Liquid asset syphoning tool disguised as an operating scheme.
MidlandMikeI recall that WB was looking at two people to take over as CEO, and one of them asked BNSF why they weren't using PSR. Hopefully he is not the one you mentioned.
One wonders if they see PSR as a method of operation or a cash extraction tool...
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...
oltmanndOh, by the way, if you want to be around in another 30 years, figure out how to do ECP and electrify. Hint, hint, it's not using the ECP stuff you've been playing with. Mixing power and signal is a bad idea. Also, electrification isn't going to be primarily battery - it's catenary. You are going to need some gov't help.
Thankfully you have broached a topic many on here don't want to consider.
CMStPnP MidlandMike As for BH, Warren Buffet is in his 90s, and when he is no longer in the picture I expect a feeding frenzy over BH. Warren Buffet is grooming his Son, Howard to take over as Chairman. Some guy named Abel will be CEO, so in my view it will be an orderly transition. People are freaked out now because he has a large cash position and his stock holdings are not that diversified but then..........he has a lot of wholly owned companies so he is still OK in my view. I think BNSF is a keeper. Though I am not sure why BH has not bought another railroad like CN.........which he convinced Bill Gates to buy into.
MidlandMike As for BH, Warren Buffet is in his 90s, and when he is no longer in the picture I expect a feeding frenzy over BH.
Warren Buffet is grooming his Son, Howard to take over as Chairman. Some guy named Abel will be CEO, so in my view it will be an orderly transition. People are freaked out now because he has a large cash position and his stock holdings are not that diversified but then..........he has a lot of wholly owned companies so he is still OK in my view. I think BNSF is a keeper. Though I am not sure why BH has not bought another railroad like CN.........which he convinced Bill Gates to buy into.
I recall that WB was looking at two people to take over as CEO, and one of them asked BNSF why they weren't using PSR. Hopefully he is not the one you mentioned.
Bill Gates also got a commitment from WB that they would give away most of their wealth. Howard Buffet might not retain enough of the company to control it.
oltmannd tree68 oltmannd ...also, Scheduled Railroading is good. The Central was doing it in the early 1960's. I have an ETT from the period that gives closeout times for all major terminals. Be there, or be square, as they say... Kind of... PC and Conrail continued to have schedules and "next connection" for their yards and terminals. But, actual scheduled Railroading involves having a plan fir every car including arrival times and interchange times and updating them over time. It also involves having an operating plan that can be executed everyday with no ad-hocing or annulling. There's a big data component to this. Conrail never really got there although they pushed hard in the mid 90s. NS did it with Toroughbred operating plan in 2002-04. CSX shortly after with One Plan.
tree68 oltmannd ...also, Scheduled Railroading is good. The Central was doing it in the early 1960's. I have an ETT from the period that gives closeout times for all major terminals. Be there, or be square, as they say...
oltmannd ...also, Scheduled Railroading is good.
The Central was doing it in the early 1960's. I have an ETT from the period that gives closeout times for all major terminals. Be there, or be square, as they say...
Kind of... PC and Conrail continued to have schedules and "next connection" for their yards and terminals. But, actual scheduled Railroading involves having a plan fir every car including arrival times and interchange times and updating them over time.
It also involves having an operating plan that can be executed everyday with no ad-hocing or annulling. There's a big data component to this. Conrail never really got there although they pushed hard in the mid 90s. NS did it with Toroughbred operating plan in 2002-04. CSX shortly after with One Plan.
Carriers have always had operating 'plans'. The big differences over the years have been the various tools available to track and enforce the plan, as well as the desire to enforce 'the plan' or some specific aspect of 'the plan'.
Recall at a point in time - CSX put emphasis on the 'premiere' trains - others be damned. I got to the point where the daily Waycross-Atlanta 'local' was run FOUR times within one 24 hour period - with the result being that by the time the 2nd, 3rd & 4th trains got to their set off points - the points had no room for the set offs and the resulting 'ad hoc' reaction to the situation.
Effective plans have to take into consideration not only how the railroad operates by also how the industries/customers operate and tender freight to be moved or received. Not all customers operate on a 7 day schedule. Plans are only as good as the emphasis Senior Management places upon operating in accordance with 'the plan'. If 'the plan' is actually followed, it becomes manifestly evident if the plan is a good or bad plan.
Never too old to have a happy childhood!
RRs did have schedules for trains and certain customers with service guarantees...auto, chemical, etc. But, generally operated to maximize cars per crew start, combining, annulling, delaying train starts as needed.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
Have a Schedules and Classification manual from the B&O from the early 50's. With their 'Timesaver Service' from the after War period, I am certain they had scheduled freight service for most of the 20th Century.
