• Hey freight trains dont make money either...

  • 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

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  by HoggerKen
 
I will have to inquire of my container expert, but several groups in Kansas were looking into shipping hay to Japan using containers. The challange of course, was the moisture content of the hay in a sealed container with a plastic liner. No matter how it is compressed, molds and mildews loves such places.
  by David Benton
 
HoggerKen wrote:I will have to inquire of my container expert, but several groups in Kansas were looking into shipping hay to Japan using containers. The challange of course, was the moisture content of the hay in a sealed container with a plastic liner. No matter how it is compressed, molds and mildews loves such places.
they ship buttercup pumpkins from NZ to Japan by container . they take one door off , and have wood slats between them .
hay would be a different matter . perhaps a door off and wrap it in chicken wire ???
  by Littleredcaboose
 
The problem would seem that these days most sidings are private. Sure there are bulk terminals but those are far fewer then the days when the Lehigh Valley and the Reading had a public team track with a loading ramp in almost every small town along the way. Railroads have become a very specialized form of transportation . My local scrap yard has a siding but has not used it this year because the railroad prefers that they truck there scrap to a larger scrap yard in the Port of Albany. Same goes with lumber and steel beams. The lumber Yard gets there lumber trucked in from Weihouser who gets 10 car packs of lumber and the steel mills ship to a steel service center who then trucks it to smaller contract yards. The days of loose car railroads serving small towns are numbered. Look whats happening out west with BNSF grain and they only want to pick up from super silos. The downside of this is that country roads are being beat to heck by trucks hauling heavy freight to and from the hubs. and that rural towns do not have the money for repairs. If we look at the recent Obama Stimulas pack there is a lot of money going to fix up local rural road systems
  by ENR3870
 
Littleredcaboose wrote: So are you guys familer with those eletrict loadboards that you see at truck stops?
Yes, have you ever heard of switch lists at a yard?
  by HoggerKen
 
The consolidation of grain elevators has been going on for decades now. No longer is it profitable from either the carriers, or elevators point of view. When the elevator in the next county ships a 100 car unit train to the gulf, the one or two car guy will never see the same rates unless he is marketing non-GMO or Organic grains, to which, price is no option. If you cannot load unit trains, you price yourself out of most markets.

When UP took over the CNW branch lines, they eliminated the 25 car sidings. We did not withhold service. In 1999 when the line was laid with CWR, customers were asked if they wanted a new switch, many turned them down. CNW used to co-load units from several elevators for ADM back then, but with the advent of local ethanol plants, ADM no longer could compete.

Grain marketing has change since 1995. But one thing has remained the same. A producer takes his grain to a local marketer from his farm. Less of it today goes to elevators as ethanol plants are just as close. This eliminates the cost added to marketed grain for transport. Meaning, the producer gets a better price close to home for his product.

So in most rural areas right now, there is just as much grain traveling the roads as there was before, only to new destinations. The conditions of farm to market roads is not because of additional grain being hauled to farther away elevators, but the lack of funding for rural roads in general. You only need to look at what is happening in Michigan, where paved roads are being torn up and returned to gravel because tax revenues cannot keep up with the need for replacing aged infrastructure.

Scrap is the same way, all market driven. A one or two car siding cannot compete with the likes of a Behr Metals in marketing scrap, unless the scrap is specialized. In the case of specialized metals, price is not as much a consideration.

There is little economic advantage to a local lumber yard to have a siding anymore. They can get their supply from regional centers at a better price overall, without having to maintain room for carloads of each specific type.

Loose car railroading is still alive in a lot of areas. No, there are no longer team tracks, as customers prefer to have their own sidings for logistics sake. However, a comany remaining competitive in his market, is probably more a reason for the lack of sidings in smaller towns.

And for the record, a railroad cannot dictate to a customer on what and where he or she will ship from, nor how much. A carrier can dictate rates, but not service. Market conditions however always will dictate what and when and where.
  by QB 52.32
 
I think that on the path to earning the cost of capital and more since their release from onerous regulation, railroads have rewarded and seek to encourage simplicity in what is required of them: volume incentives, transload operations and intermodal in leue of branchlines and "switching intensity", and, turning over to other parties involved in the transaction, the management of assets and marketing to achieve a good ROI on the business. Like much of what has been going on in American industry during the past 30 years, they're seeking to wring productivity out of their operations in order to keep up with their need for capital and their ability to compete for that capital. For example, since the early 1990's many railroads have encouraged others, like truckload carriers and a few of the 3rd party operators, to become the owners/managers of intermodal trailers and containers, bringing their own capital into the system and managing utilization and backhauls as well as maintenance and capital costs as a way to make money, shifting traffic that had moved in railroad owned, managed and maintained trailers to this private equipment.
  by HoggerKen
 
For example, since the early 1990's many railroads have encouraged others, like truckload carriers and a few of the 3rd party operators, to become the owners/managers of intermodal trailers and containers, bringing their own capital into the system and managing utilization and backhauls as well as maintenance and capital costs as a way to make money, shifting traffic that had moved in railroad owned, managed and maintained trailers to this private equipment.
The original model was APL (we supply the cars, containers, and customers, you put some engines and a crew on it and move it point A to point B for us). But, the railroads did not seek out the business, APL went to the carriers and requested it. Look where we are today.

