BaltACD What else was going on on the Linveville Sub? I can undersand the BNSF intermodals expiring around Parkwood account HOS.
What else was going on on the Linveville Sub? I can undersand the BNSF intermodals expiring around Parkwood account HOS.
blue streak 1Had a great example of CSX's precision RR ing. Westbound BNSF intermodal haulage train crew went dead on HOS at about 0400, Train 2 splits clearing our two crossing and was not picked up until abou 2:00 PM when recombining started. Crews for this haulage are Biringham based. All this just ~ 37 miles from originating yard at Fairburn.
All this just ~ 37 miles from originating yard at Fairburn.
What else was going on on the Linveville Sub? I can undersand the BNSF intermodals expiring around Parkwood account HOS. But at LaGrange means, to me, there was some situation on the Lineville Sub that was the cause. Being retired I don't know the facts, but I did have the Atlanta Division as my territory for a number of years.
Never too old to have a happy childhood!
Had a great example of CSX's precision RR ing. Westbound BNSF intermodal haulage train crew went dead on HOS at about 0400, Train 2 splits clearing our two crossing and was not picked up until abou 2:00 PM when recombining started. Crews for this haulage are Biringham based.
Know of one JIT delivery. Ran an empty B-727 from Mia - Rio ( yes Brazil ) picked up load of Crysler parts to go to Detroit. Used 3 crews to carry about 12,000 # of fenders. So it can get bad.
I belive that would be a value added tax. A tax on the product when it ships from the seller all the way up to when the customer.
Johnny,
That is my understanding too. Inventory in transit is not taxed. If it's on the property, it is. That's why JIT makes sense. It doesn't belong to the railroad as they are simply transporting it and the receiving company doesn't have it on hand to tax. The politicians will soon figure a way around that so they get their cut. Pure unadulterated greed.
Norm
Paul_D_North_Jr That Flint truck plant arrangement makes a lot of sense: It's a lot faster and cheaper to move 1 boxcar with X dozen or Y hundred of parts in it just 1 time, than to have them unloaded and stored someplace in the plant, and then have to move them all again 1 at a time with a forklift; this is the basic rationale of Just-In-Time. - PDN.
That Flint truck plant arrangement makes a lot of sense: It's a lot faster and cheaper to move 1 boxcar with X dozen or Y hundred of parts in it just 1 time, than to have them unloaded and stored someplace in the plant, and then have to move them all again 1 at a time with a forklift; this is the basic rationale of Just-In-Time.
- PDN.
Johnny
Norm48327 tree68Seems as though I've read stories of auto plants shutting down due to cars not getting to a plant on time. If the auto industry didn't run JIT, they came close, particularly as major portions of the cars started to come from different plants. It's been several years ago and when Harrison was CEO of CN that there was a huge dust-up between them and General Motors. GM told CN what to do with their railroad and began trucking their production to a CSX facility. It cost them more to ship their cars but they had simply had enoughof Harrison's BS. That wound is still festering ad nowhere near healed. A yard sits empty because of that dispute and everyone is wondering what the final outcoe will be. My comment is not meant to debase Harrison, but there have been times his methods have left a very acrid taste in shipper's mouths. CN has changed under new management and is still sruggling to get that contract back.
tree68Seems as though I've read stories of auto plants shutting down due to cars not getting to a plant on time. If the auto industry didn't run JIT, they came close, particularly as major portions of the cars started to come from different plants.
It's been several years ago and when Harrison was CEO of CN that there was a huge dust-up between them and General Motors. GM told CN what to do with their railroad and began trucking their production to a CSX facility. It cost them more to ship their cars but they had simply had enoughof Harrison's BS. That wound is still festering ad nowhere near healed. A yard sits empty because of that dispute and everyone is wondering what the final outcoe will be.
My comment is not meant to debase Harrison, but there have been times his methods have left a very acrid taste in shipper's mouths. CN has changed under new management and is still sruggling to get that contract back.
Such situations are not unique to CN - or probably most every company over time. In Chessie days there was a dust up with Armco Steel at Ashland, KY - for a period of time Armco incured the expense of trucking their output over the Ohio River and shipping it out on NS. Ulitmately the rift was smoothed over and the business returned to Chessie.
You have to keep customers satisfied at a cost you can live with and still make a reasonable profit. Having fought this in the aviation industry for over thirty years I think I'm somewhat qualified to comment on the subject. You have something to offer and if the customer thinks it's reasonable you have a meeting of the minds. If not, you part ways and seek lower rates or better profits; simply the free market at work.
