From what has been posted on the Grand Trunk Western Historical Society's Facebook page and from what I have observed on the Grand Trunk Western railroad tracks in Michigan, it appears that the current CN management will only accept customers that can provide high-volume local traffic.
How and why would they say that customers have too few carloads a week or a month to justify the use and maintenance of locomotives and track?
The less carloads they have, means less work for employees and a smaller workforce.
They can only steamline operations so far before there is no railroad left to operate.
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Andrew Falconer From what has been posted on the Grand Trunk Western Historical Society's Facebook page and from what I have observed on the Grand Trunk Western railroad tracks in Michigan, it appears that the current CN management will only accept customers that can provide high-volume local traffic. How and why would they say that customers have too few carloads a week or a month to justify the use and maintenance of locomotives and track? The less carloads they have, means less work for employees and a smaller workforce. They can only steamline operations so far before there is no railroad left to operate.
That is the established business model for Class 1's at present. They are not seeking car loads of freight - they are seeking train loads of freight. Car loads require terminal resources and manpower and raise the cost structure of the carriers. Train loads - hook up the power, haul to destination and cash the check for the freight bill. The aims of Class 1's are smaller workforces and higher ton miles to bring more of the revenues to the bottom line.
Never too old to have a happy childhood!
In my area CN is still actively seeking carload freight, before oil prices dropped and the economy went south multiple new spurs were put in for less-than-trainload customers. Some of those customers have since quit shipping by rail (or gone out of business altogether) but some of those that remain only get 1 or 2 spots a week, and we still switch them.
CN likes customers that want a switch on a regular, predictable basis (even if it's just for one car at a time); preferably daily but will still serve those who get less, and new spurs can be put in without too much of a fight, providing the customer pays for them of course.
But there is a distinction here, they DO NOT like mainline switches, and have been trying for quite a while now to remove lightly used ones. They view each switch as an opportunity for a derailment, and customers located out on the mainline can tie up traffic while they are switched by a local. So to sum up, if a customer is located on a branchline, industrial park or off a yard CN likes them, but if your connection is out on the main they likely view you as a thorn in the side.
But it could be worse, from what I hear UP, CSX et al are trying to get out of the carload business entirely, while CN at least recognizes that it is a legitimate stream of business with some sort of future.
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Hopefully not true, but if it is, someone else will step in to fill the void. We will look at anything if the money is right. No shipper is too small or too large. So long as they pay their bills on time, that's all we ask.
Whatever happened to railroads as common carriers?
C&NW, CA&E, MILW, CGW and IC fan
Shlimm- Exactly! So if you are a captive smaller shipper what do you do? is another operator granted trackage rights for access. I can think of a small chemical plant that ships 3 cars a week, situated along on a CN main line. Trucking is not an option.
SD70M-2Dude In my area CN is still actively seeking carload freight, before oil prices dropped and the economy went south multiple new spurs were put in for less-than-trainload customers. Some of those customers have since quit shipping by rail (or gone out of business altogether) but some of those that remain only get 1 or 2 spots a week, and we still switch them. CN likes customers that want a switch on a regular, predictable basis (even if it's just for one car at a time); preferably daily but will still serve those who get less, and new spurs can be put in without too much of a fight, providing the customer pays for them of course. But there is a distinction here, they DO NOT like mainline switches, and have been trying for quite a while now to remove lightly used ones. They view each switch as an opportunity for a derailment, and customers located out on the mainline can tie up traffic while they are switched by a local. So to sum up, if a customer is located on a branchline, industrial park or off a yard CN likes them, but if your connection is out on the main they likely view you as a thorn in the side. But it could be worse, from what I hear UP, CSX et al are trying to get out of the carload business entirely, while CN at least recognizes that it is a legitimate stream of business with some sort of future.
I think it depends on the railroad. I know when I drove up from Texas to Wisconsin through Central Illinois near the BNSF mainline they must have had about 10-15 giant track loops along the freeway on what looked like a branch line for loading grain trains from elevators, the loop tracks were huge and look like they served a coal plant but were meant for serving giant grain or crop storage areas.
However with CN in NE Wisconsin and Michigan UP they still seem to accept less than trainload as a way to initially build traffic on lines that have lost most of their traffic. Especially see that with the log car purchase and how they are trying to structure it. BTW, last I heard on that deal the state was going to float the bonds but then got into an argument with CN as CN then wanted to raise rates (lol). So I think that deal might be bogged down at the moment.
Heard from my Brother in Law that works for Tower Automotive that makes auto or truck frames (or both). Norfolk Southern refused to haul frames from a new plant they were building in Mid to Northern Ohio to the Detroit area because NS didn't feel they could make enough money on it. So NS turned them down initially. I don't know what the final resolution was as I never asked for a follow-up on it.
schlimm Whatever happened to railroads as common carriers?
Staggers Act of 1980's repurposed railroads as for profit transportation entities, rather than the ICC public utility model.
If railroads feature they can make a sufficient return on thier investment in serving a customer, they will. If they can't make sufficient profit, they won't. No every customer or carload is profitable.
ie- Is this a pricing themselves out of the market or a denial of service complaint? Not clear.
