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Blackstone Group Launches Takeover Bid Of KCS

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Posted by BaltACD on Saturday, September 5, 2020 11:21 PM

jeffhergert
 
jeffhergert 
SD70Dude

Jeff, is it true that they fired a whole bunch of Dispatchers yesterday? 

I couldn't say, I've been on vacation the last few weeks.  Go back on Monday.

On UP, dispatchers are management.  They have been consolidating dispr's territories over the system and they are supposed to be rolling out some new CAD on steriods system.  They probably think they won't need so many dispatchers in the future.

Jeff 

The Trains' newswire says 60 dispatchers were let go.  A source on a Facebook group said 107 have gotten the axe.  For now.   

Being management, they weren't let go by seniority.  One who posted on that FB group had 24 years in as a dispatcher. (I'm not sure, but he may have been one that dispatched a portion of my work area.)  Another had 8 years in.

One hump at North Platte is going to be shut down.  All this is PSR and the goal of a 55% OR.  

Forget how the KCS might be divided up.  Let's decide how the UP might be divided up when the bubble eventually bursts and the house of cards falls. 

Jeff 

I wonder if or how 'New York Dock' guarantees will work for those let go?

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Posted by PNWRMNM on Sunday, September 6, 2020 8:04 AM

blue streak 1

How about this for open access ?  RR ABC transferes track and ROW to govt entity at no cost. 

How bout we call that what it is - outright theft of billions of dollars worth of private property.

Mac

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Posted by zugmann on Sunday, September 6, 2020 9:22 AM

BaltACD
Nobody on Wall Street is going to let any railroad that trades stock to 'give' their physical plant to any entity, government or others without those getting the plant paying real money for it.

I think they'd jump at it.  They're already trying to get rid of everything physical - think of the operating ratio if all they had to do was run trains and let someone else do the boring infrastructure part?  

It's been fun.  But it isn't much fun anymore.   Signing off for now. 


  

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Posted by Los Angeles Rams Guy on Sunday, September 6, 2020 11:26 AM

jeffhergert

The truly "tragic" thing (I guess) about the UP fiasco is that, when I was a kid, UP was the kind of RR that one truly looked up to when it came to excellence and how a RR should be run.  Remember my very first time when I was on the UP's portion of the Overland Route in Nebby as a 14-year old kid and I was just blown away.  It's no wonder that UP was CNW's exemplar for so many years.  It's just sad when I see what's happening now and I hope you guys can ride this storm out without too much damage being done.

But I don't want to veer too far off topic here and get back to KCS.  I won't lie to you.  The one thing that I want to see more than anything is a CPRS - KCS combination simply because it makes the most sense and it would finally give CPRS an even footing with arch-rival CN.  The other thing is that I think that a combination like CPRS + KCS wouldn't necessarily have to trigger the final round of mergers amongst the Class Is.  Now, there may be some concessions that would have to be made and I'm not exactly sure how the Meridian Speedway partnershipt that KCS and NS have would factor in but I think that if you're CPRS, there may not be another opportunity that's as golden as this to make that big move and I also think that Keith Creel wants to find a way to cement his legacy at CPRS as well.       

 

 

 
SD70Dude

Jeff, is it true that they fired a whole bunch of Dispatchers yesterday?

 

 

 

I couldn't say, I've been on vacation the last few weeks.  Go back on Monday.

On UP, dispatchers are management.  They have been consolidating dispr's territories over the system and they are supposed to be rolling out some new CAD on steriods system.  They probably think they won't need so many dispatchers in the future.

Jeff 

 

 

 

The Trains' newswire says 60 dispatchers were let go.  A source on a Facebook group said 107 have gotten the axe.  For now.   

Being management, they weren't let go by seniority.  One who posted on that FB group had 24 years in as a dispatcher. (I'm not sure, but he may have been one that dispatched a portion of my work area.)  Another had 8 years in.

One hump at North Platte is going to be shut down.  All this is PSR and the goal of a 55% OR.  

Forget how the KCS might be divided up.  Let's decide how the UP might be divided up when the bubble eventually bursts and the house of cards falls. 

