The reply from Triple Crown should speak volumes....the financial reward does not meet the risk involved.
Good point CN on the JBH model. I talked to an old acquaintance who was an over the road driver for ABF (great job, Teamster, line haul between terminals, etc) who recently retired. His son is 28 and is a JBH OTR driver operating out of Chicago with a sleeper unit. He handles intermodals within 400 miles of Chicago and really likes it.
Watching NS intermodals with JBH units, it is obvious they concentrate of volume movements from key locations to a few terminals. There are no JBH on the Detroit trains, but there are on the Columbus, Ohio trains. Why? Lots of distribution centers in Columbus and the movements are coming on trains from BNSF. The daily Detroit intermodal is usually overseas containers...probably auto parts and it is usually only about 50 containers per day.
You need volume in the intermodal business for it to work. If you are going to lease refer units at $1500 per month....you better get 4 turns per month, maybe more.
ed
CNSFWith the right trucking partner, highway to Chicago and Omaha and rail beyond to markets in the northeast and on the west coast should work economically for the Iowa traffic. I'm a bit surprised no one's tried it.
Oh, I once had the bright idea to do something like that.
There are four large meat plants reasonably close to Chicago:
1) Tyson in Geneseo, IL (Beef - I'm figuring about 2,500 head/day)
2) Tyson in Columbus Jct., IA (Pork - 9,500 head/day)
3) Smithfield/Farmland in Monmouth, IL (Pork - 10,400 head/day)
4) Jonsonville in Momence, IL and Watertown, WI (Pork - combined 2,300 head/day)
I conceptualized arranging funding for 25 or so refrigerated RoadRailers at $80,000 each. (fat chance of that) Then using existing Triple Crown service to move the meat to eastern population centers. (Truck to Chicago, Triple Crown train east of Chicago.) The 25 RoadRailers would be more or less a demonstration of the feasibility of such an intermodal movement of meat.
I decided to talk to Triple Crown first. I wanted to see if they were receptive to putting privately owned reefers on their trains before I spent a lot of time doing research and working through the details. They were not at all receptive. The woman in Ft. Wayne wouldn't let me get beyond about three sentences. She told me they did not handle temperature controlled shipments.
I tried to say: "I know that but ..." She would not let me get any further. She just kept repeating with ever more emphasis that they would not handle the freight even if it showed up at their Chicago terminal in a RoadRailer vehicle.
After a few tries I just gave up. Screw you lady and your Triple Crown trains. This was basically no risk to Triple Crown. And I couldn't even get the base concept outlined over the phone without being told an emphatic "NO".
Today, Triple Crown does offer refrigerated service. In conventional TOFC trailers, not RoadRailers. Maybe she didn't like the way I sounded.
I think the biggest hurdle to this working is the Chicago hurdle...and it is pretty big.
I enjoy looking at these issues and this one has certainly caused us to scratch our collective heads and examine cost structures and challenges. I would not put up any capital (of my own or that in which I would be held accountable for) in this project. The rewards for the risk involved are simply not there. I would demand a very high rate of return to compensate for the risk (Chicago).
Also, consider the recent bankruptcy of a fruit/produce expeditor when BNSF suddenly decided it was much more lucrative to haul explosive oil rather than greens....and I cannot say that I blame BSNF for their decision.
CSX and NS both run hand off intermodal trains from UP and BNSF in Chicago. These are volume driven trains, primarily with overseas containers from UP and overseas plus JBH from BNSF. These are also specific destination trains, primarily to Harrisburg area and other vast distribution center clusters. I dont see the volume yet, nor do I see the cooperation between CN and the eastern carriers.
Indiana Railroad/CN is a great example of what can occur with established trains and capacity...along with lower valued time insensitive freight. Meat in my opinion doesnt fit that model.
Keep up the conversation tho, it has been a great one.
Ed
MP173So, let's put this in dollars and cents. If it were up to you, would you invest your capital in such a project. I am not talking about the actual railroad, that is capital intensive, but let's say: 1. Soliciting the business in Iowa and backhaul from east coast. 2. Leasing or purchasing refer trailers or containers. 3. Arranging for drayage on both ends. 4. Administration. Would you throw down $2million to start this up? Ed
Ed,
We're not finished putting it together yet.
Basically you've described the hurdles involved in any intermodal business development. (except for reefers instead of dry vans) It's something that's done regularly.
