Too Many Abandoned Railroads

[Convicted One]

gabe

At the time, I more or less believed that NS/N&W was responsible for both fires.  Now, as an attorney, there is no way I believe that NS has such temerity, as the risk/reward for such criminal activity for a non-judgment proof corporation simply is not worth the risk.  Also, it is noteworthy that NS eventually passed on the landfill deal and did not build the spur.

In any event, the initial severance of the Clover Leaf line was from this bridge fire, rather than a straight abandonment.

Gabe

P.S.  RWM, the reason I am copying you on this one is, I seem to remember an individual with unequalled knowledge of the railroad industry and whom I have very high respect for once told me at a University of Depaul rail confernce that there was a Missouri Pacific line that was abandoned more or less to keep it from falling into the hands of a competitor.  Of course, I am not contending that this disproves the claim that railroads do not abandon lines for such reasons, but I am wondering whether the MoPac line (that I believe saw SP freight, or vice versa) was some kind of exception that proves the rule.

 

Well Gabe,

Just being frank,while I find RWM's presentation to be very plausable, I don't necessarily see the existence of a formally prescribed methodology for abandonment (as he describes), to  be any kind of "proof positive" that the brains inside the railroads coundn't find ways to manipulate this system and still facilitate "strategic" abandonment in ways designed to thwart competitors from picking up the(ir) spoils.

Just look at how the RR's have  historically manipulated passenger service offerings when their first priority was to kill off routes, scheduling connections hours apart in the middle of nowhere expressly to facilitate inconvenience, removing food service,  and chopping locals up into less than desirable segments that best amount to (remaining) trips from nowhere to nowhere, forcing passengers to exit trains before USEFUL destinations were attained.

In illustration, just look at how the  NKP facilitated EXACTLY such tactics:  with the passenger service on the former cloverleaf   See page 166

Indeed, to claim that the abandonment regs somehow PREVENTED railroad minds from concocting elaborate strategic abandonments seems to sell these great minds short of their capabilities. I suspect they were up to the challenge,

[Falcon48]

A clarification to Paul's earlier note.

The Staggers Act didn't significantly change the statutory standard applicable to most rail abandonments.  Since the 1920's, the standard has been that an abandonment would be permitted if continued operation of a line would cause a "burden" on interstate commerce (ie., the line would lose money), and that was not outweighed by the harm the abanonment would cause to shippers and communities served by the line.  Obviously, this is a pretty subjective standard and it left lots of room for policy decisions by the agency, particularly as to how much "harm" had to be shown to warrant requiring retention of a money losing line.  In the early years, many abandonments were denied due to "harm".  However, since the 1970's, it has been very rare for the agency to require a money losing line to be kept in service because of shipper or community harm.  This represented a major policy shift by the agency, and led to a lot of abanonments being approved that wouldn't have been approved in earlier years. But it wasn't compelled by any statutory changes.

The Staggers Act (or the Regional Rail Reorganization Act, I forget which) did enact a special abandonment procedure applicable only to Con Rail, which operated much as you describe.  Under this procedure, CR could file a "notice of insufficiant revenue" with the ICC and abandonment was automatic, subject to the right of other persons to acquire the line.  Where CR utilized this procedure, the acquirer could obtain the line for less than net liqudiation value (75% of NLV is the number that sticks in my head).  This procedure was applicable only to CR, and I think it may have expired.

The real change in abandonments for the rest of the railroad world has been one creating by agency policy - the ICC and STB's use of exemptions.  The 1976 4R Act gave the ICC the authority to "exempt" transactions or classes of transactions from regulation, and that authority was expanded by Staggers.  Where a transaction is "exempted", the railroad can go forward with it without any agency approval.  The ICC very aggressively used its exemption authority in the abandonment area.  It did so, initially, by freely approving railroad "petitions for exemption" covering individual abandonments.  Later, the agency adopted a "class exemption" covering lines which had not originated or terminated any on-line business in two years.  Where the class exemption applies, a railroad can effectuate an abandonment by simply filing a fairly summary "notice of exemption" with the agency.  The notice of exemption doesn't try to demonstrate that the old regulatory standard is met.  It simply demonstrates that the abandonment meets the conditions of the class exemption.  Today, the vast majority of rail abandonments are authorized by exemptions (either "petitions for exemption" or "notices of exemption" under the class exemption).  Occasionally, however, you will still see a full blown abandonment application (the railroad may decide it is best to use a full application if a line is carrying a lot of traffic, and/or the railroad expects substantial opposition).  In these cases, the old standard still applies in all of its faded glory.      

