John WRNo one is going to pay you money for saying "Amtrak is doing all the right things."
Worse, they might lock you away!
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
...and we haven't even begun to talk about the opportunity cost of train operation. What if the LD trains didn't operate on the NEC. What is the value of what could fill their slots on the railroad. More NJT commuters? More Acela riders? More trains in generals since the 110 mph LD trains wouldn't be in the way of the 125/135 mph trains. A chance to turn the order for those 125 mph baggage cars into coaches?
John WR PS. Where does this leave Don Phillips' point? If the current Acela has a large but hidden deficit then certainly new Acela service on a whole new rail line would have a much larger deficit. Yet many people -- and I confess to being one of them -- believe northeast rail service must be continued because we simply have run out of space for more roads and planes. So deficit or no we need northeast rail service.
PS. Where does this leave Don Phillips' point? If the current Acela has a large but hidden deficit then certainly new Acela service on a whole new rail line would have a much larger deficit. Yet many people -- and I confess to being one of them -- believe northeast rail service must be continued because we simply have run out of space for more roads and planes. So deficit or no we need northeast rail service.
But how do you feel about LD trains such as the California Zephyr, Empire Builder or the Southwest Chief, etc.?
Not wanting to speak for anyone, but I've always thought of Don Phillips as an Amtrak supporter. All of Amtrak, not just the corridor or state sponsored local services. It may be he is afraid that at by showing the LD service as big money losers, Amtrak may be thinking about shedding these trains. Something like the plans of the MILW RD (successful) or the RI (unsuccessful) to shrink down to a "profitable" core system. Or at the very least, Amtrak themselves saying the LD service is a money pit akin to the Grand Canyon, it gives critics who want to shut down most, if not all, of Amtrak fuel for their fire.
I doubt that he's against Acela trains, or even the expansion of them. He just might think all the services should be treated the same when it comes to the way they are accounted for.
Jeff
jeffhergert John WR PS. Where does this leave Don Phillips' point? If the current Acela has a large but hidden deficit then certainly new Acela service on a whole new rail line would have a much larger deficit. Yet many people -- and I confess to being one of them -- believe northeast rail service must be continued because we simply have run out of space for more roads and planes. So deficit or no we need northeast rail service. But how do you feel about LD trains such as the California Zephyr, Empire Builder or the Southwest Chief, etc.? Not wanting to speak for anyone, but I've always thought of Don Phillips as an Amtrak supporter. All of Amtrak, not just the corridor or state sponsored local services. It may be he is afraid that at by showing the LD service as big money losers, Amtrak may be thinking about shedding these trains. Something like the plans of the MILW RD (successful) or the RI (unsuccessful) to shrink down to a "profitable" core system. Or at the very least, Amtrak themselves saying the LD service is a money pit akin to the Grand Canyon, it gives critics who want to shut down most, if not all, of Amtrak fuel for their fire. I doubt that he's against Acela trains, or even the expansion of them. He just might think all the services should be treated the same when it comes to the way they are accounted for. Jeff
Agree. But, the problem is "treated the same" and "treated fairly" aren't always the same thing and often subject to interpretation. Too often the interpretation depends on the outcome you wish. Both sides know it and are quick to point the finger at the other.
I would bet that the LD trains ARE treated the same at all other Amtrak trains on the NEC - costs allocated per train/car/axle. It's just that some would say that's not fair. Why should the LD trains have to pay for expensive, high speed tracks they don't need?
Amtrak's trains hoisted by other carriers have equipment depreciation. Amtrak depreciates equipment (locomotives and cars) in groups up to 42 years, which probably means that the newer equipment is still incurring some depreciation and embedded interest charges, albeit relatively little.
The hoist carriers may pass some depreciation through to Amtrak in their billings. Again, without being able to look at the books, we simply don't know.
Sam1 The hoist carriers may pass some depreciation through to Amtrak in their billings. Again, without being able to look at the books, we simply don't know.
Sam,
Freight railroads "hosting" ATK can not pass thru their MofW depreciation. All they get is marginal cost, which is next to nothing.
Mac McCulloch
PNWRMNM Sam1 The hoist carriers may pass some depreciation through to Amtrak in their billings. Again, without being able to look at the books, we simply don't know. Sam, Freight railroads "hosting" ATK can not pass thru their MofW depreciation. All they get is marginal cost, which is next to nothing. Mac McCulloch
The freight railroads supposedly bill Amtrak for the cost of hoisting its trains. Included in the hoist railroad's costs would be depreciation. Clearly, any depreciation that flows through to Amtrak would be very small.
