I spent much of this week watching trains on the CSX North End Subdivision, between Richmond, Va., and Rocky Mount, N.C. Usually, you can count on spotting on this heavily trafficked, mostly single-track line the Four Horsemen of the Apocalypse, their names being Hunger, Death, Pestilence, and Unexpected Delays. But they and their black stallions were nowhere to be seen this time. The North End Sub operated like a well cleaned watch, the dispatchers seemingly trained by Peter Josserand (Rights of Trains, 1945), or maybe the fictional Eddy Sand (The Boomer, 1942).
No, what’s different about the North End Sub this trip is local politics. Every front yard — even the water tower in sleepy Stony Creek — seems to spout a sign, NO TOLLS. Virginia’s governor, Bob McDonnell, is proposing to turn Interstate 95, the Maine-to-Florida highway, into a toll road through his state, as is already the case north of Virginia. A similar proposal is being debated in North Carolina.
Two things are immediately apparent. First, the idea is immensely unpopular in Southside Virginia, one of the poorer parts of the state. It’s as of British redcoats had returned. Second, the state has an expensive road to maintain and expand, but not the money to do so. Something has to give, in other words. To put it in concrete terms, Virginia projects the need for $12.1 billion to maintain and enlarge the busy highway over the next quarter century, but can expect only $2.5 billion in funding.
This is the whole interstate highway problem in microcosm. Our interstates are crowded and crumbling, and we lack the money to maintain and expand them.
Of course, Interstate 95 has a competitor from New Jersey to Florida: CSX. The railroad takes no position in the toll proposal, perhaps wisely. Clearly, it’s to the advantage of CSX to block tolls and starve the highway. By the way, that’s the likely outcome. It is politically possible to finance new limited-access highways with tolls. But I can think of few roads (actually, none at all) that were built as freeways and later turned into toll roads.
On the other hand, why isn’t CSX exploiting its crumbling competitor? Driving home to suburban Washington, D.C., traffic in the opposite direction south of the capitol city grinds to a standstill. Trucks seem to occupy half of the space — hundreds, thousands of them.
The answer, unfortunately, is that CSX does a poor job capturing this highway traffic. It does best going wooing trucks that ply I-95 the entire distance to and from Florida, which describes but a fraction of the traffic. It is poorly equipped to market intermediate origins and destinations.
CSX is not alone in this. Railroads as a whole are best in dealing with the J.B. Hunt Transports and Schneider Nationals of the trucking world over the highest-volume, longest-distance routes. But institutionally, they all seem to lack the ability to pick at the smaller origin-destination pairs and to reach out to the smaller truck lines. To put it another way, the huge Class I railroads are no *** good at all retailing. Wholesaling is what they know.
This I do know: It would be tragic for this nation to have the worst of all worlds, that is, crumbling, overcrowded highways and railroads unable or unwilling to taking advantage of that opportunity. There has got to be a better way to go at this. — Fred W. Frailey
Greyhounds, you are so right! While the Port of Tampa continues to expand and build for tomorrow (www.tampaport.com), CSX is still using the outdated ACL Uceta Yard and SAL Yeoman Yard facilities east of the city. Had the former ACL Ocala Division not been abandoned (now the Neely spur where Amtrak wyes their inbound trains to back into Tampa Union Station) a new modern automated yard and intermodal terminal could have been constructed north of Tampa. So much track has been ripped up in Florida all traffic from the West, Pacific Northwest and Midwest has to travel a roundabout way to reach the Tampa Bay area resulting in transit delays for all freight originating or being shipped to and from these points.
CSX inherited the Tropicana juice train from SCL. Indeed, no thanks to a progressive marketing team at CSX! If the railroad can make money hauling OJ, why not bananas too? If economic sanctions are lifted on Cuba one can even envision imported sugar moving through the Florida ports again but will CSX be prepared to go after this new business? It will probably move through the Port of Palm Beach with the dynamic Florida East Coast reeping the harvest instead!
If you want to "Go Bananas" pick up a copy of Classic Trains special issue "Fast Trains in the Golden Age of Railroading" and read the excellent artical on Illinois Central's banana trains that moved from their Gulf ports to the Mid-west. Likewise, GM&O moved tons of the golden fruit in MDT reefers as well! These were the days when the marketing department worked for their wages. I used to visit the Frisco's off-line traffic office in Tampa during my high school days (1962-64) and those boys went out solicit business so they could "Ship IT on the Frisco!" One of their best customers was Publix Super Market with HQ in Lakeland. They received a lot of pershable traffic from the SP and UP for Florida delivery. Frisco handed over the goods to the ACL and SAL at their Birmingham, Alabama, interchange for Florida destinations.