That said, there are hedge funds, corporate raiders and speculators who are looking for nothing beyond short term gains at the expense of the corporations, employees, and stockholders. The almighty dollar has become the holy grail.
I remember occasions back around 1980 when sometimes a very short train, four or five cars, would be run to get "shut-down" cars to GM's Oshawa assembly plants. Those occasional trains would not have helped the statistics that seem to take priority today, but it kept the business on the rails and a major revenue stream flowing. And without sufficient revenue there can be no profits.
[quote user="tree68"]Seems as though I've read stories of auto plants shutting down due to cars not getting to a plant on time. If the auto industry didn't run JIT, they came close, particularly as major portions of the cars started to come from different plants./quote]
tree68 CMStPnP Seems as though I've read stories of auto plants shutting down due to cars not getting to a plant on time. If the auto industry didn't run JIT, they came close, particularly as major portions of the cars started to come from different plants.
CMStPnP
Seems as though I've read stories of auto plants shutting down due to cars not getting to a plant on time. If the auto industry didn't run JIT, they came close, particularly as major portions of the cars started to come from different plants.
Back in the day when GM had assembly plants at Baltimore and Wilmington, train 396 originated a Saginaw operated through Flint and Detroit picking up additional parts cars and operated through to Wilmington. Train operated with a caboose marking the cut between Wilmington cars on the head end and Baltimore cars on the rear end of the train. There were JIT cars for both destinations in the trains as well as cars for 2nd and 3rd days production. Not all parts were JIT, but those that were, were critical. In some cases GM would send personnel and a truck to unload a number of units from a rail car before the car could be switched out of the train and delivered to the plant - this was not a frequent happening, but it did happen. During that period of time GM Traffic Dept. had a much better handle on the cars on the railroad than the railroad did.
When GM closed the plants, obviously JIT died with them. The closest to JIT, in my areas of responsibility, that still exist are in trash operations. The lack of empties can shut down municipal trash transloading operations - they can't take in more trash if they can't get rid of the trash they have. A second area of JIT is in Export Coal - coal needs to arrive to be matched with the correct vessel - delay to coal trains delay the vessel and incur the costs of delay. A third area is with coal fired power plants - not all the time - but when the plants coal supply is drawn down it can be to the point where receipt of the next coal train is needed to keep the plant producing power.
tree68 CMStPnP I don't think we have many examples in this country of JIT delivery with a railroad involved. Seems as though I've read stories of auto plants shutting down due to cars not getting to a plant on time. If the auto industry didn't run JIT, they came close, particularly as major portions of the cars started to come from different plants.
CMStPnP I don't think we have many examples in this country of JIT delivery with a railroad involved.
I have been told that some railroad deliveries were "JIT" and specific to certain GM plants. Of course, they were give much more time to make those deliveries, and meet production schedules.
I had some co-workers that were responsible for shutting down a couple of GM (Canada) plants; weather was a factor, but was not excused. Our company, always, got the 'bill' for costs related to 'our' late 'JIT'. deliveries.
Did have a co-worker who had 'to fly a load' from a truck breakdown. Large cargo aircraft charters do not come cheap.
CMStPnPI don't think we have many examples in this country of JIT delivery with a railroad involved.
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
Ulrich - Good point, but I said "all things considered", which includes allowances / reserves for contingencies of the risks such as the ones you mention. A claim can occur to a very profitable shipment as well as a small one; the risks out on the road don't know which is which (there's a statistical term for this).
schlimm - Off the top of my head, no. I'd have to look for one that's been characterized as "overcapitalized" and/ or too much fixed-cost for the traffic base (perhaps shrinking), which is nevertheless still profitable on an out-of-pocket basis; then look for one with a low OR to support my point.
The basic problem - profitable operations but not enough to support the fixed costs - is common enough in railroad (and corporate/ Chapter 11) reorganizations; the challenge would be to find the best example of it. The key would be to start with the overcapitalized / high overhead designation; that would weed out the ones with the high ORs, as you point out.
Paul_D_North_JrIt's possible to have a great OR and still go bankrupt because even the aggregate profits from the low OR business are still insufficient to cover the fixed costs.
Theoretically true, yes. But can you name ONE railroad that had that occur? However, there are many whose ORs were high who did declare bankruptcy.
C&NW, CA&E, MILW, CGW and IC fan
So I would like to know exactly what is "precise" with EHH version of railroading. I don't think we have many examples in this country of JIT delivery with a railroad involved.
