A lumber broker we buy cars of lumber from sent out this notice to all their customers: “A number of Canadian mills who ship into the US on the CN RR have been told they will no longer (for the time being) be able to ship to “Low-Velocity” destinations – like those in ND, SD, IA and NE – because (according CN) it takes too long to get cars into and out of those destinations. “ Huh? Aren’t the railroads kind of in charge of how long it takes to get cars in and out of an area? And just exactly what is a “Low-Velocity” destination? If we decide that some states are low velocity destinations, can we quit shipping them corn, wheat and soy beans?
Thanks to Chris / CopCarSS for my avatar.
Murphy Siding A lumber broker we buy cars of lumber from sent out this notice to all their customers: “A number of Canadian mills who ship into the US on the CN RR have been told they will no longer (for the time being) be able to ship to “Low-Velocity” destinations – like those in ND, SD, IA and NE – because (according CN) it takes too long to get cars into and out of those destinations. “ Huh? Aren’t the railroads kind of in charge of how long it takes to get cars in and out of an area? And just exactly what is a “Low-Velocity” destination? If we decide that some states are low velocity destinations, can we quit shipping them corn, wheat and soy beans?
Norris (Murphy Siding): Some time back, you posted a stiory about a car load of lumber that kept passing your facility over a period of a number of days. You mentioned it, seemed to miss the local that would have dropped it off. The next time you saw it going back on a through freight, to be brought back by the local; because of traffic the local could not get track time to use the switch to get in to your lumber yard...It seemed to be a situation that the car was never in the 'proper' position on the railroad to make the local and the drop into your place.
When my father was in the lumber business, his feed stock was ponderosa pine from the PNW. His suppliers in the PNW would load 'speculative' cars, and have their original BOL destination be a place with service on a weekly basis. His favorite, was Beloit, Ks., with weekly service. His 'price' to be bargained for, was a 'race' between acruing demurage charges to the shipper, and the price they were asking for the lumber in the car... Kind of a game of financial 'chicken'.
So 'low velocity' was his friend; in your case 'low velocity' was not your friend. Sort of a case of whose ox is being gored!
Murphy Siding A lumber broker we buy cars of lumber from sent out this notice to all their customers: “A number of Canadian mills who ship into the US on the CN RR have been told they will no longer (for the time being) be able to ship to “Low-Velocity” destinations – like those in ND, SD, IA and NE – because (according CN) it takes too long to get cars into and out of those destinations. “
A lumber broker we buy cars of lumber from sent out this notice to all their customers: “A number of Canadian mills who ship into the US on the CN RR have been told they will no longer (for the time being) be able to ship to “Low-Velocity” destinations – like those in ND, SD, IA and NE – because (according CN) it takes too long to get cars into and out of those destinations. “
Murphy,
First consider the source. Is it possible he is not telling you exacty what CN said?
When I was clerking on the GN in the late 1960's we billed many "rollers". These were cars to end of branch line destinations where there was an interchange to someone else's branch line. The one I remember to this day was Huron SD to CNW.
After partial dereglation in 1980 many, if not all, of these slow ball were closed as through routes. Now rates were higher combination rates, which curtailed the ability of the lumber brokers to use rail cars as free warehouses.
You would have a better idea than I do about current situation regarding diversion in route cars.
I tend to think there is more to the story than your broker is telling you.
Mac
Hard to understand that the state of Iowa, which CN crosses, is considered low velocity.
The demurrage rate (daily car rent) is supposed to be more or less compensatory. So why would CN care how long the cars are gone, as long as it's getting paid for them ? (There are legitimate responses to that, though.)
Does it matter if the cars are leased vs. owned by CN ? Again, if they're leased, why would CN care ? That's up to the lessee to be concerned about the 'low velocity'.
Likewise for the value of and interest, etc. on the freight, as Sam alludes to above. That's for the seller and buyer to allocate between them - why should the railroad care ?