In the early 60s when the merger talks between ACL and SAL were progressing, Southern Railway demanded entrance to the Tampa Bay area as a condition for final merger approval and at this time Frisco made a bid for the Central of Georgia. Alas, the stupid government (translated ICC) approved the merger that gave us Seaboard Coast Line, shot down Southern's request to serve Tampa and gave the CG to Southern instead to the Frisco. The result was a single railroad serving most of Florida outside of the FEC on the east coast. Being the only railroad in town, SCL quickly acquired Vanderbilt's "Public Be Damned" attitude. Despite the fancy boxcar slogan "Service Customer's Like" they lost a bunch of business to the trucks. Publix was one of those customers!
The construction of the Interstate highway system in the Sunshine State gave the trucking industry the way to move freight quickly and dependably in and out of Florida that left SCL standing in their tracks. By the time they took notice is was too late. The problem still exists today. Perhaps CSX should hire FEC's marketing team to show them how to run a railroad. They certainly need help from somebody!
Greyhounds, I am confused:
If, in your latest, you have not described the same "too hard" mentality at the railroads that you didn't like in my opening post, what were you describing?
shades of John Kneiling (sic)
In regards to the Port of Tampa,
Perhaps the Florida East Coast's passenger rail effort to go to Orlando, has a longer term goal of going to the Port of Tampa using the Interstate medium that has been saved for passenger rail. Perhaps?
I see no reason why both passenger trains and unit intermodal trains couldn't share the same tracks, perhaps with the container trains running mostly between 12am and 6pm.
The first German HS lines carried freight, it is what made them economically possible to build in the 1970-80s.
I really wish I had been able to spare a little time to look around this part of the CSX back in October when we were traveling about the area. Must a dispatcher that has studied the playbook of The Mighty Oz. Sounds like a great time was had by all.
I agree....that Interstate is horrible. Trucks need to be thinned out and sent on rails.
I work for JB Hunt, on the truck side of the operation, so I don't have total knowledge of the intermodal side. I also was a driver here for five years in the late 90's. Hence, some thoughts in a semi professional light.
The congestion issues have become a problem everywhere, though it seems like there are certain pinch points. The major cities, obviously, they always have been. One I see fairly often is the stretch of I 40 from Memphis to Little Rock. It's approximately 130 miles of wall to wall traffic most of the time. Speed is posted at 70. Even in a car, I can't maintain that consistently across that stretch. Trucks are limited by a posted speed of 65, and many are limited to approximately that mechanically, which ties up the right lane. That leaves anyone passing them to the left lane, which adds congestion and slows down everyone-and that does not take into account the left lane sitters, who are at 60 MPH and won't get out of anyone's way. There is also a rebuild of the westbound side near Hazen, where 5 plus mile backups are not uncommon. A two hour trip now takes sometimes up to four, depending on conditions. I'm sure this is not the only place this happens, but it seems to be one of the worst. The result of this congestion is that it reduces the efficiency of the truck. Drivers are limited to what they can do in 14 hours, then must shut down. If a truck spends 2 hours in congestion, there is no offset for that under the 14 hour rule. It just means he runs about 100 miles less than he would have if there had been no traffic issues. That stretch of I 40 really needs to be six lanes-and really, all of it could be, it's busy almost from the time you roll up onto it in North Carolina til you swing onto I 15 in Barstow.
Which brings up another point on congestion. I'm 53 years old. The population of the US has almost doubled in my lifetime. Most of those people own or drive cars, and they all eat, wear clothes and live indoors, with all the products that entails, meaning trucks to deliver them. So of course there is going to be a lot more traffic than there was when the interstate system was designed and built. We need not only to repair and replace the roads and structures in place, but expand to accomodate the additional traffic. We're way behind on that in many places. Government finances being what they are, it's likely that those needs will go unmet for years as traffic volumes build.
Toll roads may be the way to do it-and don't get me wrong, I love my free highways. But I also look at the Ohio Turnpike, which at the turn of the millenium was expanding the section from Youngstown to Toledo to six lanes. It's still busy with the extra lanes, but it flows more smoothly. Another thing to consider: the toll roads are usually better prepared for weather, at least of the winter variety. If I have to run somewhere in a snowstorm, I want to be on the Ohio Turnpike, or the NY Thruway. They run plows around the clock, and you never hear about them running out of salt. Something that would be a great idea is if all the toll roads could get together on a uniform toll collection system. I have EZ pass which covers everything from the Illinois Tollways to the Maine Turnpike, and down into Virginia. It's great-don't have to lay out cash, and usually don't have to sit in a toll booth line. But I can't use it in Oklahoma, or Kansas, or Texas-even those states are not compatible with each other-and I can't use my Pikepass anywhere but Oklahoma. One thing I have always liked about Oklahoma is that they have the readers set up so that I do not have to go through a toll booth. On the Cherokee Turnpike, which I run most often, the toll booths are set up as a pull off, and Pikepass holders sail right through at speed. It's been like this for at least 20 years, so this is not fancy new stuff. It can be implemented anywhere, something that toll roads in congested areas would do well to set up.
