Quentin
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QUOTE: Originally posted by Wdlgln005 Of course, the govmt will eventually step in. Most people thing govmt has all the money & they let us have just enough to eat & sleep & pay more taxes. THe railroads need a fair shake at the tax free bond market, the same as any other mode of transit. Who pays for the airports? Who do you think pays for the highway? I'm sur all the contractors get paid plenty & vote Demopiblican so they can get the next deal. Most states borrow to the hilt to do all these projects, then need big sales/gas tax to pay for it all. THere's not a railroad that didn't go bankrupt at one time or another & didn't need govmt to get them started or bail them out of trouble. THe limit to the freeway system is how many more lanes can be added to I whatever. Spending on rails will be needed by the states & locals to keep their connection to the national system alive.
QUOTE: Originally posted by AntonioFP45 At times it seems that Class 1 railroads make rather bizarre decisions that help shoot themselves in the foot. I never thought I'd see the day when Class 1s are actually turning away industrial customers if their shipments only require a few freight cars. However, we've seen the bueracracies at work in government run agencies and they're far from efficient. .
QUOTE: Originally posted by dblstack There's a lot of evidence to support the theory that Wall Street is running the Class 1 railroads. A lot of decisions are made in an effort to dress-up the financials for the current quarter and less is being done to improve the RR for the longer run. Wall Street wants railroads to provide returns like companies that are in entirely different industries (retailers, technology co's, dot-coms, etc.) Those companies may have higher returns, but they have more risk. How many of those companies have a history nearing 150 years? How many will be around 150 years from now? That Wall Street mentality is forcing RR management to act short term. It rewards them for doing so. It is also causing them to lag demand in purchasing equipment and in building infrastructure (track, terminals, etc.) They want to run existing capital at "110%" to show superior returns. However, the dangerous downside is that you can't meet demand. Simple minds would say that the simple answer is to raise prices and the market will sort itself out. That will drive some traffic away from the rails to trucks, but then you're forcing freight to a less efficient mode (ie. fuel, labor efficiency) for longer haul moves. Not good policy. Infrastructure in the rail world takes a long time to build. By the time a carrier works through local government objections, citizen objections, EPA issues, environmental impact issues, obtains permits, and actually builds a facility, it can be years. Global 3 at Rochelle, ILL took about 7 yrs from inception to opening. That's one example of many that have take greater than 5 yrs to build. Additionally, since our Federal Govt has given away hundreds of thousands of great paying US manufacturing jobs to China, the supply chain has gotten a lot longer. Products that used to be manufactured close to your home is now made in Bejing. The product is shipped by water, then has to be hauled from the coast to your neighborhood. More goods moving more miles. With the lags that Wall Street is driving, the delay in building infrastructure and the growing length of the supply chain, the RR's (all 4 US majors) are getting stretched thin. So when does it stretch so far that it breaks? Does the gov't end up stepping in at some point and start prioritizing the freight that will move (ie. essentials (coal for energy, food, clothing, housing materials.))?? Do the loads of DVD's, TV's, and other non-essential widgets end up getting a lower priority and get left on the dock for a while so that a load of processed food gets on the train? Its not there yet, but if the economy gets much stronger, well.........
Living nearby to MP 186 of the UPRR Austin TX Sub
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