[Paul_D_North_Jr]

Railway Man

[snip]  Alternatively, law could be changed to force railways to continue to operate lines that have become uneconomic.  This might require an amendment to the U.S. Constitution, however, as it would be in conflict with the 5th Amendment.  Supposing that was done, however, it would eventually result in bankruptcy of the railroad companies.  If that happened, it is unlikely any private individual would choose to throw good money after bad, so if the nation wanted railways to continue to operate, it would have to finance it out of the state or federal treasuries.

RWM

Some technical points on this - note, though, that I'm only attempting to explain something, not advocating or favoring it:

First, so that we're all on the same page here - it's most likely the 5th Amendment's clause that prohibits ''takings of private property without just compensation being paid' that RWM is referring to.

Second, I am under the impression that earlier in the 20th century, this issue was addressed - and unfortunately for the railroads, settled against them, to the effect that as long as the overall enterprise remains at least somewhat profitable, the government could require the continuing operation of a unprofitable line, if it chose to do so, without violating the 5th Amendment.  Part of the rationale was that the private enterprise is not entitled to any specific level of profit, so a lessening of that profit is not prohibited.  However, when this doctrine is carried to its (il)logical extreme - many or all of the railroad's lines are unprofitable - then you have essentially the Penn Central bankruptcy situation of the early 1970's.  Even U.S. District Court Judge John P. Fullam, Jr. and the appeals courts recognized and agreed that the situation there was so bad that it was reaching the limits of what the 5th Amendment would tolerate for the 'erosion of the creditor's estate' = dissolution of the railroad's assets through compelling continuing money-losing operations.  At that point, as RWM notes, those continuing operations would indeed have been financed by the the government, mainly the Federal treasury - though likely long after the fact, such as via 'Tucker Act' or 'inverse condemnation' suits for compensation in the U.S. Court of Claims, etc.

Third: However, I believe this trap for the railroads was essentially nullified by the Staggers Deregulation Act's criteria, which repealed the ICC's previous policies.  Instead, Staggers instituted a requirement that once certain threshold criteria regarding the actual unprofitability of a line were met, then the railroad's request for a line abandonment must be automatically approved, though it could then be converted to a 'forced sale' to another railroad/ operator/ government for the values as RWM describes, as well as the customary 'Rails to Trails' rail-banking conditions.

But if that portion of the Staggers Act were ever changed back more to what it was like in the old days, then the 5th Amendment's limits might be tested once again.  I certainly hope not, though.

Finally, a couple of comments with regard to the overbuilt railroad network:

- At one time, there were something like 7 independent railroads from Chicago to Omaha.  Anybody here - other than the passenger train fans and rare-mileage riders - think that's not aa few too many ?

- The granger roads - such as across Iowa - often had lines built and stations located at intervals of something like every 6 miles.  Why ?  Because that was about as far apart as they could be for a farmer to get there and back in a single day with his horse team and wagon, whether he was delivering grain or picking up a package, etc.  Unless we now ignore the invention and development of trucks of all kinds and regress to the transportation technology of 100 years ago, that would still be way to many lines in too small of an area.

- Paul North.

 

[bobwilcox]

 I think the Pacific Harbor Lines at Long Beach/LA has been an outstanding success moving trains between the port and the UP or BNSF.

[Railway Man]

bobwilcox

 This may be changing the subject a bit but Central Montana story makes me wonder what is the most successful shortline operating today in the US.  I define success as a shortline that makes it investors, customers and employees smile.

Most successful?  Who knows?  But I think we could find a few that are standouts.  Finger Lakes Railway in Geneva, New York, comes to mind.

RWM

[bobwilcox]

Anyone smaller than a Class I.

MP173

Bob:

Good question.  Are you including regionals in the question?  What is the cutoff for shortline vs regional?

There is a shortline in Georgia (Sanderville Railroad) which handles kaolin clay in pretty big volumes.  My March 1971 Official Guide shows it has 9.1 miles of track. 

