The Future of leasing in Railroads...leasing track...leasing crews...leasing terminals

[Murphy Siding]

I'm the one who asked. I can't get the links to work. I'll check it out through Google when I get a chance. Anybody willing to give a "Reader's Digest Version" in the meantime?
Thanks

[edblysard]

http://www.brs.org/PDF%20files/NYD-ANALYSIS.doc

See if this link works


Ed

[csxengineer98]

crap..the link didnt work
ok..to view it
do a google search useing the search words NEW YORK DOCK PROTECTIVE CONDITIONS.... and then click on the link..use the View as HTML click
and in the first few lines it reads
Labor protective conditions to be imposed in railroad transactions pursuant to 49 U.S.C. 11343 et seq. [formerly sections 5(2) and 5(3) of the Interstate Commerce Act], except for trackage rights and lease proposals which are being considered elsewhere, are as follows:
take note to the "except for trackage rights and lease proposals"
csx engineer

[csxengineer98]

some info on NY DOCK agreement
http://64.233.161.104/search?q=cache:q8czr63hwg8J:www.brs.org/PDF%2520files/nyd-text.doc+new+york+dock+agreement&hl=en

[csxengineer98]

QUOTE: Originally posted by ironken

Gee csxengineer98. I find it odd how if you mention signals or locos everybody has an opinion (some mistaken), but when you mention agreements that make us or break those of us that spend their lives out there movin all of those pretty trains, few give a rats ---. just my .02

thats becouse the ratio for foamer veres rails in here is about 100 to 1... only us railroaders care about agreements...eveyone else that isnt in the industry just cares if the locomotives are clean and sparkely....

and im doing some resurch on the NY Dock agreements... for the person that asked what it is...
csx engineer

[Anonymous]

Gee csxengineer98. I find it odd how if you mention signals or locos everybody has an opinion (some mistaken), but when you mention agreements that make us or break those of us that spend their lives out there movin all of those pretty trains, few give a rats ---. just my .02

[CSSHEGEWISCH]

J. Paul Getty once opined, "Own what appreciates, lease what depreciates." While it is impossible to follow that statement to its logical extreme, the transportation business has long had much of its operating equipment under long-term lease. Locomotives have quite routinely been operated under 15-year leases from the builder or financial institution. Airlines have routinely leased a large percentage of their fleets, Guiness Peat Aviation and International Lease Finance Corp have long been placing some of the largest orders with Boeing and Airbus for planes to be leased long-term to various operators. Ships are often under similar arrangements. As Ed pointed out in his post, this can be a good deal for all parties involved.

[dldance]

To add to what Ed has said - look at all the smaller road where a 10 year old locomotive is the new kid on the block. That investment may still be generating revenue for somebody 20 years from now. That is why long-term reliability is so important to leasors.

dd

[edblysard]

Andrew,
To add to the above, CEFX leases the locomotive on a long term lease, so the return is guaranteed.
Take the MK2000s(the new GP20) they lease to UP.
A fleet of them, on a ten or fifteen year lease.
UP doesn’t want to buy or build switchers, the cost isn’t worth it to them, but they do need small, dual use locomotives.
So they lease them from CEFX, who had Boise Locomotive build them to UP specs.
CEFX owns the locos, and UP pays to lease them.
Maintenance, beyond the normal things, brake shoes, oil changes, stuff like that, is CEFXs responsibility.
So UP gets a fleet of switchers, without the cost of buying or building them outright, (research the SW10 program UP created)or the cost of heavy maintenance, and CEFX, (Citibank) gets a guaranteed long term return on their investment, which, after the lease is over, and if UP doesn’t want to lease them again, they can sell on the second hand market to short lines.

Keep in mind, the current nationwide fleet of small, dual use switchers, the GP35 and 38, the GP15, and the SWs, are getting older, really older, and no one is building any new ones, neither EMD nor GE.

So, a market for these exists, and after the lease is up, they can be sold off.
A win-win for both parties.


Ed

[dldance]

QUOTE: Originally posted by Junctionfan

If I'm not mistaken, CEFX railcars and locomotives are owned by CIti Bank. What is their reasoning for the interest in the railroad business?

Generally capital leases, such as CEFX, provide a good, steady return over a number of years. They are not flashy investments - but the stability of the returns is the important factor.