MidlandMikeAs for BH, Warren Buffet is in his 90s, and when he is no longer in the picture I expect a feeding frenzy over BH.
oltmannd...also, Scheduled Railroading is good.
...also, Scheduled Railroading is good. Having an efficient blocking/classification plan is good. Having an efficient train plan is good. These are things RRs did in the 1990s-2000s to cut costs from their carload network. It worked very well.
DPUs are good (done safely...) They also help with costs.
Trying to wring 11:59 out of every employee every time you call them...just because the law allows it is bad.
Trying to get by with the bare minimum of resources below your ability to cope with your process variability is bad.
Focusing on costs instead of value is always bad.
Not having a clue what the next 20 years might look like and what you need to do to get there is also bad.
Yes. By a lot. The whole business changed. It used to be you fit your stuff in a 50/70 ton box car and the RR would find a backhaul. Trucks took the finished goods, high rate traffic and now RRs were stuck with low rate raw material moves.
Boutique cars were born to handle raw material more efficiently. Center beam cars, auto racks, DF equipment, end of car cushioning, high cubes... General service box car business died.
Rates are high and costs are low because shipper/consingee lanes are large, use dedicated, special equipment and are under contract. Efficiency of scale means customers really can't get a better deal from trucks.
But, the RRS ALREADY HAVE ALL OF THIS BUSINESS! There isn't "more" to get.
You "win" the RR game by stuffing as much traffic as possible down the fewest track miles. If you let intermodal dry up, your precious high margin carload traffic now has to bear more of the fixed cost...and stops being so high margin.
There is this notion that intermodal "is low margin", yet BNSF is predominantly intermodal - and throws gobs of cash to the bottom line. An frt car is doing well if it makes a turn a month. Intermodal cars do better than a turn a week. Intermodal trains generally make better use of long pool crews...(and could do even better with some investment...and I don't mean higher tack speed)
The goal is to MAKE MONEY, not have high margins. OR chasing is just dumb. Net $$ is where it's at.
UlrichSo when carload freight dominated (40 plus years ago) the margins on it were lower?
Trains like the Super C and BSM lost much if not all of their ability to command a price permium over the end-to-end service that TOFC/COFC could provide in a world of ubiquitous truck access. o if you needed faster, or more secure, or more convenient service you paid for intermodal, not some carload kludge, except in specialty niche markets requiring more effort than most railroads cared to put into the game (cue greyhounds).
What's happened more recently is that stack COFC has become commoditized: there is no longer much of an emphasis on speed (at least not in the East) where it is not financially beneficial; there is less importance on JIT management, scheduling, and delivery (which is the thing that replaced high end-to-end speed as a business desideratum); there came to be more perceived value in assured block-length or train-length volume, with the vendors understanding that they could exact lower per-unit pricing for that assurance of volume. Accordingly many 'margins' for COFC have dropped to commodity levels, on the order of what we've seen for bulk service like coal unit trains. "Carload margins" have little if anything to do with this (except that we've seen instances where organized 'carload' service, like the UP cold train service to Rotterdam, is abandoned for not being worth what the revenue provided).
So when carload freight dominated (40 plus years ago) the margins on it were lower?
UlrichCarload business is shrinking, yet it continues to command better margins than intermodal...why is that?
Because it is a niche business. Intermodal has progressed from a niche to volume business.