My 1998 Moody's Transportation Manual states that it operates 9.1 miles with 14.22 miles of sidings and .36 miles of trackage rights.  Further, the shortline had 3 locomotives and 544 freight cars.  No financial data given.

Anyone know about this line?

ed

 

[MP173]

Bob:

Good question.  Are you including regionals in the question?  What is the cutoff for shortline vs regional?

There is a shortline in Georgia (Sanderville Railroad) which handles kaolin clay in pretty big volumes.  My March 1971 Official Guide shows it has 9.1 miles of track. 

My 1998 Moody's Transportation Manual states that it operates 9.1 miles with 14.22 miles of sidings and .36 miles of trackage rights.  Further, the shortline had 3 locomotives and 544 freight cars.  No financial data given.

Anyone know about this line?

ed

[bobwilcox]

 This may be changing the subject a bit but Central Montana story makes me wonder what is the most successful shortline operating today in the US.  I define success as a shortline that makes it investors, customers and employees smile.

[VerMontanan]

There has been a recent controversy in Montana about (more or less) the effects of shuttle elevators other shippers.  One article is from the New York Times at:

http://www.nytimes.com/2009/12/27/us/27rail.html?_r=2

This is about how the Central Montana is being threatened, and the article makes it sound like a deliberate attempt to shaft the smaller railroad. All this really about that BNSF offers better rates to farmers/shippers when grain is shipped in Shuttle (110-car) movements. There are no shuttle facilities on the Central Montana Railroad, so the farmers are trucking their grain to the nearest places where there are shuttle facilities: Moccasin(Grove), Moore, and Carter. Offering a better rate for shuttle grain trains is true all over the country, not just in Central Montana.

The history of this shortline starts after March 1980 when the Milwaukee Road discontinued operations west of Miles City, Montana, and much of its track was abandoned. Some lines were kept in operation, and the biggest chunk in Montana to remain was around Lewistown. Burlington Northern took over the operation of routes from Lewistown to Heath, Moore, and Geraldine. The longest was the Geraldine segment about 80 miles. I have always wondered why BN took over these lines, but I imagine it had to do with politics as many were complaining about the BN's "monopoly" in the state after the pullout of the Milwaukee Road, Perhaps this was a way to somewhat appease the state.

In the mid-1980s, BN shortlined the Geraldine line and it became the Central Montana Railroad. In addition, BN also spun off a branch line from Moccasin to Spring Creek Jct. This allowed the Central Montana to interchange with BN on its main line at Moccasin. (Due to an unsafe bridge east of Spring Creek Jct., the Central Montana never operated to Lewistown, and its operations headquarters was established at Denton, Montana.)

Evidently, according to a similar article in the Billings Gazette, BN agreed to pay the Central Montana for every car it handled to interchange at Moccasin. This, in effect, resulted in the rate being the same for cars on the Central Montana as on nearby Burlington Northern, it's just that part of what BN would receive was returned to Central Montana to finance their moving the cars from Geraldine and or Denton (the two grain-loading points on the Central Montana) to Moccasin. The article in the Gazette states that BNSF was granted relief from paying the Central Montana by an arbitration panel. There is no other information in the article about this arbitration panel and its authority. The State of Montana wants to appeal in a local, district court, while BNSF says it needs to be heard in a federal court. My question is whether the arbitration panel really does have the authority to remove the subsidy. The article does not elaborate.

Almost all the grain shipped from the Central Montana railroad goes through Great Falls and then to the west coast, usually to the Portland/Vancouver area. On the Milwaukee Road, Geraldine was only 62 rail miles from Great Falls. But due to the instability of the roadbed along this part of the line, this section was abandoned in 1980. Cars now must move from Geraldine southeast on the Central Montana about 85 miles to Moccasin before moving a similar distance back west to Great Falls. In effect, BN was subsidizing the farmers who used the Central Montana to make up for the circuity of their shipments.

