Railroad Capacity

[Anonymous]

http://www.sltrib.com/2004/Jul/07042004/business/180807.asp

SUNDAY July 04, 2004

Railroad industry determined to remain on track

By John Eckber
Gannett News Service

Reports of the demise of the railroad freight industry appear to be premature.

In fact, U.S. railroads say they expect to hire 80,000 workers before the end of the decade.

Though total track-miles have fallen from 319,000 in 1970 to 170,000 last year, that decline has not
led to a corresponding swoon in rail transit. In fact, companies are increasingly turning to
railroads to move material:

* Highway congestion and new federal regulations restricting the hours that truck drivers can remain
behind the wheel are making less-congested rail lines a viable alternative.

* As fuel prices continue to soar -- threatening to force trucking companies to raise their fees --
railroads are more attractive as an economical way to long-haul goods to many markets. Of course,
once in a location, trucks still have to be called on to get most goods to a final destination.

* As operating costs rise for trucking companies, manufacturers and wholesalers are looking for ways
to trim their bottom-line transportation costs.

All of which mean that trains as a player in the market supply chain are growing in importance --
and so is demand for people to manage the flow of freight.

"Every company is looking for better [profit] margins because that goes right to [the] bottom line.
What we have are the rails of the country undergoing a renaissance," said Gary Sease, spokesman for
CSX Transportation Inc. The Jacksonville, Fla.- based railroad unit of CSX Corp. employs 34,000 in
23 states and two Canadian provinces.

Despite the pressures on trucking, that industry, too, continues to benefit from the nation's
recovering economy and its volume of goods is rising as well, said Mike Gorman, a transportation
expert and professor of management information systems, operations management and decision sciences
at the University of Dayton.

But a federal hours-of-service law, which reduces the time a driver can drive from 12 to 10 hours,
went into effect Jan. 1 and has tended to curtail the movement of goods by trucks.

"Truck drivers are in short supply anyhow, so that further limits the supply. With the new rule,
every truck trip takes a little longer and the law means that drivers are, well, busy resting
instead of busy driving," Gorman said.

Railroads offered an average salary of $61,895 in 2003, according to the Association of American
Railroads. Locomotive and freight car maintenance specialists earn an average of $48,853, while
conductors earn an average of $67,128 and locomotive engineers earn an average of $75,162 and peaks
at $110,000.

Josh Williams, 22, came to the Butler County, Ohio, training center of AMDG Inc., a private school
that trains people to be railroad workers, about five weeks ago to learn to be a conductor.

"My grandfather worked on the railroad for 30 years. I've kind of lucked into this and decided it
would be a real good career," said the former telecommunications major at Lincoln Trail, a junior
college in Robinson, Ill. "They said within five years I could be promoted to engineer. And that's
maybe a $50,000 job. You work extra, maybe it's $100,000."

[Anonymous]

Routings can be complex. Often the most efficient routings don't necessarily involve the shortest distance, but rather the smallest number of different railroads.

LC

[dehusman]

So when you fly, you'll fly by the direct route, no matter how much it costs, no matter how many times you have to change planes, because the cheaper air fare may require you to go through Denver or Memphis or Atlanta?

How do you know it will be faster? What happens if you lose a day on each interchange? You are assuming that a train will pick the car up from interchange going in the direction you want the car to go and take it directly on its next leg. Unless its a run through operation, you will probably lose a day or more on the connection and then that train will have to be switched someplace. Just because its a shorter mileage route, doesn't mean its a shorter time route.

Dave H.

[edblysard]

The quickest route isnt always the cheapest.
Belive it or not, it may be cheaper for the shipper to let the railroad drag it all the way around the world, instead of paying several different rates and switching charges.
If you didnt know, it cost every time a car is switched, in a yard.
If I have to move a car more than once, it becomes a special switching move, and we charge.
And, like everybody above stated, this is a for profit business, why would we give business away to our competiors, unless directed to do so by the shipper?

Ed

[Anonymous]

QUOTE:
It all boils down to $$$ not efficiency.

Exactly, if the freight isn't running on their tracks they aren't cashing cheques.

It's all about the bottom line.

[Anonymous]

QUOTE: Originally posted by garyaiki

Jim,

A railroad has an incentive to hog cars for the whole route. But when capacity is tight they have an incentive to pass cars to another railroad. A smart railroad would adapt when they reach capacity. Are you saying they still hog cars even after they reach capacity?

