Impolite dinner conversation for railroaders: Chinese tank cars

CHICAGO - If you want to silence a table of railroaders in a noisy restaurant, do what I did last week and ask, "What did you think of the Chinese tank cars?"

[Crickets chirping. Blank stares. Puzzled looks.]

My fellow diners' reaction was understandable. At first, these Class I railroaders and managers might have thought I said something random, like "frog guts" to get attention. Truth is, no fewer than six Chinese railroad suppliers attended last week's conference and exhibition in Chicago for AREMA, the American Railway Engineering and Maintenance-of-Way Association.

"No, really, there was a freight car manufacturer today," I told them. "They were offering steel hoppers, intermodal well cars, and what they called 'light' crude oil and 'heavy' crude oil tank cars."

A structural engineer next to me said as she glared, "Do you have any idea what their standards are like? Chinese tank cars, here?!"

Trying to be helpful, another railroad civil engineer asked if the tank cars would meet the latest FRA tank car regulations, issued in a notice this summer. I said I assumed so. The most prestigious individual at the table (a senior manager at a Class I) was asked his opinion. He gave a quick explanation of the FRA regs, reminding us that they are only "proposed" rules and until they are final, no one really has a clue how they should be building compliant tank cars to roll on American rails.

I can't tell you what anyone thought, but I believe the consensus soon afterward was that Chinese tank cars would never come to North America. Like square pegs going in round holes, or steak in a vegetarian restaurant - it just isn't going to happen.

You know what's funny, though? I've talked to one old-head who says he sees so much demand for tank cars between increasing Bakken crude oil production and the mandatory phase-out of infamous DOT-111 models, that existing manufacturers will not be able to keep up. North American companies will HAVE TO buy from China to fill demand, he says.

And while Chinese manufacturing standards might be up for debate in the U.S., railroads in Argentina and Brazil have no qualms about ordering Chinese-made passenger equipment. At least one Persian Gulf state railroad has unit trains of hoppers for its brand-new mineral railroad - all made in China. Consider this: everything from sweatshirts and super-efficient water heaters to iPads are made in China. Americans purchase these products in large quantities, generating billions of dollars in profits for retailers and, we assume, billions of dollars in avoided costs for end-users. And all meet stringent U.S. standards with Apple products alone undergoing rigorous testing at Underwriters Laboratories before being introduced here.

I can imagine a tipping point where value-conscious U.S. shippers (the oil companies, wholesalers, and chemical companies that really own most of the U.S. tank car fleet) compare rolling stock from Europe, the U.S., and China and go with the half-priced Chinese cars if the companies perceive that the Chinese goods are of comparable quality.

In his blog, Fred Frailey says Chinese capital could rejuvenate U.S. railroading. That may be true, but I only know what I saw: dozens of Chinese sales people and engineers ready to move rolling stock at the Chicago trade show. All they needed was a buyer.