Short-line car supply problem relief

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Short-line car supply problem relief
Posted by daveklepper on Monday, April 09, 2018 11:20 AM

Class Is cannot furnish enough cars for the business?

Can shortlines and regionals with good overhaul shops, like Reading and Northern and Strassburg, get into the freight-car rebuilding business?  The currently out-of-service but repairable, but possibly of low priority for repair for Class I's could be repaired and then owned by shippers with the car routing rules applicable to shipper-owned cars.  And those with good shops would helop those without.

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Posted by PNWRMNM on Monday, April 09, 2018 4:11 PM

daveklepper

Class Is cannot furnish enough cars for the business?

Can shortlines and regionals with good overhaul shops, like Reading and Northern and Strassburg, get into the freight-car rebuilding business?  The currently out-of-service but repairable, but possibly of low priority for repair for Class I's could be repaired and then owned by shippers with the car routing rules applicable to shipper-owned cars.  And those with good shops would helop those without.

Dave,

Where are you getting the idea that class I carriers are short of cars? Traffic is currently down from peaks of a couple of years ago, and there are lots of cars stored. That said, the car builders have about a years worth of production at current run rates, which are far off historical peaks.

In general, the class I carriers are best positioned to supply cars. If demand for a particular car type picks up they will return stored cars to service, almost instantly. Next, they can pull bad order cars out of storage and repair them either in house or at AAR certified contract shops.

Doing such work at short line shops or Stasburg is possible but not likely due to lack of capacity, lack of expertise, and probably higher than market cost.

Certainly, shippers can supply their own cars, new or used. Except for tank cars shippers seldom do so. Among the reasons is that they can run their cars only with the permission of the origin railroad. That permission is almost certain to be contingent on the origin railroad not being able to supply the cars. When railroad cars are in surplus, shipper cars will be stored, thus not earning their car hire. Most shippers see no reason to enter into such deals.

A car shortage exists for a shipper when they can not get a car over night, regardless of fleet size, total demand, and actual car cycle time, something they have some impact on. Shippers always complain about car shortages. Grain shippers have been at it since about 1870. Once in a while they are right.

Mac

 

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Posted by Murphy Siding on Monday, April 09, 2018 4:47 PM

Lumber coming out of western Canada by rail is taking a long time to ship. The mills are blaming it on a shortage of railcars. Whether that's the truth or not, I can't tell.

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Posted by MidlandMike on Monday, April 09, 2018 4:58 PM

A NewsWire article today about KCS, says that because of longer cycle times, thre is a shortage of auto carriers.

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Posted by BaltACD on Monday, April 09, 2018 5:36 PM

MidlandMike
A NewsWire article today about KCS, says that because of longer cycle times, thre is a shortage of auto carriers.

Car supply is a function of turnaround time.  There are three parts involved in turnaround time.  How effectively the shipper is in loading their cars - how effectively the carriers handle the cars between shippers and consignees in both directions, how effectively the consignees are in unloading and releasing the cars.

Issues with any of the parts can lengthen the cycle times and thereby decrease the effective supply of cars.

         

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Posted by MidlandMike on Monday, April 09, 2018 6:50 PM

In the NewsWire article, KCS indicates it's the slow transit times thru the Huouston area in UP trackage rights, causing long cycle times.

http://trn.trains.com/news/news-wire/2018/04/09-kansas-city-southern-gets-tangled-up-in-union-pacifics-houston-area-capacity-crunch

 

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Posted by daveklepper on Tuesday, April 10, 2018 12:26 AM

I don't see where any of the arguments presented indicate that my idea is not feasible.  If the Class I cannot supply the car,the reason is irrelevant.  If the shipper has his own cars, he or she can plan their use on the basis of what the transit times really are.  Even build in some slack if he or she can afford to do so.

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Posted by PNWRMNM on Tuesday, April 10, 2018 7:58 AM

Murphy Siding

Lumber coming out of western Canada by rail is taking a long time to ship. The mills are blaming it on a shortage of railcars. Whether that's the truth or not, I can't tell.

