This is from Freightwaves. It's quite critical of RR management.
https://www.freightwaves.com/news/railroad-barons-are-reconsidering-the-playbook-that-made-them-rich?j=226774&sfmc_sub=50660216&l=256_HTML&u=4697936&mid=514011755&jb=5012&utm_source=sfmc&utm_medium=email&utm_campaign=FW_Daily_12_9_22&utm_term=Railroad+barons+are+reconsidering+the+playbook+that+made+them+rich&utm_id=226774&sfmc_id=50660216
I tend to agree with most of the writing. But please note well that the problem started long before PSR. I found the following particularly concerning:
"Over the last 15 to 20 years, Eric Voigt of the Washington Potato Commission said the farmers in his association have stopped moving potatoes by train. They’re all moved by truck now. Rail is much cheaper than truck, but it wasn’t dependable, Voigt said."
"Around 1 in 10 carloads of potatoes had some quality issue as a result of rail transportation, Voigt said. One example might include a carload of potatoes forgotten on rail siding, rotting for weeks."
"Farmers in the Washington Potato Commission have stopped shipping (fresh potatoes) by rail because of the lack of dependability. (AP Photo/Roberto Pfeil)
The potato farmers of Washington state now use rail to move frozen potatoes; around 20% of frozen potatoes go on rail, according to Voigt."
Washington state produces a lot of potatoes. Thet're a close 2nd to Idaho in that regard. These spuds are largely moving long disrtances to eastern population centers, etc. And the best the railroads can do is 20% of the frozen market.
Hauling potatoes isn't hard and the railroads need this long haul, high volume business. They just have no idea how to go about getting such business.
You can't really freeze potatoes: just like when they freeze in the railroad car by accident, they turn to mush and blacken when they thaw.
I suspect the 'frozen potato' market Voigt is discussing is flash-frozen packaged products, like fries or pre-seasoned bagged wedges. This is similar to the discussion of meat traffic, first between stock and carcasses, and then cut and packaged meat in trays for quick commoditized distribution.
Overmod You can't really freeze potatoes: just like when they freeze in the railroad car by accident, they turn to mush and blacken when they thaw. I suspect the 'frozen potato' market Voigt is discussing is flash-frozen packaged products, like fries or pre-seasoned bagged wedges. This is similar to the discussion of meat traffic, first between stock and carcasses, and then cut and packaged meat in trays for quick commoditized distribution.
Yes Overmod potato products such as you mentioned above are what he means.
Well Greyhounds... BNSF's 2013 capacity crunch let Coldtrain out of Quincy become an operational mess leading to its closure.. UP's fumbling of Railex.. The Class 1's especially the western's have an uphill battle to re-gain the trust of PNW perishable shippers.
Unfortunately I don't see BNSF or UP under their current boards moving anytime soon to try and regain this traffic... Honestly I think BNSF, and UP are stagnant under current leadership.
I think we'll have a better opportunity watching CSX grow headhauls of Maine potatoes to the Southest, and Gulf Coast. With Florida perishable backhaul to the Midwest, and Northeast.
Also FYI. Eastern Washington has the highest potato yield per acre in the world due to is excellent volcanic based soil.
Both potatoes and apples 'keep' for a very long time in my fridge, they're pretty low hanging fruit as non-frozen perishables go, so to speak. If the railroads are letting either of them spoil that really speaks to excessive congestion and/or poor car management.
Frozen loads should last far longer, unless they thaw of course.
How many days worth of fuel does a modern reefer carry?
Greetings from Alberta
-an Articulate Malcontent
Curious as how Bannanas are now transported. IC's hauling of them back in the day probably cannot be matched. Lately have found they are really green in our stores. However they do seem to have a few bruises when ripening up.
blue streak 1Curious as how Bannanas are now transported. IC's hauling of them back in the day probably cannot be matched. Lately have found they are really green in our stores. However they do seem to have a few bruises when ripening up.
B&O had the United Fruit Pier at Locust Point in Baltimore and used to run Banana Specials in the 40's and 50's.
When I worked Locust Point in the mid 1970's there was no longer any rail service of the Fruit Pier. On days the vessels were due, trucks would line up on the road that separated the WM's Port Covington Yard complex from the B&O's Locust point complex on both sides of the road to await getting their load of bananas. One of those truckloads might have been the one that was the idea behind the following song. https://www.youtube.com/watch?v=OGldNpngDws
On a personal matter, when I go to the store on Sunday's I buy the greenest bananas I can find - if they aren't green I don't buy them. I will only buy 4. They will be eaten Monday-Thursday - any longer and the skin gets soft which I find objectionable.
Never too old to have a happy childhood!
OvermodYou can't really freeze potatoes: just like when they freeze in the railroad car by accident, they turn to mush and blacken when they thaw. I suspect the 'frozen potato' market Voigt is discussing is flash-frozen packaged products, like fries or pre-seasoned bagged wedges. This is similar to the discussion of meat traffic, first between stock and carcasses, and then cut and packaged meat in trays for quick commoditized distribution
Most potatoes made available for consumption in the US are processed in some manner. Only 27.9% of the harvested weight (farm weight) is sold unprocessed. 45.1% of the crop is frozen. (2020 USDA data) Freezing reduces the weight to be shipped by about 50%.
