Thanks, Ken. That's a lot of business. Certainly would seem to be capable of generating a decent positive cash flow. Increase that 6% to 10% or more and you have some real money.
C&NW, CA&E, MILW, CGW and IC fan
greyhounds OK, let me see if this table works. These are 2014 numbers. The 2015 data is not yet available. Truckloads are calculated at 44,000 pounds payload per truck. Workdays are calculated at six days per week (overtime on Saturday) less six holidays per year. Please note the very low production figures in New England and the Mid Atlantic. Also note the very low production in states such as Georgia and Florida. They have to bring in a lot of red meat. (since we're dealing with the CN, I don't mention California. But, it doesn't produce enough red meat by a long shot.) The table lists red meat production by state. It is sorted in descending order with the largest producing states at the top. Iowa is number #2 after Nebraska. But CN can serve the Nebraska facilitiies from intermodal terminals at Council Bluffs and Sioux City. CN could also serve Sioux Falls, SD over Sioux City. Most of the South Dakota production is from a very large Smithfield/Morrell hog plant in Sioux Falls. Not all this production is available to the CN. Some is produced too far off line and some is going out west. But if you look at the numbers, CN would need about 6% of the meat production from Iowa, Nebraska and South Dakota to make a viable six days per week 80 container train in to Chicago. East and southeast of Chicago the meat could readily move on existing intermodal trains to anywhere east and southeast. And meat is not the only available traffic. Kelloggs makes cereal in Omaha. Sioux Falls has (or had) a major UPS sort facility, etc. There are a good number of other such opportunities. This is doable. Livestock Slaughter 2014 Summary: Released April 27, 2015, by the Agricultural Statistics Board, United States Department of Agriculture. Commercial Red Meat Production, Number of Pounds – States and United States: 2014 [Includes total beef, veal, pork, and lamb and mutton. Data may not add to totals due to rounding] State 2014 Total Tons Trucks per Workday Percent of US Total Cumulative Percent of US Total Nebraska 3,637,200 648 15.37% 15.37% Iowa 3,298,550 588 13.93% 29.30% Kansas 2,537,300 452 10.72% 40.02% Texas 2,090,300 373 8.83% 48.85% Illinois 1,514,500 270 6.40% 55.25% Minnesota 1,253,300 223 5.29% 60.54% North Carolina 1,145,400 204 4.84% 65.38% Colorado 1,092,150 195 4.61% 69.99% Missouri 943,350 168 3.99% 73.98% Indiana 887,650 158 3.75% 77.73% California 725,000 129 3.06% 80.79% Pennsylvania 637,700 114 2.69% 83.49% Wisconsin 581,200 104 2.46% 85.94% South Dakota 548,200 98 2.32% 88.26% Oklahoma 526,000 94 2.22% 90.48% Washington 433,000 77 1.83% 92.31% Kentucky 256,400 46 1.08% 93.39% Virginia 239,650 43 1.01% 94.40% Utah 234,250 42 0.99% 95.39% Michigan 233,000 42 0.98% 96.38% Arizona 209,100 37 0.88% 97.26% Ohio 134,500 24 0.57% 97.83% South Carolina 122,850 22 0.52% 98.35% Tennessee 120,100 21 0.51% 98.86% Georgia 60,050 11 0.25% 99.11% Florida 47,100 8 0.20% 99.31% Oregon 38,250 7 0.16% 99.47% New Jersey 22,600 4 0.10% 99.56% Idaho 21,750 4 0.09% 99.66% New York 17,450 3 0.07% 99.73% Delaware-Maryland 15,550 3 0.07% 99.80% New England 1/ 10,250 2 0.04% 99.84% Montana 8,300 1 0.04% 99.87% Alabama 4,600 1 0.02% 99.89% Hawaii 4,600 1 0.02% 99.91% North Dakota 3,900 1 0.02% 99.93% West Virginia 3,350 1 0.01% 99.94% Mississippi 3,250 1 0.01% 99.96% Wyoming 2,600 0 0.01% 99.97% Louisiana 2,550 0 0.01% 99.98% Arkansas 2,350 0 0.01% 99.99% New Mexico 1,750 0 0.01% 100.00% Nevada 550 0 0.00% 100.00% Alaska 300 0 0.00% 100.00% United States 23,671,650 100.00% 1/ New England includes Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont.
OK, let me see if this table works. These are 2014 numbers. The 2015 data is not yet available.
Truckloads are calculated at 44,000 pounds payload per truck. Workdays are calculated at six days per week (overtime on Saturday) less six holidays per year.