Exceptions?

The I-5 service, using someone else to find the customers, consolidate, and load box cars. The carrier takes the cars, unswitched from point A to point B. I believe there is a lot of market for that. Look at I-35 St. Paul to KC corridor. Look at the I-55 Chicago to St. Louis corridor. Service must be consistant, and predictable for customers even consider it.

Railex has broken ground with the same concept for perishable. Load 55 cars indoors, railroad reports at a scheduled time, pulls the cars, and moves them point A to point B, without switching or sitting in terminals. No work en-route, no one elses cars. When it arrives at point B, the cars are shoved inside for unloading, all of them. So successful, a second origination point was added. That makes two separate trains specifically run for one customer. And the carrier is making money and guarantees the service.

All this goes back to what I have been observing for some time now, freight is profitable, if you do it right. One more case. Several years ago, Cargill needed to move some beans 120 miles when the local market was short. They moved in 15 or 25 car lots at a time. A single crew. and one GP38-2. Problem solved, and lots of trucks that were not on the road.
  by 2nd trick op
 
The downside of this is that country roads are being beat to heck by trucks hauling heavy freight to and from the hubs. and that rural towns do not have the money for repairs. If we look at the recent Obama Stimulas pack there is a lot of money going to fix up local rural road systems
Exactly what we don't need!

The economy changes constantly, in response to changes in the most basic of all the inputs (such as fuel and raw labor) needed to keep a diverse post-industrial society running. Any attempt to restore the (over-sentimentalized) past of siding-to-siding delivery (and create political-plum jobs for the union contingent in the current coalition trying to run things from within the Beltway) will only take more money out of the pockets of those of us who still know that only the private sector can generate real wealth. What the Obama clique seems to have in mind is something along the lines of the "Five Year Plans" that some people in Moscow started cooking up back in the 1920's.

I came of age at a time when the rail industry was at its ablsolute nadir in the early 1970's; since the railroads weren't hiring, I sidestepped into trucking. We never had any problem finding loads, although the natural tendency of the American economy to ship large quantities of raw materials to the Coasts, and much smaller shipments of high-value finished goods back to the interior caused problems for us, too. Salesmen were taught the fine art of "how to pick freight" and the railroads got whatever wan't wanted. Clarence Werner, the man who turned a small fleet into the huge family-run, but publicly-held firm that bears his name, has said on many occasions that he could always get a back-haul that would otherwise have gone by rail.

In those days, Interstate 80 had only recently been completed across Pennsylvania's northern tier, and within a few months, an even bigger share of transcontinental meat and perishable traffic had left the rails both east and west of Chicago. The new realities of both the energy market and the pricing freedoms granted by the Staggers act have been slowly re-diverting a lot of that traffic back onto CSX and NS, but the process is a subtle one, not always noticeable unless you know what to look for. If, as has been predicted, the huge volumes of imported consumer goods that fueled the rail boom post-1985 really have peaked, then those rebuilt mains have paved the way for the rails to take back shorter distance moves. Remember, Conrail experimented with a simple New York-Buffalo RoadRailer freight service called the Empire State Express back in the late 70's, and that was before the renegotiated crew districts offered the savings they do today.

At its core, rail technology packs so much raw energy efficiency that it can lure any traffic that's worth the effort; the problem is that the fixed, expensive and not-easily changed plant is a sitting duck for politically-motivated interference.
Last edited by 2nd trick op on Wed Jul 29, 2009 1:43 pm, edited 3 times in total.
  by roadster
 
Not all truckers can utilize the "load" board. Mostly, Only Indies, as they are not tied to their companies dispatcher. And alot more of those semi's are running mty's, than you think. All frieght industries have an empty segment to their trip. The driver may find a load to headout with. But the container he brought in is empty, and need to sent to another facility for loading. The railroads already have figured the cost of returning empties back to a loading facility in their rates. Intermodals, actually have the least amount of return on their rates baring making a few pennys of profit per car. Chemicals, and coal are the best returns on rates. Bottom line is, railroads make a profit. How much depends on how much time is used to get the car delivered. Truck and railroads each have their own niche in the freight transportation market. To say freight trains don't make money,is not understanding the economics of the business.
  by HoggerKen
 
