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Shipping Scrap Metal by Rail

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Shipping Scrap Metal by Rail
Posted by zardoz on Wednesday, April 6, 2005 10:46 AM
The following are excerpts taken from the March/April 2005 issue of Scrap (www.scrap.org). Article by Lynn R. Novelli.

In a survey conducted by ISRI (Institute of Scrap Recycling Industries) last July, 88% of the respondents rated rail transportation as "somewhat" to "very important" to their companies. Unfortunately, almost as many--82%--rated the railroads' service as "fair" to "poor".

"Service is the most important issue to scrap shippers", says Steve Hirsch (of the ISRI). 79% of respondents rated consistency and reliability as the most important elements of rail service, outweighing price more than 6 to 1.

"Declines in transport speed, extended dwell times and turnaround times, and lack of power on the rail lines contribute to a domino effect", says Doug Starosta, a member of the ISRI. "If the railroads were fluent, it would help the railcar situation tremendously", he says. "That's also why throwing more cars on the line will just bottlekneck the system more and not solve the problem".

In a report by Tom Pellington, senior director of transportation for the David J. Joseph Co. (Cincinnati) says the UP has experienced a 4% decline in train speed and a 6% increase in dwell time. CSX has seen their speed decline by 9% and dwell times increase by 13%, NS speeds declined by 7% and dwell times increase by 2%. Only the BNSF has come closest to holding speeds steady with only a 1% decrease in speed with a 0% increase in dwell times.

According to the National Industrial Transportation League, Class 1 track mileage has declined by 100,000 miles in the last 20 years, from 270,000 in 1980 to 170,000 in 2002. In that same period, the number of railroad employees slid from 450,000 to 150,000. Meanwhile, the number of carloads has grown by 6,000,000.

Also, the railroads are still trying to sort out the problems stemming from their various mergers, says Greg Dixon, chair of ISRI's rail transportation task force. For instance, mergers have made it necessary for railroads to integrate lines, and service has suffered as a result.

In addition to the above challenges, railroads face shareholder pressure to perform well financially--not an easy task in the capital-intensive rail business, says Dennis Wilmot, president of Wilmot Logistics, a logistics consulting and railcar supply and management company in Aurora, OH. "Unlike highways that are supported by public monies, the rails belong to the railroad, which have to answer to shareholders who want a decent return on investment".

To add to the pressure, the federal Surface Transportation Board requires railroads to show a 20% return on investment to be deemed profitable. Unfortunately for shippers, the railroads' focus on cost reduction to satisfy shareholders has coincided with an upswing in the global economy. At the time when shippers need service the most, railroads have cut their personnel and aren't investing in infrastructure and equipment.

An option for some shippers is paying a premium for cars to ensure their availability abd delivery. BNSF is a leader in this area; they developed an innovative program that requires shippers to pay a premium price for cars but also guarantees their availability. Under its Load Origination Guarantee Service (LOGS) program, shippers can bid on available gondolas, and the cars go to the highest bidder. What makes this program a success, says Starosta, is that the shipper with the winning bid is guaranteed to receive the number of cars ordered on time or BNSF pays the shipper a $200-per-car penalty. The LOGS program not only gives the shipper peace of mind, it also helps the railroad plan for car allotments, Starosta explains.

According to Starosta and Wilmot, the single most important element in improving rail service is for shippers to accurately forecast their needs. "When the railroads know in advance what to plan for in cars, power, and crews, they can stay fluent". "The railroads appreciate at least a 6-12 month forecast".

ISRI's task force is attempting to meet with the railroads to lay the problems on the table in a nonadversarial way. "I'm hopeful that opening up a dialog and addressing the issues will at least start improving the situation", Dixon says. "Our members have been persistent and have worked their way up the chain-of-command at the railroads to make their voices heard", he says. "And we feel the railroads have been trying to figure out strategies that work for both sides".
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Posted by spbed on Wednesday, April 6, 2005 10:57 AM
In short scrap is low paying cargo, gets non priority service no difference then used newspapers or other similar very cheap commodities. [:o)][8D]

Originally posted by zardoz
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Posted by Junctionfan on Wednesday, April 6, 2005 11:57 AM
I think BNSF's policy is a good idea. The rest of the railroads should follow suit.

