Rather late to the party but your right, its a depressingly common mindset these days, they arent in the business of railroading theyre in the business of business. Figured that out myself when i started reading up on the Class i companies for a project of mine.
No business has ever cut their way to expansion.
Never too old to have a happy childhood!
I said it when PSR first came out. No way to run a sustainable business. Any business will lose customers without trying, through mergers, bankruptcy, relocations, etc. They ran off business that didn't meet metrics, profitable or not. Throwing away ones you have while still failing to satisfy they ones you have is very short-sighted. Even the ones they kept got tired of the BS and left.
The OR will approach zero (which they think is good) as revenues approach zero.
OT, but...
True Story. Automotive engineer decided to get rid of his family for reasons I'm not sure were ever made public.
He had access to almost pure carbon monoxide - which is used in automotive testing - where he worked (major auto manufacturer test facility).
He carefully drilled a hole in the firewall of his wife's car. I think he also plugged up some of the vents. When she and the kids got in the car to go somewhere, he told her he had to do something under the hood, whereupon he inserted a hose from the CO bottle into the hole and turned it on.
The car was in the garage, so it would be easy for authorities to assume that it was because the car was running in the closed garage that the family succumbed.
Alas, the engineer didn't realize that with the amount of CO he was releasing into a closed space (never mind the car) that the entire garage would soon be filled.
When he returned to the garage to remove the evidence, he, too, succumbed.
My father, a reserve police officer at the time, was among the first on the scene when the father didn't show up at a village government meeting and police went to see why. I have no idea why the police went, but that's for another discussion.
You can be smart, but still be stupid...
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...
Electricians and EE's are two different beasts, probably the same way that an automotive engineer may not be all that great at auto mechanics. As an EE, I've had a few decades of experience working with electronics techs and a good is worth his/her weight in gold.
I can MC's point about the "highway bubba's" not having a clue about railroads - a 2% grade on a highway is not that big of a deal, but is a very major grade for a railroad. I've also seen several examples of pretty serious settling on some freeways in my area, a prime example is CA-52 between I-805 and CA-163 (formerly US-395) which was built over a sanitary landfill - quite the roller coaster ride.
Erik_Mag mudchicken Transportation Engineers are NOT automatically qualified to railroad. (Something MS-DOT could not understand) Similarly, it has been my experience that EE's are NOT automatically qualified for dealing with electric power systems.
mudchicken Transportation Engineers are NOT automatically qualified to railroad. (Something MS-DOT could not understand)
Transportation Engineers are NOT automatically qualified to railroad. (Something MS-DOT could not understand)
Similarly, it has been my experience that EE's are NOT automatically qualified for dealing with electric power systems.
Mr. Peabody's 'Wayback Machine' brings up a memory of a next door neighbor when we were living in Pittsburgh. The individual was a EE and was part of the team that conducted the Bikini Atoll Atomic Bomb tests. One evening called my fathers (Career Railroader) over to install ceiling lights and the switches to operate them - he knew what the circuits looked like on paper, but could not translate them to real world hardware.
Somewhere in New England, the mechanical engineer that created/championed the business administration discipline is spinning in his grave since that discipline lost touch with reality.
NKP guy kgbw49 I recall Matt Rose telling a story after the Berkshire Hathaway purchase of BNSF that Warren Buffet told him to run the railroad for the next 100 years, or something to that effect. John Wannamaker of Philadelphia and New York, a significant figure in American business in the 19th century, always described himself as a merchant, not a businessman; the idea being that a businessman could run any business. But a merchant knew a great deal about one special business and was somehow operating on a more exalted level. Warren Buffet in this instance reminds me of Wannamaker: He's an investor, not a businessman; he's in it for the long haul. Berkshire Hathaway and BNSF are and will be the beneficiaries of that kind of wisdom. The other railroads, not so much. Remember that when the NYNH&H RR wanted a fast and really first class train, the very exemplar of that railroad and railroading, they didn't call it The Businessmen Limited.
kgbw49 I recall Matt Rose telling a story after the Berkshire Hathaway purchase of BNSF that Warren Buffet told him to run the railroad for the next 100 years, or something to that effect.
John Wannamaker of Philadelphia and New York, a significant figure in American business in the 19th century, always described himself as a merchant, not a businessman; the idea being that a businessman could run any business. But a merchant knew a great deal about one special business and was somehow operating on a more exalted level.
Warren Buffet in this instance reminds me of Wannamaker: He's an investor, not a businessman; he's in it for the long haul. Berkshire Hathaway and BNSF are and will be the beneficiaries of that kind of wisdom. The other railroads, not so much.
Remember that when the NYNH&H RR wanted a fast and really first class train, the very exemplar of that railroad and railroading, they didn't call it The Businessmen Limited.
The pronouncements of business courses in college in the mid 60's and early 70's was that their 'education' could make anyone who completed their courses could run any business with no need to KNOW the business.