As for the $2 million, it's all going to depend on acceptance by the three targeted main shippers. If they make some kind of commitment to use the service at the required volume the money should be available. I certainly do not have $2 million. But there are entities that are looking for places to invest such money. If they see a good potential for a good return on their investment.
I see this concept as having good fundamentals. It's got the length of haul needed for rail intermodal to be competitive with motor freight and the truck driver shortage is only going to get worse. Quality intermodal service is already available east of Chicago and this business would just be incremental to that existing service.
Someday, maybe, we'll see.
So, let's put this in dollars and cents.
If it were up to you, would you invest your capital in such a project. I am not talking about the actual railroad, that is capital intensive, but let's say:
1. Soliciting the business in Iowa and backhaul from east coast.
2. Leasing or purchasing refer trailers or containers.
3. Arranging for drayage on both ends.
4. Administration.
Would you throw down $2million to start this up?Ed
You're correct, Jeff- CN will frequently use the south side yard as their inbound tracks, especially if they have a long train. But the diagonal yard is their main storage yard for outbound traffic.
Note: the building between the two yards near the throat is the old Alliant Power Plant/Steam Generator, which was irreparably damaged by the 2008 flood and is being torn down.
Brian (IA) http://blhanel.rrpicturearchives.net.
jeffhergertThe yard parallel to I-380 on the south side of Cedar Lake is also CN. I think it is the original IC yard. Part of it may have been MILW way back, as they came through that way from Marion toward Ottumwa.
Thanks Jeff.
(I wish I knew how to post a Power Point slide as a visual on this forum so I could show this.)
A close in Google satelite view of the yard near I-380 shows two yard tracks taken up on the I-380 side. The outside track near I-380 is still there but it deadends in to some trees and, in the Google photo, is empty except for one car.
From the satelite image I make the length available for each track to be 900 ft. +. So each track, if restored, could hold three five platform spine cars (260 ft. each) with a capacity of 15 teed up 53 ft. containers on flatcars per track. We're shooting for a 40 container capacity so there is room. We've even got space for an extra car to create some "surge capacity".
You know the motto of this imaginary project: "Don't get hung up on problems, solve them."
https://www.google.com/maps/place/418+2nd+St+NE,+Cedar+Rapids,+IA+52401/@41.9874377,-91.6635451,591m/data=!3m1!1e3!4m2!3m1!1s0x87e4f753fa80f4c5:0xf3303b194958d7f
While the part about the CN being the middle yard running diagonally is correct. I think it might be part of the old WCF&N. The rest isn't, unless there have been some massive sales/swaps in CR.
The UP's North yard is the complex to the left, running kind of North-South between the river and Cedar Lake. It's the old RI yard that the CNW bought after the RI's demise.
The yard parallel to I-380 on the south side of Cedar Lake is also CN. I think it is the original IC yard. Part of it may have been MILW way back, as they came through that way from Marion toward Ottumwa. The picture that Greyhounds linked to I believe is taken in that yard.
Jeff
jeffhergert ccm Hello all, this is my first post here. The CN yard is in the middle, pointing NNE toward the intersection of G+12th, with the Iowa Northern yard on the left and the ex-CNW North yard on the right. I know I've been away from the CR area for a while now, but I think you better try again. Jeff
ccm Hello all, this is my first post here. The CN yard is in the middle, pointing NNE toward the intersection of G+12th, with the Iowa Northern yard on the left and the ex-CNW North yard on the right.
Hello all, this is my first post here.
The CN yard is in the middle, pointing NNE toward the intersection of G+12th, with the Iowa Northern yard on the left and the ex-CNW North yard on the right.
I know I've been away from the CR area for a while now, but I think you better try again.
Please, please let Spel Czech rise up and make itself known!
We could use a grammar checker, too (and my omitting "any" the first time would have been caught).
Johnny
Although, I should add that the UP yard is 4 miles southwest (north of the Iowa Interstate yard), where many intermodals pass through running between Chicago and the west coast.
blhanelFrom a practical standpoint, I don't think there's room for the terminal in the CN yard, unless they fill in some of Cedar Lake. That yard can get pretty full from time to time with covered hoppers and tanks.