How many employees does BNSF have in the operations (engine crews, yard crews)?

How does it compare with the other railroads?
Andrew
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Posted by mudchicken on Wednesday, April 6, 2005 2:31 PM
Scrap metal operators/ recyclers survive under the thinnest of margins. This has been a fact for as long as I can remember. SPbed is correct. What the scrappers ought to print in their industry rag, but won't, is a request to get their own houses in order. From a trackman's perspective:

(1) The maintenance of their facilities is non-existant. Track is in terrible shape.
(2) They do a poor job (Most, but not all) of keeping the area around tracks clear. These industries are like minefields to any switchman that has to work them.
(3) There are enough jury-rigged devices around these tracks to either kill or maim dozens with clearance, stumbling and other assorted hazzards.
(4) You go to inform these folks to fix something before somebody gets hurt and all you get is bellyaches about shipping rates.

It is a two way street, they just do not see it until the OSHA or FRA man come to hit them where it hurts. As soon as the inspector leaves, it's back to business as usual.

[soapbox][soapbox][soapbox]
Mudchicken Nothing is worth taking the risk of losing a life over. Come home tonight in the same condition that you left home this morning in. Safety begins with ME.... cinscocom-west
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Posted by bobwilcox on Wednesday, April 6, 2005 5:26 PM
The scrap dealers lobbying group's statement about not giving a high priority to low rates in one of the most bizarre statements I have run across in a long time. Only a scrap dealer could make such a statement.

When we got people off the training program we use to let them make scrap rates as a baptism under fire in the real world far, far away from their University campus.
Bob
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Posted by edblysard on Wednesday, April 6, 2005 5:53 PM
I will second mudchickens statements...
We serve two scrappers on the PTRA...
If given the choice of walking a120 car grain train in the middle of august, or spotting a pair of gons in either ones of these plants,,,the grain train wins, every time.

What he forgot to mention are the guard dogs...on hand to keep the thieves from raiding the place...and they are very good at keeping switchmen from pulling the empties and spotting the loads.

Filithy beyond what you could ever dream up, and in both of these places, the tracks disappear into the dirt, and are often covered up with scrap spilled from the gons you are supposed to pull.

We bad order these places two out of every three times, no walkways, (they are there, just buried in junk) no lights, no keepers on the gates, or the gates no longer have a railroad lock, and we can't get in...along with the dogs loose inside the fence...

One of our switchmen did a dog in recently, it was hiding under the car he was sent to pull, and attacked him.

He grabbed the first thing at hand, which happened to be a aluminum I beam, and whacked it on the head...while he was backing up between a dumpster and the gon.
He said it dropped like a rock, must have got in a lucky shot!

He also ended up getting several stiches on his arm, which got sliced on some coiled steel scraps leaning against the dumpster, along with a tetnus shot...

And the scrapper complained over the dog, and the fact the switchman didnt pull the empty, and spot the load before calling a relief!

Ed

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Posted by UPTRAIN on Wednesday, April 6, 2005 6:55 PM
Crew member: 1 Dog: 0.

Pump

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Posted by Junctionfan on Wednesday, April 6, 2005 7:51 PM
QUOTE: Originally posted by mudchicken

Scrap metal operators/ recyclers survive under the thinnest of margins. This has been a fact for as long as I can remember. SPbed is correct. What the scrappers ought to print in their industry rag, but won't, is a request to get their own houses in order. From a trackman's perspective:

(1) The maintenance of their facilities is non-existant. Track is in terrible shape.
(2) They do a poor job (Most, but not all) of keeping the area around tracks clear. These industries are like minefields to any switchman that has to work them.
(3) There are enough jury-rigged devices around these tracks to either kill or maim dozens with clearance, stumbling and other assorted hazzards.
(4) You go to inform these folks to fix something before somebody gets hurt and all you get is bellyaches about shipping rates.