The circuity of the route is probably why, for instance, there is no shuttle train facility on the Central Montana Railroad. Another thing is track condition....good only for mostly 10 MPH, and also a horrible 1.5 percent grade for loaded cars near Arrow Creek, Montana (between Geraldine and Denton), which is a stiffer grade than anywhere on BNSF between Moccasin and Portland! And it's not like BNSF would have a problem if an grain company wanted to put in a shuttle facility off its line. BNSF interchanges shuttle trains for loading on shortlines like the Red River Valley and Western (mostly in North Dakota), the Minnesota Northern, and to other Class I railroads like CN and CP. Again, given the circuity of the route, the grade, and the poor track condition on the Central Montana, it's easy to see why shuttle facilities are on BNSF.

My question to the State of Montana, which owns the Central Montana, would be: What were your long term plans for the line? It's still not in very good shape. Were you ever going to upgrade it so it COULD accept shuttle trains, or was your sole strategy banking on a subsidy from BNSF in perpetuity? I think the state's court action answers that, so even if the state prevails, for now, it's obvious that it's probably not going to be enough to save this railroad.  I understand why the railroad like shuttle grain trains.  It’s much better utilization of equipment, and overall requires fewer of their people to move the product.  Whether it’s cheaper overall remains to be seen.  Clearly, the farmers central Montana think they can still come out ahead by driving longer distances to shuttle elevators (the article indicates that shipments on the Central Montana Railroad have declined in recent years).  On the other hand, there’s a cost for shuttle elevators, too: more maintenance to local roads that are seeing increased truck traffic en route to the shuttle facility, and in many instances, more product going longer distances by truck than they would have otherwise if loaded at multiple smaller (but nearby) elevators.  In other words, could local and state governments used some of the money they’re spending to fix up the roads being torn up by these grain trucks running longer distances on roads that weren’t designed for this kind of traffic to have instead given the railroads some kind of incentive to maintain service to smaller elevators at a competitive rate?  I really don’t think the railroads would be too impressed, but did they even try?

 

[blownout cylinder]

RWM:  OK--thanks for that answer! Now if only I could remember what a "force account" was----

[Andy Cummings]

Railway Man

I thought, perhaps in error, that what you were addressing earlier was the competitive position of country elevators shipping to a distant market vs. shuttle elevators shipping to a distant market.  The country elevators are at a disadvantage, and no jiggering of the railroad connections or service to the country elevator is going to upend that economic equation.

 

RWM — 

The initial question, as I understood it, related to whether railroads abandon lines in such a way as to prevent increased competition. My point was to give this example, which seemed to demonstrate that, yes, in at least one situation, this did occur. But you can find examples of anything if you look hard enough, and perhaps it's the exception that proves the rule.

I certainly agree with your point: shuttle loaders are efficient ways to move grain. Were that not the case, the Class Is wouldn't be pushing them so hard. Of course, there are exceptions: blended grains can't ship via shuttle, for example. And in the example I gave, PW didn't have to "win" a competitive war against the shuttle loader for the Class I to lose revenue; it merely had to siphon off some portion of the business.

Here's another interesting exception to the shuttle vs. smaller elevator question: In the James River Valley south of Aberdeen, S.D., BNSF and DM&E operate closely parallel routes. DM&E must use trackage rights over BNSF to access its route. BNSF serves the area through a shuttle loader at Mellette, S.D., while DM&E has three smaller loaders at Athol, Northville, and Mansfield, S.D.

In 2003, DM&E arranged for interline moves via CP to reach feedlots in Alberta. DM&E would gather units from the three elevators on its James River branch, move them to the BNSF connection at Redfield, S.D., then run BNSF trackage rights northward to Aberdeen. At Aberdeen, the train would use DMV&W rails to reach Hankinson, N.D., where it would be interchanged to CP. BNSF allowed one train to move this way, then refused to issue a track warrant to the next one, and the issue went to court. The suit was all about the original trackage rights agreement between C&NW (DM&E's predecessor) and Milwaukee Road (BNSF's predecessor). In the end, the suit settled when the state agreed to sell the "core lines" to BNSF in 2005. But BNSF was clearly eager to protect its Mellette shuttle loader against competition from the smaller DM&E loaders.

Anyway, I find this stuff interesting. Much as shuttles are tremendously efficient, the railroads themselves will tell you that there will always be smaller cuts moved as well. Though I suspect every year that goes by, we'll see a march toward a point where everything that can be moved efficiently by shuttle, will be.

[Victrola1]

Trench style warfare in the 19th Century resulted in overbuilding the rail network. Like the Western Front of 1914, you built to keep the enemy out of "your territory." It was a move to protect what was profitable with something that may well not be on its own.