How do you know that they don't include a small amount of depreciation in their billings to Amtrak. I know that they cannot flow through any taxes, but I was not aware that they cannot flow through any depreciation.
In another post, I don't remember where it is located, a comment was made that the freight railroads lose hundreds of millions of dollars a year hoisting Amtrak's trains. Unless one has access to all of the freight railroads books, how would one know that?
Sam1 In another post, I don't remember where it is located, a comment was made that the freight railroads lose hundreds of millions of dollars a year hoisting Amtrak's trains. Unless one has access to all of the freight railroads books, how would one know that?
That was probably one of my posts since I seem to be he only one who cares about this issue.
By law the railroad can only bill ATK for marginal costs. Carriers can not bill ATK for delays to freight train incurred meeting ATK and ATK is required to have priority treatment. This is clearly a marginal costs that the carriers can not bill for! Railroading is a high fixed cost business so marginal costs are a small part of revenue and total cost.
One could make a reasonable estimate by getting what ATK pays host railroads per train mile from ATK reports.
One could make reasonable estimate of the value of a train slot by taking average revenue per freight train mile and removing fuel, labor and equipment costs. The remainder would be the value of the slot per train mile. Subtract ATK payment from value and that is what the freight carriers are subsidizing ATK per train mile. Multiply by ATK train miles on freight carriers on an annual basis. See freight carrier's R1 report. ATK probably also has to file an R1 but I have never looked for it. This figure is biased low since it does not include the cost of ATK caused delay to freight trains.
IIRC you were in the utility business. If you were required to wheel power for someone else at marginal cost what costs could you include? Certainly not depreciation on the transmission lines and transformers. I would expect that power wheelage fees are based on average costs, not marginal costs, and I would expect the average costs to include a return on invested capital.
The habit of abusing freight carriers dies hard in the hallowed halls of congress.
PNWRMNM Sam1 In another post, I don't remember where it is located, a comment was made that the freight railroads lose hundreds of millions of dollars a year hoisting Amtrak's trains. Unless one has access to all of the freight railroads books, how would one know that? Sam, That was probably one of my posts since I seem to be he only one who cares about this issue. Mac McCulloch
You are not the only one who cares about the issue. The freight railroads should be able to recover all the costs associated with hoisting Amtrak's trains. Forcing them to hoist Amtrak's trains without being able to recover the full cost of doing so is an expropriation of shareholder wealth. What makes it even worse is that it is a hidden expropriation.
You and I make two.
Mac
. The remainder would be the value of the slot per train mile. Subtract ATK payment from value and that is what the freight carriers are subsidizing ATK per train mile.
jeffhergertBut how do you feel about LD trains such as the California Zephyr, Empire Builder or the Southwest Chief, etc.?
I would assume Don Phillips is not talking about these trains since they have nothing to do with the Northeast Corridor.
To answer your broader question, I think that in the long haul there is an advantage to the freight railroads in hauling Amtrak trains. The advantage is that every Amtrak rider gets to see freight operations up close. This is a regular dose of reality about freight railroads made to the rail riding public and I think ultimately freight railroads will benefit from it.
Of course, not all people agree with me. But I will let them speak for themselves.
jeffhergertNot wanting to speak for anyone, but I've always thought of Don Phillips as an Amtrak supporter.
I've only been reading Don Phillips for a short time and I don't want to rush to judgement.
My impression is that he as been reporting on railroads for a long time and his expertise is both deep and broad. Whether or not he supports Amtrak I don't know. However, I think here he is simply reporting the facts as he sees them.
On the issue of ATK paying a fair share to theel that the issue should be re-examined, possibly using Don oltmann's calculus.. If the accounting were done correctly, it would show more dramatically the inefficiency of LD trains. I wonder how much the rents would increase? And then perhaps the fares would need to more accurately reflect the true costs of these trains or else be subsidized by some other funding source, as Joe Boardman has stated.
C&NW, CA&E, MILW, CGW and IC fan
John WR To answer your broader question, I think that in the long haul there is an advantage to the freight railroads in hauling Amtrak trains. The advantage is that every Amtrak rider gets to see freight operations up close. This is a regular dose of reality about freight railroads made to the rail riding public and I think ultimately freight railroads will benefit from it.
This one reminds me of a line from Dr. Walter E. Williams. (For those not in the know, Dr. Williams is a PhD economist who retired as the head of the economics department at George Mason University.)