It is a two way street, they just do not see it until the OSHA or FRA man come to hit them where it hurts. As soon as the inspector leaves, it's back to business as usual.

[soapbox][soapbox][soapbox]


That is a pretty good reason for the switching delays but what about the loads on the trains; the in terminal waits? Have the railroads publicly told them the reasons for this so everybody else listening hears this? If no than they should because I agree with the railroads in that why should their workers get injured in that kind of a mess particularly if the load isn't worth that much to begin with.

I was fortunate to be able to have the opportunity to tag along with Trillium's St.Catharines switching crew and when we went in to pull out some of those DJJX high side gondolas, that yard was actually pretty decent looking. Obviously then this is not the norm for every scrapyard. Can the scrapyards be reported for any safety violations or is there any way that the railroads can file grievences through an agency to have them ensure that their switching crews are not put in unnecessary harms-way because that particular customer is messy.
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Posted by PNWRMNM on Thursday, April 7, 2005 12:57 AM
Junctiuon,

The most practical solution is to not switch the place until it is safe. Railroad management seldom has the guts to do that.

Mac
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Posted by zardoz on Thursday, April 7, 2005 6:07 AM
I agree with what everyone says about the safety (or lack thereof) in the scrap facilities. I sustained my only railroad work injury when as a brakeman switching a scrap facility at night, I stepped on some scrap metal buried in muck (broke my ankle); in addition, I now work at a metal recycling center (fancy name for a junk yard [but don't let the boss hear you call it 'junk']), so I can attest to the conditions in some scrap yards (actually we do keep ours clean).

My intention of the original post was to show how some shippers view the railroads and their operations, as well as the program that BNSF uses. I thought it was interesting.
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Posted by spbed on Thursday, April 7, 2005 6:22 AM
Thank you. While I never worked in the RR industry I was a manager in the steamship industry. Since there were always more import loads then export loads we would have to load empties to balance out the system. No matter if a container is loaded or empty you have to pay the stevedore for the lift on here & the lift off at discharge. So we came up with a plan to take the highest possible rates for loading & unloading then add in a profit & offer that rate to what we termed very "low paying cargo" like scrap & used newspapers. That insured that the low paying freight was paying to return a empty steamship container not the steamship line. if we got lucky & booked higher revenue cargo well we would just leave behind the low paying freight on the dock for the next vessel. That cycle would continue vessel after vessel after vessel. i'm am sure something similar occurs with scrap in the RR biz. [:o)][:D]


QUOTE: Originally posted by mudchicken

Scrap metal operators/ recyclers survive under the thinnest of margins. This has been a fact for as long as I can remember. SPbed is correct. What the scrappers ought to print in their industry rag, but won't, is a request to get their own houses in order. From a trackman's perspective:

(1) The maintenance of their facilities is non-existant. Track is in terrible shape.
(2) They do a poor job (Most, but not all) of keeping the area around tracks clear. These industries are like minefields to any switchman that has to work them.
(3) There are enough jury-rigged devices around these tracks to either kill or maim dozens with clearance, stumbling and other assorted hazzards.
(4) You go to inform these folks to fix something before somebody gets hurt and all you get is bellyaches about shipping rates.

It is a two way street, they just do not see it until the OSHA or FRA man come to hit them where it hurts. As soon as the inspector leaves, it's back to business as usual.

[soapbox][soapbox][soapbox]

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Posted by dldance on Thursday, April 7, 2005 10:34 AM
In spite of the gripes - there is a lot of scrap moving by rail. The margins are so thin that moving much scrap by truck is almost out of the question.

dd

ps - a daylight ride on Amtak most anywhere will pass a lot of scrap yards that confirm mud's statements.
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Posted by PNWRMNM on Thursday, April 7, 2005 1:23 PM
SPBED,

Once a car gets in the system it gets handled with the normal flow. It is not worth the trouble to sharpshoot the traffic as you describe. If you hold cars you have to have a hold track, you have to switch it now and then, and you are paying car hire on the cars.