Can you tell us which one of these rail yards is the CN yard?
https://www.google.com/maps/place/418+2nd+St+NE,+Cedar+Rapids,+IA+52401/@41.9861743,-91.6703068,17z/data=!4m2!3m1!1s0x87e4f753fa80f4c5:0xf3303b194958d7f
It impractical to fill in the lake. The project would be tied up in court for 10 years.
From a practical standpoint, I don't think there's room for the terminal in the CN yard, unless they fill in some of Cedar Lake. That yard can get pretty full from time to time with covered hoppers and tanks.
greyhounds Drayage Costs! OK, after spending fruitless time trying to get actual numbers I'm going to SWAG the drayage costs. If I assume the CN Cedar Rapids intermodal terminal goes at the current CN yard, this picture becomes relevant: http://www.railpictures.net/viewphoto.php?id=484112&nseq=14#remarks That's the Quaker plant in the background. Remember, the drivers will be shuttling the containers between that close by plant and the yard. They'll be operating used day cab highway tractors. So I'll guess this dray can be had for $65/load. The General Mills facility is five miles from the Quaker facility. So I'll budget another $10 to serve that plant, $75/load total. For the points farther from the ramps I'll guess $50 + $3.50/running mile. It's 52 miles from Waterloo to Cedar Rapids so the charge is $50+($3.50*104) or $414/load. It's 50 miles from the NS terminal in Bethlehem, PA to Tobyhanna so the charge is $50+($3.50*100) or $400/load. Does anyone have any objections to these numbers?
Drayage Costs!
OK, after spending fruitless time trying to get actual numbers I'm going to SWAG the drayage costs.
If I assume the CN Cedar Rapids intermodal terminal goes at the current CN yard, this picture becomes relevant:
http://www.railpictures.net/viewphoto.php?id=484112&nseq=14#remarks
That's the Quaker plant in the background. Remember, the drivers will be shuttling the containers between that close by plant and the yard. They'll be operating used day cab highway tractors. So I'll guess this dray can be had for $65/load. The General Mills facility is five miles from the Quaker facility. So I'll budget another $10 to serve that plant, $75/load total.
For the points farther from the ramps I'll guess $50 + $3.50/running mile. It's 52 miles from Waterloo to Cedar Rapids so the charge is $50+($3.50*104) or $414/load. It's 50 miles from the NS terminal in Bethlehem, PA to Tobyhanna so the charge is $50+($3.50*100) or $400/load.
Does anyone have any objections to these numbers?
Ken - The numbers sound reasonable.....I would only add the possibility of shippers in the Iowa City/Coralville area; a relatively quick hop down I-380 from Cedar Rapids.
[quote user="greyhounds"]
schlimm My question on IC/CN was for greyhounds. Why doesn't it carry refrigerated trailers of meat to the Chicago area to be distributed around here? There are ~10 million folks in the area and several large food distribution centers. Incompetence/laziness as above or no profit?
My question on IC/CN was for greyhounds. Why doesn't it carry refrigerated trailers of meat to the Chicago area to be distributed around here? There are ~10 million folks in the area and several large food distribution centers. Incompetence/laziness as above or no profit?
Oh, it's beyond no profit. It would be a flat out loss. I don't think anyone is incompetent or lazy. The railroads just no longer have the skills needed to aggregate shippers into market segments. Not having a particular skill is in no way the same as being incompotent. I have intentionally avoided showing how the government regulatory morons drove a wedge between the railroads and the potential customers here. When the railroads were not allowed to use this marketing skill they lost the skill. Let's leave it at that for now.
One way to look at the cost of a rail intermodal service is:
TC = TDO + (RLHCPM * RLHM) + TDD
Where:
TC is Total Costs
TDO is Terminal and Drayage Costs at Origin
TDD is Terminal and Drayage Costs at Destination
RLHCPM is Rail Line Haul Cost Per Mile
RLHM is Rail Line Haul Miles
TDO and TDD really are insignificant for competing motor carriers. They don't go through termnals. The driver just picks up the load at origin and drives it through to destination. Basically, the only costs on an over the road truckload shipment are the line haul miles.
Rail line haul cost per mile are generally less than motor carrier line haul cost per mile. It's only when there are enough miles between origin and destination that rail intermodal can be competitive with trucking. The total reduction from using the lower cost rail line haul miles must be enough to offset the added expenses of terminal and drayage at each end.