Didn't agree with it then and 50+ years of real world experience has proved it beyond any doubt as being just hot air.
Those that don't KNOW the business they are in are a clear and present danger to the organizations they are in charge of.
kgbw49I recall Matt Rose telling a story after the Berkshire Hathaway purchase of BNSF that Warren Buffet told him to run the railroad for the next 100 years, or something to that effect.
Maybe Berkshire Hathaway will be allowed to acquire an eastern road one day (said with rose-colored glasses on.)
SD70Dude oltmannd I'm not wanting anybody to "look bad". I just want them to wake up! They know they look bad, and they don't care. The public doesn't vote in railroad managers and executives. As has been mentioned repeatedly all that they care about is the stock price. The top executives don't need to have a long term plan because they and the major shareholders won't probably won't be involved with this railroad in 10 years. Might as well cut as much as possible and get out while the going's still good. A plan for going out of business indeed.
oltmannd I'm not wanting anybody to "look bad". I just want them to wake up!
I'm not wanting anybody to "look bad". I just want them to wake up!
They know they look bad, and they don't care. The public doesn't vote in railroad managers and executives.
As has been mentioned repeatedly all that they care about is the stock price. The top executives don't need to have a long term plan because they and the major shareholders won't probably won't be involved with this railroad in 10 years. Might as well cut as much as possible and get out while the going's still good.
A plan for going out of business indeed.
Wall Street's push has been for the past decades - What can you show me at the bottom line NOW!. Max the bottom line by any means, legal or illegal, shortsighted though those decisions may be. MAX NOW!
Greetings from Alberta
-an Articulate Malcontent
PJS1 oltmannd Intermodal is the only way forward. Can trucks undercut intermodal on cost? No...mostly. But, if it takes you 9 crews to go 1200 miles from NJ to Memphis...maybe. Same RR takes four crews to go 930 miles from NJ to Chicago. Has anybody done anything about it? You seem to be saying labor is a significant impediment to growing the intermodal business. And management has not come up with a workable plan to deal with it. If management believes the President of the United States might show up at the union hall or even walk a picket line, they probably are reluctant to take on the union head-to-head. As seen in the auto negotiations, taking a strong stance against labor is not likely to result in a win-win.
oltmannd Intermodal is the only way forward. Can trucks undercut intermodal on cost? No...mostly. But, if it takes you 9 crews to go 1200 miles from NJ to Memphis...maybe. Same RR takes four crews to go 930 miles from NJ to Chicago. Has anybody done anything about it?
Can trucks undercut intermodal on cost? No...mostly. But, if it takes you 9 crews to go 1200 miles from NJ to Memphis...maybe. Same RR takes four crews to go 930 miles from NJ to Chicago. Has anybody done anything about it?
You seem to be saying labor is a significant impediment to growing the intermodal business. And management has not come up with a workable plan to deal with it.
If management believes the President of the United States might show up at the union hall or even walk a picket line, they probably are reluctant to take on the union head-to-head. As seen in the auto negotiations, taking a strong stance against labor is not likely to result in a win-win.
Typical accountant. Straight to blame labour.
As we're all aware a crew can only work 12 hours at a time, that's the law and it is so for good reason. What the railroad does with the crew in that 12 hours is up to them. They could get out of the yard in an hour or two and then average 40-50 mph on a straight, level double track CTC mainline, but these days it is more likely to for them to run out of hours before they've made it much more than 100 miles. Long, heavy trains take much longer to build and yard and are more difficult to operate out on the road, along with not fitting in sidings or spots between crossings.
There are procedures in the union contracts for how to do things like lengthen crew districts and re-allocate employees, and the Class I's have done so in the past when and where it makes sense. Yes, you have to eat the material change payment costs and negotiate some other conditions with the unions, but it is very possible. Doing so can indeed lead to long-term savings and smoother operations, but it is pointless to try this unless the railroad's physical plant can allow it to happen.
Railroad management violates the contracts and fights their workers every single day, and they are never afraid of taking a hard line in contract negotiations.
Rio Grande Valley, CFI,CFII
I recall Matt Rose telling a story after the Berkshire Hathaway purchase of BNSF that Warren Buffet told him to run the railroad for the next 100 years, or something to that effect.
And we have seen BNSF plug away ever since on capacity improvements.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
charlie hebdo I seriously doubt if Don's motivation was "deliberately trying to make rail results look bad." A national business concern that cannot keep up with growth in GDP is by definition stagnant or even in decline. That's not exactly a ringing endorsement of their business plan, if they even have one.
I seriously doubt if Don's motivation was "deliberately trying to make rail results look bad."
A national business concern that cannot keep up with growth in GDP is by definition stagnant or even in decline. That's not exactly a ringing endorsement of their business plan, if they even have one.