Perkins of the C. B. & Q. and Gould of Wabash clashed throughout Southern Iowa and Northern Missouri. Perkins built heavily to protect "his territory" from Gould.

Like all wars, this one came to an end. The rise of the automobile and motor freight made these lightly used lines untenable. The C. B. & Q. started large scale abandonment in this area during the 1930's and 40's.

Little is left of these old battle lines. 

 

[Railway Man]

Andy Cummings

RWM —

Not sure I agree with you 100 percent in this situation. It exists in a state with local grain processors: ethanol plants, corn syrup plants, mills, etc., and it so happens the PW has access to some of these facilities. PW frequently makes hauls of 100 miles or less, moving small cuts of grain cars from elevators to the ag processing plants. It seems to me (correct me if I'm wrong) that if these processing plants are offering competitive rates, and if PW offers a cost-efficient haul, some of the grain that would otherwise move via shuttle (probably for export via the West Coast or Gulf Coast) might instead be diverted to the local processing plants.

Additionally, if you're a farmer, a small elevator that's 7 miles from your farm might look pretty appealing compared to a shuttle loader that's 30 miles from your farm, even if you can sell to the shuttle elevator for more money, no?

Local processing plants, if they want a feedstock, indeed are going to have to pay competitive prices for the grain versus a terminal market or export market.

I thought, perhaps in error, that what you were addressing earlier was the competitive position of country elevators shipping to a distant market vs. shuttle elevators shipping to a distant market.  The country elevators are at a disadvantage, and no jiggering of the railroad connections or service to the country elevator is going to upend that economic equation.

The farmer's costs for hauling grain 7 miles are less than 30 miles, but not proportionally less because most of the cost is in the first and last mile.

RWM

[Railway Man]

blownout cylinder

RWM--or anyone else who can answer this:  The shuttle elevators that I've seen have what appears to be "racetracks" that the cars and engines appear to be stored on. Who is responsible for the construction costs? And who maintains the switches and such on them?

 

Like almost all industrial tracks, the shipper or receiver is 100% responsible for design, construction, permitting, land acquisition, environmental problems, hazmat spills, and maintenance.  When you send the plan set to the railroad, the railroad charges you a fee for the review costs.  The switch off the main track is railroad-constructed and railroad-maintained, but the shipper pays for its construction on a force-account basis.  Any signaling system modifications that are required, as well as maintenance, are railroad-performed, but design and construction costs are paid for by the shipper on a force-account basis.

RWM

[blownout cylinder]

RWM--or anyone else who can answer this:  The shuttle elevators that I've seen have what appears to be "racetracks" that the cars and engines appear to be stored on. Who is responsible for the construction costs? And who maintains the switches and such on them?

[Railway Man]

Imisswc

These elevators must have alot of storage silos to hold that kind of product corn, grain ect.. I would guess most of these are on main lines not branch lines right?

At the origin of the grain, some shuttle elevators have substantial storage capacity.  Some others have little more than a train's worth.  The idea at most shuttle elevators is to not store grain but to run a just-in-time operation that calls for the grain to move from the field to the elevator to the train to the export terminal in as fluid and continuous a motion as possible to reduce handling costs, storage costs, and inventory cost.  What that means in practice is that farmers are building a lot more storage capacity on-farm then previously existed, not unlike an auto assembly plant's just-in-time operation resulting in the inventory collecting at the parts supplier -- makes the auto assembly plant look smart and efficient but in reality the inventory is still there, just hidden on someone else's books.

At the destination of the grain, most shuttle elevators have very large storage capacity because they need to be able to fill ships and not delay a ship, and the ship has a more unpredictable schedule.  A Handymax-size ship will absorb 5 trainloads.  Also, the export grain marketers want to be able to play the foreign grain markets as well as the bulk shipping market, and it's cheaper to store grain than it is to be caught out on foreign purchases, exchange rate fluctuations, and availability of ships.  Most grain ships are trip-charter/tramp operations and they chase markets.

Most origin shuttle elevators are on main lines.  Virtually all destination shuttle elevators are on main lines.  Most that are located on branch lines are not very far up the branch. The locations are marked on the railroads' web sites if you're interested.

