Shortline profitability

jg greenwood wrote:I was told, by the ole "reputable source," that we (CN) received $175.00/car for the UP coal trains we run to Paducah, KY. These trains are 105-137 cars. I'm no accountant, $18,375-$23,975/train.

Fuel, equipment rent, and labor take a big bite out of that, but it's healthy business, for sure. Remember, you have to take the empties back home, too (included in the shipping charges).

LCJ wrote:

jg greenwood wrote:I was told, by the ole "reputable source," that we (CN) received $175.00/car for the UP coal trains we run to Paducah, KY. These trains are 105-137 cars. I'm no accountant, $18,375-$23,975/train.

Fuel, equipment rent, and labor take a big bite out of that, but it's healthy business, for sure. Remember, you have to take the empties back home, too (included in the shipping charges).

Believe it or not LCJ, the UP provides their distributed power, picks up the tab for re-fueling, and, or so I've been told, pays for the crews. The only expense the IC has is the tab for the motel and the van service. Even with this unbelievable gravy-train, pardon the pun, they will still manage to pi$$ this business away! The St. Louis sub, from E. St. Louis to DuQuoin, is rapidly becoming two streaks of rust thru a mudhole. Seems they can only maintain the routes that Amtrak and the intermodal trains utilize.

Some deal. How many miles is that move?

Seems they can only maintain the routes that Amtrak and the intermodal trains utilize.

I'm not so sure about their concern for Amtrak...

Roughly 155+/- to the Chiles steam generating plant just over the Ohio River. The route to the Paducah and Louisville R.R. is about 15-miles more. We deliver trains to both locations. I know exactly what you mean re: Amtrak!

LCJ wrote: Low margins are still an issue not to be ignored.

Class I railroads often walk away from a percentage of low margin shipping by pricing it out of the market range (here truckers, take it away). Remember that the volume of business takes up valuable capacity, too -- capacity that is better used by higher return business.

We are talking in terms of shortlines. Again, margins are not the issue. The margins are good for the RR, but there is more money to be made with higher volume customers.

It's like making $1000 an hour, but only working 1 hour a month. It's great pay, but not enough volume.

-r

razor wrote:intermodal=gobs of cash

This (from you) was in response to comments about Class I railroads and how they are fond of intermodal. Not too many short lines are much into intermodal that I'm aware of.

Margins are an important part of any business equation. Lower margin business (such as intermodal) has to be in larger volume in order to be worth getting in to it. (In order to be gobs of cash left over after you pay operating expenses.) Revenue minus operating expenses equals operating income for any railroad of any size.

I'm missing your point here, I guess, about how margins are not part of the evaluation of intermodal for Class I railroads.

I mean, like, huh? Maybe I'm just being hard-headed (as I'm known to be at times).

LOL perhaps we are talking about different things. I thought I was talking only about shortlines, but heck what do I know?

Of course, margins are important to any business.

My point being is that there are more total dollars to earn by servicing high volume customers. Hence, the shortlines are less important to the RR's bottom line.

-r

Now that I get. Sorry for the confusion!

Carry on as you were.

I work for a shortline here in Canada. We get daily interchanges from the big 3, CP,CN, and BNSF. We have an exclusive trackage rights to service 2 ports for auto racks. We are a unionized company, granted we don't make class 1 money, but a brakeman will make $50000 to $63000 Cnd. per year plus benefits. We are very profitable, as our parent company would'nt be re-investing money into us and our car counts have gone up steady for the past 6 yrs.