Williams once riddled: "Why is a thief preferable to a politician?" The answer: "A thief will simply take your money and be on his way. A politician will take your money and then insist on staying around and telling you why you are better off without your money."
I'm sure that the private sector dolts managing and investing in the railroads just don't realize how much of a favor the government is doing them by seizing the railroad's assets without reasonable, just compensation. They're better off without the revenue from that freight train. They are just are too blame dumb to realize it.
PNWRMNMOne could make reasonable estimate of the value of a train slot by taking average revenue per freight train mile and removing fuel, labor and equipment costs. The remainder would be the value of the slot per train mile. Subtract ATK payment from value and that is what the freight carriers are subsidizing ATK per train mile. Multiply by ATK train miles on freight carriers on an annual basis. See freight carrier's R1 report. ATK probably also has to file an R1 but I have never looked for it. This figure is biased low since it does not include the cost of ATK caused delay to freight trains.
I think that when Amtrak started and there were lots of "unused slots" on nearly every route, this approach would have drawn funny looks.
But, now, it's exactly the right approach. It's the one taken by the UP when they costed out a daily Sunset. They looked at how much infrastructure they'd have to add so that there was zero impact on the line capacity for freight.
The "back of the envelope" calculation would be Amtrak train miles x (Frt RR net revenue/frt RR total train miles). In reality, an Amtrak train can consume more than pro-rata capacity based on train miles. They generally don't "go with the flow". They tend to pass a lot of traffic en route. Railroads would use a modeling tool, probably RTC, to determine exactly how much capacity was being consumed by the Amtrak train.
In some places, Norfolk to Petersburg, for example, there are plenty of "slots" going unused, so small improvements in the route allowed a new passenger train to operate at a reasonable cost. Other, like Cincy to Atlanta are very close to capacity. Adding an Amtrak schedule without harming freight capacity would cost a small fortune.
I just looked at some numbers. Doing the "back of the envelope" calculation, NS made $700M net from railway operations in 2012. The Crescent is about 1% of NS's train miles. That works out to about $9 a train mile, which is about what Amtrak pays, I believe.
oltmannd [I think that when Amtrak started and there were lots of "unused slots" on nearly every route, this approach would have drawn funny looks. But, now, it's exactly the right approach. It's the one taken by the UP when they costed out a daily Sunset. They looked at how much infrastructure they'd have to add so that there was zero impact on the line capacity for freight. They generally don't "go with the flow". They tend to pass a lot of traffic en route. Railroads would use a modeling tool, probably RTC, to determine exactly how much capacity was being consumed by the Amtrak train. In some places, Norfolk to Petersburg, for example, there are plenty of "slots" going unused, so small improvements in the route allowed a new passenger train to operate at a reasonable cost. Other, like Cincy to Atlanta are very close to capacity. Adding an Amtrak schedule without harming freight capacity would cost a small fortune.
[I think that when Amtrak started and there were lots of "unused slots" on nearly every route, this approach would have drawn funny looks.
They generally don't "go with the flow". They tend to pass a lot of traffic en route. Railroads would use a modeling tool, probably RTC, to determine exactly how much capacity was being consumed by the Amtrak train.
John WR jeffhergertBut how do you feel about LD trains such as the California Zephyr, Empire Builder or the Southwest Chief, etc.? I would assume Don Phillips is not talking about these trains since they have nothing to do with the Northeast Corridor. To answer your broader question, I think that in the long haul there is an advantage to the freight railroads in hauling Amtrak trains. The advantage is that every Amtrak rider gets to see freight operations up close. This is a regular dose of reality about freight railroads made to the rail riding public and I think ultimately freight railroads will benefit from it. Of course, not all people agree with me. But I will let them speak for themselves.
When I read his article, I get the impression he is talking about ALL long distance trains, not just those that use the Northeast corridor.
jeffhergertWhen I read his article, I get the impression he is talking about ALL long distance trains, not just those that use the Northeast corridor.
Jeff,
As I recall in the article Don simply refers to long distance trains. But as it goes on he explains that the costs of the Acela are inappropriately allocated to long distance trains that use the Northeast Corridor. The only way that makes sense to me is that he is just writing about those particular ld trains and not all ld trains. Do you understand it differently?
John
Blue Streak,
I am very familar with the BNSF Transcon as I see it frequently when I travel on I-40, and when I stay at the La Posada in Winslow where crews change. There are several manifest trains each day which are restricted to 60 MPH max, and less when certain commodities are in the consist. There are at times are more than 100 trains a day passing through Winslow and somehow the dispatchers handle #'s 3 and 4 with an excellent on time percentage.