Jeff 

 

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Posted by alphas on Sunday, September 6, 2020 12:03 PM

Rather than first going the government ownership route, I'd change the laws to exempt RR right-of-ways and whatever is attached to it such as signals, protective fencing, bridges, tunnels, etc. from all property taxes.    Tell the states and local governments that if they don't go along with this, they'll lose the tax revenue anyway as the Federal government will assume ownership of what RR property exists.   I know in PA that tax exemption is the major component for the RR's owned by local Government established Authorities under PA law.   Then I'd also change Federal Tax law to let the RR's immediately expense all construction & maintenance to their physical plants.

I would only consider having the Federal Government assume ownership of the physical plant if the RR's still couldn't make it work after doing those 2 things.


 

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Posted by Overmod on Sunday, September 6, 2020 12:56 PM

PNWRMNM
blue streak 1

How about this for open access ?  RR ABC transfers track and ROW to govt entity at no cost. 

How 'bout we call that what it is - outright theft of billions of dollars worth of private property?

How could that possibly be 'what it is'?  He called for a voluntary donation of that billions of dollars of property.

I'll grant you it's as improbable as the pretext for Bellamy's Looking Backward, and no railroad board of directors would sanction such a thing without considerable additional concessions or compensation... but wait until someone proposes something like "nationalization" before gearing up the ire.

Even the government 'takeover' to Federal Control didn't involve confiscation of the real estate!  Think of the compensation amounts if they had ... not that it couldn't have been arranged with a more protracted abusive 'liberty bond' campaign into the horror of a war in 1919.

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Posted by charlie hebdo on Sunday, September 6, 2020 1:08 PM

I proposed payment, not just compensation.  Then we might get better ROWs and electrification where traffic is sufficient.  The railroads would have a ton of money to use on new equipment.  Any agreement would require that,  not declare huge dividends to stockholders. Time to move into the 1980s at least,  if not into the future. 

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Posted by Overmod on Sunday, September 6, 2020 1:23 PM

charlie hebdo
I proposed payment, not just compensation.  Then we might get better ROWs and electrification where traffic is sufficient. 

The far likelier scenario, all the way back to the mid-'20s, has been something like a transfer of either running infrastructure or full lease-like operating rights as a kind of analogue of PILOT in real estate: a substantial and 'guaranteed as far as possible' reduction of taxes -- here Federal taxes, perhaps including also various current requirements on railroad contribution to Federally-mandated special agencies like RRB -- equivalent to the TVM fair market value of that infrastructure.

This would not necessarily include more than the track and easements to access it (including drainage arrangements); it would in particular leave the fiber-optic, pipeline collocation, etc. rights in private hands if desired.  Note that it leaves actual "government" money involvement minimized, so all actual 'cost to the government' goes into improvement, not acquisition.

Electrification plans as progressive buildout in conjunction with private 'grid' distribution improvement has been thoroughly hashed out at EPRI alone; any expansion as a targeted 'stimulus' or 'employment creation' incentive could easily be developed with a minimum of expensive new 'consultant fees'.

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Posted by azrail on Sunday, September 6, 2020 10:06 PM

The government does'nt have enough money to buy the National rail syste, and they didn't do so well during WW I 

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Posted by charlie hebdo on Sunday, September 6, 2020 11:16 PM

I'm not sure the railroads pay much in federal taxes (a lot of big corporations pay little or none)  and how much the property taxes sre actually paid.  Several years ago I tried to get a rough estimate of the value of land carried on the books for one of the US big 4. Not all that much.  Maintenance is costly.  The rails might well find getting out of that cost center well worth selling at a discount. 

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Posted by alphas on Monday, September 7, 2020 12:13 AM

[quote user="charlie hebdo"]

"I'm not sure the railroads pay much in federal taxes (a lot of big corporations pay little or none)  and how much the property taxes sre actually paid." 

 
"A lot" is too broad.   Some do pay little or none because of tax credits of various type or they simply didn't make a profit for a particular tax year.   Most US corporations do pay a significant amount of taxes---Local, State, and Federal.    Then their bond interest and dividends paid to bondholders & stockholders are taxed again by local, state, and federal governments.  The only way Corporations get out of paying property taxes is if they've received an incentive package to move their businesses into a particular location.
 I know one of the managers who helps run a PA Authority involving RR's.  It was he that told me the lines couldn't be operated if they had to pay normal property taxes.     Now that's PA but I do know that property taxes were a major consideration for any private RR, especially in urban areas. 

