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Possible RailRunner app in North Dakota
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[quote]QUOTE: <i>Originally posted by greyhounds</i> <br /><br />[quote]QUOTE: <i>Originally posted by futuremodal</i> <br /> <br /> <br />It may be that this particular Minot to Twin Cities move will go by way of Grand Forks rather than the busy Surrey line. If that's the case, then there is available capacity and incremental costing would therefore be appropriate. This was kind of the same approach we used when trying to get BNSF to run RailRunners over Stampede Pass in Washington, there was excess capacity available so why not price the move at a rate where everyone wins? <br />[/quote] <br /> <br />Well, not really. Ownership and maintenance of the rail line itself isn't that big of a deal given that there is a reasonable (4 trains/day) amount of business over the line. <br /> <br />I'm looking at a line haul cost analysis of a 397 mile run from New York to Pittsburgh put out by an intermodal reasearch arm of the AAR. <br /> <br />For a 3,800 ton train with two 4,000hp locos the long run variable line haul (excluding terminal) cost is $19,133. Of that, only $1,859 (less than 10%) is track cost (maintenance and ownership). <br /> <br />Other cost elements are not, in any way, incremental. Crew, Locomotive maintenance, fuel, locomoitive ownership, etc. all relate directly to the movement and go up directly with the movement. These are the overwhelming majority of the total costs <br /> <br />Got to cover 'em with revenue from the move. Hope this explains why you didn't get the cheap-O rate over Stampede. The railroad may have some excess track capacity, but that relates to only a small fraction of their cost structure. <br /> <br />They certainly don't have excess locomotives, crews, fuel, etc. - the items that make up the bulk of their cost. No incremental rates for you or anybody else. <br />[/quote] <br /> <br />Greyhounds, <br /> <br />First just let me say that I apprciate your ability to provide counterpoint without being insulting. <br /> <br />On those AAR numbers, can you provide the breakdown of cost allocations for that $19,133? $19,133 - $1,859 = $17,274. Of that $17,274 what is the crew cost? Assume $6,000 for the crew costs, that leaves $11,274. Then 3,800 tons going 397 miles, say we're using a gallon of fuel per ton so that's 3,800 gallons at $4,000 - $5,000 dollars, that leaves roughly $6,000. What's left? Locomotive cost allocation, freight car allocation (do they assume the freight cars are fully depreciated, leased?), insurance, ??? <br /> <br />By comparison, for the Stampede Pass RailRunner operation, we assumed a gross revenue of between $30,000 and $40,000 depending on the number of boxes at 25% backhaul. If we assume the same cost allocation the AAR used in it's example, then there is a $10,000 to $20,000 net in there somewhere. Even with 0% backhaul we're still making a flat minimum of $5,000 net for the per trip. <br /> <br />Given all that, I will stand by my assertion that something else was going on outside of normal business thought. It may have something to do with the fact that BNSF spent three times to repurchase the Stampede Pass line for what they sold the Valley portions for, and they lined and signalled the route for 20 to 30 trains per day. Right now they are running maybe 5 per day at most, so it may be that these trains are being forced to accout for the full cost recovery one would expect with the projected traffic counts.
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