I do not know if it still aplies, but the scrappers in the last years of regulation got special hold downs when other products took general rate increases, which had the effect of depressing their rates relative to other matierials. Nice of the ICC to force the rails to subsidize the scrappers wasn't it?

Mac
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Posted by spbed on Thursday, April 7, 2005 1:33 PM
I do understand the RRs are not the steamship industry. What I am saying is if you have 2 calls for say a gond car but you only have 1 gond car available I would presume the RR would give the car to the shipper whose freight pays the most. [:D][:o)][:p]

Originally posted by PNWRMNM

SPBED,

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Posted by PNWRMNM on Friday, April 8, 2005 1:29 AM
SPBED

Probably not. That is discrimination, which if not illegal is at least immoral and fattening. Practical answer is it will go to closest loading point or to whoever's order is oldest, depending on how car management system is designed.

Mac
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Posted by Anonymous on Friday, April 8, 2005 1:43 AM
You know what? Forget the rail service to these scrap yards. Foundrys should be built nearby to melt the scrap down to pig iron or whatever we call them today.

Then these loads can be shipped out of the foundry on trucks or train as revenue.
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Posted by daveklepper on Friday, April 8, 2005 3:15 AM
Normal safety inspections by the local government authorities would solve the problem. Why don't they do it? Are they being bought off? But there is no reason why you railroaders reading this post cannot call the police after subjecting yourselves to some horror at a scrapmetal siding and report all the safety violations. If all railroaders did this consistantly would not the jobs for all be a lot safer?

Sure it takes time. But time you take may prevent future injury!
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Posted by spbed on Friday, April 8, 2005 7:31 AM
Yes heard that word a whole bunch in the S/ship industry "discrimination" used every day by shippers of low paying cargo. They use to complain to the Federal Maritime Commision. There were investigations yada, yada, yada but in the end PROFITS always was the end product of everything. Never any fines. In the S/ship industry no matter if the container was low paying cargo or high paying container it cost the same to load & unload it. I'm sure lets say from NYC to CHIC via CSX the costs to move a car of low paying freight & high paying freight is more or less the same. Again I have not been employed in the RR biz just worked very closely with them & if the RRs are not interested in making mega bucks then oh well to them. [:o)][:p][:D][:)]


Originally posted by PNWRMNM

SPBED

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Posted by MP173 on Friday, April 8, 2005 7:43 AM
My favorite train is NS 177 which is a Chicago - Ft Wayne/Cincinnati manifest. When I hear it on the scanner, I go watch it. It almost always has at least 40 cars of scrap metal.

Something sort of neat, as an economic railfan, after watching train after train of containers and auto racks to watch a REAL train with boxcars, tanks, covered hoppers, and gons loaded to the brim with scrap metal.

I look at it this way...NS177 usually has 100+ cars. If 40 of those are scrap metal, then that is still a very profitable train.

Anyone know where rates can be found on scrap? What would a load from Chicago to Ft. Wayne pay?

ed
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Posted by spbed on Friday, April 8, 2005 7:46 AM
No maybe at the NS site they have a calculator of freight charges you can use to get the number? [:o)][:)][:D]

Originally posted by spbed

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Posted by MP173 on Friday, April 8, 2005 8:29 AM
Thanks spbed....should have done that.

I guess it is time to enter the wonderful world of rates and tariffs again.

ed
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Posted by spbed on Friday, April 8, 2005 8:34 AM
Good luck in my very early days I used to file our rates with the FMC & attend rate meetings. I sought of enjoyed it. The best was dealing with the shippers who wonder why used newspapers pays $0.01 & photo equipment cost $100.00 a ton as a example. The battle of wits with shippers was very enjoyable to say the least. [:D][:o)][:p]



Originally posted by MP173
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Posted by MP173 on Friday, April 8, 2005 8:57 AM
spbed:

I was a "rate man" myself....in LTL trucking. Before it was computerized, it was quite a world. Everyday there would be new tariffs and supplements from the bureaus. All to be filed away.

We had the classification guide with 15 factors to determine the "class" of freight. It was pretty interesting.