What I am saying is basically this: Railroads do not use the shortest routes or allow other railroads to get a car to its destination when it could be done so quicker. In some cases a car could save at least 8 or 10 hours (maybe even more) if another railroad was allowed to accept the car. But instead of giving it up to another railraod which has a quicker route the first railroad will "hog" it. It will still get to where it is going, but it will take at least 1/2 day longer (or more). It all boils down to $$$ not efficiency.

[Anonymous]

But it's fairly simple Jim, if they aren't moving the cars on their line, then they aren't getting paid for them, and therefore not making any money.

Like garyaiki said, if the railroad does become bogged down, then they may have more insentive to pass the car onto someone else, otherwise they'll do their best to handle the cars all the way on their lines if it's possible.

[Anonymous]

Jim,

A railroad has an incentive to hog cars for the whole route. But when capacity is tight they have an incentive to pass cars to another railroad. A smart railroad would adapt when they reach capacity. Are you saying they still hog cars even after they reach capacity?

[Anonymous]

L C, Go back to work. [;)] [;)] [}:)] [;)] [;)]

Just joking. [}:)] [;)] [:p]

Maybe some of the abandoned lines will be brought back into service. Some might need a little rehab but if they are still there maybe it is time to use them again. If the Class 1s don't want those lines then let a regional or short line use them.


I didn't want to start a new thread but I have an observation and sort of a question to ask. It is somewhat related to the capacity issue, and somewhat related to $ $ $. But anyway, has anybody noticed how a railroad doesn't always ship a boxcar (or other car) on the shortest route? Instead of interchanging it to another railroad that has a straighter and faster route they will haul it "round about" "their" system so they can keep all the $ $ $ for hauling it around. Here is an example (and I won't mention any railroad names, because I don't want to play any railroad games [;)] [:D] ). One railroad will bring a car into the northwest corner of a state. There is an interchange point there. However, railroad A will keep the car and not interchange it. Railroad B could accept the car but Railroad A won't give it to them. Railroad B could have the car in the southwest part of the state in 3 or 4 hours. Roadrail A sends the car to the mid cental part of the state where it has a large rail yard. The car must be "classified" , humped, and put into another train. There a new set of power is assigned to the train and a crew called. But the car has traveled an additional 4 or 5 hours, then humped and all, taking another 4, or 6 hours. Then put into a train to leave town. Another 2 hours or so. Then it will travel 4 or 5 hours to get to the southwest part of the state. All in all Railroad A has had the car for 10, or 12 hours (if not longer) trying to keep all the $$$ for hauling that car. Railroad B could have had the car to the southwest part of the state in 3 hours or so whereas Railroad A took many hours longer to get that car there. Now I know this is greately simplified and might even "ruffle" some feathers. But if railroads would cooperate more and develope a more efficient routing system (and not be greedy) then the capacity issue might not be such a big issue at all. If rail service became better and car delivery time decreased then more companies might go back to rail shipments. Well I bet this get some comments now. [;)]

Should I lock myself in the storeroom now or later? [}:)] [;)]

[edblysard]

Careful, guys...
Dont confuse capacity with storage space.
Capacity, in the context of the story, means how many trains you can run over a given section of track in a fixed amount of time(24hours).
Which is why UP and BNSF dont add more tracks on their transcon routes, it wouldnt make that much difference.
Now, if they can figure out how to run more, bigger trains on the track they have, then their capacity (to handle cars)increases, more cars moved equals more revenue earned.
Most of the time, cars sitting still earn no one any money.

Track mileage dosnt equate into capacity, almost every major railroad has more track than they can use now, and keeping it in shape cost.

Every single customer's car you get headed in the right direction, and keep headed that way, means you increased your capacity, which keeps your railroad fluid, which should mean your railroad can increase it's....

Ed

[JoeKoh]

LC
ns has 6 tracks rusting in montpelier ohio on the old wabash line.if they need storage space there it is.
stay safe
Joe

[Anonymous]

As noted in the August Issue of TRAINS, particularly by industry pundit Larry Kaufman, capacity on our rail network is getting quite strained. Customers want more and better rail service as an alternative as trucks become more dificult to use and more expensive with the tightening of trucking regualtions on hours of service, vehicle emissions and rising fuel costs.

At the local level on the railroad this increased demand manifests itself as more trains than crews, frequent calls on off days and customers complaining about inadequate or outright unavailable car supply for certain commodities.

Calls for better service have reached short lines as well where the 286K issue has become more prevalent as a result. Will this result in a more in depth look by the government or others into the needs for 286K capacity on Class 1s and smaller roads? Will RRs be able to raise rates as a result of this new surging demand outpacing supply and build a larger car fleet and achieve returns on investment greater than the cost of capital?

See what happens when I get a vacation. I have some time to think...

LC