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[quote]QUOTE: Originally posted by TomDiehl [quote]QUOTE: Originally posted by Murphy Siding [quote]QUOTE: Originally posted by futuremodal What was the shortline viability rule of thumb? 100 carloads per mile per year? How many carloads minimum would probably ship from this plant each year, more than a few hundred? If so, then UP can more than afford to pay for a few miles of upgraded spur line. Remember, this plant will be captive to UP, which means UP is getting up to 400% of revenue to variable costs. Obviously, something else is going on with the railroad's management to derail this project. Something other than reasoned logic and up front honesty. But as mudchicken points out, the railroads are right and everyone else is wrong! [/quote] You're making an assumption that it is automatically the railroad's fault. I guess I don't see anything that leads me to that assumption. One would guess that there are a lot of other things going on behind the scenes that none of us know about. If it's not a profitable deal for UP, they're not going to do it. Would you? [/quote] To add to Murphy's comments, industrial spurs and sidings were traditionally the property of the industry, and were the responsibility of the industry to maintain/repair/upgrade. There's no reason whatsoever that the railroad should upgrade someone else's property without compensation or a contract that will have this pay them to do it. The UP's BOD and stock holders would be up in arms about this, and rightly so. [/quote] It's funny, but the gas and electric companies regularly build their infrastructure into an industry's property, placing the meter (e.g. the dividing line between utility responsibility and property owner responsibility) right up to the factory wall. Question: Why can these other service providers build infastructure on the customer's property, but the railroad can't? Most casual observers would conclude that the railroad just doesn't want the new business. And it is especially ironic, in that the utilities revenues from the new deal are regulated at 9% to 11% ROI, but UP's rates are unregulated and unchallenged by any other railroad competitor for this new business. Are we to conclude that 400% of R/VC will not lead to an ROI of over 11% for this venture?
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