RWM

[blownout cylinder]

Imisswc

These elevators must have alot of storage silos to hold that kind of product corn, grain ect.. I would guess most of these are on main lines not branch lines right?

Could be on both branch line and main as well. Not all shuttles are the same size either---

[Railway Man]

bobwilcox

 Does the BNSF restrict the number of trips a shuttle can make under the control of one freight payer?  I remember many years ago when the Northwestern started early grain trains we had a problem with keeping control of our cars.  Equipment was short so control of a equipment set became an advantage in the market place.  As I recall we finally put on a cap at 25 trips.

 

Not in the current tariff.

RWM

[Andy Cummings]

RWM —

Not sure I agree with you 100 percent in this situation. It exists in a state with local grain processors: ethanol plants, corn syrup plants, mills, etc., and it so happens the PW has access to some of these facilities. PW frequently makes hauls of 100 miles or less, moving small cuts of grain cars from elevators to the ag processing plants. It seems to me (correct me if I'm wrong) that if these processing plants are offering competitive rates, and if PW offers a cost-efficient haul, some of the grain that would otherwise move via shuttle (probably for export via the West Coast or Gulf Coast) might instead be diverted to the local processing plants.

Additionally, if you're a farmer, a small elevator that's 7 miles from your farm might look pretty appealing compared to a shuttle loader that's 30 miles from your farm, even if you can sell to the shuttle elevator for more money, no?

Appreciate everybody's input on this question.  

On the issue of shuttle trains, I encourage folks to check "Not your grandpa's grain train," which appeared in the April 2009 issue (last year's grain issue).  

Railway Man

Andy, you are describing one railroad with a high-cost operation attempting to compete with another railroad with a low-cost operation.  Expanding the reach of the high-cost operation is like trying to be the Rock Island, "we're losing money on every carload but we're going to make it up on volume."  In the scenario you describe, the railroad with the high-cost operation either came to its senses, or more likely, their equity and debt financing partners helped them come to their senses.

Or, your source was pulling your leg.  A country elevator is not going to be competitive with a shuttle elevator.  He can't pay as much for the grain he is buying from the farmers because his rail rates are higher.

RWM

 

[Imisswc]

These elevators must have alot of storage silos to hold that kind of product corn, grain ect.. I would guess most of these are on main lines not branch lines right?

[bobwilcox]

 Does the BNSF restrict the number of trips a shuttle can make under the control of one freight payer?  I remember many years ago when the Northwestern started early grain trains we had a problem with keeping control of our cars.  Equipment was short so control of a equipment set became an advantage in the market place.  As I recall we finally put on a cap at 25 trips.

[Railway Man]

 Yes, but the reasons for compartmentalization include reduction of contamination or pest infestation spread, abililty to better define the source of the commodity during testing of grade at destination (grain is not at all a uniform commodity), and adding structural integrity to the car.

RWM

[Murphy Siding]

Railway Man

Each car may only be loaded with one commodity

  Are covered hoppers compartmentalized, to be able to haul more than one commodity?

[Railway Man]

Imisswc

I have a dumb question, what is a shuttle elevator??

 

Not a dumb question.  Dumb would be not asking!

A shuttle elevator is an elevator that is approved to handle (and capable of handling) shuttle trains.  A shuttle train is a unit grain train of 110 cars, 5,161 cubic foot capacity each, that must load in 15 hours or less at its origin and unload in 15 hours or less at its destination. To qualify as a shuttle elevator, the elevator must be able to receive and depart the train as one string in one continuous motion (no doubling over, no switching of any kind by the receiving or terminating railroad), cannot foul the main line at any time while loading or unloading the train, holds the railroad's locomotives on-site during loading or unloading, and must be arrange to enable initial terminal inspection of the train on-site. Each car may only be loaded with one commodity and each train with a maximum of two commodities (e.g., corn, wheat).  The shuttle train may have only one origin and one destination, unlike a non-shuttle unit train which might have as many as 4 origins and 4 or more destinations.

Because it turns the railroad equipment (cars and locomotives) much faster than a non-shuttle train, and utilizes railroad personnel more efficiently, a shuttle train qualifies for a substantially lower transportation charge than a non-shuttle unit grain train moving between the same origin group and destination group. The faster turns enable the railroad to sell the use of the equpment more often in the same period, giving the railroad a greater return on its investment than a non-shuttle unit train.