Skinny margins are fine until something goes wrong, and then one is faced with the absurdity of dealing with a 40K claim and maybe a lawsuit instead of realizing a profit of $150.00.. No way.. truck/rail /other/..always make sure there's enough juice in it.. if all goes well then that's great.. but if things go sideways as they so often do then at least we can look at ourselves in the mirror honestly and say we had a lot to gain had things worked out. In my industry it amazes me how many people will accept huge risks for a potential profit of only $150.00 or less!! The risks are no less on the rail side..either way the upside has to justify the risk which is always the unspoken elephant in the room.
The economics are different are different in a high fixed-cost/ overhead business like railroading. Any traffic that covers its direct variable costs should be at least considered (though not necessarily accepted). That's because it can contribute towards that overhead; and if there's capacity available - even if created by shedding less profitable traffic - then it should be solicited. Even traffic with an incremental Operating Ratio (all things considered) of 99 will contribute $1 of every $100 to the overhead. (This is John Kneiling 101.)
The fallacy with EHH's approach is that is leaves on the table all the potential earnings from traffic that has an incremental OR of from 70 to 99. OR measures operating expenses only, and doesn't include any contribution towards the high fixed costs of the financing of the business, MOW, signals, etc. It's possible to have a great OR and still go bankrupt because even the aggregate profits from the low OR business are still insufficient to cover the fixed costs. But adding in the contributions from the business with incremental ORs from 70 to 99 might have enough volume to cover those fixed costs, and only then return profits to the shareholders.
If there are surplus crews, locomotives, cars, and track, and business available that has a incremental OR of less than 100, then EHH is doing a disservice to the shareholders by ignoring it.
EHH will find in coming to CSX he is dealing with a company whose business practices mirror the companies he left at CN & CP. The small and minimal margin rail car customers were shed decades ago. The industrial park where my final office was located in the past handled over 100 cars a day and supplied work for yard crews stationed there around the clock in the 70's & 80's - most all of this traffic was short haul and marginal in revenues to the company. In the 21st Century the entire area gets 2 or 3 cars a week and is serviced by a yard crew from another yard once a week - how much longer this customer will exist is open to question. This location is not unique and has been replicated at many locations around the property.
BOB WITHORN40+ years in the sale/service business, we sold then delivered stuff. I've read and listened to presentations about 'divorcing' your company from marginal customers. Simple version is that by walking away from those that are break even or very small margin/small volume customers, you free up capacity to better serve you profitable customers or seek additional customers. It works, found out the hard way. We, (I), could never get myself to follow through on it, always afraid to take the chance. I went broke and sold out to a competitor that has no problem cutting. Both companies were about the same size in the mid 80's, they grew to 6 or 7 times our size as we started losing market to them are others. Same basic market both delivered on company trucks. By not being afraid to charge more and use common carriers or just walk away, they had the capacity to expand without harming service, we didn't. There is more to it then that, but I lived it. Doesn't make EHH a positive but, some where in there is the point that not all business is good business and you need to divorce a few. Just a thought, Bob
Right on Bob.. we have no problem saying astalavista baby to customers who are beyond hard to deal with or who don't respect our terms. For some time we were weighted down with these deadbeats until I reached my tipping point.. sent out letters to all of them and our sales dipped by 30% that year.. On the plus side.. our net profit went up by almost the same amount!.. blood pressure down throughout the office.. Too many companies and sales people walk hat in hand, feeling lucky to have any customers at all.. so they settle for pandering to the deadbeats.. We look at all the factors in our business.. all deadbeats and hard to deal with influences (customers, employees, contractors, others..) are dismissed promptly and without hesitation! Looks like EHH operates the same way..
jeffhergert . . . Some railroads view service to some customers along the lines of "It's my way or the highway." Then one day they wonder where all their business went to.
kgbw49 OK, so what about the 28 hour "day"? Any thoughts in that regard? Thanks for a great discussion, by the way.
OK, so what about the 28 hour "day"? Any thoughts in that regard? Thanks for a great discussion, by the way.
That was laughable. Clained they were saving crews by holding and combining two trains into one. Then very consistently, the originating crew would get the power out of the roundhouse and to the train, double, triple and maybe even quadruple the cuts together, remove the shops from the train, pump air, pump air, and then finally do the brake test and their 12 hours expire still inside the terminal. The recrews would take the train to its destination.
Another modern version of what John Kneiling called - back in the 1960's and 70's - the "We have a boxcar and you can figure out a way to use it" attitude.
There's so many EHH themed threads, I'm not sure sometimes where to post something.
I read in the pro-EHH articles about his methods on how he turns around companies that one is he drives away unprofitable customers. I think that is misleading. It probably should be that he drives away customers that aren't profitable enough.
Some railroads view service to some customers along the lines of "It's my way or the highway." Then one day they wonder where all their business went to.
Jeff
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