BaltACDIf railroads feature they can make a sufficient return on thier investment in serving a customer, they will. If they can't make sufficient profit, they won't. No every customer or carload is profitable.
That is your interpretation. The Staggers Act did many things, but your interpretation seems well beyond its scope. Railroads can charge whatever they want if the rate can be shown to be "reasonable" and is equal to or exceeds the variable cost. It seems to me, at least, as a non-expert on commercial law, that the railroad needs to offer rates for carload and less-than-trainload services that exceed variable cost. You can look through the entire law, but I failed to find any section that says a railroad can cease to offer services as a common carrier.
Public Law 96-948 (Staggers Act)
TITLE II—RAILROAD RATES AND INTER-CARRIER PRACTICES REGULATION OF RAILROAD RATES SEC. 201
"(3) In determining whether a rate established by a rail carrier is reasonable for purposes of this section, the Commission shall recognize the policy of this title that rail carriers shall earn adequate revenues, as established by the Commission under section 10704(a)(2) of this title.
(cXl) A rate for transportation or other service provided by a rail carrier subject to the jurisdiction of the Commission under subchapter I of chapter 105 of this title may not be established below a reasonable minimum. Any rate for transportation by such a rail carrier that does not contribute to the going concern value of such carrier is presumed to be not reasonable. A rate that contributes to the going concern value of such carrier is conclusively presumed not to be below a reasonable minimum. (2) A rate for transportation by a rail carrier that equals or exceeds the variable cost of providing the transportation is conclusively presumed to contribute to the going concern value of such rail carrier.
[In CSX's Form 10-K]
In 2012, the STB announced it would accept comments on a proposal by the National Industrial Transportation League that would require Class I railroads to provide a form of "competitive access" to customers served solely by one railroad. Under this proposal, CSX would be required to allow a competing railroad to access certain customers that are currently solely served by CSX's network. In early 2013, shippers, railroads and other parties submitted comments on the proposal, and the STB held a hearing in March 2014 to receive further input from participating parties. Since the hearing, the STB has taken no further action in the proceeding. In April 2014, the STB announced it would receive comments to explore its methodology for determining railroad revenue adequacy. The revenue adequacy standard represents the level of profitability for a healthy carrier. Shippers, railroads and other parties filed comments in late 2014. More recently, the STB held a hearing in July 2015 to receive further input from participating parties. Since the hearing, the STB has taken no further action in the proceeding. New rules regarding competitive access or revenue adequacy could have a material adverse effect on the Company's financial condition, results of operations and liquidity as well as its ability to invest in enhancing and maintaining vital infrastructure.
BaltACD Andrew Falconer From what has been posted on the Grand Trunk Western Historical Society's Facebook page and from what I have observed on the Grand Trunk Western railroad tracks in Michigan, it appears that the current CN management will only accept customers that can provide high-volume local traffic. How and why would they say that customers have too few carloads a week or a month to justify the use and maintenance of locomotives and track? The less carloads they have, means less work for employees and a smaller workforce. They can only steamline operations so far before there is no railroad left to operate. That is the established business model for Class 1's at present. They are not seeking car loads of freight - they are seeking train loads of freight. Car loads require terminal resources and manpower and raise the cost structure of the carriers. Train loads - hook up the power, haul to destination and cash the check for the freight bill. The aims of Class 1's are smaller workforces and higher ton miles to bring more of the revenues to the bottom line.
Sometimes I think the plan is to get down to one customer, one train and then charge the heck out of them.
Jeff
Imagine if the package services worked that way. Only taking packages from large customers...
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...
Miningman Shlimm- Exactly! So if you are a captive smaller shipper what do you do? is another operator granted trackage rights for access. I can think of a small chemical plant that ships 3 cars a week, situated along on a CN main line. Trucking is not an option.
Every shipper thinks some form of open access/forced reciprocal switching will give them competition and lower freight rates. Maybe for the giant players, but the small companies like the above described are probably SOL. If the STB ever does decide to establish some form of open access, that doesn't mean that anyone wants to, or has to, serve you.
I think the NITL is using their smaller sized members to benefit their larger ones. The ones that often have near monoply like control in their own industries.
jeffhergert Miningman Shlimm- Exactly! So if you are a captive smaller shipper what do you do? is another operator granted trackage rights for access. I can think of a small chemical plant that ships 3 cars a week, situated along on a CN main line. Trucking is not an option. Every shipper thinks some form of open access/forced reciprocal switching will give them competition and lower freight rates. Maybe for the giant players, but the small companies like the above described are probably SOL. If the STB ever does decide to establish some form of open access, that doesn't mean that anyone wants to, or has to, serve you. I think the NITL is using their smaller sized members to benefit their larger ones. The ones that often have near monoply like control in their own industries. Jeff
Those industries that protest the most are the ones that had railroads held captive for their revenues in the ICC days - now that they have to negotiate rates with railroads as equals they chafe at having to deal with organizations they previously thought of as their indentured servants. These industries still have monopoly power over their customers and they want it again over their transportation suppliers.
Look at the original post. It is a second or third hand rumor at best. There is no reason to get all excited over this as it is no nonspecific as to be meaningless.
Mac
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