Unfortunately (for the rails), the last three comments are probably true. The railroads lack the marketing expertise and have labor costs that make them uncompetitive for LCL for many years. It's questionable whether they can even handle LTL unless it is in trailers and containers.
C&NW, CA&E, MILW, CGW and IC fan
I was fortunate to attend June 25th Sandhouse Gang presentation which featured Ed Ellis (Iowa Pacific). His presentation was entitled "Restricting Signals Ahead" and discussed the pessamistic aspect of the railroading industry, primarily the downward spiral of coal.
Energy revenue (coal, oil, etc) is about 50% of industry revenues....and slipping. As we have discussed on the UP thread, coal is down 17% YTD with continued declines seemingly inevitable.
Ed's solution for arresting the declines and adding revenues include:
1. Short haul business.
2. Utilizing the carload network (paper loads in boxcars would fit this description).
3. Passenger trains.
4. Transportation of food....boxed beef was mentioned and I smiled to myself thinking of Greyhound (a Northwestern grad BTW).
5. Intermodal growth instead of the major points, develop intermediate markets. Again, I thought of Greyhound.
It was a very sobering presentation. Just think...less than a year ago we were wringing our hands about the need for capacity. How quickly the trend has shifted.
BTW, I will be making a trip out west and plan on going to Bailey yard and paralleling US 30 in Nebraska for awhile. It will be interesting to see how many coal trains are running.
Ed
That is what I'm suggesting CSSH. Thanks to advances in technology the LCL biz isn't as labor intensive as it once was; in any event the railroads are now in the LCL business anyway... only difference is that right now the setup is such that other third party vendors handle the LCL consolidation/distribution function and then hand off the linehaul to the railroads. THE consolidation/distribbution is the hard part..
greyhounds K. P. Harrier Boxcars need to be kept moving, at least more than they are now. If they were kept moving, they could make two or three or maybe four trips instead of one. In 185 years of railroading no one in the world has figured out how to do this. The slow, erratic movement of carload freight is an inherent characteristic of such shipments.
K. P. Harrier Boxcars need to be kept moving, at least more than they are now. If they were kept moving, they could make two or three or maybe four trips instead of one.
In 185 years of railroading no one in the world has figured out how to do this. The slow, erratic movement of carload freight is an inherent characteristic of such shipments.
To your point about keeping Boxcars moving: When the railroads were actually in the LCL Business [operated their own 'cross dock' freight houses and their own truck lines] There was the 'Pool Car' it was loaded and reloaded at different locations for multiple destinations. Probably not practical these days(?) They did keep the boxcars loaded and moving.
Might Short Haul containers be considered the 'new' boxcar of the 21st Century? Their problem is that the last leg must be from a specialized handling unload/load location. [phyical lifting equipment]
If the BOXCAR business was'there' would not a Corporation like TTX not be building new cars to fill that gap? I remember a number of years ago, TTX and its RBOX Fleet { They had painted on their sides a big red "X" that said " ANY LOAD" x "ANY ROAD" those cars seemed to be everywhere;then they seemed to be storing those cars, and they gradually disappeared. Now you can see a few of their 'new' boxcars in trains, but nowhere near previous levels that could have been observed all over the country.
Containers (COFC) do resolve the current delimma in the trucking industry; that of a pool of drivers who have been convinced they MUST be home frequently during their work week [a driver recruiting tool used by trucking company recruiters to 'sell' driving, as a job to individuals who would be new to transportation]. But Containers do help with drivers wanting to stay "Regional'
Long Haul driving jobs generally require individuals who are typically individualistic and 'unattached'. They are willing to stay out on the road for lengthy periods, and more of less 'living' in the cab of their truck; utilizing facilities available at Truck Stops for their various needs. It requires a particular mind-set in those individuals willing to make their living in that way. Twenty + years OTR , in my case, created those impressions.
