See their cars in there Holyoke yard and thru NYC DeWitt NY Yard. .Railway Ag reportede this month reported private car owners are petitioning STB over demurage..times and how long railroads sit on their cars in yards and customer sidings..lack of crews could be a issue
I've seen their cars out here in Alberta.
So much for PSR keeping cars moving..........
Greetings from Alberta
-an Articulate Malcontent
Different rules apply to railroad owned cars and private owned cars.
Railroads invest capital to buy railroad owned cars. In recent years railroads have been selling cars from their fleets to equipment leasing companies. Watching a 'merchandise' train pass and you will see many 'general purpose freight cars' (Boxes, Gons, Flats, Hoppers etc.) with a reporting mark ending in X (this discounts cars such as TTX, RBOX, GONX and other Trailer Train owned cars).
Being retired, I don't know what forms of games that the carriers are playing - but from experience I know they are playing games.
Never too old to have a happy childhood!
If it's not yours, you don't have to fix it (or can charge the owner if you do).
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...
BaltACD Different rules apply to railroad owned cars and private owned cars. Railroads invest capital to buy railroad owned cars. In recent years railroads have been selling cars from their fleets to equipment leasing companies. Watching a 'merchandise' train pass and you will see many 'general purpose freight cars' (Boxes, Gons, Flats, Hoppers etc.) with a reporting mark ending in X (this discounts cars such as TTX, RBOX, GONX and other Trailer Train owned cars). Being retired, I don't know what forms of games that the carriers are playing - but from experience I know they are playing games.
Reporting marks ending in X means it is not railway owned. I thought that if a car is railway owned then the railway gets more revenue via hauling it or via it hauling freight on another line. Gets a larger share of the per diem rate? Is that what it is called? Not sure.
Yes so by playing games you mean probably the accounting tricks of useful life of a fixed asset and using rebuilding programs to renew that somewhat with the various tax write offs and depreciation that can be claimed to boost income. Last I read the Milwaukee Road had won the Olympic Gold in that category but also managed to dig it's financial hole deeper instead of boosting it's revenue on paper....the latter was the goal and not the former.
CMStPnPReporting marks ending in X means it is not railway owned. I thought that if a car is railway owned then the railway gets more revenue via hauling it or via it hauling freight on another line. Gets a larger share of the per diem rate? Is that what it is called? Not sure. Yes so by playing games you mean probably the accounting tricks of useful life of a fixed asset and using rebuilding programs to renew that somewhat with the various tax write offs and depreciation that can be claimed to boost income. Last I read the Milwaukee Road had won the Olympic Gold in that category but also managed to dig it's financial hole deeper instead of boosting it's revenue on paper....the latter was the goal and not the former. Add Quote
Yes so by playing games you mean probably the accounting tricks of useful life of a fixed asset and using rebuilding programs to renew that somewhat with the various tax write offs and depreciation that can be claimed to boost income. Last I read the Milwaukee Road had won the Olympic Gold in that category but also managed to dig it's financial hole deeper instead of boosting it's revenue on paper....the latter was the goal and not the former. Add Quote
Lots of confusion and misunderstanding here.
Yes, reporting marks ending in 'X' indicate private, or non railroad, car owner.
Freight rate may or may not be different if private car is used. Case one, no distinction but railroad pays a mileage allowance for every mile private car moves on its line. Case two by contract or letter quote, railroad offers lower rate for shipper supplied cars, but carrier does not pay mileage. This is strictly a matter of negotiation between the parties.
Per diem is an obsolete term for car hire. Back when cars were cheap, labor was expensive, and computers were unknown car hire was calculated based on who had the car at 12:01 AM each day, and was known as per diem, Latin for by the day. Now is calculated by the hour and is called car hire.
Depreciation does not boost income. It is a non-cash expense that shelters income from taxation. To have depreciation, one must own a long lived capital asset, cars and locomoties for example. Any railroad that does not consider capex and depreciation vs. paying car hire, vs leasing is run by idiots. It is not game playing in a perjorative sense; it is figuring out the least cost way to move the traffic.
Mac
If money is involved, if tax laws are involved - GAMES are being played. The formation of the tax laws are another game that is being played.
BaltACD If money is involved, if tax laws are involved - GAMES are being played. The formation of the tax laws are another game that is being played.