What kind of cars ? Are they something which might be scarce, and CN wants to use them for traffic with a shorter turn-around time, so it can get more paying loads per year with them ?
Could this be a back-door attempt to abandon or embargo thiose branches - or to justify abandoning them, with the resulting lower traffic levels ?
- PDN.
Paul_D_North_Jr The demurrage rate (daily car rent) is supposed to be more or less compensatory. So why would CN care how long the cars are gone, as long as it's getting paid for them ? - PDN. Paul, I fear you are confusing demurrage and car hire. Car hire refers to payments a using road makes to the owning road, and yes it is supposed to be compensatory, but break even. When costing a move, the cost model should include car hire for the cars regardless of whether they are home road or foreign. The logic is that while the home road does not pay itself car hire, it does incur the costs of ownership and use that car hire is intended to cover. The cost model should also inculde the "free time" allowed for loading and unloading, since most customers will use most of the free time most of the time and weekends do not count in free time calculations. Demurage is a charge assessed by the carrier against the customer for holding cars beyond the free time. In summary the cost of ownership clock is always running. If a car is off line, then the car-hire clock is also running and at a rate intended to make the car owner whole with regard to the ownership cost. The demurrage clock starts, in theory when the car is spotted, but in practice usually at the first 7AM after the car is spotted. The traditional standard is one day free time to load and two days to unload, weekends and holidays not counted. Demurrage charges begin to accrue at the end of free time with holidays and weekends counted after the first chargable day. The point is car hire, and the cost of car hire imbedded in the freight rate, is NOT demurrage, and demurrage is NOT car hire. Mac
The demurrage rate (daily car rent) is supposed to be more or less compensatory. So why would CN care how long the cars are gone, as long as it's getting paid for them ?
Paul,
I fear you are confusing demurrage and car hire.
Car hire refers to payments a using road makes to the owning road, and yes it is supposed to be compensatory, but break even.
When costing a move, the cost model should include car hire for the cars regardless of whether they are home road or foreign. The logic is that while the home road does not pay itself car hire, it does incur the costs of ownership and use that car hire is intended to cover.
The cost model should also inculde the "free time" allowed for loading and unloading, since most customers will use most of the free time most of the time and weekends do not count in free time calculations.
Demurage is a charge assessed by the carrier against the customer for holding cars beyond the free time.
In summary the cost of ownership clock is always running. If a car is off line, then the car-hire clock is also running and at a rate intended to make the car owner whole with regard to the ownership cost. The demurrage clock starts, in theory when the car is spotted, but in practice usually at the first 7AM after the car is spotted. The traditional standard is one day free time to load and two days to unload, weekends and holidays not counted. Demurrage charges begin to accrue at the end of free time with holidays and weekends counted after the first chargable day.
The point is car hire, and the cost of car hire imbedded in the freight rate, is NOT demurrage, and demurrage is NOT car hire.
samfp1943 When my father was in the lumber business, his feed stock was ponderosa pine from the PNW. His suppliers in the PNW would load 'speculative' cars, and have their original BOL destination be a place with service on a weekly basis. His favorite, was Beloit, Ks., with weekly service.
When my father was in the lumber business, his feed stock was ponderosa pine from the PNW. His suppliers in the PNW would load 'speculative' cars, and have their original BOL destination be a place with service on a weekly basis. His favorite, was Beloit, Ks., with weekly service.
Mac, thanks for correcting/ clarifying my post above - you're quite right (I was in too much of a hurry this morning to think clearly before I had to leave). And you say better what I was trying to say: "The point is car hire, and the cost of car hire [is] imbedded in the freight rate".
So the serving railroad is being actually compensated for whatever car hire costs are incurred (either implied to itself, or actual to the car owner). As such, the car owner - and the serving railroad - have no cause to complain about any delays on that branch line, because they're getting paid for the car hire, one way or the other.
