing to release a car to the railroad within the "free time" provided in the tariff (or frequently, nowadays, in the contract). It is paid by the shipper to the railroad that placed the car, irrespective of who owns the car. The railroad that placed the car in turn pays "car hire" (formerly called per diem, until railroads began measuring per hour instead of per day) to the owning railroad (if the car has railroad reporting marks); demurrage is normally considerably higher than car-hire charges and thus more than offsets them. It's getting harder to generalize nowadays, however,since so much traffic now moves under contracts, which spell out details like that. Before the Staggers Act (1980), demurrage was uniform and rigidly prescribed in tariffs.
  by ExCon90
 
SooLineRob wrote:
Jersey_Mike wrote:
Anyway, there was an interesting story back in the 70's or 80's when the Class 1's were having trouble keeping boxcars available for carload service. Some enterprising New England shortline bought up a whole mess of boxcars...
Middletown & New Jersey?
As I recall, the Vermont Railway became famous for it, but many short lines took advantage of a (in the view of many, wrongheaded) ruling of the Interstate Commerce Commission (ICC) imposing "incentive per diem" providing for a sliding scale of per diem rates based on the value of the car (previously the rates had been the same). Any short line that had enough originated traffic could then acquire new boxcars to push out to a waiting world, and the more bells and whistles they hung on the cars, the higher the per diem rate, and fervently hoped the cars would never come home. (As pointed out in an earlier post, when they did come home some lines had nowhere to put them.) A number of leasing companies also acquired cars for the same reason, leasing them to individual investors who hoped to get rich on the per diem and took a bath when the ICC later deregulated per diem and the Class Is were no longer obligated to take them.
  by Cowford
 
... "car hire" (formerly called per diem, until railroads began measuring per hour instead of per day)...
Hmmm... yes and no. Though the rates are now on an hourly basis, involved parties typically talk about the charge for a railroad-marked car in terms of $/day. And the the term "per diem" is informally used interchangeably with car hire as in, "what's the per diem on that hopper?"

And try to figure out how to pronounce it! Many say per "die-m" or "dime," others say "dee-em." The first two never made sense to me (how many people say "carpe dime?"), but it's probably the more common choice. Rabble. :wink:
  by Marty Feldner
 
SooLineRob wrote:
Jersey_Mike wrote:
Anyway, there was an interesting story back in the 70's or 80's when the Class 1's were having trouble keeping boxcars available for carload service. Some enterprising New England shortline bought up a whole mess of boxcars...
Middletown & New Jersey?
The M&NJ was a legitimate 'incentive per diem' (IPD) practitioner, along with several other shortlines.

The 'enterprising' shortline referred to was, I believe, the St. Johnsbury & Lamoille County and as I remember was playing fast and loose with demurrage before the IPD program.
  by ClinchValleySD40
 
Cowford wrote:
... "car hire" (formerly called per diem, until railroads began measuring per hour instead of per day)...
Hmmm... yes and no. Though the rates are now on an hourly basis, involved parties typically talk about the charge for a railroad-marked car in terms of $/day. And the the term "per diem" is informally used interchangeably with car hire as in, "what's the per diem on that hopper?"

And try to figure out how to pronounce it! Many say per "die-m" or "dime," others say "dee-em." The first two never made sense to me (how many people say "carpe dime?"), but it's probably the more common choice. Rabble. :wink:
Two types of car hire charge. Railroad owned cars (with railroad reporting marks) are an hourly charge - range from .50 for a regular box car to 1.00+ for special cars like auto racks.
Private owned cars (with the X on the reporting marks) are charged at a mileage rate. Hence you will see them sit for a long time at an industry.
Rates are usually set in the Umler file, but railroads do negotiate monthly reduced rates among themselves when cars are in assigned service.

Demurrage is negotiated between railroads and shippers/receivers that pay "rent" on the car while it is spotted at an industry. Typical is one day free.
  by 2nd trick op
 
There was a similar "scandal" back in the winter of 1970-71, involving the now-departed Illinois short-line LaSalle and Bureau County.

Although I can no longer remember the exact details, appparently, "LSBC" reporting marks were stencilled over empty general-service boxes from any of the component roads of Penn Central. These cars were then routed westward to the new "home" road. I can remember seeing two of them (appropriately, one in red and one in green; the paint job definitely was not slap-dash and I'm not sure if the perps bothered to change the road numbers) moving west on one of the former Pennsy "PR"- or "LCL"-series freights one morning in Altoona; The story behind the suspicious lettering didn't break for several more months.

Daughen and Blinzen's book, "The Wreck of the Penn Central" has more details, if anyone's got a copy. Given the news media's lack of familairity with rail operating practices, I can't even recall whether "phantom demurrage/per diem", rather than actual posession of the cars, was cited/established as a motive for the activity.
Last edited by 2nd trick op on Fri Jan 29, 2010 6:34 pm, edited 1 time in total.
  by Marty Feldner
 
2nd trick-

Thanks for the memory jog; pretty sure the LSBC was the one I was thinking of, not StJ&LC. (I was overseas for a couple of years back then, courtesy of Uncle Sam, and could only get rail news from my subscription to Trains Magazine.)
  by ExCon90
 
As I recall, the main difference between the LS&BC and the other short lines was that the other lines at least bought (or leased) the boxcars before putting their reporting marks on them. What distinguished the LS&BC was that they bypassed that first step.
  by wis bang
 
Having worked a rail to truck transfer facility; we had shopper owned railcars spotted on a facility we rented from Conrail. Our rent was 'rebated' depending on the monthly 'thruput' of cars. All kinds of things end up in RR contracts.

Intermodal containers and their trucking chassis are also handled like the railcars w/ per diem and demurage. You get 5 - 7 'free days' b/4 you are supposed to return the box and chassis.
  by David Benton
 
ExCon90 wrote:As I recall, the main difference between the LS&BC and the other short lines was that the other lines at least bought (or leased) the boxcars before putting their reporting marks on them. What distinguished the LS&BC was that they bypassed that first step.
i like it , i didnt steal it , i just bypassed the purchasing step !