Today, I am in a different world, it is "what the market will bear." I like this a lot better than the old regulated days.

ed
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Posted by bobwilcox on Friday, April 8, 2005 9:59 AM
QUOTE: Originally posted by MP173

spbed:

I was a "rate man" myself....in LTL trucking. Before it was computerized, it was quite a world. Everyday there would be new tariffs and supplements from the bureaus. All to be filed away.

We had the classification guide with 15 factors to determine the "class" of freight. It was pretty interesting.

Today, I am in a different world, it is "what the market will bear." I like this a lot better than the old regulated days.

ed



MP173-I remember the joys of rating a mixed shipment only to discover the operating authority was not there on one of the commodities.
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Posted by spbed on Friday, April 8, 2005 10:15 AM
Well my world today is clicking on A/trade to see what is going on with my investments. However, as I said I do miss the battle of wits with the shippers.

In the steamship world whatever the shipper described his shipment as was how it was rated. For guidance they were also required to furnish us with a US Customs form call a "shippers export declaration" which had a schedule "B" number. By checking that number in the schedule "B" book you would know if the shipper descripition was correct as the presumption was the shipper would not lie to the US Customs.

For me it was easier as I had the authority to fix a rate without have to go to a bureau for approval as the FMC rules were so long as the rate agreed upon was lower then the filed rate. So we would file a really super hi rate & then be able to barter with the shipper for a rate that they would accept that would be lower then the filed rate. Thats what made it such fun was that the shipper wanted to pay 1/2 a widget we wanted him to pay 10 widgets. [:o)][:D][:p]

Originally posted by MP173

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Posted by mudchicken on Friday, April 8, 2005 10:16 AM
QUOTE: Originally posted by daveklepper

Normal safety inspections by the local government authorities would solve the problem. Why don't they do it? Are they being bought off? But there is no reason why you railroaders reading this post cannot call the police after subjecting yourselves to some horror at a scrapmetal siding and report all the safety violations. If all railroaders did this consistantly would not the jobs for all be a lot safer?

Sure it takes time. But time you take may prevent future injury!


(1) FRA is hard stretched to inspect trackage on the common carriers, much less trackage owned by individual industries. They will come if called on a case by case basis and talk to an individual track owner (who usually feigns ignorance.)

(1a) Railroads are bound to inspect only the track that they own, not neccessarilly operate over. It's up to the operating supervision to bring in a track department person to inspect out of bounds if they see something wrong. Track guys will look beyond the line where they can to spot trouble, but they cannot go out of their way. (If the forum could only see the finger pointing that goes on after a track caused derailment on industry owned track. The industry rarely wants to pay for anything, cannot justify regular maintenance and inspection costs, thinks track lasts forever and is outraged when the railroad sends it a track repair bill after a derailment or when the track deteriorates to the point the train cannot get over it and they need cars)

(2) The State PUC or Railroad Commission will come out and inspect and order a track removed from service if it violates a state statute (usually road crossing or clearance issue).....there is no longer a qualified individual in Colorado to do this since the last PUC Railroad Engineer retired (he was VERY good and is now sorely missed)[V] ... again the industry feigns ignorance even though you beat them over the head with the facts after giving up on gentile persuasion long ago with them.....This is as close as you get to police daveklepper!

Neither (1) or (2) wants to discourage commerce, and they try to persuade the industry to straighten out, but I have seen them pull the plug on rare occasion.

(3) Chicken solution, you forbid (by sign and superintendents notice) to spot cars or have employees go past a certain point on a track where it is known to be safe and in compliance, force the industry to come get the cars. more bellyaching to be heard from the industry

I personally have done (1), (2) and (3)....sometimes at the risk of getting called on the carpet by a superintendent (most understanding, some witless "Odies") after the 'supe gets his butt chewed by the shipper.