Note there is no rule that a shuttle elevator not break the trainset apart for loading or unloading, but I can assure you that if you must break it into more than 2 pieces for loading or unloading, the 15-hour rule gets difficult to meet.  Most shuttle train elevators are set up either as a loop track for continuous movement of the train through the loading/unloading building, or as a long parallel track to the main track.  But I've approved some that do break the train into two, doubled-over by the originator or receiver into two load/empty tracks and pulled through the dumper in two cuts.

The current BNSF tariff on shuttle trains provides a $200 discount per car per train for a shuttle train with both origin and destination at shuttle trains, plus another $200 discount per car for a shuttle train that once made empty returns intact to another shuttle elevator to restart the cycle. 

Note that a shuttle train doesn't have to go to the same origin or destination elevator every next trip, just another shuttle elevator.  Often a customer purchasing a shuttle train certificate will cycle them between 10 or more origin points and 2-3 destination points for awhile, then relinquish the set.

These are BNSF rules.  UP is very similar.  CSX, NS, KCS, CP, and CN are different.

RWM

[Imisswc]

I have a dumb question, what is a shuttle elevator??

[Railway Man]

 

Andy Cummings

Falcon and list —

True story, but with names changed, told to me by one of the players involved:

The "Missouri, Illinois & Wisconsin" Railroad, a Class I, built a network of grain-gathering branches in a region of the prairies through a series of mergers and buyouts. A connecting short line, the "Podunk Western," operates a small network in that same region, a sort-of competitor at certain points, as PW has rights to interchange with both MI&W and other Class Is, plus serves some ag processing industries directly.

MI&W and PW do have a business relationship, and interchange cars with one another. Now, Class I MI&W owns a branch we'll call the Springfield Branch that connects to MI&W at one end and PW at the other. We'll say the MI&W connection point is Johnsonville, and the PW connection is Springfield. As time goes by we see the switch to unit-train-loading elevators, and as only small elevators are located on the Springfield Branch, MI&W decides it no longer wants to operate it. PW, on the other hand, makes its living off small elevators, and would love to pick up the customers on the Springfield Branch. But it doesn't offer to buy the line.

Why not? Because the bosses at PW get the distinct impression that MI&W management doesn't want competition for grain shipments out of the Johnsonville area. You see, a few miles north of Johnsonville, there's a shuttle loader on MI&W's main line, and MI&W is afraid if PW buys the Springfield branch, some of the grain that's currently shipping out via the shuttle loader will instead go to the smaller loaders on the branch, then to ag processors or foreign connections on PW's line. 

Since PW values its relationship with MI&W, its managers make the decision not to file an OFA. The real-life Springfield Branch has since been abandoned and salvaged.

Anyway, Falcon, in a sense this story is a counterpoint to what you're saying, but then again, it could be a rare exception. I found it interesting, and would be curious to get your thoughts, and of others who've participated in this sort of process.

Best,

Andy Cummings
Associate Editor
TRAINS Magazine
Waukesha, Wis.

Andy, you are describing one railroad with a high-cost operation attempting to compete with another railroad with a low-cost operation.  Expanding the reach of the high-cost operation is like trying to be the Rock Island, "we're losing money on every carload but we're going to make it up on volume."  In the scenario you describe, the railroad with the high-cost operation either came to its senses, or more likely, their equity and debt financing partners helped them come to their senses.

Or, your source was pulling your leg.  A country elevator is not going to be competitive with a shuttle elevator.  He can't pay as much for the grain he is buying from the farmers because his rail rates are higher.

RWM

[Bob-Fryml]

classicalman114

Bob-Fryml

Now let's entertain a dream.  What was essentially the Shore Line Route of the C.N.S.& M. could be resurrected fairly easily and at less cost than one might think. 

How, you ask?

1. Build a short, multi-billion dollar connection between the CTA's Howard St. terminal and the Kenosha Sub. - remember, this would be a State of Illinois government project (hence the outrageous price tag).
2. Hang wire all the way to Milwaukee!

An amusing fantasy, no?

Quite the fantasy. :) How much would option two cost?