I'm saying the Rail Renaissance was a good thing. PSR is a very attractive box canyon. A wonderful tool for having a "going out of business" party.
The trends have been obvious. Intermodal is the only way forward.
Can trucks undercut intermodal on cost? No...mostly. But, if it takes you 9 crews to go 1200 miles from NJ to Memphis...maybe. Same RR takes four crews to go 930 miles from NJ to Chicago. Has anybody done anything about it? No. Moorman talked about it, then quit. RR is throwing off gobs of cash. Can't think of any good places to spend it other than giving it back to investors - and a few nickel and dime IT things. That's a "going out of business" strategy.
dpeltier charlie hebdo https://blerfblog.blogspot.com/2023/12/how-to-kill-rail-renaissance-and-maybe.html Short summary: NS intermodal, measured as "units moved divided by GDP", has declined overall since 2007, and the reason for this specifically since 2018 is because of PSR. To quote Bill Lumbergh: "Oooo...yeahhhh, ummm...I'm gonna have to go ahead and sort of disagree with you there." First of all, using "units moved divided by GDP" only makes sense if you're deliberately trying to make rail results look bad. Most GDP growth over the time period in question happened in fields like software that present no market opportunities for railroads. (See https://itif.org/publications/2023/05/30/six-tech-industries-accounted-for-more-than-one-third-of-gdp-growth-in-the-last-decade/). Rail has lost market share by other measures as well, but this particular metric doesn't show anything about how competitive rail shipping is. Second, correlation does not equal causation. "Intermodal traffic on NS dropped in 2018, and NS implemented PSR in 2018" taken together do not, in fact, demonstrate that PSR had any effect whatsoever on NS intermodal traffic. In fact, there's a much better hypothesis available for the fluctuations in NS's intermodal traffic: see the graph of historical trucking costs at https://www.truckingdive.com/news/operational-costs-of-trucking-American-Transportation-Research-Institute-2023-report/685581/. Note that fluctuations in trucking costs would explain the intermodal falloff not just in 2018, but in 2015 as well (before NS got into the PSR game). Now, that doesn't prove causation either. But if you ask most shoppers why the choose intermodal over truck, about 99% of the time, the answer comes down to cost. So the cost of trucking is in every way a superior explanation to "PSR" in explaining why NS intermodal fell off between 2018 and the pandemic. (Yes I am deliberately ignoring 2022 which was just a goofy year all around in the transportation sector.) Dan
charlie hebdo https://blerfblog.blogspot.com/2023/12/how-to-kill-rail-renaissance-and-maybe.html
https://blerfblog.blogspot.com/2023/12/how-to-kill-rail-renaissance-and-maybe.html
Short summary: NS intermodal, measured as "units moved divided by GDP", has declined overall since 2007, and the reason for this specifically since 2018 is because of PSR.
To quote Bill Lumbergh: "Oooo...yeahhhh, ummm...I'm gonna have to go ahead and sort of disagree with you there."
First of all, using "units moved divided by GDP" only makes sense if you're deliberately trying to make rail results look bad. Most GDP growth over the time period in question happened in fields like software that present no market opportunities for railroads. (See https://itif.org/publications/2023/05/30/six-tech-industries-accounted-for-more-than-one-third-of-gdp-growth-in-the-last-decade/). Rail has lost market share by other measures as well, but this particular metric doesn't show anything about how competitive rail shipping is.
Second, correlation does not equal causation. "Intermodal traffic on NS dropped in 2018, and NS implemented PSR in 2018" taken together do not, in fact, demonstrate that PSR had any effect whatsoever on NS intermodal traffic.
In fact, there's a much better hypothesis available for the fluctuations in NS's intermodal traffic: see the graph of historical trucking costs at https://www.truckingdive.com/news/operational-costs-of-trucking-American-Transportation-Research-Institute-2023-report/685581/.
Note that fluctuations in trucking costs would explain the intermodal falloff not just in 2018, but in 2015 as well (before NS got into the PSR game).
Now, that doesn't prove causation either. But if you ask most shoppers why the choose intermodal over truck, about 99% of the time, the answer comes down to cost. So the cost of trucking is in every way a superior explanation to "PSR" in explaining why NS intermodal fell off between 2018 and the pandemic.
(Yes I am deliberately ignoring 2022 which was just a goofy year all around in the transportation sector.)
Dan
Correct Dan. When truckers operational cost cascade, truckers can offer lower rates. Due to the superior service quality of trucks. When truck rates reach or near parity with IM rates. Shippers will convert to highway.
Opposite of Don.. IM is not dying.. Far from it. A better way would be to say IM has stagnated.. At least for now ..