Back when dinosaurs roamed the earth and I was a college student, on the first day of Tax I the professor gave us all some very good advice - "Do not try to apply logic to the Internal Revenue Code. Do not try to make it make sense, because it does not. If you try, you will only end up with a severe headache" (or words to that effect). Trust me, the man said a whole mouthful of truth that day.
Availability to equipment when needed. Same reason that trucking companies own their own chassis's and trailers.
PNWRMNMcar hire was calculated based on who had the car at 12:01 AM each day, and was known as per diem,
This was responsible for an exercise known as the "Midnight Shove" where each road would try to dump as many cars as possible via a transfer run to their connections just prior to midnight. That way, the recipient was responsible for paying for any foreign railroad the per diem for their cars and paying your railroad for any of your cars you sent them. If the recipient refused to take the cars, the sending railroad filled out a form and sent it to the AAR's per diem clearing house and the recipient was charged the per dien amyway
This nice, tidy operation collapsed under the PC bankruptcy (of course, EVERYTHING bad in US railroading at the time was worsened by the PC sailing down that ever popular waterway, the tubes). Since it was in bankruptcy, the law said that creditors would not be paid until a resolution was reached by the court. So PC paid no per diem. BUT, any lines caught with PC cars at midnight had to pay per diem to PC. You see where I'm going here, right? Normally, per diem charges between railroads pretty much balanced out, so the actual cash transferred at the end of month or whatever was small. But with the PC situation, due to the number of cars involved, it was as if a huge black hole was eating the other railroads cash reserves alive. Several northeastern lines that connected with the bankrupt giant mentioned this as a reason for applying for their own bankruptcy, they had no liquid assets left due to the disparity in per diem charges.
JoeBlowAvailability to equipment when needed.
I am not sure how Sullivan's operates but I suspect it takes in bulk scrap from a wide variety of prospective sources, sorts and perhaps classifies it, then delivers it to mills and other users -- Holyoke not being particularly renowned, to my knowledge, as a steelmaking town. That would imply a large fleet of the special gons slithering along at PSR monster-train speeds, with only the limited few that would seem to fit the actual Sullivan trackwork being actually unloaded/reloaded or dispatched at any one time. The question then arises where any 'surplus' cars might be stored securely...
Reminds me of the wealthy Manhattan woman who was going overseas for a few months. She went to her bankers and took out a loan for $10,000, securing it with her Rolls-Royce Phantom. She even offered that they could keep the car as collateral 'just in case' -- which they, being bankers, cheerfully agreed to do.
When she got back, she briskly paid back the principal and interest, and had them bring the car to be picked up. One of the bank officers wondered why she'd taken out the loan if she was paying it back so quickly. "Oh, I didn't need the money. Do you have any idea how much it would cost to park a Rolls-Royce in Manhattan for three months with the owner away?"
Overmod The question then arises where any 'surplus' cars might be stored securely...
Based on the "art" seen on many such cars, their storage security might be called into question...
PNWRMNM Depreciation does not boost income. It is a non-cash expense that shelters income from taxation. To have depreciation, one must own a long lived capital asset, cars and locomoties for example.
Depreciation does not boost income. It is a non-cash expense that shelters income from taxation. To have depreciation, one must own a long lived capital asset, cars and locomoties for example.
I disagree with the underlined sentence at least in regards to US tax laws. Assets that last less than one year can be expensed, i.e. a direct cost of doing business. Assets with a limited lifetime of more than one year need to be capitalized, where accounting for the cost of the asset has to be spread over the life of the asset, hence depreciation.
For financial market reporting, not taking depreciation of assets into account can be construed as fraud.
Strangely enough, my education on expensing versus capitalization came from a course on nuclear fuel cycles, as the fuel rods typically last three to five years before being replaced. The "magic number" is lasting more than one year - where coal or oil bought for a thermal power plant would rarely be stored for more than 180 days.
Depreciation versus expensing can be seen as one way where the RR's get treated unfairly vs trucking and airlines. Construction work and a considerable amount of maintenance on RR's has to be capitalized, where the equivalent for road and airway construction and maintenance is expensed as part of fuel taxes.