The only possible gripe that the serving railroad may have is that after the shipper/ receiver releases the car and the demurrage charges stop as a result, the slow or infrequent service on the line may cause the railroad to incur car hire costs that are no longer being compensated by the then-ended demurrage charge. But that slow/ infrequent service is caused by the serving railroad, so it has no cause to complain, nor to blame or punish the shipper/ receiver for the railroad's own inaction.
All that said, this morning (0910 EDT) I was able to take a brief look at a short NS train of abou 15 cars and 2 locos (both short hoods facing towards the rear, so the lead one was long hood forward!). So likely it was a local, and geographic southbound on the Lehigh Line, being held out just north of the Allentown Yard at CP HAM.
Anyway this train had all 3 types of cars commonly used to haul lumber products in its consist - a centerbeam and an end bulkhead car, both having reporting marks of TT_X, and of course we all know most boxcars are RBOX. So it's likely that at least some cars are leased by shippers from Trailer Train, and hence paid for by them. So the railroad isn't incurring any car hire costs for them either, and we again have to wonder why tjhe railroad is upset with the slow service on the line when it has no financial exposure to those costs.
Perhaps Murphy Siding can inform or clarify us as to the facts of the actual situations.
Paul_D_North_Jr Anyway this train had all 3 types of cars commonly used to haul lumber products in its consist - a centerbeam and an end bulkhead car, both having reporting marks of TT_X, and of course we all know most boxcars are RBOX. So it's likely that at least some cars are leased by shippers from Trailer Train, and hence paid for by them. So the railroad isn't incurring any car hire costs for them either, and we again have to wonder why tjhe railroad is upset with the slow service on the line when it has no financial exposure to those costs. Perhaps Murphy Siding can inform or clarify us as to the facts of the actual situations. - PDN.
Car hire cost is like gravity, it is always there. Shippers do NOT lease TTX or RBOX cars for private use in the normal course of business. TTX is owned by the several class I railroads. Whichever line has the car in its car hire acounts (think possession) must pay TTX car hire, both time and mileage. It is in the freight rate. To come back to our CN lumber case CN either supplies the car and incurrs ownership and maintenance costs OR uses a foreign (including TTX) car and pays car hire. Assuming cars of equal age and value, the CN incurs the same car hire cost with TTX cars as with its own.
The classic case of shipper supplied cars are tank cars. The classic arrangement here is that the shipper (Dow Chemical) leases cars for Trimethyl death service from a fleet operator, GATX, UTLX et al. Since cars for trimethyl death are specialized, GATX will insist on a lease rate that pays for the cars, after operating costs, in about 15 years. If the car costs $90,000 lease rate will be something in the range of $1,200 per month. Staying with the classic model, the carriers publish a tariff that shows the mileage rate that they will pay the car owner. GATX in this example. GATX in its lease to Dow says it will rebate to Dow the mileage earnings, less operating costs, up to the monthly limit of the lease cost. I once had a tank car user tell me that his cars were free since his fleet was generating enough income to pay the lease costs. I just similed since I knew that the freight rate includes the cost of the mileage payments, in the Dow case say $1.00 per loaded car mile. The carriers figure mileage based on the capital cost of the car and some assumption about mileage per month. In this case, the railroad does not charge Demurrage if the car is owned by or trip leased to the consignee. If the customer sits on the car for a month, he pays $1,200 lease cost and has no offsetting mileage earnings. The railroad could not care less. The railroad will be sure to include its mileage payments in its costs, and thus the quoted freight rate.
Some customers figured this out and said to the railroads, "Don't pay us mileage but give us a break on the freight rate and we will supply the cars." Generally the railroads are willing to do so to the limit of the car hire they would otherwise incur. That is certainly the case with some private marked coal cars for example. Here the cost of car hire is NOT in the freight rate, but it is certainly in the customer's cost of transportation.
The point is that car hire is a real and significant cost, and there no way to make it go away in an economic sense.