[soapbox][soapbox][soapbox]
Mudchicken Nothing is worth taking the risk of losing a life over. Come home tonight in the same condition that you left home this morning in. Safety begins with ME.... cinscocom-west
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Posted by MP173 on Friday, April 8, 2005 10:42 AM
I just spent a wonderful hour in the world of railroad tariffs. NS does not have published tariffs for scrap available to the general public. You must register in order to get access. In order to register, you must have an NS employee (probably sales person) sponser you.

However, there were some public rates out there...

But, it was interesting looking at lumber, grain, and fertilizer rates!!!!

A 500 mile haul of food oil yiels about $1985 in a shipper supplied car.

A 500 mile haul of grain in a greater than 5000 cf cover hopper is $2033.

Joint line lumber rates for NS and CSX are in effect. The 500 mile rate is $2585 to be split between the two carriers for a big flatcar.

Proportionate rates coming from another carrier at either Chicago or Streator yield $2277 for a big flat car for 500 miles. All of that revenue goes to NS.

It appears that a hefty fuel surcharge is in affect. Their tariff states .4% of line haul for every $1 above $23.00 for west Texas crude. That is about 13% today.

Bob, perhaps you can help with other accessorial charges. Typically, what other charges can a shipper expect.? Is there a charge for switching into an industry? Or is that part of the rate? Lets say NS hands off to a short line for final delivery...does NS split their rate with the short line or does that carrier also bill the customer?

What about return of empty private cars? If a customer ships food oil in a private tank car...ADM, Bunge, AGP, Cargill, etc...what is the charge to return the mt tank car? Is there a mileage allowance.

Back in the day, I worked for a small LTL carrier and we interlined with the major carriers. We would split revenue based on an old book of railroad rates. It had been published sometime in the 20's and there were "factors" for interline points such as Chicago, Indianaplis, etc. I wish I would have kept a copy.

ed
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Posted by bobwilcox on Friday, April 8, 2005 12:13 PM
QUOTE: Originally posted by MP173


Bob, perhaps you can help with other accessorial charges. Typically, what other charges can a shipper expect.? Is there a charge for switching into an industry? Or is that part of the rate? Lets say NS hands off to a short line for final delivery...does NS split their rate with the short line or does that carrier also bill the customer?

What about return of empty private cars? If a customer ships food oil in a private tank car...ADM, Bunge, AGP, Cargill, etc...what is the charge to return the mt tank car? Is there a mileage allowance.


In general, based on loose car movements.

The most common added charges are for weighing and demurage. One switch in and out of an industry is included in the rate. However, you will see caps on this because some carriers have tried to limit access with very high switching charges. Shortlines either have a contract with the connecting Class I for a fixed fee per car or they take a percentage of the through rate. The fixed fee approach is the most common with the shortline not appearing in the route on the bill of lading.

Shipper owned cars are returned empty to the loading point without charge. However, if you shipped a load from TX to PA and went to send the empty out to WA there will probably be a charge in cents per mile for the extra distance.

Prior to Staggers the railroads paid a feee in cents per mile to use shipper cars. It was a rate the ICC perscribed. However, in an effort to save the accounting expense, only about 10% of the traffic still moves on this basis. The rest move on so called zero mileage payout rates where the equipment cost is backed out of the rate.





Bob
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Posted by Junctionfan on Friday, April 8, 2005 1:12 PM
Movement of empty cars is a "necessary evil" in railroad profit means. The good thing is that 3 locomotives can haul 180 cars no problem as long as the grade isn't to steep.

The interesting thing is that unit trains don't usually need to change cars often so it saves money on buying more railcars to replenish industries with shipping means. That is likely why railroads prefer unit trains. I know CN at one point was in preference to running unit trains. I suspect that the "Tank Train" cars of GATX was built for that kind of purpose.

As far as scrap metal trains, I believe CSX runs a few K500 series as required. Not sure what kind of customer has that much scrap metal for a steel mill.
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Posted by corwinda on Friday, April 8, 2005 4:03 PM
QUOTE: Originally posted by Junctionfan

As far as scrap metal trains, I believe CSX runs a few K500 series as required. Not sure what kind of customer has that much scrap metal for a steel mill.


Perhaps a yard that dismantles old ships. Or from pier to mill.

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