The railroads want to get back with the public would station to station LTL and package delivery.Back to the 1940s. I know that Railway Express Agency was rife with corruption and was very sick in its last see-Turtles to Tucumcari: A Personal History of the Railway Express Agency. But now UPS and and the Post Office trys its best to avoid rail. Nothing under 500 miles. But railway express was very efficant and even had same day service. The rements of the warehouses had pull tracks and a small army of workers. No town was not served by them. However I have noticed in Europe and Canada rail mail has gone too.
As far as I know what may be the problem of what is a railroad worker. If RR get into LTL would those workers fall under RR retirement and be more expensive so what UPS is outsourcing what REA used to do
Railroad intermodal already hauls for UPS, Fedex and a myriad of LTL carriers. You're thinking the RRs should set up shop and compete for this business?
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
I don't think the railroads will ever get back into the business of stopping at every small town they go through. Too many of the small passenger depots that used to house the Railway Express office have been torn down, sidings have been removed, and trains no longer even slow down at those locations.
They probably could do that. It would take a tunneling electron microscope to find any motivation for them to do so.
UPS, FedEx, DHL and USPS have the market and railroads have no financial incentive to enter it.
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Take a look at the web rail cams and pay attention to the intermodal trains. If one knows trucking, then it is pretty easy to determine what is being handled on the trains. The really hot intermodal trains still handle quite a bit of trailers and UPS, Fed Ex, YRC, and ABF are well represented.
If you are going to enter a market, there must be a compelling reason to do so and to use the capital necessary to go all in. LTL and parcel delivery is very expensive to operate with considerable fixed costs and traditionally operating ratios in the mid 80s - mid 90s. Rails have plenty of opportunity to allocate their capital on other projects which will yield a higher return.
Ed
ChuckCobleigh They probably could do that. It would take a tunneling electron microscope to find any motivation for them to do so.
Now, now, stop overestimating the amount of motivation the RR's have for package delivery. I think something like a particle accelerator would be more appropriate - the motivation would make a quark seem huge by comparison.
erikem ChuckCobleigh They probably could do that. It would take a tunneling electron microscope to find any motivation for them to do so. Now, now, top overestimating the amount of motivation the RR's have for package delivery. I think something like a particle accelerator would be more appropriate - the motivation would make a quark seem huge by comparison.
Now, now, top overestimating the amount of motivation the RR's have for package delivery. I think something like a particle accelerator would be more appropriate - the motivation would make a quark seem huge by comparison.
BaltACD UPS, FedEx, DHL and USPS have the market and railroads have no financial incentive to enter it.
ChuckCobleigh erikem ChuckCobleigh They probably could do that. It would take a tunneling electron microscope to find any motivation for them to do so. Now, now, top overestimating the amount of motivation the RR's have for package delivery.
erikem ChuckCobleigh They probably could do that. It would take a tunneling electron microscope to find any motivation for them to do so. Now, now, top overestimating the amount of motivation the RR's have for package delivery.
Now, now, top overestimating the amount of motivation the RR's have for package delivery.
Reminds me of an old Punch cartoon from the '70s -- picture of scientist intently peering into complex apparatus, with caption like "analyst inspects 197x British defense budget..."
Yeah, Amy Farrah Fowler keeps mentioning a two-photon microscope on "The Big Bang Theory." I guess I need to keep up-to-date, as the TEB microscope reference was used in a "Frasier" episode more than 10 years ago. In either case, you are right in suggesting I may be overstating the interest level.
UPS 5-year average ROI = 10.43%
FedEx " " " = 7.22%
NS (#3 in the industry) = 5.88%
UP (#1 in the industry) = 7.61%
CSX (#2) = 6.09%
Average of those 3 = 6.53% vs 8.82% for UPS and FedEx.
Looks to me like package delivery is better by more than 2%.
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schlimmLooks to me like package delivery is better by more than 2%.
Do your numbers for Federal Express include all divisions, including Ground? If so, you could make the point somewhat better by breaking out Express and Custom Critical, and perhaps (if there is a clean way to do it) the two- and three-day package deliveries that often go by Ground but have premium pricing.
On the other hand, part of this discussion is the actual QoS that a railroad's package delivery service could provide. If it's going to match FedEx and UPS it's going to have to have local delivery infrastructure... well, just about everywhere. Amtrak Package Express was a cute idea, but driving to the station to drop packages off, and having the recipient drive to retrieve it... that's what truck freight companies do, and it's something of a mockery of what competing package services already do.
What I see when I look at the statistics provided is how LITTLE a margin over existing profitability there would be in a package delivery modality ... for a very, very large capital investment in all sorts of equipment, personnel, and training, and the need to carve out enough of a niche in an already-competitive package delivery market.