 

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Posted by jeffhergert on Monday, September 7, 2020 8:06 PM

Question.  How will Government ownership be set up?

Is Government ownership going to be ALL railroad trackage (except that belonging to customers) or just the major routes?

Will ownership and maintenance be at the Federal level or like the highway system, owned and maintained by the states with Federal aid?

Jeff

 

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Posted by BaltACD on Monday, September 7, 2020 9:41 PM

zugmann
 
BaltACD
Nobody on Wall Street is going to let any railroad that trades stock to 'give' their physical plant to any entity, government or others without those getting the plant paying real money for it. 

I think they'd jump at it.  They're already trying to get rid of everything physical - think of the operating ratio if all they had to do was run trains and let someone else do the boring infrastructure part?  

The physical plant is a huge Capital asset - letting it go for nothing does not help the bottom line - the locomotives and rolling equipment are a relatively smaller fraction of the value of the company.  Not paying for the upkeep of the physical plant will help the Operating Ratio, however the total value of the of the railroad will be a small fraction of what it was at the start. 

Wall Street may believe in a lower OR, but they do not belive in vaporized value.

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Posted by tree68 on Monday, September 7, 2020 10:31 PM

jeffhergert

Question.  How will Government ownership be set up?

Is Government ownership going to be ALL railroad trackage (except that belonging to customers) or just the major routes?

Will ownership and maintenance be at the Federal level or like the highway system, owned and maintained by the states with Federal aid?

Jeff

As they say, the devil is in the details...

I would opine that a quasi-government entity would be formed to run the system which the feds would own.  Letting the states control the maintenance of the tracks leaves the possibility that a state with budget issues might let the ROW maintenance go (kinda like they do with highways) or hold the rails hostage, insisting on more money.

One part of that entity would handle maintenance, one would handle traffic control (a la FAA), and a third would handle the billing.

Many thruway authorities are going (or have gone) cashless, even removing all toll booths.  That kind of accounting is already in place on the railroads, although the number of sensors would need to increase substantially.

But, the details...

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Posted by BaltACD on Tuesday, September 8, 2020 12:04 AM

tree68
 
jeffhergert

Question.  How will Government ownership be set up?

Is Government ownership going to be ALL railroad trackage (except that belonging to customers) or just the major routes?

Will ownership and maintenance be at the Federal level or like the highway system, owned and maintained by the states with Federal aid?

Jeff 

As they say, the devil is in the details...

I would opine that a quasi-government entity would be formed to run the system which the feds would own.  Letting the states control the maintenance of the tracks leaves the possibility that a state with budget issues might let the ROW maintenance go (kinda like they do with highways) or hold the rails hostage, insisting on more money.

One part of that entity would handle maintenance, one would handle traffic control (a la FAA), and a third would handle the billing.

Many thruway authorities are going (or have gone) cashless, even removing all toll booths.  That kind of accounting is already in place on the railroads, although the number of sensors would need to increase substantially.

But, the details...

We already see how Congress treats Amtrak with funding, and how they have done that for 49 years - what leads anyone to think that if the Government owns the operating plants of the railroads that they wouldn't apply the same lack of proper funding to maintaining those plants.

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Posted by daveklepper on Tuesday, September 8, 2020 5:34 AM

Tree, try and find one railroad investor, management person, or operating employee who favors government ownership of freight railroads' RoWs/  Find just one!

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Posted by tree68 on Tuesday, September 8, 2020 9:23 AM

daveklepper

Tree, try and find one railroad investor, management person, or operating employee who favors government ownership of freight railroads' RoWs/  Find just one!

And now you see why FM was such a lightning rod...

On paper, it looks like a doable idea.  But, as I said (and many have pointed out), the devil is in the details.

I really don't care one way or the other.  As long as they keep running trains.  

As Balt notes - the government has a pretty poor track record on that kind of endeavor.  New York state turned over perfectly servicable track to some folks who said they wanted to turn it into a trail...

