Mechanicville Yard Aerial Report

wow- i asked a simple question and made a few knowledge-based statements. look at the history of csxi- mercifully folded into csxt to avoid showing the world why 'putting trucks on trains' remains a flawed concept. long trains? of course since intermodal equipment cannot run in merchandise trains. railroads have two strengths and a weakness. weight and volume but incredibly slow. (their happy with 20 mph system throughput). trucks have two weaknesses. weight and volume but incredibly fast.( 50mph +) railroad intermodal cancels their strengths, retains their weakness and subjects them to truck pricing. i've 22 years of bulk intermodal , multi-railroad pricing, unique equipment creation and operation and world-wide patents (which you should google ). as a cpa, i understand business. i do marvel at these responses, however, since they confirm how little is truly known about railroad economics. ken patrick

KEN PATRICK wrote:wow- i asked a simple question and made a few knowledge-based statements. look at the history of csxi- mercifully folded into csxt to avoid showing the world why 'putting trucks on trains' remains a flawed concept. long trains? of course since intermodal equipment cannot run in merchandise trains. railroads have two strengths and a weakness. weight and volume but incredibly slow. (their happy with 20 mph system throughput). trucks have two weaknesses. weight and volume but incredibly fast.( 50mph +) railroad intermodal cancels their strengths, retains their weakness and subjects them to truck pricing. i've 22 years of bulk intermodal , multi-railroad pricing, unique equipment creation and operation and world-wide patents (which you should google ). as a cpa, i understand business. i do marvel at these responses, however, since they confirm how little is truly known about railroad economics. ken patrick

As a CPA you understand accounting, not marketing, strategy, management, ect. If you knew about supply chain management and logistics then you probably wouldn't have made a lot of claims you did.

I apologize for being blunt and I am questioning your success in whatever your endeavors are. I am merely pointing out that your arguments are fundamentally flawed as you make claims about railroads that are the complete opposite of what they are actually doing.

If what you are saying is true, then the intermodal revolution in railroads is a fluke that is out of their control and eventually will be their doom. Obviously modern trends indicate otherwise.

As for business decisions that railroads have made in the past, they each have their own time and reason for having occurred. Also, I'm not sure where you came up with the CSXI claim as it appears that they are still a separate (but integrated) unit of CSX that is different then CSXT.

http://www.csxi.com/

KEN PATRICK wrote:wow- i asked a simple question and made a few knowledge-based statements. look at the history of csxi- mercifully folded into csxt to avoid showing the world why 'putting trucks on trains' remains a flawed concept. long trains? of course since intermodal equipment cannot run in merchandise trains. railroads have two strengths and a weakness. weight and volume but incredibly slow. (their happy with 20 mph system throughput). trucks have two weaknesses. weight and volume but incredibly fast.( 50mph +) railroad intermodal cancels their strengths, retains their weakness and subjects them to truck pricing. i've 22 years of bulk intermodal , multi-railroad pricing, unique equipment creation and operation and world-wide patents (which you should google ). as a cpa, i understand business. i do marvel at these responses, however, since they confirm how little is truly known about railroad economics. ken patrick

While it is amusing to see someone say putting trucks on trains is flawed and to claim to understand railroad economics, your work experience gives you very little railroad and railroad operations experience outside of trying to get a piece of metal from point A to B for a good rate. This is not to knock your career, it is just my opinion that you are trying to apply the wrong (and unrelated) logic to almost all topics here. You realize you're not taken seriously right?

Mr Patrick, your problem may not be knowledge or experience, but it is certainly hyperbole. Making a blanket statement that intermodal is not cost justifiable is silly. And that it's too slow to compete effectively with truck? Have you heard of UPS and FedEx? Perhaps you are confusing the intermodal market of the 1960s/1970s with today.

PS: Coal does not generate 90% of railroad industry contribution.

PPS: And what's coal's growth outlook vs that of intermodal?

Mr. Patrick, well-managed and properly-applied domestic and international stack intermodal earns healthy financial returns not that far off the returns on the coal business and, at the very least, is certainly well worth the rail industry's investment...and there's a pretty big chunk of promising traffic out there as rail's competitive advantage rises.

well what unfounded beliefs arise when i questioned the $40mil for some tracks rather than lower the tunnel track. love to see the analysis on that investment, now as to uncomfortable facts. intermodal gains 12% of total revenues but has to move 35% of total cars to do that. coal is 31% revenues on 25% of cars. merchandise 54% revenues on 40% of cars. now tell me intermodal is a winner. look how they struggle to get operating ratios below 70%. 'csxt intermodal' is not csxi- a stand-alone company that is now in the ash bin. i know the former management. you all need to reflect on csx's 6% return on assets. i, like you, appreciate railroading but opine that you need to understand their cost-volume-profit curve and why improvement bedevils railroad management. ken patrick

Once again you have shown a clear misunderstanding of things. Mechanicville has nothing ro to do with the Hoosac Tunnel. If they lowered the track in the tunnel, the yard still would have been built. It was opened so they could close the Intermodal facility at Kenwood (too small, highway access required driving through downtown Albany, etc). Oh yeah, Kenwood had no automobile facility. They are building ramps in Mechanicville.