I'm not sure I can clarify much. I never pay attention to whose cars the lumber comes on. I know that a majority of our lumber cars comes into the USA at the top of Minnesota. CN may originate the cars, but BNSF delivers them into South Dakota. BNSF is who would be charging us demurrage if we kept them too long. BNSF now counts weekends when figuring demurrage. I dont' know if they count holidays but they probably do. Does CN charge BNSF something for keeping a car too long, or does that depend on who the owner of the car is?
Murphy Siding I'm not sure I can clarify much. I never pay attention to whose cars the lumber comes on. Does CN charge BNSF something for keeping a car too long, or does that depend on who the owner of the car is?
I'm not sure I can clarify much. I never pay attention to whose cars the lumber comes on. Does CN charge BNSF something for keeping a car too long, or does that depend on who the owner of the car is?
Demurage is between the serving carrier and the shipper or consignee.
Demurage cares not who the car owner is, given railroad ownership(railroad and TTX owned cars) because the spotting road, BNSF in this case, is either paying car hire to whatever foreign railroad owns the car OR is incurring ownership and maintenance cost for its own equipment.
Assuming a CN car, CN started earning car hire when it interchanged to car off to the BNSF and BNSF will pay car hire until it gets rid of the car, in this particular case probably by reverse route over the oncoming junction. Car hire is now figured on an hourly basis and has a mileage component.
samfp1943 Murphy Siding A lumber broker we buy cars of lumber from sent out this notice to all their customers: “A number of Canadian mills who ship into the US on the CN RR have been told they will no longer (for the time being) be able to ship to “Low-Velocity” destinations – like those in ND, SD, IA and NE – because (according CN) it takes too long to get cars into and out of those destinations. “ Huh? Aren’t the railroads kind of in charge of how long it takes to get cars in and out of an area? And just exactly what is a “Low-Velocity” destination? If we decide that some states are low velocity destinations, can we quit shipping them corn, wheat and soy beans? The term "Low Velocity" is one of those that can be wheeled about and 'dumped out' wherever the party who is designating velocity wants it used...I would say the definition is most likely unspecified, over a long period of useage; depending on who, and why they are using it. It is generally common thought that the Class1's want long length of haul to gain the most $$$$ for their operations and costs. Norris (Murphy Siding): Some time back, you posted a stiory about a car load of lumber that kept passing your facility over a period of a number of days. You mentioned it, seemed to miss the local that would have dropped it off. The next time you saw it going back on a through freight, to be brought back by the local; because of traffic the local could not get track time to use the switch to get in to your lumber yard...It seemed to be a situation that the car was never in the 'proper' position on the railroad to make the local and the drop into your place. When my father was in the lumber business, his feed stock was ponderosa pine from the PNW. His suppliers in the PNW would load 'speculative' cars, and have their original BOL destination be a place with service on a weekly basis. His favorite, was Beloit, Ks., with weekly service. His 'price' to be bargained for, was a 'race' between acruing demurage charges to the shipper, and the price they were asking for the lumber in the car... Kind of a game of financial 'chicken'. So 'low velocity' was his friend; in your case 'low velocity' was not your friend. Sort of a case of whose ox is being gored!
The term "Low Velocity" is one of those that can be wheeled about and 'dumped out' wherever the party who is designating velocity wants it used...I would say the definition is most likely unspecified, over a long period of useage; depending on who, and why they are using it. It is generally common thought that the Class1's want long length of haul to gain the most $$$$ for their operations and costs.
The lumber that was handled in the locations I worked was normally loaded by a PNW producer and shipped to themselves at a location of their choosing. While the car was in transit the producers sales staff went to work to find a buyer while the car was in transit (circuitious routing may have been specified by the shipper), once a buyer was found the car(s) were reconsigned and diverted to the purchaser's facility.
The producer could keep shipping without waiting for a specific customer to buy. From the buyers point of view, they would get what the purchased sooner that if they had to initiate the buy direct from the PNW.
Never too old to have a happy childhood!