Other processing includes chips, dehydration, and a very small amount of canning.
Yesterday I saw a 70-75 foot white and orange cryogneic reefer southbound stopped on the overpass in my home town. The train was waiting to proceed into the NS Hagerstown, Maryland yard. They do show up occasionally on merchandise trains.
Caldreamer
greyhoundsHauling potatoes isn't hard and the railroads need this long haul, high volume business. They just have no idea how to go about getting such business.
I guess the "Road Of The Great Big Baked Potato" is a truly fallen flag.
They could probably handle the spuds well if they had enough crews...
This goes back to the statement occasionally made that the railroads don't want the carload business. If the potato growers want to put together 100 car blocks...
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
Meanwhile in The Wall Street Journal Weekend Exchange section there is a massive article about the shift of import container traffic to the East Coast.
The Port of New York and New Jersey had more import containers in August, September and October than the Port of Los Angeles. (Though LA plus Long Beach is still larger combined.)
Savannah, Charleston and Houston are all mentioned as big gainers.
There seems to be an awakening with the railroad management that PSR and the "cult of OR" went too far...or at least that is their talk. Will they walk the talk?
The management at NS and CSX is talking "growth" for a change. They better as volumes are shrinking. Cindy Sandberg is out at NS and Foote is gone at CSX. Both had strong anti labor stances.
Meanwhile, NS is running a very interesting intermodal operation, at least out of Chicago with much more flexibility in the schedules. Instead of limited number, very long intermodals, they seemingly have reverted to the more frequent, shorter versions. Kinda like moving from one 747 between markets to multiple 737s. Lets see how that works during the first quarter when volumes drop. Will they run 100 container/trailer trains?
Interesting times ahead. PSR probably was needed to a certain extent but at some point in time it seemed to go extreme.
Ed
MP173 PSR probably was needed to a certain extent but at some point in time it seemed to go extreme.
Kind of like someone who goes on a diet to lose a few pounds and winds up anorexic?
Flintlock76 MP173 PSR probably was needed to a certain extent but at some point in time it seemed to go extreme. Kind of like someone who goes on a diet to lose a few pounds and winds up anorexic?
I suspect that PSR is a good thing in principle. The problem is that the "I want my money tomorrow" investors got ahold of it...
Good point. To get down from the low 60s operating ratio into the 50s seems like it takes cutting too much personnel because that is all there is left to cut, and also super long infrequent trains to run with the too thin personnel ranks so it drives away business because infrequent service doesn't work for customers and also there is never an opportunity to grow volume.
Theoretically speaking is it better to earn $6 billion on $26 billion of revenue and $20 billion of expenses or $5 billion on $20 billion of revenue and $15 billion of expenses. In the former you have a higher operating ratio but more net income and in the latter have a lower operating ratio but less net income.
Have to wonder what stock prices would be without stock buy backs and higher than normal dividends vs. net profit.
Stock prices would probably be lower. Something has to be done with cash generated. As a shareholder of a number of companies, including a Class 1 railroad, I want a return. If the cash is accumulated share price will fall as there is excess cash on the balance sheet which is doing nothing.
Great analogy above regarding going on a diet and ending up aneroxic...I almost used that but didnt want to be accused of body shaming.
ed
MP173Great analogy above regarding going on a diet and ending up anorexic...I almost used that but didn't want to be accused of body shaming.
If you don't want to body-shame, consider using prison-camp slave labor as an analogy.
Another analogy?
You and I buy a house. You see it as an income source for a long while - rent it out, etc.
I, on the other hand, want a quick return. So I gut the house of anything with value (copper pipe, wiring, pressed metal ceiling panels, what-have-you), sell it all and walk away, leaving you with an empty shell. So long, sucker!
tree68 Another analogy? You and I buy a house. You see it as an income source for a long while - rent it out, etc. I, on the other hand, want a quick return. So I gut the house of anything with value (copper pipe, wiring, pressed metal ceiling panels, what-have-you), sell it all and walk away, leaving you with an empty shell. So long, sucker!
Interesting! Gut the house and all you've got is a tear-down worth less than the land it sits on. Something worth thinking about.
Around here they're constantly upgrading and maintaining..Bayview Junction got a major upgrade a couple of years ago.. new ballast and ties going in all over the place. It's almost as if no one here got the PSR memo.
caldreamer Yesterday I saw a 70-75 foot white and orange cryogneic reefer southbound stopped on the overpass in my home town. The train was waiting to proceed into the NS Hagerstown, Maryland yard. They do show up occasionally on merchandise trains. Caldreamer
Ulrich Around here they're constantly upgrading and maintaining..Bayview Junction got a major upgrade a couple of years ago.. new ballast and ties going in all over the place. It's almost as if no one here got the PSR memo.
