Three major ways to make a profit: increase revenue stream, cut costs, leverage debt. In a period of declining coal (and oil) revenue for the UP and BNSF, #2 and 3 can work if interest rates remain low, but only for so long. Finding new, potentially profitable traffic sources (even marginal ones) has to happen to continue to prosper. Otherwise you are stuck with underutilization of assets (track and equipment).
C&NW, CA&E, MILW, CGW and IC fan
Well unless they build more pipelines in the country. The rail lines can also start hauling LNG to the ports in addition to Baaken Oil, thats one potential new traffic source they have not tackled yet. Also, jury still out on perishables traffic via Chicago and I think a number of Class 1's are probably in wait and see mode to see how the capacity improvements shave time getting through or around Chicago.
Intermodal is going to continue to grow year over year long-term with our growing economy. I suspect Coal will eventually also make a come back.
BaltACD How far from the toilet is the line in this urination contest?
How far from the toilet is the line in this urination contest?
Great post, Balt. Where's that "Like" button?
ChuckAllen, TX
Much of the way (Elko to Winnwmucca) there is directional running with the westbounds on the track close to the freeway and the eastbounds waaay off across the valley where you likely wouldn't see them. With track speed close to freeway speed limit it's not surprising you wouldn't see anything.
Winnemucca to Reno Amtrak is on the former SP parallel to the freeway.
Sadly, it applies to too many threads around here.
The posted topic didn't even last to the end of the first page.
I followed the lines on trips to/from Californication in 2014 and 2015 and was somewhat disappointed with the number of trains then. No doubt it is slightly worse, now.
According to this site, UP traffic levels for week 26 were higher in four major categories, autos, grain, chemicals and containters, than the same week in 2015
http://www.up.com/investor/aar-stb_reports/index.htm
I just returned from a California Zephyr trip and can confirm with this downturn UP is not using the D&RG route through the Rockies. Specifically, from Provo thru Winter Park, we encountered one freight when eastbound, and I don't believe there was anything when westbound.
Also of interest are the sidings at Grand Junction. Hundreds (perhaps 300) of four axle locomotives are stored there -- both SW and road types.
Most containers shipped by rail are domestic...JB Hunt, UPS, etc..that isn't going away
chicagorailseven domestic cont are way down this year,our economy is doing terrible. may be a recession or depression coming soon.nafta shipped mucho jobs overseas and mexico. no one cares
Your statement is generally not supported factually.
NAFTA
Yesterday the newspaper reported the Dow and SP 500 stock index closings both reached record highs.
Dave H. Painted side goes up. My website : wnbranch.com
Easy to make fun of Chicago in the details, but tell you what, he has the flavor.
A temporary boost for the rails, while much of the rest of the economy and country rusts out? Big whoop!
MidlandMike chicagorails even domestic cont are way down this year,our economy is doing terrible. may be a recession or depression coming soon.nafta shipped mucho jobs overseas and mexico. no one cares Yesterday the newspaper reported the Dow and SP 500 stock index closings both reached record highs.
chicagorails even domestic cont are way down this year,our economy is doing terrible. may be a recession or depression coming soon.nafta shipped mucho jobs overseas and mexico. no one cares
Jeff
I sure don't see a great economy right now. On average, I would say that manufacturing has not been this slow in decades, if ever. I am not sure what shape construction is in, but apparently it is a lot better off than manufacturing. However, I have been told by people in the construction excavating equipment business that the bottom has just recently fallen out of sales. We need solid economic growth of GDP at 5-7% in order to get things to normal where people can get jobs, buy houses, and move up with a general sense of prosperity.
According to the Bureau of Economic Analysis, manufacturing in the U.S. fell by 3.9 per cent between 2014 and 2015. However, between 2008 and 2015, which is better for trend analysis, manufacturing output is up 8.8 per cent.
Construction increased 9.6 per cent between 2014 and 2015. It increased 4.2 per cent between 2008 and 2015.
First quarter 2016 Gross Domestic Product was up 3.3 per cent over the same period in 2015. The constant dollar increase - 2009 dollars - was 2.08 per cent. GDP increased 3.45 per cent between 2014 and 2015. The constant dollar increase was 2.42 per cent.
Although there are pockets of resistance, overall it appears that the U.S. economy is performing reasonably well.
The U.S. is a mature economy. It is not likely to see the dramatic increases in GDP or other output indexes that it saw from 1946 through the 1970s or the increases seen in emerging market economies.
As noted earlier, the big problem for the railroads is the substantial decline in coal mining and its impact on coal loadings, which across the board, according to the Wall Street Journal, account for an average of 20 per cent of rail revenues.
Rio Grande Valley, CFI,CFII
jeffhergert MidlandMike chicagorails even domestic cont are way down this year,our economy is doing terrible. may be a recession or depression coming soon.nafta shipped mucho jobs overseas and mexico. no one cares Yesterday the newspaper reported the Dow and SP 500 stock index closings both reached record highs. I guess it depends on where you are. If you're towards the top looking down, the economy is great. If you're towards the bottom looking up, it's not so rosy. Jeff
I guess it depends on where you are. If you're towards the top looking down, the economy is great. If you're towards the bottom looking up, it's not so rosy.