The venture capitalists are always bragging about the fact that they made 20% on a deal - but they may have invested that money in a venture for 5 years before they get the 20% return. On the other hand, a capital lease returning 4% per year actually returns nearly 22% over 5 years due to compounding.

So the CEFX folks would be 2% ahead of the flashy venture capitalists. That's money they can take to the bank -- and they do.

dd

[Junctionfan]

If I'm not mistaken, CEFX railcars and locomotives are owned by CIti Bank. What is their reasoning for the interest in the railroad business?

[dldance]

QUOTE: Originally posted by Peterson6868

A railroad could be built by a bank or a group of investors and leased to a railroad to operate its trains over
and the investors just sit back and collect the rent and do some track mainatnce every now and then

that presumes that the railroad earns sufficient to pay back the cost of capital sometime in the investor's liftime -- something that is not happening in most class 1's today. the industry that I am in pays back it's capital investment in 3 to 5 years and we still have a hard time finding investors.

dd

[Anonymous]

A railroad could be built by a bank or a group of investors and leased to a railroad to operate its trains over
and the investors just sit back and collect the rent and do some track mainatnce every now and then

[tree68]

Not a few companies have fired all their employees - then leased them back from an employee leasing firm. All they have to do is write a regular check to the leasing company - no taxes to figure or anything like that.

Considering the need to know the track and territory, leasing employees in train service seems unlikely, except in the type of situation I just described.

As for leasing track/ROW, why not? If the owner is getting appropriate return on his investment and has no interest in actually operating a railroad, sure!

[CSSHEGEWISCH]

Leasing virtually everything is possible if you operate an airline. You would probably still directly employ most of your own personnel and some subtantial hardware may need to be purchased. All that this proves is that you can establish a substantial business with a relatively small amount of upfront money, most of the rest being borrowed. Such undercaptialization is almost a guarantee of failure, though.

[Anonymous]

Economic theory dictates that . . .
Oh, bloody 'ell with it. I've read more about economic theory this past week than at any time since college.
But unlike now, college Microeconomics and Macroeconomics made sense to me.

[dehusman]

Peterson6868 must have caught something from Futuremodal.

Dave H.

[Murphy Siding]

csxengineer98: what is New York Dock Agreement money?

[ericsp]

Unfortunately for you, I doubt they will start leasing lunatics.

[csxengineer98]

the class 1s lease lines to get out of having to pay crews any New York Dock aggreement money to crews that will lose their jobs or have to relocate to other terminals to keep working for that company...
csx engineer

[Murphy Siding]

Why not just lease out the whole thing to some open acccess advocate,and just collect the rent?[:)]

[alstom]

Hmm. Quite an interesting thought.[:D]

[CopCarSS]

QUOTE: Originally posted by chad thomas

Then mabee you could lease a train for your amish moving co.
[(-D][(-D][(-D][(-D]

ROFL! [(-D][(-D][(-D][(-D]

[chad thomas]

Then mabee you could lease a train for your amish moving co.
[(-D][(-D][(-D][(-D]

[dldance]

railroad has always been a capital intensive business and leasing has always been a big part of the finance picture - however, leasing used to be transparent to railfans because the leasing method was the long-term equipment trust. I'm sure many of you have seen trust plate on cars and locomotives. Now with shorter term leases and power sharing - we can see anything anywhere.

But I don't see any future for leasing of track - unless the track is owned by a government agency of some kind. Any leasor whats to lease things that can be reused when the lease expires - or conditions change. And its hard to move track from one location to another.

You may see leasing of right of way - particularly if the ROW can also be used for other applications such as power or communication lines. But it is really hard to make the numbers work for a track lease.

dd

[CopCarSS]

And you can all lease me as your rent-a-railfan, and I'll take pictures of the leased trains on leased railroads run by leased employees with leased camera equipment transported in a leased vehicle. [(-D][(-D][(-D]

[Anonymous]

I heard leased employees are stored in freezers[bday][bday][bday][bday][bday][D)][oX)][#ditto][#dots][#offtopic][#oops][#welcome][#welcome][#welcome]

[Anonymous]

The next big step in leasing is where the railroads companys sell there track to the banks and lease time slots from them to run there trains. They wont hire there own employees but use "Leased Employees" From Addeco or Manpower.
The will sell off there engine terminals and lease time and repair work not unlike when we go to joes garage. yards will be sold to regional railroad terminal authoritys who will bill the railroad for sorting there trains.
The railroads main focus will be selling and aranging transportation and custumer service.