The CN's Iowa line is 500 miles in length. That's right on the lower end of the distance at which rail intermodal has a chance of being competitive. There are some shorter IM lanes. CP's Expressway between Montreal and Toronto is one example. BNSF's UPS based service from Chicago to St. Paul is another example. Of course there's FEC and now, the Indiana Rail Road.
But, in general, it's very difficult to avoid a loss on a 500 mile intermodal haul. It would take some very special circumstances and I just don't see such circumstances here. The focus needs to be on the longer hauls into the east.
To get more competitive at lesser distances the railroad would have to reduce the TC result.
One way to do this would be a one person crew on short haul, lower capacity, trains such as these. I don't want to get crosswise with the good union people out here, but I really wish their labor organizations would allow trials of such operations. That would reduce the RLHCPM factor in the equation and reduce TC as a result. This could make rail more competitive at shorter distances. Most freight moves these shorter distances. It would conceivably open up new markets for rail freight and increase the number of railroad union jobs.
Another way is to reduce TDO and/or TDD by putting in small, low cost, IM terminals located near the shippers and receivers. This will allow substitution of lower cost rail miles for higher cost drayage miles. Overal cost (TC) will be reduced as a result. Alas, this would require the marketing skill most railroads no longer have. In this case small, low cost IM terminals at Waterloo, Cedar Rapids, Storm Lake and Denison, IA could be considered along with terminals at Council Bluffs and Sioux City.
[/quote
@greyhounds. Thank you for such a factually interesting response. First of all, I know nothing about the locations and daily output of Iowa-based meatpacking plants. What I am now wondering is this. I realize the drayage costs are high. Elimination of them at one end, therefore, could reduce the total cost. Specifically I am thinking of unit RTOFC trains from the plant in Iowa to Chicago, one or more times per week. This service could possibly be offered to any other plants on the RoW. Once the train reaches Chicago, trailers would go to food distribution warehouses in the metro area or to the CSX or NS yard as drayage, same as in other proposals.
C&NW, CA&E, MILW, CGW and IC fan
I like Greyhounds' point that the US railroads no longer have the capacity to manage moves like this. In my view it's due to numerous government regulatory and policy decisions made over the years, as well as the fragmented structure of the industry. Biased, nonsensical ICC decisions, the advent of the interstate highway system, even the Railroad Retirement Act which makes railway employees more costly than those of companies covered by Social Security, all conspired over time to force the migration of these sorts of skills from the railroads to truckers, freight brokers, and third-party logistics companies - all of which could use rail, but have no particular mandate to.It's ironic that the railroad in question here is CN, because if this move was inside Canada, they'd be handling it. Unlike the US, where we still don't have a railroad that can offer a shipper direct service to every significant market in the country, Canada has essentially had two competing transcontinentals since the 1920's. As a result, CN has one of the largest trucking companies in Canada, used entirely for intermodal drayage, plus a special logistics arm which does really sophisticated work to promote use of both intermodal and carload service. It works great, because it's their railroad, their tractors/drivers, their trailers, their integrated computer systems. But when you start involving other railroads and have to rely on independent local drayage companies, it can fall apart pretty fast. I was at CN during an early attempt to extend their door-to-door 'retail' intermodal service to the US, on the recently-purchased IC and... wait for it... an interline marketing alliance with CSX. The CN sales guys and gals were ecstatic - booking all sorts of loads from Alberta or Quebec to Memphis, Florida, etc. which they'd always known about but never could compete with the truckers for before. It lasted a few months and was a disaster. Once the load went outside of their in-house control system, they just couldn't manage the service and maintain the necessary quality. The US intermodal marketing companies, such as Hub Group or Alliance Shippers, built their whole business model, systems, and processes around managing multiple railroads and truckers, and do a pretty good job. The historical problem with them was they always seemed to prefer going after the low-hanging fruit (and then pilfering it from each other) while leaving tougher nuts like the Iowa example on the tree. I suspect they've gotten better with time, plus competition from the likes of Hunt and Schneider. CN's solution to their US problem was to cut a deal with a couple of the big IMCs, in which CN salespeople would handle the customer, CN's in-house system would handle everything taking place in Canada, but on the US end CN would book the load into the IMC's operating system and pay them a flat rate management fee. The IMCs liked it because they got incremental revenue and volume without any sales effort. And that worked reasonably well.At the time (early 2000s) CN had some really good sales people. Illinois Central (after they lost their in-house marketing skill and had to depend on the IMCs) had spent a decade or more trying in vain to balance the Chicago-New Orleans corridor (which once upon a time had been balanced). Once the new CN model was in place, with CN selling and IMCs simply managing the logistics, they had the corridor balanced again in less than a year. I don't know what's happened to their US sales ability since then. I'm guessing they ignored this particular move because most of the linehaul (and thus the potential profit) was off their rails, they didn't already have a terminal in place, and they had lower-hanging fruit to pick. But it could be that their abilities have atrophied again.