Wizlish schlimm Looks to me like package delivery is better by more than 2%. Do your numbers for Federal Express include all divisions, including Ground? If so, you could make the point somewhat better by breaking out Express and Custom Critical, and perhaps (if there is a clean way to do it) the two- and three-day package deliveries that often go by Ground but have premium pricing. On the other hand, part of this discussion is the actual QoS that a railroad's package delivery service could provide. If it's going to match FedEx and UPS it's going to have to have local delivery infrastructure... well, just about everywhere. Amtrak Package Express was a cute idea, but driving to the station to drop packages off, and having the recipient drive to retrieve it... that's what truck freight companies do, and it's something of a mockery of what competing package services already do. What I see when I look at the statistics provided is how LITTLE a margin over existing profitability there would be in a package delivery modality ... for a very, very large capital investment in all sorts of equipment, personnel, and training, and the need to carve out enough of a niche in an already-competitive package delivery market.
schlimm Looks to me like package delivery is better by more than 2%.
blue streak 1Actually the RRs are in it by allowing the above companies to do what they do best. That is the RRs financial interest. The RRs do the intermediate haul for the aabove companys
schlimm... if you can invest in a business activity that returns ~33% more on the dollar, that would seem to be an easy choice.
The issue is whether you want to spend what may amount to a considerable multiple of the percentage gain in return, with non-trivial risk factors, and that may be far from an easy choice.
To use an analogy from another thread -- if you had to spend 3.9 billion for a World Trade Center PATH station, and then justify the investment in terms of farebox return, do you think a 33% increase in the farebox return would be adequate?
ROI is a major factor in investment decisions. To use another analogy, if I want to purchase a preferred class stock for income purposes, and one yields 4% and another 6% (with equal risk) which one would you choose?
Fedex and UPS (and some others) are already doing a great job with overnight package delivery. Aside from lower prices, railroads have nothing to offer this market that would be considered an added value to consumers. Now LCL FREIGHT is an altogether different story: railroads could get back into that maket, and IMHO they're leaving alot of money on the table that is currently going to freight forwarders and consolidators/distributors.
UlrichNow LCL FREIGHT is an altogether different story:
LCL faces the same major hurdle that packages do - the infrastructure is no longer in place to handle it. Team tracks, freight houses, even stations with sidings, no longer exist.
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That's true, but getting into LCL could also be accomplished by purchasing an existing forwarder... profits that had accrued to the forwarding co. would then flow to the railroad instead. And LCL service standards fit in with rail capabilities. As an added bonus, such an acquisition would be easier than puchasing or merging with another railroad.. less regulatory pushback.
Where would the railroads find the extra capacity to handle packages or LCL, both of which are presumed to move faster than standard freight?
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Murphy Siding Where would the railroads find the extra capacity to handle packages or LCL, both of which are presumed to move faster than standard freight?
1. Where did they find it before when most freight moved slower?
2. As bulk cargoes, such as oil, lessen, the capacity will be there. And LCL is a more steady business.
3. The ROI is better than what the railroads currently achieve with their traffic mix. Why not go after business that was abandoned in the past, like this or frozen meat, as greyhounds suggested earlier?
schlimm 1. Where did they find it before when most freight moved slower?
Not really. LCL is HUGELY seasonal, peaking right before Thanksgiving and then the week before Christmas. Besides they are already carrying a huge slice of the LCL business, why would they want to set up a business to attract the business they already haul?
3. The ROI is better than what the railroads currently achieve with their traffic mix.
For the line haul yes, but that probably doesn't include all the trucks, drivers, retail establishments, mixing centers, advertising overhead that would be required to support an independent distribution network. Back in the 1970's and 1980's the railroads tried this and is was a dismal failure.
Why not go after business that was abandoned in the past, like this or frozen meat, as greyhounds suggested earlier?
They have, that's why all those brand new reefers are floating around out there. Remember also that the meat trade didn't move in railroad cars, they were all mostly privately owned. Many of the intermodal trains carry refrigerated trucks or containers that carry foods and meat, its just not that visible unless you are specifically looking for it.
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dehusman2. As bulk cargoes, such as oil, lessen, the capacity will be there. And LCL is a more steady business. Not really. LCL is HUGELY seasonal, peaking right before Thanksgiving and then the week before Christmas. Besides they are already carrying a huge slice of the LCL business, why would they want to set up a business to attract the business they already haul? 3. The ROI is better than what the railroads currently achieve with their traffic mix. For the line haul yes, but that probably doesn't include all the trucks, drivers, retail establishments, mixing centers, advertising overhead that would be required to support an independent distribution network. Back in the 1970's and 1980's the railroads tried this and is was a dismal failure.
2. I was referring to a longer time span.
3. The ROI figures include all of the costs you mention. Why not get into a more profitable sector? Or at least buy out an existing forwarder? The rails already carry the LCL and packages wholesale, so why not get a much larger portion of the pie? FedEx was a start up. Probably the naysayers back then asked why try to compete in an already crowded, compative sector.
dehusmanWhy not go after business that was abandoned in the past, like this or frozen meat, as greyhounds suggested earlier? They have, that's why all those brand new reefers are floating around out there. Remember also that the meat trade didn't move in railroad cars, they were all mostly privately owned. Many of the intermodal trains carry refrigerated trucks or containers that carry foods and meat, its just not that visible unless you are specifically looking for it.