I came of age at a time when the rail industry was at its ablsolute nadir in the early 1970's; since the railroads weren't hiring..........
Some actually were at the time given the retirements in their areas. I look at 1968 and 1973 at least on rosters here, to be a spike in hiring. Those that hung on, most of them did, are now pulling the pin. However, from 1973 to 1980, no one was hired, creating a huge void, which was filled by former Rock employees. After that, the Halloween agreement caused a glut of employees until 1993. Those hired in 1993 to 1996 are now sitting in the catbirds seat. The old Rock heads are thinning (pun intended), and anyone with a 70's date has already contacted the RRB, or very soon will. If you are a young guy, hold hope, in the next two years, some areas will see a lot of change.
If, as has been predicted, the huge volumes of imported consumer goods that fueled the rail boom post-1985 really have peaked, then those rebuilt mains have paved the way for the raikls to take back shorter distance moves.
We don't have the crystal ball, but added capacity that existed prior to this "malaise" has paid off. And some carriers who earlier funded expansion, are following through with those projects, will be poised when traffic returns. I did note however, that a lot of unpopular policies carriers enforced when traffic was peak, have not been relaxed. One carrier I am familiar with, has stepped back to look at business it previously turned away, looking to implement ways to accept it. They cautiously do so, remembering the logjams in the not too distant past. Another one has thrown all caution to the wind, agreeing to haul any and all private empties for repositioning gratis for one customer. If traffic returns to peak levels again, the decision will become a problem.
  by Littleredcaboose
 
What freight Forwarder does that ? i know about railex but who are these guys
  by HoggerKen
 
Littleredcaboose wrote:What freight Forwarder does that ? i know about railex but who are these guys
Be a bit more specific with your question. Such as who you are refering to or what post. I cannot make heads or tails out of it.
  by 2nd trick op
 
Well, here's a link to the company in question:

http://www.railexusa.com/

From this writer's personal point of view, the concept of completely re-orienting transcontinental perishable distribution is more likely to succeed preciscely because societal changes have made it impossible to rebuild using the previous network as a model.

Those of us with access to back copies of Trains might recall an article by William D. Middleton describing a ride on Illinois Central's "meat train" CC-6 in the fall of 1959. Within a few years, changes in the industry doomed not only the service, but many of the packing plants that fed it.

http://books.google.com/books?id=t2A2hM ... t&resnum=1

And for another example, check out Dr. Ed Brunner's description of the slow strangulation of Rock Island's Chicago-Denver main in the 1970's, in an article published in the June, 2004 issue of Trains

Nevertheless, the majority of the trackage on both lines survives today, but while a very foresighted entrepreneur might redevelop them as an outlet for "surplus" non-time-sensitive traffic, they're in no shape to go head-to-head with the UP and BNSF "Transcons".

Successful entrepreneurship involves a search for opportunities, rather than an attempt at regression fueled by politicians leading a clientele seeking to turn back the clock.
Last edited by 2nd trick op on Wed Jul 29, 2009 11:01 am, edited 1 time in total.
  by Cowford
 
Not sure if I understand the logic of the original statement about coal trains being the only profitable trains running. If profit is predicated solely on load/empty ratios, coal would be in the same boat as everything else, considering they, too, run empty 50% of the time. Anyway... there is a valid point in there: not all traffic is profitable, i.e., the revenue produced from the move does not fully cover the variable costs expended.

Railroad pricing folks will determine general rules to meet the company's overall profit goals, in other words, "how should we price to make the most money?". Everyone that's taken Finance or Accounting 101 knows the formula: Revenue - Variable Cost = Gross Profit or Contribution Margin (CM). Railroad marketers work toward profit goals by maximizing CM. In theory, all traffic should contribute to the CM pot, but some traffic is inherently more profitable (chemicals, coal) and some less so (scrap paper, tissue, logs). As such, a Revenue/Variable Cost ratio target is often used as a guideline. Let's say a railroad chooses a target RVC of 1.65, this means that the average load should produce $1.65 for every $1.00 of variable cost associated with the move. The $0.65 goes toward fixed costs and eventually (and hopefully) profit. Some traffic will achieve an RVC of 2.5, some will barely come in above 1.1... so long as, at the end of the day, the weighted average CM is 1.65, everything's cool. For a variety of reasons, the larger railroads always end up with a certain amount of business which doesn't pay its way, i.e., the traffic that has an RVC <1.0. Railroads identify such traffic and do what they can to either raise the rates to a compensatory level, or shed the business altogether. Sometimes the railroad is locked in a long-term contract, so they can be stuck with the dog business for several years.

RE the comment about empty car movements = unprofitable business... railroad costing systems incorporate associated empty car movements into a revenue load's cost calculation. Take a paper shipper that has a dedicated pool of boxcars: The shipper's rates for the loads include the cost of returning the mty car home.
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