nanaimo73 wrote:Ive read on another forum that some of the politicians in southern California are now pushing for a levy on imported boxes. This may push some inbound containers further north as well.
The Ports of Los Angeles and Long Beach have at least since 1977 imposed fees on containers coming over the dock, regardless of whether they were international or domestic in origin. The fee per 20-foot container in 1977 was $20 at POLA, today it's $193.20. The most recent fee hike took effect this month at both POLA and POLB, $35 per container loaded onto trucks (not containes loaded onto rail) to raise $1.6 billion to replace 17,000 older high-emissions trucks serving the docks with new low-emissions trucks.
The fees at POLB and POLA are de facto infrastructure fees, imposed to internalize the costs of operating the ports onto the users of the ports, who are in many cases not local users, rather than externalizing the costs onto local taxpayers who may not derive benefits from the ports. The success at POLB and POLA of instituting these taxes will not so much drive business away from these ports as provide an umbrella for other ports to institute their own fee hikes to pay for their infrastructure needs, too. Every West Coast port in order to grow significantly needs to raise billions of dollars; the fee is simply a method of charging the user rather than expecting the benefits of the port to trickle to the state or national taxpayer, and taxing them to pay for the infrastructure. I think rather than expecting the fees to drive business away, the fees will be absorbed, and other ports will do the same shortly.
The fees at POLA and POLB were imposed by the port commissions, which is probably not "politicians" in the sense you meant, Dale. Most ports are autonomous. Though their boards might be elected or appointed, they are not truly an extension of state legislatures or the state executive in the manner in which they think and act.
RWM
Murphy Siding wrote: Railway Man wrote: Growth, however, will seek to shift northward on the West Coast to reduce the line-haul by container ships because they burn more fuel per ton-mile than railroads. RWM Does that mean that the Port of Prince Rupert(?) in Canada suddenly has a built in advantage over California ports?
Railway Man wrote: Growth, however, will seek to shift northward on the West Coast to reduce the line-haul by container ships because they burn more fuel per ton-mile than railroads. RWM
No. It means the ship burns less fuel to get to Prince Rupert than it does to Southern California. But there's a number of other tradeoffs. The big question is the final destination of the boxes. A ship calling at Prince Rupert needs to have virtually every box on the ship destined for Chicago or points east -- it can have a few for Calgary or Winnipeg, which are small markets, but zero for anything in the U.S. west of the Mississippi. It doesn't save much fuel to have the ship only unload some of the boxes there, then travel to Los Angeles to unload the rest. That means that in Asia, the ship has to load only boxes for Chicago east, and that means the ports it starts at in Asia have to be able to generate that kind of volume at the right time. That takes space at the port, it takes absorption of inventory costs, it takes infrastructure at the factories. It's not simple by any means to generate the logistics planning and execution, much less the cost tradeoffs.
Then when the ship leaves, it needs to have enough boxes to fill it up from Chicago east, hopefully destined for the same ports it started at.
Los Angeles is one of the largest load centers in the world. Even though it might take more fuel for the ship to travel there, it pays off in economies at the ports, the factories, the distribution centers, the railroads, the ship loading/unloading planning, the return moves, the container cycles, and many other costs. It took a tremendous volume threshold to be established before Prince Rupert began to make economic sense, and it's competitive niche is the container volume that is above the existing base volume. Also, as business grows, the port and railway lines serving it will soon face some very expensive infrastructure needs, and that in turn erects yet another volume stairstep.
Thanks to Chris / CopCarSS for my avatar.
tpatrick wrote: Regarding the cost of fuel, here is something you may not have thought about: Last month Investor's Business Daily noted that the cost of transporting a container across the Pacific has risen dramatically. They report that what used to cost $3000, now costs $8000. If this added cost of transportation is permanent, there will be a migration of manufacturing from China and other eastern areas to Mexico, says IBD. Such a move would have a profound impact on our railroads. Container shipments from west coast to east will dwindle, to the detriment of UP and BNSF. KCS, on the other hand, is in perfect position to profit from increased traffic originating in Mexico. Much of the container flow through Chicago would shift to KC and perhaps StL. NS and CSX would still move container traffic as before, but with emphasis on more southerly routes. Thus, the Lake Shore Line, for example , might give up traffic to the old B&O route through Cumberland.Note that what IBD reports isn't just idle speculation. The reported costs are actual and the expected migration is the thinking of business insiders who know what they are talking about. The impact on the railroads IS idle speculation - mine.
Regarding the cost of fuel, here is something you may not have thought about:
Last month Investor's Business Daily noted that the cost of transporting a container across the Pacific has risen dramatically. They report that what used to cost $3000, now costs $8000. If this added cost of transportation is permanent, there will be a migration of manufacturing from China and other eastern areas to Mexico, says IBD.