This is a good sample case, but Murphy does not tell us which origin road, CP or CN or both.

It is common knowledge that CN is a mess across Alberta, the route his cars have to travel. That mess increases car cycle times on both the loaded and empty leg. Lets imagine that normal fleet turn time was 20 days, shippers were able to get cars on demand, and CN had no cars stored. The fleet was in perfect balance. If CN has 2,000 lumber cars they can spot 100 cars per day.

Now lets imagine that that turn times are 30 days due to congestion. Now CN can spot only 66 cars per day. That would cause the situation Murphy reported. It will also increase demand at mills served by CP. If CP's fleet started in balance, they are now car short due to problems on CN.

What about BNSF? They have lots of lumber cars. Will Murphy and his cohorts pay higher prices for American lumber? If so demand increases on BNSF and a new equilibrium is attained. Since last I knew they had cars stored, they can meet the demand.

If buyers insist on cheaper Canadian lumber, cars will be short until CN untangles its mess. Will that happen with summer, later, or much later?

Note that either of the Canadian roads could lease surplus cars from BNSF. If I were BNSF I would sit tight and see if my demand picks up. I have no duty to rescue the Canadians from CN's debacle and could pick up some traffic as the brokers selling to Murphy souce from BNSF customers. Then again I may choose to get some revenue off cars that are otherwise sitting idle.

The point here is that fixing heavy Bad Order cars is far down anyones list, due to cost and time. CN and CP will have fixed their own light B/O cars long ago. Next choice is short term lease, with TTX, BN and UP being likely sources. Next would be fixing the few heavy B/O cars on CN, and maybe CP. Ordering cars today that will not exist until a year later is the last choice, particularly if CN figures to have itself running right by summer or fall.

It is the origin road's duty to supply cars. CN seems not to be able to in this case due to congestion. First solution is to fix the congestion, but they can not or they would have. They need a short term car supply solution, which would be short term leases.

One other common issue in car shortage situations is whether simply adding cars is the correct solution. In this case, because of the relatively small number of cars involved, it probably is. In the case of grain, where you may be talking two or three more trains per day each way, most of the effect would be to lengthen the traffic jam on CN.

Also notice the wise skepicism on Murphy's part about the truth of the stories he is getting. Blaming the railroad for one's own failures is not uncommon. Given the fact of CN's problems, I think the mills are probably telling the truth in this case. There are relatively simple, relatively low cost solutions.

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Posted by mudchicken on Tuesday, April 10, 2018 10:47 AM

MURPH: Plenty of center sill and end bulkhead flats still in storage in south central CO.

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Posted by Miningman on Tuesday, April 10, 2018 11:23 AM

Very long lines everywhere of Bulkhead Flats on the Ontario Northland...been sitting for years now. 

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Posted by PNWRMNM on Tuesday, April 10, 2018 12:45 PM

daveklepper

I don't see where any of the arguments presented indicate that my idea is not feasible.  If the Class I cannot supply the car,the reason is irrelevant.  If the shipper has his own cars, he or she can plan their use on the basis of what the transit times really are.  Even build in some slack if he or she can afford to do so.

Dave,

You idea is fesable, but it is at the bottom of the list of alternatives.

The reason that the class I is unable to supply the cars ordered is entirely relevant. Failure to understand the cause increases the probability of an economically wrong cure being applied which will cost someone serious money.

The rub is what the transit times really are. Today you have a 15 day car cycle. Tomorrow your carrier is in the ditch and car cycle goes to 25 days. The shipper with private cars is going to be short unless his fleet is almost double what he normally needs. Ten spare cars at $600 per month lease cost is $6,000 per month insurance cost. Most customers choose not to incur those costs and take on the burden and cost of managing a fleet.