Ulrich Great points Jeff..with the decline of coal the railroads do need to look at other options... maintaining or improving service to the paper industry would be one. Another might be targetting certain shorthaul business that might work on rail. The conventional wisdom is that rail isn't competitive on shorthauls under 500 miles, yet that is where 70% of all freight moves. If the railroads could somehow tap into that market then that would go a long way to making up for the shortfall in coal. Railroads also need to get away from the "conveyor on rails" mentality and upsell the customer on services such as consolidation and distribution: focus on first mile/last mile services and working directly with shippers/manufacturers. At present the railroads outsource the consolidation/distribution to third parties who effectively cream off a disproportionate amount of the profit with nothing or very little invested in infrastructure. Ideally a little shipper like a 10 person metal shop in Denver, CO (for example) should be able to call Union Pacific directly.. UP would then send in one of their own trucks for pickup and send it off to a UP service center for consolidation with other shipments. Now all that is done by outsiders who then hire UP as the low cost conveyor belt. The railroaders need to go back to taking ownership of the entire transportation supply chain, from initial sale to delivery of the goods.. instead of just being the go between as they are now.
Great points Jeff..with the decline of coal the railroads do need to look at other options... maintaining or improving service to the paper industry would be one. Another might be targetting certain shorthaul business that might work on rail. The conventional wisdom is that rail isn't competitive on shorthauls under 500 miles, yet that is where 70% of all freight moves. If the railroads could somehow tap into that market then that would go a long way to making up for the shortfall in coal. Railroads also need to get away from the "conveyor on rails" mentality and upsell the customer on services such as consolidation and distribution: focus on first mile/last mile services and working directly with shippers/manufacturers. At present the railroads outsource the consolidation/distribution to third parties who effectively cream off a disproportionate amount of the profit with nothing or very little invested in infrastructure. Ideally a little shipper like a 10 person metal shop in Denver, CO (for example) should be able to call Union Pacific directly.. UP would then send in one of their own trucks for pickup and send it off to a UP service center for consolidation with other shipments. Now all that is done by outsiders who then hire UP as the low cost conveyor belt. The railroaders need to go back to taking ownership of the entire transportation supply chain, from initial sale to delivery of the goods.. instead of just being the go between as they are now.
I've seen several forum members make arguments for the railroads to get back into OTR trucking but nobody has answered a question I've posed on previous threads about it.
Does anyone have financial projections that indicate that the Class 1's would do better competing directly with Swift, Hunt, etc.. rather than having them as major (and well paying IINM) customers?
That is, of course primarily truckload business but what you are proposing strikes me as a possible detriment to getting more business from customers like UPS and Fed Ex.
What you are suggesting may make sense from the standpoint of simplifying logistics but are you gambling that the truckers have no place else to go?
"I Often Dream of Trains"-From the Album of the Same Name by Robyn Hitchcock
That's a good point Carnej1... JB Hunt and Swift are important customers, and one would have to tread carefully in order to ensure that any foray into selling these services directly to shippers isn't inadvertently alienating current intermodal marketers. But I believe it can be done.. speaking for myself, I have suppliers and customers who are also competitors in other markets or in other lanes. The distinction between supplier and competitor is growing increasingly blurry... which is I guess why one sometimes sees competitors' railway locomotives working together.. i.e. a train with both CSX and NS power.
One market that isn't dominated by any of the large trucking carriers is skid lot LTL.. the big LTLs (like YRC, Fedex, Old Dominion) don't like anything over 1500 lbs.. and the big TLs like JB Hunt and Swift work primarily with truckloads only. So that middle ground (heavy LTL if you will) is really virgin territory which is currently being handled by small carriers predominantly.. No large carrier that I know of specializes in heavy LTL.. although there sure seems to be alot of it around that needs shipping. In my experience the small stuff (up to 1500 lbs) is easiest to move... truckloads come in number two, and the heavy partials are toughest to move.. the railroads could probably go after those without offending the Swifts and Old Dominions of the world.
samfp1943 To your point about keeping Boxcars moving: When the railroads were actually in the LCL Business [operated their own 'cross dock' freight houses and their own truck lines] There was the 'Pool Car' it was loaded and reloaded at different locations for multiple destinations. Probably not practical these days(?) They did keep the boxcars loaded and moving.