Such a move would have a profound impact on our railroads. Container shipments from west coast to east will dwindle, to the detriment of UP and BNSF. KCS, on the other hand, is in perfect position to profit from increased traffic originating in Mexico. Much of the container flow through Chicago would shift to KC and perhaps StL. NS and CSX would still move container traffic as before, but with emphasis on more southerly routes. Thus, the Lake Shore Line, for example , might give up traffic to the old B&O route through Cumberland.
Note that what IBD reports isn't just idle speculation. The reported costs are actual and the expected migration is the thinking of business insiders who know what they are talking about. The impact on the railroads IS idle speculation - mine.
These are interesting possibilities. We've entered into a territory whose existence has long been predicted (and the predictors dismissed as Chicken Littles) and there's not a lot of guidance as to what will happen. Opinions are freely offered, but for what it's worth no one in the railroad business I know of is predicting any substantial decline in the volume of import-export traffic via North American West Coast ports, except one that follows general business cycle trends. In other words, a recession that knocks off 10% of volume will be equally felt -- the West Coast ports will not lose business at a higher proportion than all North American ports.
Similarly, no one I know is predicting any substantial shift of manufacturing from Asia to Mexico. (I posed this question to a major athletic shoe manufacturer I know and he scoffed at the idea.) There is simply not the human infrastructure to support a large-scale shift to Mexico, i.e., education, engineering, law, finance, policing, etc. There may be substantial new investment in heavy manufacturing in Mexico, but not the light, labor-intensive, assembly-intensive manufacturing that drives Chinese exports. For heavy manufacturing it's cost-effective for businesses to invest in Mexico in training, housing, security, etc., because labor inputs are low. That type of manufacturing generates carload and bulk traffic for railroads. China (and to a smaller extent India) offer outstanding engineering support for manufacturing process design and improvement, whereas Mexico does not. We don't even have that kind of engineering support available in the U.S. except at 10X the cost.
I don't know anyone in the ports and railroad business (except pr types) predicting any significant shift in container volumes from Southern California to Mexico. The railroad infrastructure is not there to support it and the cost of building it starts in the 10s of billions. There is no readily available unused rail capacity to support large-scale growth through the gateways of St. Louis, Memphis, or Meridian. However, growth is looking to shift northward on the West Coast to reduce the line-haul by container ships because they burn more fuel per ton-mile than railroads.
Cheese wrote: Hello,Recently I've been pondering the future of railroads whenever I found spare time to do so. With gas prices what they are, more people are talking about rail transit and its got me thinking.Oil prices are not only affecting the roads, but could we see the day when its more economical for a railroad to operate Coal fired steam rather than diesels, like the Crab Orchard & Egyptian Railroad did in the 1980's?
Hello,
Recently I've been pondering the future of railroads whenever I found spare time to do so. With gas prices what they are, more people are talking about rail transit and its got me thinking.
Oil prices are not only affecting the roads, but could we see the day when its more economical for a railroad to operate Coal fired steam rather than diesels, like the Crab Orchard & Egyptian Railroad did in the 1980's?
Could railroads once again be the top choice of transportation as they had been?
P:S: This isnt really relavent to this topic, but I thought I'd ask anyway. Say I were to become the owner of a 80 odd mile long shortline, with track in such bad condition the maximum speed limit is 10 mph and I wanted to rebuild the tracks and roadbed, what would be the better rail for me to use: Welded rail or Jointed Rail. Should I use Concrete ties or Wood ties. If I were to rebuild the roadbed from the ground up what would be the best way to do it? And finally, if I were to replace a very old wooden trestle that people are afraid to cross when passenger trains for special events are run, what sort of bridge would be best?
Depends what you are using it for and whether you're intending to operate the line to make money or for a hobby. If you want to operate 150-car coal trains every day with 286K axle loads, then welded rail and new ties would probably be the most economical choice. If you're planning to run a tourist passenger train, then perhaps the existing rail is fine, and perhaps not all the ties need replacing. The decision between concrete or wood only applies if the line is going to support large tonnages and high speeds. If that's the case, then it depends which is cheaper, installed, where the line is located, and whether some of the existing ties are still good. Concrete and wood cannot be mixed randomly; it's one or the other. So if, say, 20% of the ties still have some life in them, then the decision is probably more economical to stick with wood. If none of the ties have remaining life, then it depends whether wood or concrete is less expensive in that locale. In many cases the prices is almost identical.
There's nothing wrong with timber trestles. If it's got life in it, why replace the whole thing? That can be very expensive.
"I Often Dream of Trains"-From the Album of the Same Name by Robyn Hitchcock
Traffic from Mexico might mean more carload bussiness and the BNSF and UP would probably continue to ship raw materials and grain to the west coast ports even if container import tapers off. Even if Asia can't sell thier products here they would still need raw materials just to support themselves....... maybe
What do you think will happen?
Cheese
(My, my, my, it seems the future of rail seems to have taken a backseat to the other questions)
Nick! :)
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