Free or toll, there needs to be more highway capacity. One of the things that enabled the United States to become the economic power it became in the 20th century was good transporation infrastructure. While recognizing the financial issues, it seems we've lost our vision in that regard, at least when it comes to roads. We're going to negatively impact our economy because we almost literally cannot get out of our own way.
Intermodal has been a great tool for JB Hunt, among others. It allows us to get the line haul, but eliminates two big cost components-the driver and fuel. Even that has changed over the years. When I started as a driver in 1995, it was not uncommon for me to pick up a load going to the west coast in upstate NY or Pennsylvania and take it over the road to the ATSF in Chicago. As reliable as CR became in the 90's, sometimes the transit from Syracuse or Harrisburg was too long for the service commitment, and then there was always the interchange time at Chicago. To alleviate those issues, we just trucked it to the Santa Fe or BN. As things got better coordinated-we were pretty aggressive about getting ensuring service levels from the railroads-we went more to the regional hubs. Ultimately, we set ourselves up where most of our traffic in the east is handled by NS, and in the west by BNSF, because they have promised and delivered consistently. We use the other roads as well, and you'll see our boxes on CSX, and UP, but not the trainloads you see on BNSF. We also send some on CN ex IC, and KCS, mostly on the Meridian Speedway.
That brings up the point of drayage. Since we act as our own intermodal marketing company, and make the pick up and delivery, we can pretty much run the freight as we see fit, so have the option of putting it on the train where it makes the most sense. Presumably we offered the customer an acceptable rate, since they booked the load with us. This works for us, since we make all the transportation decisions and the customer gets a bill from JB Hunt Transport. For someone who is not as well integrated, it's obviously going to be more involved.
The intermodal hub set up referred to in a couple of other posts also works for us. We do a thorough job marketing intermodal service, and we can usually work the truck on an out and back set up, where it takes a load off the rail, drops at a customer, sometimes will pick up a loaded box at the same place, but if not, typically nearby-within 50 miles or so-and back to the rail. Depending on rate, it will even be feasible to run a deadhead move one way, though we really win when we're loaded both directions from the ramp.
Finally, not all intermodal freight is "hot", despite those 70 MPH shooters you try to pace on US 60 from Amarillo to Clovis. Sometimes they're on the train because the rate is good. I once was trying to finagle the local dispatcher in Memphis to put me on a load from there to the Scranton PA area. It was showing as a rail load, with a six day transit. Route was IC Memphis to Chicago, CR there to Harrisburg. I told him I could make it in two days. No deal. The reason that load was going by train was that the rate was low enough we'd lose money on it over the road. Presumably the people who cost these things got a profitable rail rate on it, but it was not going in that lane for speed!! I'm not sure how much of that traffic exists, but it's probably more than any of us realize. It might explain why you sometimes see a couple of trailer flats or stack wells in what is otherwise a junk freight.
Thanks for reading, I know this was long. Merry Christmas to all. Here's a winter scene from someplace I'm sure Fred will recognize!!
I have never understood why short lines make a lot of money handling traffic the big boys don't want. Have you ever seen a charge chart for switching plus the rate for hauling on their track? Lower wages the big boys claim-----hell, that really can't be that tall a ladder. I know shortlines don't maintain their track for 60 MPH, but then they aren't hauling trains of 80+ cars many times a day either. Short lines are making their money off one train a day (or less). Ft Worth & Western is a good example. I guarantee you the owner of that line gets further from the poor house each day.
I do agree that to be in the short haul business coupled with a thriving long haul business, a second track for one way running would be needed to be truck time competitive. I am sure railroads know that. The Transcon and the double tracking of the Sunset route are evidence of that even though they are long haul. They don't need the whole route double tracked, just the portions that had good short haul traffic. I guess the question is would they want to take the gamble to put it in and then solicit the business?
Tom Stamey: If only the short lines could haul freight at 60 mph. They cannot. Many, if not most, can barely move at 10 mph. They were money-losing branch lines when they got shortlined and those that are still alive are not taking any freight that a Class I (big boys, you call them) doesn't want. They are responsible for the first-mile, last-mile and the Class I, usually it's former owner, does the line haul that it can do efficiently, economically, and profitably.