Please note the very low production figures in New England and the Mid Atlantic. Also note the very low production in states such as Georgia and Florida. They have to bring in a lot of red meat. (since we're dealing with the CN, I don't mention California. But, it doesn't produce enough red meat by a long shot.)
The table lists red meat production by state. It is sorted in descending order with the largest producing states at the top. Iowa is number #2 after Nebraska. But CN can serve the Nebraska facilitiies from intermodal terminals at Council Bluffs and Sioux City. CN could also serve Sioux Falls, SD over Sioux City. Most of the South Dakota production is from a very large Smithfield/Morrell hog plant in Sioux Falls.
Not all this production is available to the CN. Some is produced too far off line and some is going out west. But if you look at the numbers, CN would need about 6% of the meat production from Iowa, Nebraska and South Dakota to make a viable six days per week 80 container train in to Chicago. East and southeast of Chicago the meat could readily move on existing intermodal trains to anywhere east and southeast.
And meat is not the only available traffic. Kelloggs makes cereal in Omaha. Sioux Falls has (or had) a major UPS sort facility, etc. There are a good number of other such opportunities. This is doable.
I would add that the Quaker Oats facility in Cedar Rapids would be another good source for intermodal traffic as well going to Chicago and eastern markets.
Yet another CN/IC untapped potential revenue stream. And their are more of these all over the US. All rail CEOs should be examining this and determine why their organizations fail to study these potential souces and why they are often rejected with a facile, knee jerk rejection "Costs too much."
Although this discussion has centered on the CN, othe railroads also have a feasible opportunity. From Sioux City, UP is only 60 miles away from their Overland Route. BNSF is slightly further to their Chicago-Denver mainline. Of course, to go southwest meat from Iowa is at a distance disadvantage to the Texas and Kansas plants. However, to the east/southeast, you get a decent distance run before turning the load over to the eastern railroads.
Murphy Sidinggreyhounds- A couple of points: How would CN service Sioux Falls, if the nearest CN rail is at Siouc City, 80 miles away? If you load a truck to haul it 80 miles, you might as well haul it 500 miles, like they do now. Sioux Falls still has the majot UPS sort facility. It's at the airport and built around those big ol' UPS planes.
Well Murphy, you're into an area where I have personal experience and knowledge.
When I was in intermodal marketing with the ICG we did serve Sioux Falls over the Sioux City intermodal terminal. A good chunk of the business was UPS ground. We moved their trailers 500 miles to Sioux City from Chicago. They'd then truck the trailers up to their sort at Sioux Falls. It worked.
UPS would put some of their westbound loads in their Martax reefer trailers and we'd get meat loads back to the east.
Generally, 80 miles of trucking is within economical drayage distance on an intermodal movement. For example, CR England, which has significant intermodal reefer opeations, sets 125 miles as a guideline for trucking operations beyond an IM terminal.
We did 80 miles trucking on many moves. I.E., beer from Memphis to Milwaukee. Which is 85 miles north of our IM terminal in Chicago. We'd pick up the beer with a truck in Memphis and move it to our local terminal. Then move it by train to Chicago. Then truck it to the beer distributor in Milwaukee.
Don't ever assume "Can't".
Ken:I love these discussions with you. It would be great to see that meat moving on the CN line, but as we discussed last year, it would be a tough hurdle.
Meat out of Iowa has been a huge passion of yours for years. You have intel on where it produced and where it goes. Let's revisit the Iowa to East Coast moves updated based on $30/barrel oil. Lets see if this can work.
My mind is usually open to change.
BTW, I am in the Stockyards district frequently. It is still there and host a number of meat purveyors. Slaughtering? No. Processing and distribution? Yes.
In fact, one of the iconic Chicago brands, Vienna Beef will soon be in the Stockyards District with manufacturing and distribution.
Ed
schlimm Yet another CN/IC untapped potential revenue stream. And their are more of these all over the US. All rail CEOs should be examining this and determine why their organizations fail to study these potential souces and why they are often rejected with a facile, knee jerk rejection "Costs too much."
UP has an IM terminal in the Omaha/Council Bluffs area. (Over at the IAIS yard. The IAIS runs transfers between their yard and the UP. A few times, I've cut away from an IM set out and they were waiting to grab it and take it across town.) All the IM business is to/from western points. No IM moving directly between the Chicago area and Omaha/Co Bluffs over the UP.