My late aunt worked for a lumber wholesaler. Were she still with us, I'm sure I could come up with dozens of stories - traffic management is what she did...
Of course, that's back when there were still dozens of Class 1's...
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...
For what it's worth, we got in a car yesterday. It was on a rusty, old spine car, reporting marks TTZX…. It came to us off the BNSF *low velocity* main line that has a 10 mph or such slow order on it right now. We released the car 15 hours after it was spotted. Now it’s up to BNSF to high-velocity that car out of here and back to CN so they can high-velocity it back to Canada.
These days I am a low velocity person as I get older.
BaltACD samfp1943 Murphy Siding A lumber broker we buy cars of lumber from sent out this notice to all their customers: “A number of Canadian mills who ship into the US on the CN RR have been told they will no longer (for the time being) be able to ship to “Low-Velocity” destinations – like those in ND, SD, IA and NE – because (according CN) it takes too long to get cars into and out of those destinations. “ Huh? Aren’t the railroads kind of in charge of how long it takes to get cars in and out of an area? And just exactly what is a “Low-Velocity” destination? If we decide that some states are low velocity destinations, can we quit shipping them corn, wheat and soy beans? The term "Low Velocity" is one of those that can be wheeled about and 'dumped out' wherever the party who is designating velocity wants it used...I would say the definition is most likely unspecified, over a long period of useage; depending on who, and why they are using it. It is generally common thought that the Class1's want long length of haul to gain the most $$$$ for their operations and costs. Norris (Murphy Siding): Some time back, you posted a stiory about a car load of lumber that kept passing your facility over a period of a number of days. You mentioned it, seemed to miss the local that would have dropped it off. The next time you saw it going back on a through freight, to be brought back by the local; because of traffic the local could not get track time to use the switch to get in to your lumber yard...It seemed to be a situation that the car was never in the 'proper' position on the railroad to make the local and the drop into your place. When my father was in the lumber business, his feed stock was ponderosa pine from the PNW. His suppliers in the PNW would load 'speculative' cars, and have their original BOL destination be a place with service on a weekly basis. His favorite, was Beloit, Ks., with weekly service. His 'price' to be bargained for, was a 'race' between acruing demurage charges to the shipper, and the price they were asking for the lumber in the car... Kind of a game of financial 'chicken'. So 'low velocity' was his friend; in your case 'low velocity' was not your friend. Sort of a case of whose ox is being gored! The lumber that was handled in the locations I worked was normally loaded by a PNW producer and shipped to themselves at a location of their choosing. While the car was in transit the producers sales staff went to work to find a buyer while the car was in transit (circuitious routing may have been specified by the shipper), once a buyer was found the car(s) were reconsigned and diverted to the purchaser's facility. The producer could keep shipping without waiting for a specific customer to buy. From the buyers point of view, they would get what the purchased sooner that if they had to initiate the buy direct from the PNW.
Ah yes, the lumber "Rollers".
A carload of unsold lumber would be loaded and headed east to a fictitious consignee and destination that it was never going to get to. The shipper controlled the routing. And such shippers wanted slow "Rollers" so they had time to sell the load. They'd intintionally use inefficient routes, increasing the railroads' cost, to add transit time.
But.
As soon as the load was sold they'd "reconsign" the car while in transit. That is, they'd change the consignee and destination to the real buyer of the lumber. After such a sale they'd insist that the car was "hot" and want it expidited. The car could be sitting in Oshkosh, Nebraska and they'd want it in New Jersey yesterday. They didn't get paid until the lumber was delivered.
Just part of the games people play.
The "rollers" may have been responsible for how long the railcar ferry kept operating across the Mackinac Strait in Michigan. By the time I saw it back in 1978 I understand the Chief Wawatam only sailed once a week, and the cars being loaded appeared to be lumber boxes. All gone now, of course.