A message for a lot of people who are regulars here: The people who run America's railroads are not stupid, even if you seem to think they are. The U.S. freight rail system is the envy of the world. The fact is that there is enough freight for railroads, trucks, and intermodal all to operate successfully. Rail Pundit is tired of reading comments from people who still wish we were in the era of steam. This is December 2012; Rail Pundit suggests you accept the accuracy of the calendar.
Just to reiterate Rail Pundit's point: Since 1980 (Staggers) the railroads have invested over $500 billion of private monies into their respective franchises, NS invested $150 million of private and public funds for the Heatland Corridor, NS is investing $2.5 billion of private and public funds for the Crescent Corridor, CSX is investing $700 million of private and public funds for the National Gateway project. A million here and a million there and soon we're talking about real money.
In 2010 about 23% of intermodal traffic traveling over 500 miles used the railroads and investments such as the above will help increase that, maybe to 50% in the not too distant future. But more boxes on flatcars will mean more investment... capital which has become scarce. Demand and proof of a return on investment will drive the building/rebuilding of infrastructure. When said demand materalizes then we will see something, if not then things will stay the same. Where is the safe money? Heatland Corridor, Crescent Corridor, National Gateway are just the beginning. Wait and see what comes next.
The railroads didn't loose the LCL & perishables business because it was "Too Hard" to handle. They innovated and fought like Hades to keep the business.
I'm most familiar with their LCL struggles. With the advent of the internal cumbusion engine there was a sea change in land transportation. The role of the railroads changed dramatically. The railroads were adapting well to their new role. They implemented innovations such as intermodal container service (in 1922 or so), truck pick up and delivery service to the store's door, partnerships with freight forwarders, etc. The rails were doing OK until the regulators of the Interstate Commerce Commission got involved. The ICC either blocked or greatly inhibited every significant move the railroads made to compete with the truckers. Killing the container service was the big problem, but the ICC also greatly restricted the railroads' efforts to do pick up and delivery, work with forwarders, etc. In the end, the ICC even ordered railroads to haul LCL at a loss. The ICC had no valid reasons for doing any of this. They were just a bunch of bureaucrats acting like a bunch of bureaucrats. The ICC effectively locked the railroads into the inefficient, costly, unreliable loose car system. And it would not let the railroads market their way out of such a system. Our nation continues to suffer because of these government actions.
Perishables have a similar story. The ICC regulated rail perishable service into oblivion. They never had regulatory authority over motor freight movements of fruits and vegetables.
These commodities were not lost due to a lack of interest or hard work on the part of the railroads. They were lost due to government regulation.
Now, some folks, such as Rail Pundent, question whether this has anything to do with the situation today. It has everything to do with the situation today. Businesses have cultures. As much as the financial statements, these cultures determine what a business will do. The railroads were forbidden from acturally marketing their services for at least 50 years. Is it any wonder that they don't now have a marketing culture?
Going back to my political science major days (long since rectified with graduate school) I learned that government oppression succedes when the population internalizes the oppression. That is, you don't need a cop or soldier on every corner because the people have internalized the restrictions on their freedom and effectively control themselves. They don't know freedom, and consequently, they do not seek it.
Well, over the years of regulation that's just what happened to the railroads. The railroad culture internalized the government control. The object was to please the regulators, not to please the customers.
When intermodal was deregulated I worked in intermodal marketing for the ICG. We needed northbound loads to balance our traffic. Chiquita was bringing in two container ships per week of bananas to Gulfport, MS. It's no brag, just a fact to say that I did lead the charge to get bananas back on the railroad.
I ran in to a major wall with our freight claims people. They would not accept the fact of deregulation. When I said: "Intemodal has been deregulated." the response was "Not this part of it." I actually had a guy pick up a stack of papers, shake 'em in my face and tell me that "In 1974 (or whenever) the ICC told us how to handle freight claims." I finally had to get a major meeting together with several company lawyers to explain the facts to the freight claims department. The freight claims guys were very upset with our freedom to actually negotiate loss and damage liability with the customer. They had internalized the government control.
Now, to get from that corporate culture to a free wheeling "Let's get the business" marketing approach is quite a challenge. No one can edict such a change. It has to be grown and nurtured.
My point has always been that the railroads are not market oriented companies. If a large shipper, such as UPS or someone with a trainload of oil, shows up the railroad marketing people witl work as hard as necessary to put the freight on the railroad at a profit. But they don't actively seek the opportunities that consist of smaller shippers moving loads in great volumes. That's the problem. The railroads don't have a marketing culture.