Sam, You're talking about LCL while I was talking about carload. They're different animals.
LCL was an intermodal operation with pick up and delivery done by trucks. Railcars moved between a limited number of terminals (freighthouses). To serve smaller communities a "Pedler" car was used. It stayed in the train and was unloaded/loaded at the railway station while remaining in the train.
That is a big difference.
The railroads didn't voluntarily exit the LCL business so much as they were drivien out by inane government regulations that kept them from being truck competitive. Government restrictions on the use of intermodal containers is the prime example but there are many other such Federal restrictions that moved LCL to long hauls on the highway.
UlrichOne market that isn't dominated by any of the large trucking carriers is skid lot LTL.. the big LTLs (like YRC, Fedex, Old Dominion) don't like anything over 1500 lbs.. and the big TLs like JB Hunt and Swift work primarily with truckloads only. So that middle ground (heavy LTL if you will) is really virgin territory which is currently being handled by small carriers predominantly.. No large carrier that I know of specializes in heavy LTL.. although there sure seems to be alot of it around that needs shipping. In my experience the small stuff (up to 1500 lbs) is easiest to move... truckloads come in number two, and the heavy partials are toughest to move..
Ulrich, can you qualify something for the stupid like me? Is this referring to LTL loads of 1500 lb or more on multiple pallets, or a single item that weighs that much?
Raises an interesting question on what a railroad would need, by way of infrastructure or equipment, to handle and work with the latter...
Not stupid at all.. I just wasn't very clear. I meant shipments that weigh in the 1500 lbs to 20,000 lb range. They may consist of many pieces/pallets or one large bulky piece. The conventional LTL outfits shy away from such heavy and/or bulky shipments or refuse to handle them altogether. So alot of these shipments end up getting moved at truckload rates because there aren't many companies that specialize in these large albeit not full load shipments. It might be something the railroads could look at servicing and would probably require something in the way of terminals just as the smaller LTL would.
The railroads might even look at purchasing one of the large LTLs... most of them are only marginally profitable and can be had very cheaply.. YRC (to name just one) has been on the operating table for quite some time now..it could be had very cheaply I think as it hasn't turned a profit in years yet defies industry pundits by remaining in business. Imagine a combo like CSX/YRC for example.. forget railroad mergers.. a CSX/YRC combo would turn the railroad into a one stop shop for all freight from the smallest boxes to the largest boxcar newsprint loads.
Ulrich Not stupid at all.. I just wasn't very clear. I meant shipments that weigh in the 1500 lbs to 20,000 lb range. They may consist of many pieces/pallets or one large bulky piece. The conventional LTL outfits shy away from such heavy and/or bulky shipments or refuse to handle them altogether. So alot of these shipments end up getting moved at truckload rates because there aren't many companies that specialize in these large albeit not full load shipments. It might be something the railroads could look at servicing and would probably require something in the way of terminals just as the smaller LTL would. The railroads might even look at purchasing one of the large LTLs... most of them are only marginally profitable and can be had very cheaply.. YRC (to name just one) has been on the operating table for quite some time now..it could be had very cheaply I think as it hasn't turned a profit in years yet defies industry pundits by remaining in business. Imagine a combo like CSX/YRC for example.. forget railroad mergers.. a CSX/YRC combo would turn the railroad into a one stop shop for all freight from the smallest boxes to the largest boxcar newsprint loads.
It has only been within the past decade that UP finally unloaded Overnite trucking to UPS.
Never too old to have a happy childhood!