oltmannd Another opportunity to sing my sad, sad song. (along with many others...) Carload ain't where it's at. It's shrinking. It's boutique business. The general purpose box car is dying. There are almost no reloads. Special purpose cars operating in dedicated lanes, empty one way, loaded the other are the rule. Large shippers. Large consignees. Think beer, drywall, scrap metal, trash. Optimizing the railroad to serve shrinking business is folly. The operating plan to serve this traffic was optimized in the early 2000's. DPUs led to another round of optimizing the train plan in the 2010s. That's it. That's all there is. Oh, and BTW, just because the law allows 11:59 of work on 8 hours rest doesn’t mean it’s a good business practice. Stop trying to optimize productivity by HOURS WORKED. Meanwhile, intermodal grows almost despite itself. If you can run the trains sort of reliably and have terminals and services in the right spots, the business will come. ...and it has. If you arrange your railroad to serve carload traffic and just try to squeeze in the intermodal as an afterthought, you're going to fail. The trains won't run. The service will be too spotty. So, the way forward is to optimize you plant for intermodal and TRY TO FIGURE OUT HOW TO MOVE THE CARLOADS STUFF IN THAT ENVIRONMENT! (maybe all caps will help?) The two large markets not heavily penetrated by intermodal are I-81 and I-85/95. Hello NS? Remember your Crescent Corridor idea? Wake it back up. 9 crews from Harrisburg to Memphis doesn't work. Fix it. Oh, by the way, if you want to be around in another 30 years, figure out how to do ECP and electrify. Hint, hint, it's not using the ECP stuff you've been playing with. Mixing power and signal is a bad idea. Also, electrification isn't going to be primarily battery - it's catenary. You are going to need some gov't help. Lobby for carbon offsets/tax/depreciation accel/whatever you can get. Just get going. Trucks are going to eat your lunch if you don't. Oh, but Wall Street! Stop whining. You are getting paid big bucks to do the HARD WORK of explaining to investors how it's better for them in the long run to do this. Stop letting them whip you. Tell them how it's going to be and why it's good for them. Earn your money. Be a modern day Alexander Cassatt. That is all. For now. https://blerfblog.blogspot.com/2023/12/how-to-kill-rail-renaissance-and-maybe.html
Another opportunity to sing my sad, sad song. (along with many others...)
Carload ain't where it's at. It's shrinking. It's boutique business. The general purpose box car is dying. There are almost no reloads. Special purpose cars operating in dedicated lanes, empty one way, loaded the other are the rule. Large shippers. Large consignees. Think beer, drywall, scrap metal, trash.
Optimizing the railroad to serve shrinking business is folly. The operating plan to serve this traffic was optimized in the early 2000's. DPUs led to another round of optimizing the train plan in the 2010s. That's it. That's all there is. Oh, and BTW, just because the law allows 11:59 of work on 8 hours rest doesn’t mean it’s a good business practice. Stop trying to optimize productivity by HOURS WORKED.
Meanwhile, intermodal grows almost despite itself. If you can run the trains sort of reliably and have terminals and services in the right spots, the business will come. ...and it has.
If you arrange your railroad to serve carload traffic and just try to squeeze in the intermodal as an afterthought, you're going to fail. The trains won't run. The service will be too spotty.
So, the way forward is to optimize you plant for intermodal and TRY TO FIGURE OUT HOW TO MOVE THE CARLOADS STUFF IN THAT ENVIRONMENT! (maybe all caps will help?)
The two large markets not heavily penetrated by intermodal are I-81 and I-85/95. Hello NS? Remember your Crescent Corridor idea? Wake it back up.
9 crews from Harrisburg to Memphis doesn't work. Fix it.
Oh, by the way, if you want to be around in another 30 years, figure out how to do ECP and electrify. Hint, hint, it's not using the ECP stuff you've been playing with. Mixing power and signal is a bad idea. Also, electrification isn't going to be primarily battery - it's catenary. You are going to need some gov't help. Lobby for carbon offsets/tax/depreciation accel/whatever you can get. Just get going. Trucks are going to eat your lunch if you don't.
Oh, but Wall Street! Stop whining. You are getting paid big bucks to do the HARD WORK of explaining to investors how it's better for them in the long run to do this. Stop letting them whip you. Tell them how it's going to be and why it's good for them. Earn your money. Be a modern day Alexander Cassatt.
That is all. For now. https://blerfblog.blogspot.com/2023/12/how-to-kill-rail-renaissance-and-maybe.html
Carload business is shrinking, yet it continues to command better margins than intermodal...why is that?
Berkshire Hathaway has a market capitalization of $871 billion as of the close of the market on 08/12/24 and is likely to be the next trillion dollar company, as well as the first one that is not "Big Tech".
If the stock market has a correction, it will be the one doing the feeding.
They have a strong, strong bench behind Warren Buffett
Pick up some Berkshire Hathaway Class B shares if you want to jump on board The Buffett Train.
Here is a little bit about Berkyville, the BNSF layout that is at the Berkshire Hathaway annual meeting.
https://www.bnsf.com/news-media/railtalk/heritage/berkyville.html
CMStPnP MidlandMike I am hoping that the institutional investors have a long term view, but it seems they go along with the activist investors and Harrison type takeovers at CN, CP, CSX, etc. As with most everything else, it depends on the institutional investor. Robert Edens is an instutional investor and his investment in Brightline seems to be long term. Same is true of the BH investment in BNSF.
MidlandMike I am hoping that the institutional investors have a long term view, but it seems they go along with the activist investors and Harrison type takeovers at CN, CP, CSX, etc.