Erik_Mag PNWRMNM Depreciation does not boost income. It is a non-cash expense that shelters income from taxation. To have depreciation, one must own a long lived capital asset, cars and locomoties for example. I disagree with the underlined sentence at least in regards to US tax laws. Assets that last less than one year can be expensed, i.e. a direct cost of doing business. Assets with a limited lifetime of more than one year need to be capitalized, where accounting for the cost of the asset has to be spread over the life of the asset, hence depreciation. For financial market reporting, not taking depreciation of assets into account can be construed as fraud.
Eric,
I do not understand what you are disagreeing about. You seem to understand depreciation. I was simply stating its effect on the income statement and on income tax calculation, which is true and accurate.
Mac,
I was disagreeing with the "use" of shelter as that has connotations of some sketchy tax avoidance schemes - i.e. "costs" not representative of the true costs of doing business. OTOH, it might be fair to say that double declining balance depreciation or other accelerated depreciation is a form of tax shelter in that deductions can exceed fairly allocated costs of depreciation.
- Erik
Erik_MagMac, I was disagreeing with the "use" of shelter as that has connotations of some sketchy tax avoidance schemes - i.e. "costs" not representative of the true costs of doing business. OTOH, it might be fair to say that double declining balance depreciation or other accelerated depreciation is a form of tax shelter in that deductions can exceed fairly allocated costs of depreciation. - Erik
In today's finance & accounting worlds I am certain there is a lot of 'sketching' taking place.
I did tax returns as a sideline for 25 years. There is Depreciation the Fact, Depreciation the Concept, Depreciation the Accounting Theory, Depreciation the Tax Law, and Depreciation as It Is Actually Done for Real on a Tax Return (all my professional returns are now Off Audit so they can't be challenged!). Yes, Depreciation does in fact exist--don't say it's a dodge and doesn't exist! Every so often Congress and the IRS change the tax law and Lord knows what the states are up to--and yet the Tax Code is a model of moral clarity when compared to the drivel of Constitutional Rights Law. Depreciation the concept is recovery of cost over "assigned" time and for purposes of determining taxable income. Span of Time as a marker for depreciation? Depreciate a 10-dollar tally counter over its decades-long life span vs. the other one that fell apart in my hands after 20 minutes' use! The "Useful Life" Rule: that last tally counter had a useful life of 20 minutes. Hey, expense the small stuff--everyone does it and it's expected of you--it's called De Minimis! OK, back to RR cars. Depends on how the cars are charged for and other factors and rules as to whether the cars are RR-owned or private--not much discussion of those factors here; just the usual grousing about bigwigs and the super-rich. Remember up to the early 1980's except for the Southern and the UP and maybe a few others the RR industry was a notorious losing proposition of a money pit to stay away from. Depreciation was and is viewed as a dishonest dodge using a non-existant supposed fact of life. OK, so in the late 1970's when there was a big racket in th Incentive Per Diem rqcket wherein rich professionals were presuaded to put big money into buying boxcars using shortline RR reporting marks which had big per diem rates; this being encouraged by the ICC to increase the boxcar supply. The per diem money flowed out of the RR industry into leasing companies and doctors, lawyers, dentists, architects etc.--until the RR industry got wise and someone (I met one of the big figures in this move once without knowing it) figured out how to better utilize cars from a railroad-owned car pool and there went the incentive per diem racket! Yes, the car owners sued under anti-trust but Congress in the Bullwinkle Act (stop giggling: No Moose!) had exempted RR's from (most) anti-trust laws so interline rates could be set--the car owners lost. For the next few years their colorful boxcars roosted on various surplus tracks earning rentals for the owning RR's until they got sold or scapped.
To call the US and state tax codes messed up is beyond an understatement. I think it took my bosses CPA 6 months to get last years taxes done for the company. This was for all the state's we run in and have properties in. Or as he put it when he delivered it killing 2 forests worth of trees so people can kill another few forests to see if I or my employees screwed up on the information I was provided with and then grab more money from you with those screw ups.
CNSF2Perhaps a simpler way to look at the whole question is to keep in mind that the railroads only have so much capital available to invest - and a lot of things that need investing in. I suspect they've found over time that, if someone else is willing to invest in railcar ownership, that frees up more of the railroads' capital for investment in locomotive, track, signals, etc. Oh, and stock buybacks, of course.
Remember - when shipping via UPS or FedEx - you the shipper are expected to provide the shipping container, not UPS or FedEx. Railroads are starting to apply the same principles to their customers.
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