A rare couple of times, I've heard of an eastbound IM picking up a cut of COFC after making their set out. I've always guessed it was either to reposition the equipment or picking up cars that had been mistakenly set out with the Co Bluffs block. What's happened a couple of times is that the conductor didn't read his train list correctly. He had X number of cars to set out, but didn't realize they were behind Y number that he had to hold onto and take with him. That also leads to not setting out ALL the CB cars, so they also have to be moved back to CB.
Jeff
With this discussion about Iowa, I thought I'd add this as an aside.
The US Navy's USS Sioux City was just launched. It passed the first test. It floats.
http://siouxcityjournal.com/news/local/uss-sioux-city-christened-launched-in-wisconsin/article_e595873f-705f-5862-9131-3a78997ab1a1.html
jeffhergert A rare couple of times, I've heard of an eastbound IM picking up a cut of COFC after making their set out. I've always guessed it was either to reposition the equipment or picking up cars that had been mistakenly set out with the Co Bluffs block. What's happened a couple of times is that the conductor didn't read his train list correctly. He had X number of cars to set out, but didn't realize they were behind Y number that he had to hold onto and take with him. That also leads to not setting out ALL the CB cars, so they also have to be moved back to CB. Jeff
I thought each major yard had a RFID reader at every exit from a yard so that the computers, among other tasks, could alert operating personnel to any additional/missing cars cars from a train. Is that not the case, or when receiving such an alert is the decision made to just continue with the move?
greyhounds Murphy Siding greyhounds- A couple of points: How would CN service Sioux Falls, if the nearest CN rail is at Siouc City, 80 miles away? If you load a truck to haul it 80 miles, you might as well haul it 500 miles, like they do now. Sioux Falls still has the majot UPS sort facility. It's at the airport and built around those big ol' UPS planes. Well Murphy, you're into an area where I have personal experience and knowledge. When I was in intermodal marketing with the ICG we did serve Sioux Falls over the Sioux City intermodal terminal. A good chunk of the business was UPS ground. We moved their trailers 500 miles to Sioux City from Chicago. They'd then truck the trailers up to their sort at Sioux Falls. It worked. UPS would put some of their westbound loads in their Martax reefer trailers and we'd get meat loads back to the east. Generally, 80 miles of trucking is within economical drayage distance on an intermodal movement. For example, CR England, which has significant intermodal reefer opeations, sets 125 miles as a guideline for trucking operations beyond an IM terminal. We did 80 miles trucking on many moves. I.E., beer from Memphis to Milwaukee. Which is 85 miles north of our IM terminal in Chicago. We'd pick up the beer with a truck in Memphis and move it to our local terminal. Then move it by train to Chicago. Then truck it to the beer distributor in Milwaukee. Don't ever assume "Can't".
Murphy Siding greyhounds- A couple of points: How would CN service Sioux Falls, if the nearest CN rail is at Siouc City, 80 miles away? If you load a truck to haul it 80 miles, you might as well haul it 500 miles, like they do now. Sioux Falls still has the majot UPS sort facility. It's at the airport and built around those big ol' UPS planes.
Thanks to Chris / CopCarSS for my avatar.
Murphy SidingTaking beer to Milwaukee- isn’t that akin to taking coal to Newcastle? OK, so the 80 miles of trucking isn’t a deal killer. Would there be enough business hauling UPS from Chicago to Sioux Falls be enough to warrant getting into that business, or would it require some other traffic moving in conjunction with it? The meat headed back towards Chicago that you mention for example? Would hauling UPS traffic that way be comparable with the timeframe of hauling it on trucks?
We handled the UPS, and all Iowa Division intermodal, on regular carload trains. CC-1 (Chicago - Council Bluffs -1) would originate at Markham yard with carload traffic, then pick up westbound intermodal at the Chicago IM terminal. The UPS business to Sioux Falls over the Sioux City IM terminal was about five trailers per day. Sioux City traffic from Chicago was set out at Tara, IA, just west of Ft. Dodge. Then a following train originating at Ft. Dodge would quickly pick it up and take it to Sioux City.
The reason this worked, I'm convinced, is that those Iowa Division Railroaders were Railroaders with a capital "R". Some of the best track on the ICG was on the Iowa Division. The train crews knew how to use it.
One night I was on the 2nd engine of CC-6 (Council Bluffs - Chicago -6) coming east out of Waterloo, IA. (we had previously made a pick up of TOFC meat loads at Denison and also a pick up of the Sioux City TOFC meat at Tara.) The engineer had something like 10 more runs before retirement. But he took that mostly carload train across Iowa at 65-67 MPH.
I was watching the speedometer in the 2nd engine with amazement. At 67 the wheel slip light would come on. Then we'd drop back to 65. I'm guessing it was the engine governor. Then we'd go back up to 67 and the process would repeat. He didn't slow down until we had to descend the river bluff near Dubuque. After the river he opened it back up in to Freeport.