Please stop posting just to do it.

It's no industry secret that margins on intermodal are lower than coal and general merchandise. However, it does make money and is a significant growth opportunity for the foreseeable future, especially with the increasing gridlock on highways and driver shortages in the trucking industry. Also consider pending legislation to further restrict driver hours on duty. Why do you think all those JB Hunt, Schneider, UPS, FedEx, Hanjin, Cosco, etc. containers are riding the rails cross-country? Back on subject, as Newpylong points out, containers are just the first step with the new facility; autoracks being next.

"...now as to uncomfortable facts. intermodal gains 12% of total revenues but has to move 35% of total cars to do that. coal is 31% revenues on 25% of cars. merchandise 54% revenues on 40% of cars. now tell me intermodal is a winner..."

Sigh...

Among other things, get your numbers right. NS 2011 results: Intermodal 19%, coal 31%, merch 50%. And cars:revenue has no direct correlation on profitability.

"...now tell me intermodal is a winner."

OK, Intermodal is a winner. Profitability and service will continue to evolve and improve, but it's a winner. You're worries about operating ratios? I shudder to think what railroad income statements and balance sheets would look like WITHOUT intermodal. You're entitled to your opinion, man... but my investment advisor and I sure are glad NS and other roads don't heed your advice!

postings are informative. i appreciate the exchanges. again, it makes no economic sense to spend '$40mil' ( i find railroads exaggerate their 'investments) to do a filet/toupee for moay/aymo ( 200 lifts/day) @$35/lift $2.6 mil/yr when you can cut 450k cu ft , increasing clearance to 22' for a one-time $4.5 mil. the tunnel width would permit train passage while cutting was on-going. what am i missing?
also, car volumes are directly related to revenues. pricing ranges from $1.00 (coal) to $6.00 ( plastics) per loaded car mile . more cars but smaller revenues is indicative of reduced profit contribution and roa. ken patrick

"...also, car volumes are directly related to revenues. pricing ranges from $1.00 (coal) to $6.00 ( plastics) per loaded car mile . more cars but smaller revenues is indicative of reduced profit contribution and roa."

Generalization doesn't work here. Consider your range above. Coal: It moves in unit trains, doesn't need hump yards, the roads run the wheels off the trainsets, and the cars are often supplied by the shippers themselves. Plastics: It moves in loose car merchandise service, requires hump yards and serving yards, and use cars that cycle, on average, about four times per year. (Terrible from a transportation asset utilization perspective, but the shippers intentionally use them as rolling warehouses.) And all plastics cars are private, so there's no ROA on the car itself that the railroad can calculate. Keep in mind, the majority of intermodal cars not owned by the railroads, so there's no "railroad ROA" in that market segment either.

Keep in mind that this facility isn't just for AYMO/MOAY. It's also a replacement for the Kenwood ramp in Albany (currently serviced by 938/939) and will be used as an auto yard as well as for some general freight blocking. Also, undercutting could be well over 4.5mil considering the drainage and bridge issues that would need to be addressed and the fact that there are probably other obstructions (low bridges, etc) elsewhere on the main. Even CSX held out on that investment until they could get MA to pay for it through the Boston-Worcester commuter rail deal.

That is all right.


Actually the ramp at Kenwood has already closed and Mechanicville is handling all the traffic. There will be 3 freight tracks to start (called "ST1-3"). Interchange will officially still be at Mohawk for general freight but a B&M local might haul all of it over to XO to be blocked together to go east.

The people that are directing Norfolk Southern really do know what they are doing. Look at their annual report to see how their performance is. As for their endeavors up in the northeast, examine this project logically. It is a multi-year, multi-phased $140 Million dollar project. In 2009, the job was to get rid of the 10M.P.H. zones between Fitchburg and Mechanicville and introduce automobile traffic to the line in early 2010. They accomplished this. Then, the next step was to get Mechanicville Yard built and operational, opening an auto and container yard there. This part of the project is coming to a close. As part of that, they decided to do the filleting of trains to deal with the physical attributes of the B&M to Ayer. They believe they can serve their customers most expeditiously this way. As the project continues to move forward, it is probably safe to suggest that NS, east of Mechanicville, will move towards more significant physical upgrades to track, signals, yards and upgrades to possibly include vertical clearances inside the tunnel. Still today, some of the tracks across the west end can not handle auto racks as of yet. So think of this as a process. NS can't do it all at once, no entity could do all of this work all at once. We will all look back to this effort in few years time and understand all of their motivations by then. BTW, the pictures of the yard are quite informative!

How many trains per day does CPRS still send down the Colonie main to Albany now that the Intermodal trains no longer go there? Thanks.