I'm in the middle, looking all around. The stock market high was sure good for my 401k. The market was up on really good employment numbers. Perhaps you are talking about income inequality, but that is a political subject that the moderators council us not to get into.
JPS1 According to the Bureau of Economic Analysis, manufacturing in the U.S. fell by 3.9 per cent between 2014 and 2015. However, between 2008 and 2015, which is better for trend analysis, manufacturing output is up 8.8 per cent. Construction increased 9.6 per cent between 2014 and 2015. It increased 4.2 per cent between 2008 and 2015. First quarter 2016 Gross Domestic Product was up 3.3 per cent over the same period in 2015. The constant dollar increase - 2009 dollars - was 2.08 per cent. GDP increased 3.45 per cent between 2014 and 2015. The constant dollar increase was 2.42 per cent. Although there are pockets of resistance, overall it appears that the U.S. economy is performing reasonably well. The U.S. is a mature economy. It is not likely to see the dramatic increases in GDP or other output indexes that it saw from 1946 through the 1970s or the increases seen in emerging market economies. As noted earlier, the big problem for the railroads is the substantial decline in coal mining and its impact on coal loadings, which across the board, according to the Wall Street Journal, account for an average of 20 per cent of rail revenues.
Good to hear a voice of reason, informed by useful, real data.
MidlandMike jeffhergert MidlandMike chicagorails even domestic cont are way down this year,our economy is doing terrible. may be a recession or depression coming soon.nafta shipped mucho jobs overseas and mexico. no one cares Yesterday the newspaper reported the Dow and SP 500 stock index closings both reached record highs. I guess it depends on where you are. If you're towards the top looking down, the economy is great. If you're towards the bottom looking up, it's not so rosy. Jeff I'm in the middle, looking all around. The stock market high was sure good for my 401k. The market was up on really good employment numbers. Perhaps you are talking about income inequality, but that is a political subject that the moderators council us not to get into.
I don't think Jeff was talking about income inequality. If income is involved, I would say that relates to the fact that the people who need jobs can't find them. Maybe higher income people are not in such a dire need for a job. I thought that was his point.
JPS1The U.S. is a mature economy. It is not likely to see the dramatic increases in GDP or other output indexes that it saw from 1946 through the 1970s or the increases seen in emerging market economies.
I have an Economics Minor, can you either explain to me what a "mature economy" is or reprint the definition you are using please. Because the definitions I find do not match the United States:
Investopedia Definition of Mature Economy (Matches Europe but not the U.S.):
"A mature economy is the situation where the country's population has stabilized or is in decline, and where the pace of economic growth has also slowed. A population has stabilized or is in decline when the birth rate is equal to or less than the mortality rate. A mature economy is characterized by a decrease in spending on infrastructure, and a relative increase in consumer spending."
OR
Financial Dictionary definition of mature economy (Again matches most of Europe but not the U.S.)
"A stable economy with low growth and generally low inflation. It especially refers to an economy with a stable population; that is, there are fewer pressures to create jobs for a larger workforce, but at the same time, there is enough growth for the economy to financially support retires as they age and need more care. See also."
By my read the United States does NOT meet definition of stable population but only sort of meets declining birthrate (because of immigration rates....population is steadily increasing). So I am at loss to see how that description matches.
My review of GDP Growth rates show that for the 1980's & 1990's generally they were North of 5% vs post 2000 where they were generally South of 5%. I personally do not think the decline in GDP growth rates post 2000 is a result of a "mature economy" it's failure to balance spending priorities between National Defense, Infrastructure Investment and Social Welfare programs. Also a failure to hold the line on regulation, we regulated a LOT more post 2000 then we did the previous 20 years. 1980's we enjoyed the fruits of the deregulation that took place in the late 1970's.
GDP Growth rates:
http://www.tradingeconomics.com/united-states/gdp-growth
And:
http://www.multpl.com/us-gdp-growth-rate/table/by-year
Anyway my two cents on our Economic Growth rates, which has a direct impact on Freight Railroad revenues. In my view we should be doing 33-50% better right now than we are with the GDP growth. You could possibly blame that on the 2008 recession until 2011 or 2012 but here it is 2016 and we are still in the doldrums. That is a political failure it is not the new normal.
MidlandMikeI'm in the middle, looking all around. The stock market high was sure good for my 401k. The market was up on really good employment numbers.
Off topic - I used to let my 401k ride on the ups and downs of the NYSE in Mutual Finds a while back before I had the experience, time, and knowledge to actively invest and back when my principal was 5 digits or less. No longer though. Yes, you can make money that way investing and yes it is safer but the returns are much higher when you actively invest with individual stocks.
CMStPnP MidlandMike Off topic - I used to let my 401k ride on the ups and downs of the NYSE in Mutual Finds a while back before I had the experience, time, and knowledge to actively invest and back when my principal was 5 digits or less. No longer though. Yes, you can make money that way investing and yes it is safer but the returns are much higher when you actively invest with individual stocks.