Mac

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Posted by Murphy Siding on Tuesday, April 10, 2018 5:49 PM

mudchicken

MURPH: Plenty of center sill and end bulkhead flats still in storage in south central CO.

 

Sure, but no Canadian lumber mills in south central CO. Mischief

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Posted by Murphy Siding on Tuesday, April 10, 2018 5:56 PM

PNWRMNM

 

 
Murphy Siding

Lumber coming out of western Canada by rail is taking a long time to ship. The mills are blaming it on a shortage of railcars. Whether that's the truth or not, I can't tell.

 

 

This is a good sample case, but Murphy does not tell us which origin road, CP or CN or both.

 

It's predominately CN. You bring up an interesting though when you mention BNSF in the context above. We are on BNSF and usually release cars within about half a day of receiving them. BNSF then takes their own sweet time pulling the cars; sometimes 3 or 4 days, sometimes more than a week. I always thought that was odd, since the local comes by about every other day and could easily grab a car. Maybe there's some method to their madness?Devil

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Posted by BaltACD on Tuesday, April 10, 2018 7:01 PM

Murphy Siding
 
PNWRMNM
 
Murphy Siding

Lumber coming out of western Canada by rail is taking a long time to ship. The mills are blaming it on a shortage of railcars. Whether that's the truth or not, I can't tell. 

This is a good sample case, but Murphy does not tell us which origin road, CP or CN or both. 

It's predominately CN. You bring up an interesting though when you mention BNSF in the context above. We are on BNSF and usually release cars within about half a day of receiving them. BNSF then takes their own sweet time pulling the cars; sometimes 3 or 4 days, sometimes more than a week. I always thought that was odd, since the local comes by about every other day and could easily grab a car. Maybe there's some method to their madness?Devil

Have a hunch that pulling your car(s) is dependent on several happenings that have nothing to do with your business.  Most likely the local that works your place was in one of two situations - the local's crew could be on short time to make their terminal for HOS.  The other is that the local must make a meet another train and working your location would cause the local additional delay on the meet and the other train is on short time to make it's destination terminal for the law.

Contacting the local Trainmaster that supervises the local would be a logical complaint path.

         

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Posted by MidlandMike on Tuesday, April 10, 2018 8:31 PM

If the car "shortage" is caused by longer cycle times, which in turn is caused by congestion, then won't adding leased cars just cause more congestion?

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Posted by BaltACD on Tuesday, April 10, 2018 9:12 PM

MidlandMike
If the car "shortage" is caused by longer cycle times, which in turn is caused by congestion, then won't adding leased cars just cause more congestion?

Yes!

         

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Posted by daveklepper on Wednesday, April 11, 2018 7:30 AM

Mac, your reply is relevant, but I do have an anwer.  My proposal is for those shippers for whom holding on to product until the overdue car or cars arrive is economic disaster.  For them having their own cars to load could be economic salvation.  I did not mean it for ever shipper.   It would not preclude ordering cars from the railroad or railroads that are the connections for the short line or regional.

And of course adding cars to the existing mix increases congestion.  But only by a tiny fraction because these shippers are a small minority in the total freight-car fleet.  And right now it would seem to be that some of these shippers are getting the short end of the stick a feel the problem far more than generally felt.  So it restores some balance and fairness to the situation.

Any shortline or regional shop that can rebuild preWWII passenger cars into safe conveinces for a tourist operation has the capibility of rebuilding freight cars.  And some can do it with an even better job and at lower costs than the Class Is do.

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Posted by Murphy Siding on Wednesday, April 11, 2018 8:10 AM

BaltACD
 
Murphy Siding
 
PNWRMNM
 
Murphy Siding

Lumber coming out of western Canada by rail is taking a long time to ship. The mills are blaming it on a shortage of railcars. Whether that's the truth or not, I can't tell. 

This is a good sample case, but Murphy does not tell us which origin road, CP or CN or both. 