OTOH, many short lines run on tracks owned by local governments.  I don't know that the local governments actually maintain the rails, generally leaving that to their designated operator.

 

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Posted by tloc52 on Tuesday, September 8, 2020 9:45 AM

Hedge funds exist to make money, lots of money. They see in the railroad an opportunity to control it and then sell it off in chunks. I have seen it in the paper mills in Central Wisconsin, look up Wausau Papers. They wont take over the KCS and do much if anything to intrastructure as that is costly. This line will not be worth it so they will sell it off. They sell off enough lines or routes and soon enough the Railroad no longer exists. But the shareholders are happy. BNSF is owned by Berkshire who has interests in growing the business and profits. When Warren Buffet passes, I will sell off my stake as their business model will also pass with him, IMO.

Government involvement, not going to happen as it would be too costly. The government can't control Amtraks purse strings how are they going to run a whole railroad. Neither party will invest in railroads and really why should they? RR's can handle their own. Interstate highways were built for the American people but trucking also grew. You want equality between rail and trucking. Increase or create rates that trucking has to pay into the interstate system for upkeep and improvements.

Tom

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Posted by charlie hebdo on Tuesday, September 8, 2020 9:58 AM

tree68

 

 
daveklepper

Tree, try and find one railroad investor, management person, or operating employee who favors government ownership of freight railroads' RoWs/  Find just one!

 

And now you see why FM was such a lightning rod...

On paper, it looks like a doable idea.  But, as I said (and many have pointed out), the devil is in the details.

I really don't care one way or the other.  As long as they keep running trains.  

As Balt notes - the government has a pretty poor track record on that kind of endeavor.  New York state turned over perfectly servicable track to some folks who said they wanted to turn it into a trail...

OTOH, many short lines run on tracks owned by local governments.  I don't know that the local governments actually maintain the rails, generally leaving that to their designated operator.

 

 

Yes,  I see the inability to discuss this in a rational manner.  Some people operate on out of date assumptions or introduce them to end a rational discussion.  Key word,  as you point out is rights of way,  not railroads. 

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Posted by BaltACD on Tuesday, September 8, 2020 10:10 AM

charlie hebdo
Yes,  I see the inability to discuss this in a rational manner.  Some people operate on out of date assumptions or introduce them to end a rational discussion.  Key word,  as you point out is rights of way,  not railroads. 

Rational is spelled $$$$$$.  Someone winning and someone losing.  Guaranteed that the losers will be crying foul.

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Posted by zugmann on Tuesday, September 8, 2020 12:20 PM

daveklepper
Tree, try and find one railroad investor, management person, or operating employee who favors government ownership of freight railroads' RoWs/  Find just one!

I'll volunteer as tribute. 

Not like this current operating scheme is doing the industry any favors. 

I mean, a LOT of freight guys go to Amtrak (or attempt to).  Don't see too many of the Amtrak peeps moving to freight. 

It's been fun.  But it isn't much fun anymore.   Signing off for now. 


  

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Posted by charlie hebdo on Tuesday, September 8, 2020 12:54 PM

zugmann

 

 
daveklepper
Tree, try and find one railroad investor, management person, or operating employee who favors government ownership of freight railroads' RoWs/  Find just one!

 

I'll volunteer as tribute. 

Not like this current operating scheme is doing the industry any favors. 

I mean, a LOT of freight guys go to Amtrak (or attempt to).  Don't see too many of the Amtrak peeps moving to freight. 

 

David K: Let's strive for some accuracy instead of setting up a straw man argument. 

I for one did not suggest a government-owned freight railroad. 

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Posted by jeffhergert on Tuesday, September 8, 2020 1:00 PM

daveklepper

Tree, try and find one railroad investor, management person, or operating employee who favors government ownership of freight railroads' RoWs/  Find just one!

 

Actually, there may be a lot of investors who might jump at the idea.  It would depend on how the user fees are structured.  If the fees aren't set up to recover the full actual wear and tear for each user, they may be glad to be relieved of ROW maintenance costs for right of way and signals.

