Would it be a good idea to buy your own privately owned freightcar and let the railroad use it . I read a article that privately owned freight trains account for $90 billion of all railroad freight. Would the profit outweigh the cost of buying a new rail car and paying fees?
This question has been brought up before, and the answer tended to indicate that you would have to be wealthy enough to purchase a fleet of rail cars in order to gain any income from them, and the type of rail car would also be significant.
Buying one freight car would be like buying one two-axle OTR trailer. If you just did it on spec, you'ld lose your shorts. OTR, IF you already had a contract in hand to load (whatever) and move it from Alpha to Omega, on a (workable with one trailer and no tractor) basis, you might make expenses - until somebody with a whole fleet decided to underbid you when renewal time rolled around.
If you want to invest in freight cars, buy stock in successful companies that own freight cars.
Chuck (prudent investor)
If you buy a private freight car, you have to have a viable business plan to get it used in a way that generates revenue. You can't just buy a private freight car, put out it on a railroad, and expect the money to start rolling in.
Most "private" freight cars (that is, freight cars bearing "private" reporting marks, rather than railroad marks) are owned or leased by shippers who use them as part of their business. For example, Powder River coal traffic is very commonly shipped in private cars - typically entire trains - owned by utilities. In these cases, the business plan of a private car owner that's not a shipper has to be to find shippers who will lease the cars. GATX is a good example of a company that does this, mostly with tank cars. Other "private" cars are owned or leased by railroad controlled car pools (e.g., TTX, Railbox, etc.), and would not be a market for "private" cars owned by individual investors. I would expect that nearly all of the "$90 billion" in freight handled in private cars is being handled in shipper controlled cars or railroad pool cars, not cars owned by individual investors.
Another tactic used by some "private" car owners (typically large leasing companies) is to get railroad marks on the cars, usually by some kind of agreement with a short line that allows the car owner to use the short line's reporting marks (sometimes referred to in the industry as "rent-a-marks"), but doesn't give the short line any control of the cars or any right to car hire payments. This can, in the short term, get the cars generating revenue for the real owner from car hire payments. But the rate is not guaranteed (it can be involuntarily reduced through the arbitration mechanism that's part of the STB "deprescription" scheme), and the car will come "home" to the short line if there's no demand for it. More importantly, the ability of the car to involunarily generate revenue from railroads in this scenario is dependent on a convoluted regulatory scheme (again, the car hire "deprescription" system). It cannot be reasonably assumed that this scheme will be around for the economic life of the car. And even if it is, it's highly unlikely that the "rent-a-mark" strategy (which is essentially fraudulant) will remain viable that long.
You might do better buying a stretch of track and renting space to folks who want to store cars...
I know of one short line that was storing over 1000 cars at one point - at something like $2 per day per car. Of course, you'd have to make arrangements for someone to spot and pull the cars, and it's a real pain when the car owner wants car number 467 out of that 1000 pulled...
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
tree68 You might do better buying a stretch of track and renting space to folks who want to store cars... I know of one short line that was storing over 1000 cars at one point - at something like $2 per day per car. Of course, you'd have to make arrangements for someone to spot and pull the cars, and it's a real pain when the car owner wants car number 467 out of that 1000 pulled...
Semper Vaporo
Pkgs.
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