This is accomplished because Santa Fe and later BNSF invested in a super RR with 50MPH crossovers every 6-10 miles which allow the DS to move trains back and forth as needed. There is not, to my knowledge, any comparable operation in the USA over the distance between San Bernardino and Belen; perhaps none for even 200 miles. The UP Sunset line is not being built to that standard and would be very-very expensive to duplicate for AMTRAK to operate daily.
This is a very late reply to an earlier comment by Rail Pundit and his statement about the selling of USTreasury Debt and the number of institutions lined up to purchase this debt.
Bloomberg Radio reported today that 72% of last month's UST debt was purchased by the Fed, as part of the QE3 or as some people refer to it ...QEternity.
Ed
John, I get my impression from the paragraph after the one where he specifically talks about LD trains on the NE Corridor. The one that starts "Suppose long-distance trains went away overnight,..."
There have been critics who have said if they can't get rid of Amtrak completely, at least get rid of the LD trains. That the LD trains are the big money losers while the NE Corridor (and maybe other regional services) better cover their losses. There have been others, Don Phillips seems to be one, who have said the LD trains losses aren't as big has reported, nor that the NE Corridor isn't as "profitable" (smaller losses) than reported.
I just feel that, except for one place where he talks about LD trains on the NE Corridor, he's talking about all LD trains.
jeffhergertI just feel that, except for one place where he talks about LD trains on the NE Corridor, he's talking about all LD trains.
Well, perhaps you are right, Jeff.
I think that many or most of the people who argue against long distance trains are not really in good faith. In order for Amtrak to exist it must be a national system; that is the only way to maintain a national consensus to continue it. To the extent that we get rid of long distance trains we also get rid of the national consensus that holds Amtrak together. So those who argue to get rid of long distance trains are really arguing to have Amtrak completely all apart for lack of a national consensus.
I guess then, if Don Phillips can show Acela's true losses, the conclusion must ultimately be that long distance trains don't loose as much as their opponents allege.
John WR I think that many or most of the people who argue against long distance trains are not really in good faith. In order for Amtrak to exist it must be a national system; that is the only way to maintain a national consensus to continue it. To the extent that we get rid of long distance trains we also get rid of the national consensus that holds Amtrak together. So those who argue to get rid of long distance trains are really arguing to have Amtrak completely all apart for lack of a national consensus.
That may be true for some people, though it sounds a lot like some nefarious conspiracy theory. But many of us in these forums believe the only way for Amtrak to really grow as a useful passenger rail system is to minimize the anachronistic long distance routes. Either that or do as Joe Boardman of Amtrak suggests, which is to get them subsidized separately from the rest of Amtrak. So ids Boardman part of that conspiracy, too?
"So those who argue to get rid of long distance trains are really arguing to have Amtrak completely all apart for lack of a national consensus. " That is merely your assertion, but it is a pretty nasty one. Try making a better case for the LD routes, rather than ad hominem attacks, if you can..
In FY12 the long distance trains lost $600.9 million before depreciation, interest, and miscellaneous charges. Assuming the long distance trains wear 10 per cent of Amtrak's annual depreciation and interest charges ($744.5 million), the total loss for the long distance trains would have been approximately $675.4 million.
The NEC had a operating profit of $$281.9 million before depreciation, interest, and miscellaneous charges in FY12. Of this amount $206.5 million or 73.3 per cent was contributed by the Acelas.
What we don't know from Amtrak's operating reports or financials is how much depreciation, interest, and miscellaneous charges are allocable to the NEC. If we assume that the NEC wears 80 per cent of Amtrak's depreciation, etc., then it had a net loss of $313.3 million in FY12, which is less than half of the losses incurred by the long distance trains. Furthermore, if we assume that 73 per cent of the depreciation on the NEC is attributable to the buildout to hoist the Acela trains, their fully allocated loss would have been $228 million, which is much less than the losses run-up by the long distance trains.
In a sense I am contradicting what I said earlier, i.e. without access to Amtrak's books, it is impossible to know how much depreciation, etc. is attributable to the NEC, other corridor trains, and the long distance trains. Nevertheless, it is not too great of a stretch to believe that the long distance trains lose a lot of money and have been doing so for a long time.
Using 2010 numbers as a base, along with the aforementioned assumptions regarding depreciation, etc., if Amtrak had not been saddled with the long distance trains in FY10, it could have covered its operating costs on its two remaining product lines with an average fare increase of $7.41. To cover its fully allocated costs, without the long distance trains, it would have had to raise its fares by an average of $33.23.