If ROW maintenance/signal costs are fully recovered through user fees, then probably investors wouldn't be interested.  

There are actually railroad employees out there (I'm not one of them) who think the entire railroad, not just the ROW/signal infrastructure should be nationalized and government owned/operated.

Jeff

       

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Posted by diningcar on Tuesday, September 8, 2020 1:10 PM

"jeffhergert"]There are actually railroad employees out there (I'm not one of them) who think the entire railroad, not just the ROW/signal infrastructure should be nationalized and government owned/operated. Jeff        [/quote]

Jeff, you, myself, MC plus others who have had boots on the ground have heard 'sand house' thinking but we would not allow our thinking to be influenced by theirs. There is questionable thinking and there is reasoned, responsible thinking.

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Posted by zugmann on Tuesday, September 8, 2020 1:15 PM

diningcar
Jeff, you, myself, MC plus others who have had boots on the ground have heard 'sand house' thinking but we would not allow our thinking to be influenced by theirs. There is questionable thinking and there is reasoned, responsible thinking.

 

There's also people that convinced themsleves they are comfortable with the status quo and don't want change. 

 

It's been fun.  But it isn't much fun anymore.   Signing off for now. 


  

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Posted by greyhounds on Tuesday, September 8, 2020 4:01 PM

charlie hebdo
Yes,  I see the inability to discuss this in a rational manner.  Some people operate on out of date assumptions or introduce them to end a rational discussion.  Key word,  as you point out is rights of way,  not railroads. 

Well, I thought it was being discssed in a rational manner.  You, youself, are one of the posters who make rational discussions difficult, if not impossible.  You tend not to respond to opposing thoughts.  Instead, you lable them (as in "out of date assumptions") and dismiss them without further comment or specifics.  What "out of date" assumptions?  You don't say.

I'm against open access and especially against more government involvement.

Open access flies in the face of railroad economics and efficiency.  It will make things worse.  Railroad efficiency is driven by volume.  In general, the more volume concentrated on a line, or in a train, the more efficient rail transport becomes.  OA will split up the business and make aggregation in to train load volumes more difficult.  This will drive up the rail cost per shipment and we don't want to go in that direction.

It needs to be understood that the unit of production in railroading is the train load.  Except for single commodity unit trains the unit of sale is the carload/trailer load/container load.  These units of sale need to be aggregated in to units of production.  The quicker and more often that can be done the lower the cost of rail movement.  OA will make the needed aggregation slower and reduce the size of the unit of production.  That means costs will go up and that's bad outcome.

Getting the government involved will politicize things to no end and also reduce efficiency.  There are some rail lines that need more capacity and they're being worked on where such investments can be justified.  Often it is the government itself that blocks capacity improvements through their own cumbersome processes.

"By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that.
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Posted by SD70Dude on Tuesday, September 8, 2020 4:18 PM

jeffhergert

There are actually railroad employees out there (I'm not one of them) who think the entire railroad, not just the ROW/signal infrastructure should be nationalized and government owned/operated.

Jeff

This is the one idea in this thread that has actually been tried in North America.

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Posted by adkrr64 on Tuesday, September 8, 2020 5:01 PM

Count me among those that think large scale government ownership/ management of RR infrastructure is not a great idea. Having local goverment authorities own the ROW but having a designated (private) operator to run trains and maintain the ROW does make sense in some low density lines. Greyhounds  makes good points about what open access can do to volumes. 

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Posted by rdamon on Tuesday, September 8, 2020 5:06 PM

The State of GA owns the ROW for the W&A and leases it to CSX.

https://en.wikipedia.org/wiki/Western_and_Atlantic_Railroad

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Posted by adkrr64 on Tuesday, September 8, 2020 5:19 PM

rdamon
The State of GA owns the ROW for the W&A and leases it to CSX.

https://en.wikipedia.org/wiki/Western_and_Atlantic_Railroad

What is different in this case is that (according to Wikipedia) that line has been government owned since its inception. It has been leased by operators for the last 140+ years. It would be interesting to see the lease terms - does the state of GA put any money into the line, or do they just get lease payments from CSX?

In any event, not quite the same thing as having a government entity own and maintain the line for the benefit of any operator to use.

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