BaltACD mudchicken Balt: Crossings are only part of the equation. (and private crossings are somewhat easier to deal with than public crossings .... both have issues.) .... Earthwork and how to accomplish that in areas with less than 100 feet out to the R/W line are a bear combined with utility snafus. The era of 15 foot track centers is largely over and the huge "pads" around turnouts along with the obsession with access roads for dwindling track & signal forces creates headaches in terms of $$$, safety and elbow-room... Such things are where the costs are in any project be it for rail or for highway. Highways can deal with more severe grades than railroads can when it comes to crossing elimination - of course there are locations that when you try to go under the railroad you strike water and going over presents a whole host of other issues. That is one of the reasons Civil Engineers are still being educated by colleges and you can then show them, they don't know anything real world yet.
mudchicken Balt: Crossings are only part of the equation. (and private crossings are somewhat easier to deal with than public crossings .... both have issues.) .... Earthwork and how to accomplish that in areas with less than 100 feet out to the R/W line are a bear combined with utility snafus. The era of 15 foot track centers is largely over and the huge "pads" around turnouts along with the obsession with access roads for dwindling track & signal forces creates headaches in terms of $$$, safety and elbow-room...
Such things are where the costs are in any project be it for rail or for highway. Highways can deal with more severe grades than railroads can when it comes to crossing elimination - of course there are locations that when you try to go under the railroad you strike water and going over presents a whole host of other issues. That is one of the reasons Civil Engineers are still being educated by colleges and you can then show them, they don't know anything real world yet.
Most investors are focused on now and maybe one or two years in the future. Nothing new there But management has been also for the past 20 years along with just doing things the way they have always been done. Ken Greyhounds encountered that stubborn inertia years ago.
zugmann In all the years of PSR (and the years of PSR lite that came before), "growth" was never uttered as a defining characteristic of said philosophy. Don't know why anyone would be surprised, really. I mean, you really shouldn't.
In all the years of PSR (and the years of PSR lite that came before), "growth" was never uttered as a defining characteristic of said philosophy.
Don't know why anyone would be surprised, really. I mean, you really shouldn't.
Are you suggesting it was always marketing bosh for the investment class?.... I believe we have a winner.
oltmanndAre RRs really thinking about what the the market for freight transport will be in 10 or 20 years, especially given the trend over the past 20 years?
The railroads might be, but the activist investors want to know how big they can expect their next dividend check to be. Who cares about 5-10-20 years from now?
Overmod Part of the issue, I think, is the depressing thing that so much of the intermodal business has been cut-rate priced, essentially to mineral-train sort of level. If you then apply PSR-style notch-5 operation of the intermodal trains, because "speed is no longer of the essence" (it's William H. Vanderbilt and the 1880s writ new) you wind up with something even more price-dependent. You won't build much of a renaissance on that even if distributed autonomous stack units become a 'thing'.
Part of the issue, I think, is the depressing thing that so much of the intermodal business has been cut-rate priced, essentially to mineral-train sort of level. If you then apply PSR-style notch-5 operation of the intermodal trains, because "speed is no longer of the essence" (it's William H. Vanderbilt and the 1880s writ new) you wind up with something even more price-dependent. You won't build much of a renaissance on that even if distributed autonomous stack units become a 'thing'.
Yes. Two things. Fuel cost has always mattered, but the OR/PSR push changed it from "fuel is a cost of doing business" to "saving fuel cost IS the business".
Speed isn't so much about how fast the top speed is as much as it is how long you are going at very low speeds. The solution for this electrification. Cutting fuel costs at least 2/3 should allow for some HPHRs to be spent raising speeds on those slow sections.
I calculated a train from Atlanta to Charlotte (260 miles) operated at 0.85 HP/ton versus 1.7 HP/ton electric would save over two hours time in an unipeded 8 hour trip and $5k in fuel cost.
The time savings come from going up grade faster, primarily, and recovery from slow speed curves.
Are RRs really thinking about what the the market for freight transport will be in 10 or 20 years, especially given the trend over the past 20 years?
I get the GDP indexing may not be totally a good thing if growth in various sectors of the economy grew at different rates. I also couldn't account for increased car capacity on the Merchandise side.
But, it showed decent growth during the Rail Renaissance period for intermodal - back when NS paid close attention to IM growth. When Moorman left and Squires couldn't hold up to the barbarians at the gates, that whole focus went away.
Coal remains dead man walking.
Merchandise is just niche business.
All the new EV battery and car plants in GA are on the interstates, not so much the RRs. That doesn't mean RRs aren't part of the supply chain - the stuff is just in containers.
mudchickenBalt: Crossings are only part of the equation. (and private crossings are somewhat easier to deal with than public crossings .... both have issues.) .... Earthwork and how to accomplish that in areas with less than 100 feet out to the R/W line are a bear combined with utility snafus. The era of 15 foot track centers is largely over and the huge "pads" around turnouts along with the obsession with access roads for dwindling track & signal forces creates headaches in terms of $$$, safety and elbow-room...
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