BaltACD Ulrich Not stupid at all.. I just wasn't very clear. I meant shipments that weigh in the 1500 lbs to 20,000 lb range. They may consist of many pieces/pallets or one large bulky piece. The conventional LTL outfits shy away from such heavy and/or bulky shipments or refuse to handle them altogether. So alot of these shipments end up getting moved at truckload rates because there aren't many companies that specialize in these large albeit not full load shipments. It might be something the railroads could look at servicing and would probably require something in the way of terminals just as the smaller LTL would. The railroads might even look at purchasing one of the large LTLs... most of them are only marginally profitable and can be had very cheaply.. YRC (to name just one) has been on the operating table for quite some time now..it could be had very cheaply I think as it hasn't turned a profit in years yet defies industry pundits by remaining in business. Imagine a combo like CSX/YRC for example.. forget railroad mergers.. a CSX/YRC combo would turn the railroad into a one stop shop for all freight from the smallest boxes to the largest boxcar newsprint loads. It has only been within the past decade that UP finally unloaded Overnite trucking to UPS.
And that sale was proclaimed a rousing success, with bonuses all around. They sold Overnite for less than they paid for it.
Jeff
jeffhergert (6-30):
I lived through the Overnight acquisition by UP, and thought it was a strange marriage from the start. Do you, Jeff, remember what CEO was in charge of UP at the time?
A Catch All Reply Attempt:
A thing that strikes one about matters in this thread is the great discrepancy in the orders in building new car types. It doesn’t seem there is much interest in investing in new boxcars, whereas tank cars have generated much willingness to invest in them. Likely, that is because unit trains have more potential for greater profits
Paul D. North Jr. spoke of car hire rates. Obviously, there will eventually be a severe boxcar shortage if investors lack a reason to put their money into boxcars. And, that simply is not going to change unless some new boxcar logistics is developed, whereby a boxcar gets utilized two to four times more times in the same timeframe than presently.
My colleague, who really no longer has an interest in the subject because he is now too old to profit by new ways, says streaming car shipments is the way to profits, i.e., speeding up shipments. He once consulted a patent attorney that saw a new type of yard (streaming facility) diagramed that would do just that, and within just two or three seconds exclaimed, ‘There is big money in this.’ But, the colleague knew railroading, and he also knew to obtain a patent one had to come up with something completely new, which this wasn’t, only an adaption, a different way of using the same type of thing, a quicker way. So, he didn’t pursue a patent further.
Things are a lot different from his heyday. Now home computers are prolific. His streaming concept could easily be proved one way or the other with a simple home computer. It is just a matter of a programmer converting his vision into a functional program, then running it and comparing the results with today’s bottom line.
He now has an interesting perspective, and says that if and whoever sees streaming first will profit from it. He laughs, saying, ‘Can you imagine shippers getting together and streaming their shipments, thus putting the profits the railroads could of had in their own pockets?’ You know, that sure would be laughable, and an ironic twist in the continuing history of railroading with boxcars.
Sweet logistical dreams,
K.P.
----------------------------------------------------------------------------------------------------------------------------------- K.P.’s absolute “theorem” from early, early childhood that he has seen over and over and over again: Those that CAUSE a problem in the first place will act the most violently if questioned or exposed.
jeffhergert BaltACD Ulrich Not stupid at all.. I just wasn't very clear. I meant shipments that weigh in the 1500 lbs to 20,000 lb range. They may consist of many pieces/pallets or one large bulky piece. The conventional LTL outfits shy away from such heavy and/or bulky shipments or refuse to handle them altogether. So alot of these shipments end up getting moved at truckload rates because there aren't many companies that specialize in these large albeit not full load shipments. It might be something the railroads could look at servicing and would probably require something in the way of terminals just as the smaller LTL would. The railroads might even look at purchasing one of the large LTLs... most of them are only marginally profitable and can be had very cheaply.. YRC (to name just one) has been on the operating table for quite some time now..it could be had very cheaply I think as it hasn't turned a profit in years yet defies industry pundits by remaining in business. Imagine a combo like CSX/YRC for example.. forget railroad mergers.. a CSX/YRC combo would turn the railroad into a one stop shop for all freight from the smallest boxes to the largest boxcar newsprint loads. It has only been within the past decade that UP finally unloaded Overnite trucking to UPS. And that sale was proclaimed a rousing success, with bonuses all around. They sold Overnite for less than they paid for it. Jeff
Instead of selling it they should have run it properly. Buying it in the first place was a smart move.. That they couldn't run it in this one example doesn't detract from the general idea. The management of the day just wasn't up to it.. as I remember UP was facing all kinds of challenges at the time. Maybe in today's environment it would work better..I guess maybe UPS had more capable management than UP did at that time..hence the sale to UPS. No doubt bonuses got paid to some of the senior heads at UPS..