It's predominately CN. You bring up an interesting though when you mention BNSF in the context above. We are on BNSF and usually release cars within about half a day of receiving them. BNSF then takes their own sweet time pulling the cars; sometimes 3 or 4 days, sometimes more than a week. I always thought that was odd, since the local comes by about every other day and could easily grab a car. Maybe there's some method to their madness?Devil

 

Have a hunch that pulling your car(s) is dependent on several happenings that have nothing to do with your business.  Most likely the local that works your place was in one of two situations - the local's crew could be on short time to make their terminal for HOS.  The other is that the local must make a meet another train and working your location would cause the local additional delay on the meet and the other train is on short time to make it's destination terminal for the law.

Contacting the local Trainmaster that supervises the local would be a logical complaint path.

 

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Posted by zugmann on Wednesday, April 11, 2018 5:48 PM

daveklepper
Can shortlines and regionals with good overhaul shops, like Reading and Northern and Strassburg, get into the freight-car rebuilding business?

There are pelenty of shortlines in the car business.  And some do fix up cars.  Ma & Pa (under the Emons flag at the time, I think) had a fleet of boxcars they refurbished in the 70s and 80s.   Although most outfits seem content to buy the cars and run their last few years out.   A shortline in town did have a contract to fix up CSX home shops for a while.   So yeah, it has happened.  I'm guessing the problem is that if a type of railcar is in that much demand, the shortlines are going to be hard-presssed to compete with the larger lease firms / roads?

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Posted by daveklepper on Thursday, April 12, 2018 12:21 AM

Muphy siding, I gather you receive shipments by rail and do not generally ship.  That means the delay in picking up the car or cars does not effect your business.  So when the car gets picked up is determined by what is most effiient for the local freight crew.  There may even be cases where the yard where the local is based is quite full?

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Posted by daveklepper on Thursday, April 12, 2018 1:48 AM

Another idea for Murphy Siding:   I guess most times you get BNSF cars, but occasionally a load for you comes on a "foreign" car.  Can you take note of the time to car pick-up in all cases and determie if there is a difference betwen these two catageries, long term averages?   I suspect the "foreign" cars get picked-up quicker because of per-diem charges.   

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Posted by BaltACD on Thursday, April 12, 2018 7:00 AM

zugmann
There are pelenty of shortlines in the car business.  And some do fix up cars.  Ma & Pa (under the Emons flag at the time, I think) had a fleet of boxcars they refurbished in the 70s and 80s.   Although most outfits seem content to buy the cars and run their last few years out.   A shortline in town did have a contract to fix up CSX home shops for a while.   So yeah, it has happened.  I'm guessing the problem is that if a type of railcar is in that much demand, the shortlines are going to be hard-presssed to compete with the larger lease firms / roads?

The short lines that had large fleets of cars in the 70's & 80's were owned by financial organizations that saw a way to 'game' the 'Incentive Per Diem' regulations that were in effect at the time to promote the percieved shortage of box cars.  This action/reaction was part of the reason the carriers through Trailer Train (which they own) developed Rail Box (reporting marks RBOX) whose motto on the car sides was 'Any Load, Any Road'.

In today's railroads, the carriers are trying to get out of the car ownership business as it eats up large amounts of capital and putting it in the hands of Private car ownership organizations.  Next time you watch a train pass - note all the car initials ending in X on box cars and gondolas - they may have been railroad owned in the past but they are now owned by private owners.

         

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Posted by tree68 on Thursday, April 12, 2018 11:57 AM

Pickens was one of the big names in per diem - lots of blue cars with several different names on them.  That's how I ended up with a "St Lawrence" car or two for the model railroad.

I think it's been said that some of the little railroads running per diem cars didn't have enough track to hold all the cars they owned.

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Posted by SD70Dude on Thursday, April 12, 2018 1:49 PM

On a related note, TTX is continuing to buy new boxcars.  

There were a whole bunch of their TTZX lettered centre same stored up in Northern B.C. last year, but I believe they have all been recalled back to service now.

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