I was driving through Storm Lake, IA when I saw our local working an industry. They were trying to role a car into an industry. One of the crew was actually putting his back into it. He was physically shoving the car to help it role. Those guys were Railroad Men.
I am partial to the line. I've never seen better Railroaders.
Thanks Ken....great story.
Those railroaders today would be suspended or fired.
If you ever get out that way, go to Council Hill, Il (about 15 miles east of Galena). There is an old depot there with a little business...part restaurant, part bar, part museum. In the summer they have local musicians in and play outside in the valley. With a small stream running thru and the CN line...it is quite a spot.
MP173Meat out of Iowa has been a huge passion of yours for years. You have intel on where it produced and where it goes. Let's revisit the Iowa to East Coast moves updated based on $30/barrel oil. Lets see if this can work.
OK, I'll use Tyson beef from Dakota City, NE to US Foodservice-Metro New York Division, 1050 Amboy Ave., Perth Amboy, NJ 08861 as an example.
I've got the current practical highway miles from PC Miler at 1,308. I've also got the current average motor freight rate at $2.63/mile plus $0.23/mile fuel surcharge. That's $2.86/mile over the road total. That's $3,742.31/truckload. That's what we've got to work with.
I'm confident that with good practical rail service those truckload costs can be easily defeated.
Dakguy201 jeffhergert A rare couple of times, I've heard of an eastbound IM picking up a cut of COFC after making their set out. I've always guessed it was either to reposition the equipment or picking up cars that had been mistakenly set out with the Co Bluffs block. What's happened a couple of times is that the conductor didn't read his train list correctly. He had X number of cars to set out, but didn't realize they were behind Y number that he had to hold onto and take with him. That also leads to not setting out ALL the CB cars, so they also have to be moved back to CB. Jeff I thought each major yard had a RFID reader at every exit from a yard so that the computers, among other tasks, could alert operating personnel to any additional/missing cars cars from a train. Is that not the case, or when receiving such an alert is the decision made to just continue with the move?
Yes, it shows up fast. But not fast enough. By the time the mistake is noted the train is usually out of the terminal area. Too far to back up and the next convienent place to set out the cars is the next crew change point.
That's how I first learned that mistakes happen. I saw a stack train setting out as I reported for work one night. I asked why they were setting out and was told the conductor flubbed the CB setout.
Compare another Chicago to Omaha route not that far away.
The Iowa Interstate now operates the old Rock Island mainline to the same end points. The Iowa Interstate is small compared to CN. The territory is similar, but contains larger urban areas like Des Moines and the Quad Cities.
Is the Iowa Interstate better at pursuing business online than the CN between Chicago and Omaha?
Iowa Interstate doesn't have a choice in the matter. It doesn't have any long-haul routes and I would imagine that any bridge traffic is negligible since I don't envision UP or BNSF shorthauling itself.
I bet both the CN's Iowa lines and IAIS are similiar in operation. Both probably originate or terminate the loads that cross their Iowa routes. I would guess that CN interchange with both UP and BNSF on the western end are cars destined to/from CN points on the old Iowa Division.
The people working at the CN might need to invest in more new Refrigerated Containers to haul red meat. They do not want to risk the investment to expand their refrigerated container fleet to handle the new loads.
Watch my videos on-line at https://www.youtube.com/user/AndrewNeilFalconer
Some of the people working at CN might eat only chicken and turkey, therefore they do not want to get into the beef and pork hauling business.
Andrew Falconer The people working at the CN might need to invest in more new Refrigerated Containers to haul red meat. They do not want to risk the investment to expand their refrigerated container fleet to handle the new loads.
Nah, semi-trailers, refrigerated trucks are barely petty cash items when it comes to a Class I railroads finances. If there was an internal objection I think it would be over the health department regulations of transporting meat and the potential civil liability for the company if something goes wrong via transport and they accidently deliver spoiled or contaminated meat.
They just might not want to deal with the added insurance or risk.
Andrew Falconer Some of the people working at CN might eat only chicken and turkey, therefore they do not want to get into the beef and pork hauling business.
I hope that was supposed to be a bit of humor.
Someone at CN ordered 200 new CargoCool refrigerated containers. They have a fleet of the refrigerated containers available for other loads.