MidlandMike
And the losses are much higher when you can't accept the reality that you are no good at being an activest investor.
Never too old to have a happy childhood!
One can debate whether or not the US has a mature economy and that slower growth of GDP is structurally rooted and inevitable. The pertinent, non-debatable fact is that the rails' downturn is primarily a consequence of lower "coal loadings, which across the board, according to the Wall Street Journal, account for an average of 20 per cent of rail revenues. ", as JBS1 said.
CMStPnP In my view we should be doing 33-50% better right now than we are with the GDP growth. You could possibly blame that on the 2008 recession until 2011 or 2012 but here it is 2016 and we are still in the doldrums. That is a political failure it is not the new normal.
It is a political failure, if the result is something that was not wanted. It could be a political success if it is the result of policies that generally disdain capitalism while believing that robust economic growth is unsustainable, that it consumes too much of the earth’s resources, and deprives the rest of the world of their share of the pie. I have heard people who hold those beliefs also declare that this economy is the “new normal.”
As Slimm pointed out the rail downturn owing to the significant drop off in coal loading, is as Euclid mentions, the result of a desirable outcome by political forces. Great comments.
BaltACD- correct about investing...if you don't know what you are really doing you will be picked clean by the pros in no time.
Strinking how all these great comments are all intrinsically linked and dependant on each other.
MiningmanAs Slimm pointed out the rail downturn owing to the significant drop off in coal loading, is as Euclid mentions, the result of a desirable outcome by political forces. Great comments.
Thats not all of it, traffic is down across the board.
If you check Intermodal Growth rates they are still growing but used to be growing a LOT FASTER. They mention it on the investor calls as well, railroads would be well into double digit growth rates still with intermodal if the economy was doing better instead of permanently stuck in this funk. Yes the rails can get more creative with marketing.
Anyways, another reason I am putting my stock money where my mouth is. We get back to above 3% overall GDP growth rates and the rails will do pretty good again. It's sheer stupidity to suggest we cannot hit 4-5% GDP Growth, though I would agree having above 5% growth is probably not sustainable for our Economy but it is also silly to accept 2%-2.5% or less as OK.......thats crap. Only one political party is pushing that BS to explain the last 8 years.
Just to clarify, when I say that some are making excuses for a slow economy by saying that robust growth is unsustainable, I do not mean that they mean that the growth itself cannot be maintained due to the difficulty of achieving a high growth rate.
I mean that they mean that robust growth is damaging because it encourages what they regard as excess consumption and excess use of world resources. So I am using the term, sustainable as it is constantly used by the green movement. Limiting economic growth is a clear objective of the Degrowth movement. After all, it is in their name.
I believe this economy has a lot of pent up drive that has been thwarted over the last several years. A simple change in policy will unleash a powerhouse of economic growth. I think growth could surge to 10% almost overnight.
CMStPnP MidlandMike I'm in the middle, looking all around. The stock market high was sure good for my 401k. The market was up on really good employment numbers. Off topic - I used to let my 401k ride on the ups and downs of the NYSE in Mutual Finds a while back before I had the experience, time, and knowledge to actively invest and back when my principal was 5 digits or less. No longer though. Yes, you can make money that way investing and yes it is safer but the returns are much higher when you actively invest with individual stocks.
MidlandMike I'm in the middle, looking all around. The stock market high was sure good for my 401k. The market was up on really good employment numbers.
I am retired now, and if I listened to the financial gurus, I should be lessening my stock exposure. Continuing to ride the S&P 500 is excitement enough for me.
Euclid MidlandMike jeffhergert MidlandMike chicagorails even domestic cont are way down this year,our economy is doing terrible. may be a recession or depression coming soon.nafta shipped mucho jobs overseas and mexico. no one cares Yesterday the newspaper reported the Dow and SP 500 stock index closings both reached record highs. I guess it depends on where you are. If you're towards the top looking down, the economy is great. If you're towards the bottom looking up, it's not so rosy. Jeff I'm in the middle, looking all around. The stock market high was sure good for my 401k. The market was up on really good employment numbers. Perhaps you are talking about income inequality, but that is a political subject that the moderators council us not to get into. I don't think Jeff was talking about income inequality. If income is involved, I would say that relates to the fact that the people who need jobs can't find them. Maybe higher income people are not in such a dire need for a job. I thought that was his point.
Correct. I'm talking about the jobs we are losing and those that are being created to replace those lost. I see a lot of help wanted signs. Mostly for retail or restaurant work.
It was always said that when one door closes, another opens so to speak in the respect that when one industry becomes obsolete another comes along to employ those displaced workers. Generally, along with that came a raise in the standard of living. I think we may be at the beginning of that no longer being true. At least for a majority of people.
There have always been winners and losers in an economy. I just think we are going to start to see more losers. As long as those on the short end of the stick can be convinced that they aren't losing or aren't losing too badly, nothing will change.
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