John
cx500 The "rollers" may have been responsible for how long the railcar ferry kept operating across the Mackinac Strait in Michigan. By the time I saw it back in 1978 I understand the Chief Wawatam only sailed once a week, and the cars being loaded appeared to be lumber boxes. All gone now, of course. John
greyhounds.......... They didn't get paid until the lumber was delivered..........
[quote user="Murphy Siding"]greyhounds
Another thing that has changed is the billing. I can tell when a carload of lumber left the mill. I get a bill the next day. Generally there's a prompt pay disocunt, so most lumber is paid for before it hits my dock. Life in the fast lane! [quote]
That's kinda like paying MSRP for a car. Try waiting for a load that's on the roll and bidding on it like you would on Ebay. Let me know the results of that experiment. if that's more profitable I'll show up at your lumber yard for a free lunch on you.
On second thought, it would be catastrophic to run out of quality 2X4's.
Norm
[quote user="Norm48327"]
Another thing that has changed is the billing. I can tell when a carload of lumber left the mill. I get a bill the next day. Generally there's a prompt pay disocunt, so most lumber is paid for before it hits my dock. Life in the fast lane!
That's kinda like paying MSRP for a car. Try waiting for a load that's on the roll and bidding on it like you would on Ebay. Let me know the results of that experiment. if that's more profitable I'll show up at your lumber yard for a free lunch on you. On second thought, it would be catastrophic to run out of quality 2X4's.
CNSFMy guess is CN's having trouble keeping up with demand for cars at origin. So it's not so much about out-of-pocket cost as about opportunity cost. They're trying to move more revenue loads with the limited fleet available to them.
That is my understanding of the situation as well. Normally I would think CN would not care what happened to the car once it was interchanged at the Twin Cities. After Murphy unloads it, BNSF might not return it at all, but send it out to the west coast to be reloaded by one of their shippers. CN would be indifferent to that specific car's next load as the centerbeams are owned by third parties, and the cars are a fungible commodity.
The only way this makes sense to me is if CN has difficulty obtaining a sufficient car supply for their shippers. Is someone in the industry hoarding centerbeams?
Dakguy201 Normally I would think CN would not care what happened to the car once it was interchanged at the Twin Cities. After Murphy unloads it, BNSF might not return it at all, but send it out to the west coast to be reloaded by one of their shippers. CN would be indifferent to that specific car's next load as the centerbeams are owned by third parties, and the cars are a fungible commodity. The only way this makes sense to me is if CN has difficulty obtaining a sufficient car supply for their shippers. Is someone in the industry hoarding centerbeams?
Normally I would think CN would not care what happened to the car once it was interchanged at the Twin Cities. After Murphy unloads it, BNSF might not return it at all, but send it out to the west coast to be reloaded by one of their shippers. CN would be indifferent to that specific car's next load as the centerbeams are owned by third parties, and the cars are a fungible commodity.
Oh, but CN does care what happens to a lumber load interchanged to BNSF at the Twin Cities. It cares deeply if it is a CN car. They want it back and the car service rules protect that desire by requiring that a CN marked car be returned via reverse route. If the car is a TTX car, then yes it is a free runner and BNSF could appropriate it for loading in the US PNW.
Last I knew, which was years ago, lumber volumes were down and hundreds, if not thousands, of center beam cars were in storage in the PNW.
Trump's lumber tariff will solve whatever car supply problem CN has. To get the PNW back in business in sufficient volume to absorb a significant part of the supply shock to the lumber market, Trump will have to let the Forest Service sell logs in Washington and Oregon as opposed to locking up the woods to "protect the spotted owl". I presume Trump's lumber advisors know this and will take appropriate action. Actually, he should have dealt with our internal, Clinton Era, problems first.
Mac McCulloch, Grown in the PNW
Out of curiosity, I searched railcar ownership. The closest I came to relevant data was a table that cited AARR as the source. According to them, the North American railroads owned 60,715 flat cars (all types) at 12/31/16 and third parties owned 136,087. Of course, that includes much more than the centerbeams, but I was surprised the rails owned that large a proportion of the fleet.
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