Numerous times I rode the IC western line between Chicago and Waterloo or Cedar Falls or between there and Sioux City, or the whole route. I also visited the Sioux Falls, SD depot of the IC as well as C&NW/GN, CR&P, and Milwaukee Road (which had the "Arrow" with parlor/diner and Pullman). The IC sleepers had fascinating names such as Petroleum, Land O'Strawberries, Magnolia State, and Banana Road. Wonderful memories of "The Hawkeye" (Chicago-Sioux City) and "Land O'Corn" (Chicago-Waterloo).
parlordome Numerous times I rode the IC western line between Chicago and Waterloo or Cedar Falls or between there and Sioux City, or the whole route. I also visited the Sioux Falls, SD depot of the IC as well as C&NW/GN, CR&P, and Milwaukee Road (which had the "Arrow" with parlor/diner and Pullman). The IC sleepers had fascinating names such as Petroleum, Land O'Strawberries, Magnolia State, and Banana Road. Wonderful memories of "The Hawkeye" (Chicago-Sioux City) and "Land O'Corn" (Chicago-Waterloo).
I envy you. Only saw the IC trains passing thrrough Cloverdale, although rode the Kate Shelly once.
re: beer from Memphis to Milwaukee.
Years ago I worked for a beer distributor 100 miles north of Milwaukee. After Schlitz closed its brewery in Milwaukee, we received their beer from the Schlitz brewery in Memphis (about 700 miles). All by truck. The owner operators would drive straight through. Had always thought it would've been neat if the IC could have piggybacked it.
This was also at the time when Heileman's Old Style from La Crosse was number one seller in Wisconsin and Chicago. I'd often drive I-90, seeing the constant parade of "From God's Country" semis to and from Chicago. Often thought, why couldn't the Burlington or Milwaukee Road haul that massive amount of Suds?
re: the CN (IC) Iowa line.
Grew up in Rockford on the IC. Many fond memories of the Land 'O Corn and Hawkeye. Many times heard or saw the morning meat trains hustle through town on their way to Chicago. Loved the IC horns echo.
Good examples of a lot of revenue sources neglected.
GrampYears ago I worked for a beer distributor 100 miles north of Milwaukee. After Schlitz closed its brewery in Milwaukee, we received their beer from the Schlitz brewery in Memphis (about 700 miles). All by truck. The owner operators would drive straight through. Had always thought it would've been neat if the IC could have piggybacked it.
We did handle that beer! It's a veritable base canard to say we didn't. I don't know where your empolying beer distributor was, but we set the standard for movement to the big population centers of Chicago and Milwaukee. We even acquired a fleet of 100 insulated trailers to keep the beer from freezing in the winter.
A very good railroad salesman, Joe Loesl (Lay-zel), had the Schlitz account and he was on top of things. He made us aware of the shift to a Memphis source and we went after it like a Patriot going for a Scud.
We made the presentation to Schlitz over lunch in Milwaukee. It was one of the most rewarding moments of my life. The Schlitz guy listend to our spiel and basically said: "That's nice but.." Then he pulled a paper out of his jacket inside pocket and started to unfold it. I assume it had a competing offer from a trucker. He looked at the paper, folded it back up and put it back in his pocket. He then said: "You've done your homework." Joe Loesl had a subtle smile on his face. So did the rest of us.
My role had been to figure out the proposed truck rate and set our TOFC rate enough below it to get their attention while making a decent buck for the railroad. (That was part of the "Homework" thingy.)
We may have missed a few distributors north of Milwaukee. But we sure scored in the big cities. This good business lasted until the brewing company, no longer Schlitz, decided to switch sources for Chicago and Milwaukee beer to the former Hamm's brewery in St. Paul. Interestingly, the brewer drew the dividing line between sourcing in Memphis or St. Paul at the Illinois/Indiana line. So the railroad (I was by then gone) continued to handle a reduced amount of beer from Memphis to the Chicago IM terminal - for delivery in to NW Indiana.
This shows what a good intermodal service can do. We were fully truck competitive at 500-600 miles. And that included an 85 mile over the road run from our Chicago terminal to a Milwaukee distributor. We were handling a fragile consumer good without damage. (A dented beer can is easy to make and is not going to be placed for sale. It is garbage.)
BTW, those Milwaukee loads were delivered by owner operator truck drivers running for the ICG Railroad. That use of OO's to Milwaukee was made posible by deregulation.
Interesting. I think the brewery handled the Milwaukee "city" accounts. Maybe that's who you dealt with. That would be the lion's share. The independent distributors made their own shipping decisions. I remember the owner operators who handled the Memphis runs to us were the same guys who had delivered from the Milwaukee brewery. Wouldn't want to be in the beer biz today. Nothing to be loyal about.
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