At Denison, IA you can still see where they loaded trailers at the IBP (now Tyson) plant. I never noticed it, it was hiding in plain site, until a few years ago a retired IC dispatcher gave a presentation at the monthly Ames Railfan show. He had slides he took of his familiarzation trips riding freight trains over the Iowa Division. He mentioned the TOFC loading there.
He said one of the reasons they stopped loading TOFC was that many of the trailers being supplied for loading at the plant were being rejected by IBP.
Ethenol may have been a factor here but with low oil prices that may not have played out as well as we thought
OK, CNSF has raised some valid concers that need to be dealt with. There are several methods of dealing with such concerns.
1) Just give up and quit. Wait for someone else to show up with a solution. In the meantime do nothing. Enjoy life as best is possible. This is sometimes referred to as "The French Solution."
2) Just ignore the issues. Plunge on ahead as if they didn't exist. If things go wrong blame CSX or another entity to the top of your lungs. How dare they use the rail equipment to cover real, existing, ready to go, loads instead of returning it to you empty. Just plunging on ahead is sometimes referred to as "The Titanic's Solution." since it usually leads to a similar result.
3) Solve the identified problems. This is the least favored method. It requires thought, reason and analysis. You might miss a round of golf if you actually work on solving problems. This is sometimes referred to as "The How Did I Get Stuck With This Assignment?" solution.
All three tend to get used by commerce and government on an international scale.
Before we go further, it is important to note that the failure of the Wisconsin Central operation was not due to a lack of economic viability. It failed becuse the interests of the WC and CSX diverged. Managing and preventing such a divergence in any future such effort is a newly identified problem to be solved.
How do we solve it?
Well, part of the problem was that CSX wouldn't turn flatcars back to WC when CSX needed those cars to handle its own traffic needs. (A perfectly reasonable thing for CSX to do.) To solve this one I suggest we need to make a change in the proposed opeation.
Don't let CSX ever get its hands on the flatcars. They can't keep what they don't have. We need to use street interchange in Chicago for the containers. We'll incur some added expense in Chicago. But we can also generate costs savings by taking our containers to different IM facilities in Chicago. i.e., we can use the NS terminal at 63rd street for our loads to Tobyhanna. The NS terminal at Bethlehem is much closer to Tobyhanna than any CSX terminal. We'll save hundreds in destination drayage per load and that will more than offset the added cost of the street interchange in Chicago. At least for Tobyhanna.
Another part of the problem was that CSX wouldn't turn trailers/containers back to WC when CSX needed that equipment to handle its own traffic needs.
Solution: Do not ever give control of the trailer/container over to CSX. The containers/trailers do have to be moved on CSX (or now, NS too) trains. But there's nothing that prevents the CSX consignor as being shown as CN and the CSX consignee as being shown as CN. The desination drayage to be done by a CN contracted trucker. CN will maintain control of the trailers and/or containers to the extent that the CN can ship them back to itself empty if it gets that desperate.
CSX and NS don't want anymore business? Well, maybe they won't offer anything special such as receiving a block of freight intact from a western carrier at one of their IM facilities. But we're now not doing that. We're just showing up of the highway with a few extra loads for an existing train. They'll haul em'.
We gotta' get westbound loads. Yes, we do. But how many and what percentage of westbound miles need to be covered with revenue loadings is yet to be determined. Anyway if we control our own equipment in the East we'll have a better opportunity to get the westbound business developed than we would working through another railroad that will have different priorities. This was always going to be a tough nut to crack. CN controlling its own fate in the east would make this easier for them to do.
The solutions aren't perfect. Perfect solutions do not exist. But they are workable solutions.
Now, back to the drayage cost estimates.
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