Running the 200 m in under 20 seconds is impossible. I know that because my neighbour tried running one time and he ended up breaking his leg.
K. P. HarrierMy colleague, who really no longer has an interest in the subject because he is now too old to profit by new ways, says streaming car shipments is the way to profits, i.e., speeding up shipments.
In many cases, those two things are not synonymous. It was my understanding that most of the railroad traffic was far more concerned with reliable and dependable arrival time than with the speed of arrival.
That said, there is little question that equipment utilization is vastly improved by reducing travel time, dwell time, etc. And reducing things like yard entry delay, hump time, and dwell time for full train makeup are relatively 'low-hanging fruit' for improvement compared to what would be involved in making similar end-to-end time reductions via faster road speed or improved 'recrewing' logistics.
A question is whether the 'big money' involved is actually bottom-line income, or would just show up credited to certain accounts, with associated costs not reflected in the accounting...
He once consulted a patent attorney that saw a new type of yard (streaming facility) diagramed that would do just that, and within just two or three seconds exclaimed, ‘There is big money in this.’ But, the colleague knew railroading, and he also knew to obtain a patent one had to come up with something completely new, which this wasn’t, only an adaption, a different way of using the same type of thing, a quicker way. So, he didn’t pursue a patent further.
I think there is an excuse here. There is a whole category of patent specifically concerned with 'adaptations' or 'different way of using the same type of thing' -- the "improvement". There was also a change in patent law, or at least in interpretation of what was considered 'patentability', with the introduction of a mass market for computer programs and software, concerned with the idea that you could patent methods of doing something -- in other words, things like 'look and feel', outside of the kinds of protection offered by trademark legislation. Now in my opinion this went overboard for quite a while, but it was nonetheless well-understood both by patent attorneys and businesses, and it's a major reason why current 'patent trolls' (and "IP gatekeepers" and the like) have so much fun nowadays -- it didn't die with ALAM.
If I understand correctly, much of the 'innovation' concerned with your colleague's idea could be reduced to an algorithm, or at least formally expressed in one. And algorithms that can be reduced to practicality have been patentable for a relatively long time -- I think formally since the late '80s; wanswheel would either know the dates or could find them.
Now, whether or not the thing could be patented with sufficient breadth to cover all variations in implementation ... that's another thing. And if the trick works, expect other railroads to implement the ideas without compensation; have fun in the courts against teams of company attorneys on retainer whose cost is tax-deductible as business expense...
Probably a better idea to set up a consultancy taking a leaf from things like open-source software development and those 'business savings' companies: offer to reduce a given railroad's costs through detailed implementation of documented policies and procedures -- then market the support, not the "product", tying the compensation to actual savings below some baseline measurement of cost.
Things are a lot different from his heyday. Now home computers are prolific. His streaming concept could easily be proved one way or the other with a simple home computer. It is just a matter of a programmer converting his vision into a functional program, then running it and comparing the results with today’s bottom line. He now has an interesting perspective, and says that if and whoever sees streaming first will profit from it. He laughs, saying, ‘Can you imagine shippers getting together and streaming their shipments, thus putting the profits the railroads could of had in their own pockets?’ You know, that sure would be laughable, and an ironic twist in the continuing history of railroading with boxcars.