Needless to say, my calculations were based on assumptions that cannot be verified unless one has access to Amtrak's books. As far as I know Don Phillips does not have such access. And I can certify that I don't have access to them. But I do have access to Amtrak's audited financial reports. So does everyone else.
Why aren't Amtrak's books a matter of public record?
Thanks to Chris / CopCarSS for my avatar.
Sam1 In FY12 the long distance trains lost $600.9 million before depreciation, interest, and miscellaneous charges. Assuming the long distance trains wear 10 per cent of Amtrak's annual depreciation and interest charges ($744.5 million), the total loss for the long distance trains would have been approximately $675.4 million. The NEC had a operating profit of $$281.9 million before depreciation, interest, and miscellaneous charges in FY12. Of this amount $206.5 million or 73.3 per cent was contributed by the Acelas. What we don't know from Amtrak's operating reports or financials is how much depreciation, interest, and miscellaneous charges are allocable to the NEC. If we assume that the NEC wears 80 per cent of Amtrak's depreciation, etc., then it had a net loss of $313.3 million in FY12, which is less than half of the losses incurred by the long distance trains. Furthermore, if we assume that 73 per cent of the depreciation on the NEC is attributable to the buildout to hoist the Acela trains, their fully allocated loss would have been $228 million, which is much less than the losses run-up by the long distance trains. In a sense I am contradicting what I said earlier, i.e. without access to Amtrak's books, it is impossible to know how much depreciation, etc. is attributable to the NEC, other corridor trains, and the long distance trains. Nevertheless, it is not too great of a stretch to believe that the long distance trains lose a lot of money and have been doing so for a long time. Using 2010 numbers as a base, along with the aforementioned assumptions regarding depreciation, etc., if Amtrak had not been saddled with the long distance trains in FY10, it could have covered its operating costs on its two remaining product lines with an average fare increase of $7.41. To cover its fully allocated costs, without the long distance trains, it would have had to raise its fares by an average of $33.23. Needless to say, my calculations were based on assumptions that cannot be verified unless one has access to Amtrak's books. As far as I know Don Phillips does not have such access. And I can certify that I don't have access to them. But I do have access to Amtrak's audited financial reports. So does everyone else.
Murphy Siding Why aren't Amtrak's books a matter of public record?
Compared to most organizations, Amtrak is quite transparent about its accounting policies, procedures, and practices. However, to understand the details of its policies regarding the allocation of depreciation, interest, miscellaneous charges, etc., one would need access to the company's property accounting books and cost allocation models. I don't know of any company that makes these records and models available to the public.
One might be able to gain access to the property accounting records and cost allocation models by filing a Freedom of Information Act request. Amtrak may be able to claim that the information is restricted for competitive reasons. If the FIA request were successful, the person requesting the information would have to pay for the labor and copy costs required to produce the records, since I doubt one would be allowed to physically inspect the books at Amtrak's headquarters.
oltmannd greyhoundsThat would have been a nice, clean way of doing it. Except....you really cannot "cost out" a carload movement on a diverse, complicated rail network. What you can do is take a bunch of averages, add them together and sort of, kind of, get a inkling of the average cost of moving the car of lumber from Council Bluffs to Bloomington, IL. Exactly! The allocation of costs is really squishy business. Depending on how you proceed, you can get radically different...and misleading...answers, none wholly right or wrong.
greyhoundsThat would have been a nice, clean way of doing it. Except....you really cannot "cost out" a carload movement on a diverse, complicated rail network. What you can do is take a bunch of averages, add them together and sort of, kind of, get a inkling of the average cost of moving the car of lumber from Council Bluffs to Bloomington, IL.
Exactly!
The allocation of costs is really squishy business.
Depending on how you proceed, you can get radically different...and misleading...answers, none wholly right or wrong.
Don and Greyhounds have it exactly right. I've never done RR cost allocation, but I have tried to allocate overhead costs in a textile factory making several (way too many) different products, each requiring a different level of inputs such as raw material procurement time, warehouse operation, cutting table time, and supervisory staff time. Allocating costs in a textile factory has to be MUCH simpler than allocating costs on a RR network, and well before I was done with the job I would have been ecstatic if I could have paid someone to kill me with a quick, clean, painless .45 round to the head. Once you start making allocations you have departed from the Land of Certainty and are floundering in the Great Dismal Swamp of judgment, estimates and complexity.
Our community is FREE to join. To participate you must either login or register for an account.