New revenue source for Railroads

[jsanchez]

As someone who has watched and invested in the Railroad industry most of my life, I'm always hearing how they railroads need to increase revenue, aren't covering there capital costs,need to increase revenue, etc.
In the 1910- 20's many railroads made money by selling advertising on the sides of boxcars and reefers. After driving by a newly built rail yard with the majority of the covered hoppers not even having the logos of the lease companies or the railroad owners on the sides. I realized what a waste of good advertising space, these train cars go all over the U.S.A, Canada & Mexico. Most trains pass by thousands of motorist on their journeys. Railroads could definitely increase their bottom lines by putting advertising on the sides of their cars. Transit agencies do this on Buses and Lightrail vehicles and Railroads in some foriegn countries do this.
It also seem incredibly stupid for G.E. or Dow chemical not to have their corporate logos or advertising on the cars they own or lease, the cost is relatively low for the amount of exposure they would get. Some companies have figured this out like ADM or Omya. If railroads are in business to make a profit why not add this to the revenue base.

James

[edahrenhoerster]

Might work fine for companies that have their own captive fleets used solely by the owner, but probably wouldn't work too well for the common carriers. If you are the traffic manager for Ford how happy are you going to be to have a cut of cars with Chevy ads on their sides show up at your factory? Also I have a vague recollection that there were some court cases involving this question back when a lot of cars did carry advertising and that the decision was that a common carrier could not force a customer to ship in a car carrying a competitors's ad. This would mean that a railroad could not simply send a customer the nearest suitable car but would have to check to see if the ads on the car were in conflict with the interests of the competitor.

[john7470]

Interesting idea... a couple of points about your msg:

- Companies such as Dow have their reasons for not having their logos on cars. The very limited benefit of brand recognition is not offset by the cost of application (and removal - many cars are leased and may only be in the company's service for a few years.) Also, these cars always get the largest- and worst- public recognition at media events such as derailments and collisions. Better to have a GATX reporting mark than a big DOW billboard to focus a camera on.

- While I can't address ADM, OMYA and most of the other clay shippers had their cars custom painted as a) they are often in longer term service, b) their product is non-hazardous, and (most importantly) c) private car mileage rules. It's a long, complicated story, I'll try a summary. Clay cars turn unusually high mileage. Railroads reimburse private car owners for every loaded mile (the rate set by car value, and can be up to $1/mile or more. The cars turn such high mileage, in fact, that the mileage payments often exceeded the monthly lease cost of the car. Industry accounting rules prevented the car lessors, eg GATX and UTLX, from rebating the lessees more than the car lease cost. In a way, OMYA and the other lessees were prevented from actually making money on their leased equipment. To minimize their "loss", they decided to up the lease rates by specifying custom paint applications - not cheap. This upped the lease rate, but the cost was negated by the additional car mileage they could receive. So they got the advertising "for free." I believe the mileage payment rules have been modified in the last several years and am not up-to-date with present situation.

Apologies for being long-winded. Hope this is of interest.