It's all due to the lingering effects of past government regulation which did not permit such a culture.
I would agree that overall our private freight railroads do a very good job, especially compared to the rest of the world, the only real competitors in geographic size, tonnage, and profits are Russia and China, very large countries like Canada and the USA.
Countries like Australia, Argentina, and Brazil are very much hampered by the different track gauges in fully utilizing freight railroads. Across much of the world national rail systems are splintered between different regions and gauges… and many small countries fail to mold their different systems into an effective international form of transport.
With that said, there is always room for improvement, and unseen opportunities.
It's the marketing department's job to see those "unseen" opportunities. And turn 'em into profits.
Great discussion, everyone. Lots of good points, thanks for sharing. Here's a few relevant lessons I learned in 15 years of intermodal marketing/operations management at two railways:
- Intermodal doesn't take any pressure off highways in and around cities with intermodal yards. And by around, I mean within reasonable drayage distance, which could be well over 100 miles. How congested are those highways 100 miles out?
- “Retail”, in an intermodal context, does not mean short-haul, small market, or small customer. It refers to full dock-to-dock service. Railroads are 'wholesalers' because they typically only provide the ramp-to-ramp portion of a retail move sold by truckers, brokers, etc. (CN is an exception; they offer full door-to-door service throughout Canada using their own drivers, trucks, and dispatchers.)
- Don't underestimate the costliness, in terms of both time and money, of the terminal and drayage operations at each end of an intermodal move. It is a big fixed cost which truckers driving over the road from dock to dock don't have. You need a long rail linehaul before you've overcome this fixed cost and are competitive with the truckers. Of course, as truckers' costs go up, the competitive length of haul for rail goes down.
- Also, don't overestimate the importance of train speed in competing with trucks. The fact that you typically have just one train departure every 24 hours, plus those big fixed blocks of time for drayage and terminal work at each end, is often more of a factor than train speed.
- There are substantial economies of scale in local drayage. Low-volume operations will almost always require more bobtail runs. This is one reason why big truckers are more successful at using intermodal than small truckers.
- Another reason why so few small truckers use rail is because the big truckers can always demand lower rates from the railroads due to their volume. I personally sold a couple of dozen smaller truckers on using rail, only to see Hunt and Schneider snap up their customers as soon as they'd sold the customer on using intermodal. Don't criticize the railroads for the practices of their customers, or for following what is standard marketing practice in most industries!
- Finally, railroaders like money as much as the rest of us. But like the rest of us, they'll pick the easy, low-hanging fruit first. Intermodal margins are typically lower than carload margins, and my sense is that congestion is still an issue for many rail lines and terminals, so expect the railroads to be choosy in going after intermodal growth for the foreseeable future. Yes, there are all sorts of latent opportunities, but they will require capital investment and the availability of capital isn't unlimited.
This has got to be one of the best discussions in a long time, whether on here or on the Forum. Thank you, Greyhounds, for the expansion on your thoughts, and thank you to CNSF and everybody else.
This is really fun! I have learned a lot from each one of you and I always stand to be corrected should the need arrise. Concerning ICC and Government. The Gov formed the USRA to take control of the railroads in WWI. A.C. Carlton had bought the Colorado Midland and was in the midst of modernizing the line when the USRA shut the CM down because the line was clogged with freight trains moving war traffic. The USRA routed ALL freight over the CM as it had the shortest line through the Rockies at the time (Moffat Tunnel was still in the future). The logical solution would have been to route the non-essential military and regualr freight via the D&RG and UP or even ATSF and SP to the south.
The CM shut down, Carlton threw in the towel thanks to the USRA's stupidity and abandoned the road altogether. In later years he admitted it had been a mistake but the damage had been done and the line was long gone.
In the 20s the Rio Grande Motor Way was incorporated to operate truck and bus lines and was still hampered at times because of government intervention. Judge Wilson McCarthy who was appointed president of the D&RGW in the 30s and brought the railroad out of bankruptcy even attempted to incorporate an airline which was stuck down by the GOV! Also in the 30s, John W. Barriger III was with the Govs RFC and attempted to draw up a plan to merge the US railroads into several large systems then into what we mainly have today. It was rejected and perhaps one of you can explain in detail more on this subject. I would appreciate it.
It apprears that despite private operated railroads in the US, the Gov has done most of the damage that dates back to WWI preventing the railroads to remain compeditive in a free society. Has the Staggers Act helped the situation?
Thanks again to all and please educate those of us seeking such information!