I suggest you look at the earlier threads concerning this that greyhounds posted. It was his area of expertise.
schlimmschlimm wrote the following post 4 hours ago: dehusman Why not go after business that was abandoned in the past, like this or frozen meat, as greyhounds suggested earlier? They have, that's why all those brand new reefers are floating around out there. Remember also that the meat trade didn't move in railroad cars, they were all mostly privately owned. Many of the intermodal trains carry refrigerated trucks or containers that carry foods and meat, its just not that visible unless you are specifically looking for it. I suggest you look at the earlier threads concerning this that greyhounds posted. It was his area of expertise.
Very little animal protein (meat/poultry) moves by rail in the US. There is some frozen product for export, that's about it.
There is currently a demonstration project underway moving fresh meat by reefer car from a Missouri River point to the northeast. This project seems to be working quite well.
It wouldn't mean anything that meat by rail, when it moved, moved mainly in private equipment. But I don't think that was so. Railroads had large reefer fleets, usually through subsidiaries specializing in temeperature controlled transportation. Merchants Despatch of the NYC was one of these subsidiaries. They hauled a lot of meat.
I've run in to two basic responses when I try to talk to railroad folks about the heavy volume, long haul opportunities meat presents.
1) They deny the business exists. This is straight out of John Kneiling's: "If we don't haul it it doesn't exist" experiences.
2) They develop a far away blank stare.
But hey, there is something brewing.
Finally, I'll repeat the well proven statement: The railroads did not "Loose", "Walk away from", or in anyway voluntarily shed the LCL business or the perishable business. They were driven out by inane government regulation. Regulation was born out of flat out ignorance and that did hurt the US economy and the American people.
Once you get forced out of a line of trade that requires special expertese, it's Hell to get back in.
greyhounds said: "...But hey, there is something brewing..."
And this: "...Finally, I'll repeat the well proven statement: The railroads did not "Loose", "Walk away from", or in anyway voluntarily shed the LCL business or the perishable business. They were driven out by inane government regulation. Regulation was born out of flat out ignorance and that did hurt the US economy and the American people.
Once you get forced out of a line of trade that requires special expertese, it's Hell to get back in..."
Greyhounds is the expert in this as far as the Rail side of it and his experience with those organizations.
I cannot speak to any other areas, but out here ( along side the BNSF) they certainly seem to be moving plenty of LCL type sutff.. U.P.S and FedEx logo'ed equipment riding the TOFC in solid trains, and in mixes with COFC as well... Not to mention the other OTR Companies that are riding the rails as well...I know they are LTL and paying premiums for their service point to point. I am also seem a lot more trailers with their reefers on and working. I am not sure the railroad needs to be in the 'loose freight business' at this point. They seem to be doing very well at what they do, and demand premium services for their services... Let the poeple who have the distribution networks step in and do what they do well. For the railroads to get back in the 'package delivery' or 'pool car' business would seem to be almost like reinventing the wheel. The Railroads have stepped into a void that the truck companies have created for themselves....Things have changed, in the trucking industry, more truckers are more interested in getting into, or staying in their 'home' regions( certainly facilitated by State and Federal enfiorcement of more and more regulations)...The railroads have facilitated that, stay in home region, desire with their services. In practically all facets of the trucking industry, they are experiencing shortages of drivers willing to 'stay out' for long periods of time.
If any RR wanted to move into the package carrying business as in days of olde, the best way to do that would be by purchase of one of the companies that already does it-UPS, Fed Ex, DHL, etc. The cost involved in setting up a new national collection and delivery network would be ruinously expensive-and that's just for the hardware, terminals, vehicles and staff. Add in the cost of marketing to let the world know you are (yet another) company to ship packages with and you have mortgaged your entire future. And maybe the one after that, too.
But if, say, Union Pacific wanted to become the UP in UPS or CSX wanted to be CSFedEx, there is still the problem that the package delivery guys go everywhere and RR's don't. I'm not talking about every little town that no longer has tracks, let alone a depot, let alone an agent. I mean geographically. The package delivery guys are truly national. US RR's aren't-and aren't likely to be. So, either a RR absorbs a package delivery network that operates mostly beyond their service territory or a package delivery company absorbs a volume freight hauling network that only helps than in a limited area (and comes with other freight like chemicals, autos, steel, coal, oil, grain, etc. that is nothing like they have any experience handling).
It would make UP's merger service meltdowns look like overnight double rush express delivery. The two businesses are compatible but not comparable.
Ulrich Fedex and UPS (and some others) are already doing a great job with overnight package delivery. Aside from lower prices, railroads have nothing to offer this market that would be considered an added value to consumers.
Fedex and UPS (and some others) are already doing a great job with overnight package delivery. Aside from lower prices, railroads have nothing to offer this market that would be considered an added value to consumers.
One thing to remember - UP was the owner of the trucking company 'Overnight Express'; they sold it to UPS.
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