Why dont Railroads use Brokers for there Carload traffic?

[Anonymous]

They use the HUB Group and pay them a commision for each trailer that they load but won't use independent outside sales people(Brokers) to find loads for empty boxcars like the truckers do. As a result a empty boxcar can go for hundreds of miles to find a load. At the truckstops there is computer screen that independent truckers can get there loads but te railroads wont even look at this to fill there boxcars and trailers.

[Anonymous]

Actually brokers are used to fill all sorts of railroad cars. For example lumber brokers who generally work as an intermediary between the sawmill and lumber yard or reloads. They don't work for the railroad but provide numerous loads just the same.

LC

[tree68]

I have an aunt who did precisely that in the lumber business before she retired.

[MP57313]

Years ago I was in a class with someone who did this for a living.

[Anonymous]

Railroads in general actively discourage the 'small volume' shipper. The logistics and efforts required to switch a free running box car around a terminal, or between terminals to service a one shot customer for one box car load is not financially rewarding.

The railroads stock in trade is 'semi-predictable' levels of traffic between established existing customers. These customers have specific equipment requirements to most effectively handle the shipment of their product. These customers also have a sufficient volume of traffic that it benefits both the customer and the railroad to have specific cars assigned to their service, moving loaded in on direction and moving empty back to the shipper on the return trip. Rail sales people are always looking for companions moves to increase the utility of such cars, such has loading product from A to D, moving empty from D to F and moving 'raw' materials from F back to A. Those moves exist, but they are rare.

Railroads operate best when they are predictable, both in the timing of movements and in the volume of movements. Railroads tend to become congested and inefficient when it loses it level of predictability. Actively seeking the small one off shipper would increase the level of unpredictability, and thus increasing the potential for congestion.

[Junctionfan]

That's probably why the railroads should invest in transloading facilities. Switching 1 or 2 cars for 12 different industries is not profitable but switching 12 or 24 cars for 12 different industries at 1 location would be. Not to mention you could make some money on storage fees.

[Junctionfan]

I'm glad some are. CN doesn't as much even though the opportunities are great. They just don't really seem to be too interested in it.

[Anonymous]

QUOTE: Originally posted by M.W. Hemphill

Andrew: With all due respect, you do not know that! What are your qualifications for saying that CN's opportunities are great but they're uninterested (apparently for no good reason)? Show me your 1000-page, $100,000 market analysis that justifies the decision to build just one of these expensive centers and reorient the railroad's pricing, marketing, and operational strategies to make them valuable, and attach to it, please, your net present value analysis of why CN is being obtuse. You have my e-mail address. Until then, I'll respect the railroad's decisions, because they have the data, experience, and knowledge at their fingertips, and WE DO NOT.

Thanks Mark, fior saying pretty much what I (and I'm sure others) were thinking.

LC

[Anonymous]

QUOTE: Originally posted by M.W. Hemphill

Andrew: With all due respect, you do not know that! What are your qualifications for saying that CN's opportunities are great but they're uninterested (apparently for no good reason)? Show me your 1000-page, $100,000 market analysis that justifies the decision to build just one of these expensive centers and reorient the railroad's pricing, marketing, and operational strategies to make them valuable, and attach to it, please, your net present value analysis of why CN is being obtuse. You have my e-mail address. Until then, I'll respect the railroad's decisions, because they have the data, experience, and knowledge at their fingertips, and WE DO NOT.

One interesting thing is that Class 1s, like many BIG businesses, cannot seem to get off their collective hind quarters and get anything done.

A great example is reload facilities. Short lines and regionals run rings around the Class 1s in terms of setting up and operating or contracting these facilities. Yes, I'm aware that some of them, BNSF in particular, are now getting into this area. It has been a long time coming.

One guy I knew with an honors PhD in Economics from a good University put together an excellent proposal for three short lines in the LA area some years ago. Part of the proposal was an intermodal facility in San Bernadino to be served and operated by the short line in conjunction with the ATSF. The proposal with in depth economic analysis was presented to the Santa Fe, who ultimately decided not to spin off the lines. Interestingly enough, the value of the economic forecasting wasn't wasted. Just go see the intermodal yard BNSF built in San Bernadino a couple of years later...

LC

[Junctionfan]

Well I guess I'm choking on my foot again because I went on CN's website to find that they DO have quite a few transload facilities in fact some that I have never heard about until recent. I am going to my club tonight so I'll ask my club members about some of the ones in my area. I'll report back to the forum tonight afterwards.

[Anonymous]

So what you are telling me is that Railroads cant do everything that used to do in the era from 1850-1979...That LCL,LTL and express is not profitble. That single car railroading is not worth the railroads time? That Railroading is a very specialsed transportation industry capable of doing only a few things well or right? That railroads are not a panacea to our nations transportation and enviromentle woes? Am I supposed to unlearn everything that I have been taught Mr Hemphill? Please tell me when did Trains magazine become a apolagist for the railroad industry? Amtrak Express was a great idea whos time had come and why is no one complianing that they are selling off there Express boxcars at way below market rates? I believe that something fishy is going on here

[dharmon]

QUOTE: Originally posted by Clevelandrocks

I believe that something fishy is going on here

Me too.........

[Anonymous]

Yes. Like amtrak selling there boxcars for 3-5000.00 each when new boxcars go for 20-30,000 each...Check the black books for this

[Anonymous]

QUOTE: Originally posted by Clevelandrocks

So what you are telling me is that Railroads cant do everything that used to do in the era from 1850-1979...That LCL,LTL and express is not profitble. That single car railroading is not worth the railroads time? That Railroading is a very specialsed transportation industry capable of doing only a few things well or right? That railroads are not a panacea to our nations transportation and enviromentle woes? Am I supposed to unlearn everything that I have been taught Mr Hemphill? Please tell me when did Trains magazine become a apolagist for the railroad industry? Amtrak Express was a great idea whos time had come and why is no one complianing that they are selling off there Express boxcars at way below market rates? I believe that something fishy is going on here

The railroads until 1979 were a heavily regulate industry and where rates between A and X for a commodity were the same, not matter the carriers involved in the haul.

In 1980 the Staggers Act took effect and allowed the railroads to compete in a deregulated enviornment. In that enviornment they were allowed to set their rates on a market basis and also on a cost basis. Once the railroads had to accurately cost the services they had been providing in the Regulated era, they found out that they were losing vast sums handling various commodities on various routes and under specific circumstance. The light bulb lit.

Today's railroads seek traffic that will compensate them for handling it. If the traffic doesn't bring money to the corporations bottom line the railroads raise the prices to the level necessary to make money on it. With the raise in prices some shippers decide, for market reasons, there is a better was to handle their shipping needs. Some shippers continue to ship rail and the increased revenue comes to the bottom line.

Railroads are in business to make money, not just to haul traffic and especially not to haul traffic that cost more to haul than is received in revenue.

[Junctionfan]

Well I never asked that night. I'll have to ask next Tuesday night when we aren't freezing our butts off.