Rail, ballast, switch and signal replacements and overhauls fall into the category of routine maintenance for a mainline railroad. Some of the recent projects around your area would also have been funded by the Ontario government as part of GO Transit's expansion through Hamilton toward the Niagara region.
CN is still recovering from the deferred maintenance and capacity reductions of the Hunter era. Out west the track isn't nearly as good as it should be.
As with so many other wretched things about our current excuse for civilization, no one in positions of authority or control seems to remember -- other than as historical curiosities -- the many 'two streaks of rust' financial machinations or forced bankruptcies of even many early ralroads... or, more significantly, Mr. Hill's 'empire-building' by picking up the depreciated streaks of rust, combining them effectively, building up the physical plant to run traffic, and operating the thing as a transportation business.
I was fond of asking, in management consulting, what the purpose of General Motors was. The usual answer was some sort of 'making a profit' or 'making money for the stockholders'. The answer is not that -- GM does not own a mint, or have a crypto subsidiary. They build things, and try to sell or service them for a profit, and how effectively they execute defines their potential profitability.
Anything that compromises their ability to produce meaningful wealth in the first place limits their effective growth. The Burger King model of economizing on paper clips and sick leave while having lavish 'conferences' at resorts and large management bonuses only goes as far as people keep buying hamburgers and the like. As Blackberry found out out at the 'pointy end' of technology adoption, drop the ball and you may be out of business in months or years, no matter how savvy you may be at cutting perceived costs or deferring expenses.
For a while, it was appropriate for a company like Conrail to abandon 'redundant' routes or single-track (with or without directional running) to reach more effective execution. They reached and passed a point of diminished capacity that currently bites successor roads in the butt every day. But while hindsight is 20/20, and no one could probably have predicted much of the traffic resurgence on ex-Conrail lines, there is such a thing as too much nominal economization, and most of the railroads embracing the wrong sort of 'PSR' are now well on the far side of it -- justifying it by picking and choosing only the low-hanging traffic that requires the least thought or performance, or which allows 'charging what the traffic will bear'.
While I was working, in my mind the one thing that would bring CSX to a halt increased business. Management couldn't comprehend 'prosperity'. If they couldn't cut something they couldn't manage it.
BaltACDWhile I was working, in my mind the one thing that would bring CSX to a halt increased business. Management couldn't comprehend 'prosperity'. If they couldn't cut something they couldn't manage it.
Overmod BaltACD While I was working, in my mind the one thing that would bring CSX to a halt increased business. Management couldn't comprehend 'prosperity'. If they couldn't cut something they couldn't manage it. That's funny and more than a bit sad; C&O had the reputation, probably more than any other road, even the Pennsylvania, of understanding the importance of civil aspects like heavy track construction and good alignment and geometry, and B&O even though chronically on a shoestring rather remarkably executed many things that required both spending and very careful attention to detail (such, I think, as dining-car service while they offered it) compellingly well.
BaltACD While I was working, in my mind the one thing that would bring CSX to a halt increased business. Management couldn't comprehend 'prosperity'. If they couldn't cut something they couldn't manage it.
That's funny and more than a bit sad; C&O had the reputation, probably more than any other road, even the Pennsylvania, of understanding the importance of civil aspects like heavy track construction and good alignment and geometry, and B&O even though chronically on a shoestring rather remarkably executed many things that required both spending and very careful attention to detail (such, I think, as dining-car service while they offered it) compellingly well.
Once you get into CSX in the 90's - the management had strayed from the concepts that had worked for both the B&O & C&O and began to take on the failing concepts of the SCL. Cut your way to increased profits.
SD70Dude Ulrich Around here they're constantly upgrading and maintaining..Bayview Junction got a major upgrade a couple of years ago.. new ballast and ties going in all over the place. It's almost as if no one here got the PSR memo. Rail, ballast, switch and signal replacements and overhauls fall into the category of routine maintenance for a mainline railroad. Some of the recent projects around your area would also have been funded by the Ontario government as part of GO Transit's expansion through Hamilton toward the Niagara region. CN is still recovering from the deferred maintenance and capacity reductions of the Hunter era. Out west the track isn't nearly as good as it should be.
About 4 or 5 years ago Railway Age had an article about CN after EHH had departed. It may have been after he had left CP. The CN folks didn't have many kind words for him then.
They had reached bottom, no more cuts to be made, and were having to start growing. To do so they were having to spend money to replace things he had undone and to catch up on deferred maintenance. I believe CP, after EHH, had to do the same. There was speculation that while EHH was still at CP, he was pushing for merger with one of the eastern carriers because there was nothing left to cut. They needed another property to make more cuts.
Most of the US class ones having been talking about growth for a few years. I haven't seen any real effort to do so. They seem to find more things to cut. They know how to talk, but have forgotten how to walk.
Or maybe they are afraid to actually do anything that raises the operating ratio, even though it may bring in more money, and risk getting fired by the activist investor controlled Boards.
Jeff
Meanwhile, over at CP they're experimenting with hydrogen fuel cell technology..they converted an SD40-2F, and a couple of GP38-2s are also being converted. So far things look promising..
Our community is FREE to join. To participate you must either login or register for an account.