My guess is this:  70-miles @ $3.5-million/mile including substations.  To be compatable with the C.T.A., 600-volt DC substations would have to be placed every 3-1/2 to 4-1/2 miles.  

[classicalman114]

Bob-Fryml

Now let's entertain a dream.  What was essentially the Shore Line Route of the C.N.S.& M. could be resurrected fairly easily and at less cost than one might think. 

How, you ask?

1. Build a short, multi-billion dollar connection between the CTA's Howard St. terminal and the Kenosha Sub. - remember, this would be a State of Illinois government project (hence the outrageous price tag).
2. Hang wire all the way to Milwaukee!

An amusing fantasy, no?

Quite the fantasy. :) How much would option two cost?

[Falcon48]

Andy Cummings

Falcon48

With respect to comments about railroads abandoning rail lines to "keep them out of the hands of a competitor", this isn't a viable strategy.  Under the "offer of financial assistance" provisions of the 1980 Staggers Act, a rail line approved for abandonment is available for sale to a person proposing to continue rail service for "net liquidation value".  If a railroad believes that a competitor might be interested in a rail line and wants to keep the line out of the competitor's hands the very last thing it would do is file for abandonment. 

 

Falcon and list —

True story, but with names changed, told to me by one of the players involved:

The "Missouri, Illinois & Wisconsin" Railroad, a Class I, built a network of grain-gathering branches in a region of the prairies through a series of mergers and buyouts. A connecting short line, the "Podunk Western," operates a small network in that same region, a sort-of competitor at certain points, as PW has rights to interchange with both MI&W and other Class Is, plus serves some ag processing industries directly.

MI&W and PW do have a business relationship, and interchange cars with one another. Now, Class I MI&W owns a branch we'll call the Springfield Branch that connects to MI&W at one end and PW at the other. We'll say the MI&W connection point is Johnsonville, and the PW connection is Springfield. As time goes by we see the switch to unit-train-loading elevators, and as only small elevators are located on the Springfield Branch, MI&W decides it no longer wants to operate it. PW, on the other hand, makes its living off small elevators, and would love to pick up the customers on the Springfield Branch. But it doesn't offer to buy the line.

Why not? Because the bosses at PW get the distinct impression that MI&W management doesn't want competition for grain shipments out of the Johnsonville area. You see, a few miles north of Johnsonville, there's a shuttle loader on MI&W's main line, and MI&W is afraid if PW buys the Springfield branch, some of the grain that's currently shipping out via the shuttle loader will instead go to the smaller loaders on the branch, then to ag processors or foreign connections on PW's line. 

Since PW values its relationship with MI&W, its managers make the decision not to file an OFA. The real-life Springfield Branch has since been abandoned and salvaged.

Anyway, Falcon, in a sense this story is a counterpoint to what you're saying, but then again, it could be a rare exception. I found it interesting, and would be curious to get your thoughts, and of others who've participated in this sort of process.

Best,

Andy Cummings
Associate Editor
TRAINS Magazine
Waukesha, Wis.

Not knowing the "real life" scenario, it's a little hard to evaluate it.  But, taking it at face value, if MI&W (the Class I) is really concerned about PW (the short line) possibly buying the line, how does it know that it can abandon the line without PW doing so? You might say it's simple - someone at MI&W just tells someone at PW that a purchase might be hazardous to PW's health.  But that's actually pretty dumb from an antitrust perpective.  After all, in your scenario, PW is a potential competitor to MI&W ("source competition"), and the purpose of the contact would be to secure an understanding that PW wouldn't enter the market. That is not a good thing to do, and can lead to serious liability - even criminal action - not to mention ending the careers of some MI&W people.  Believe it or not, Class I's are very sensitive to this kind of thing. 

Most likely, in your scenario, PW just unilaterally made the judgment itself.  And it probably misread the situation.  Look at it from MI&W's standpoint.  If they were really that concerned about a PW OFA purchase, but had no way to assure themselves that such a purchase would not be made (for the reasons stated above), they would have simply retained the line.  The fact that they pursued abandonment strongly suggests that they really weren't very concerned about the prospect of a purchase by PW or anyone else.  And it's easy to see why they wouldn't be that concerned - the "small elevators" on the line would not likely be very effective competition for the traffic moving from the nearby shuttle train loader on MI&W.