I have been having much the same thought, although it is less defined: if jitney service can be 'made new', why not express companies?
Railroads traditionally haven't been well-suited to the substantial amount of think-on-your-feet logistics that would be necessary to make 'streaming' with blocks of loose cars, even with low peak speeds and plenty of schedule 'slacks', practical. That is not to say that it couldn't be done, particularly if much of the 'information infrastructure' could be provided with open tools, OTS systems and the like, or programmed for competitive advantage. In particular, adding the necessary supporting functionality in some of the modern train-management programs like LEADER ought to be relatively simple -- both to develop it and then fine-tune it in light of experience.
Ulrich jeffhergert BaltACD Ulrich Not stupid at all.. I just wasn't very clear. I meant shipments that weigh in the 1500 lbs to 20,000 lb range. They may consist of many pieces/pallets or one large bulky piece. The conventional LTL outfits shy away from such heavy and/or bulky shipments or refuse to handle them altogether. So alot of these shipments end up getting moved at truckload rates because there aren't many companies that specialize in these large albeit not full load shipments. It might be something the railroads could look at servicing and would probably require something in the way of terminals just as the smaller LTL would. The railroads might even look at purchasing one of the large LTLs... most of them are only marginally profitable and can be had very cheaply.. YRC (to name just one) has been on the operating table for quite some time now..it could be had very cheaply I think as it hasn't turned a profit in years yet defies industry pundits by remaining in business. Imagine a combo like CSX/YRC for example.. forget railroad mergers.. a CSX/YRC combo would turn the railroad into a one stop shop for all freight from the smallest boxes to the largest boxcar newsprint loads. It has only been within the past decade that UP finally unloaded Overnite trucking to UPS. And that sale was proclaimed a rousing success, with bonuses all around. They sold Overnite for less than they paid for it. Jeff Instead of selling it they should have run it properly. Buying it in the first place was a smart move.. That they couldn't run it in this one example doesn't detract from the general idea. The management of the day just wasn't up to it.. as I remember UP was facing all kinds of challenges at the time. Maybe in today's environment it would work better..I guess maybe UPS had more capable management than UP did at that time..hence the sale to UPS. No doubt bonuses got paid to some of the senior heads at UPS.. Running the 200 m in under 20 seconds is impossible. I know that because my neighbour tried running one time and he ended up breaking his leg.
One factor that doesn't seem to be taken into account here is the pressure Wall Street puts on American Businesses to sell off so called "non core assets".
Sometimes this seems very logical is the division/business unit is involved in activities that don't really mesh with the companies business lines but sometimes it seems close to asset stripping when the unit in question is a money maker but selling it will pay a high dividen to investors in the short term.
In other words UP divesting itself of Overnite (and for that matter,CSX selling off Sealand and American Commercial Barge lines) may well have had as much or more to do with pressure from "The Street" than just short sighted Management.
Here is my 2 cent,
Triple Crown is owned by NS.
When Santa Fe started the Super C, they lost a lot of business from the 3rd parties (Hub City, etc) who saw it as a competitor, they only gained it back when they gave the 3rd parties better pricing to compete. There were more options for the 3rd parties back then. It may be harder to divert large amounts of business now.
I have heard rumors that NS is rerouting trains 100's of extra miles to fill up the expanded Bellevue yard. If this is true, the longer transit times will not attract more boxcar business.
I think a good source of new business is intermodal shorter hauls to and from intermediate points. The problem is that opening intermediate container terminals is not profitable when you have to purchase several container cranes. I think John Kneiling had some good suggestions years ago on how to reduce the cost of intermodal terminals. You would also have to run these trains the same way trains are run for UPS, fast and reliable.
Jim611 Here is my 2 cent, I have heard rumors that NS is rerouting trains 100's of extra miles to fill up the expanded Bellevue yard. If this is true, the longer transit times will not attract more boxcar business.
Why would NS reroute trains hundreds of miles just to fill up a yard? Sounds to me like someone doesn't know the whole story.
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