As with most everything else, it depends on the institutional investor.
Robert Edens is an instutional investor and his investment in Brightline seems to be long term. Same is true of the BH investment in BNSF.
I sure hope Brightline becomes profitable. As for BH, Warren Buffet is in his 90s, and when he is no longer in the picture I expect a feeding frenzy over BH.
tree68 And now we're going from NYS&W to NS to move on to Scranton. Beyond that I haven't researched at all.
And now we're going from NYS&W to NS to move on to Scranton.
Beyond that I haven't researched at all.
I know that the Reading & Northern runs a hotshot freight 6 days a week between the NS in Pittston (Scranton area) and North Reading. It's a bridgeline known as the NRFF (North Reading Fast Freight). It runs in both directions.
oltmanndThe two large markets not heavily penetrated by intermodal are I-81 and I-85/95.
The rails for I-81 through NY are mostly there - except containers can't cross the Thruway, essentially. CSX has the corridor north of Syracuse, but NYS&W owns it south, and there is no direct connection. Years ago there was a diamond, but it's long gone. The two railroads would have to figure out how to efficiently coordinate moving the cars through.
Binghampton would be another impediment, although I don't claim to know the routing there. And now we're going from NYS&W to NS to move on to Scranton.
CSX built an intermodal terminal at Valleyfield, QC, but I don't think it's being used to capacity.
MidlandMikeI am hoping that the institutional investors have a long term view, but it seems they go along with the activist investors and Harrison type takeovers at CN, CP, CSX, etc.
PJS1 MidlandMike A lot of stock is held by institutions, such as pension funds, and they have much influence or should know better. According to the Harvard Business Review, Pensions and Investments, Securities Industry and Financial Markets Association, etc., approximately 80% of the S&P 500 shares are owned by institutional investors, i.e., pension funds, mutual funds, etc. The same percentage, give or take 10%, probably applies to the total securities market. The funds are manged by sophisticated financial managers that are supported by even more sophisticated financial analysts. The notion that they have a short term view of investing is not supported by the evidence.
MidlandMike A lot of stock is held by institutions, such as pension funds, and they have much influence or should know better.
According to the Harvard Business Review, Pensions and Investments, Securities Industry and Financial Markets Association, etc., approximately 80% of the S&P 500 shares are owned by institutional investors, i.e., pension funds, mutual funds, etc. The same percentage, give or take 10%, probably applies to the total securities market.
The funds are manged by sophisticated financial managers that are supported by even more sophisticated financial analysts. The notion that they have a short term view of investing is not supported by the evidence.
I am hoping that the institutional investors have a long term view, but it seems they go along with the activist investors and Harrison type takeovers at CN, CP, CSX, etc.
They are always looking for maximum ROI every quarter - the company itself be damned. Crank up the computers and let them trade according to the algorithm they have been programmed with.
They are the exact audience that applauds PSR.
Rio Grande Valley, CFI,CFII
A lot of stock is held by institutions, such as pension funds, and they have much influence or should know better.
Yes, and even there, it is individual investors who own stock in those institutional investors. Most are just along for the ride. The fund managers know that, and this is why they tend to focus on the short term and why there's so much focus on share price appreciation.
The real culprits aren't the hedge funds, its the vast majority of passive shareholders who don't vote their shares and don't bother in the least to be informed. In such an environment those folks who do vote and participate have a disproportionate say in what happens. It would be no different if voter turnout in the next federal election is, say 5%.. those 5% getting their way.
The "general setup" needs to be overhauled so that shareholders have more accountability and skin in the game. Currently the stock market is little more than a casino and people do little more than "betting and red" when they buy shares/ownership in a business. If red looks bad then sell and buy green tomorrow.
Ancora is a threat because they largely have the field to themselves...the vast majority of other shareholders have their heads in the sand (or somewhere else), which is why NS may very well be gutted with layoffs and service reductions in the near future. It's sad, but what else can one expect when the vast majority of shareholders remain passive and silent? We hear about election apathy all the time, but the same sort of apathy is hard at work undermining the foundations of capitalism.
dpeltier On a related note: regulations on financial transactions, like limiting stock buybacks, would be silly and probably unproductive. Regulations that change the operating cash flow are the ones that have the potential to weaken the industry and hurt people other than the shareholders and bondholders.
On a related note: regulations on financial transactions, like limiting stock buybacks, would be silly and probably unproductive. Regulations that change the operating cash flow are the ones that have the potential to weaken the industry and hurt people other than the shareholders and bondholders.
No argument from me on poorly thought regulations can do more harm than good. Perhaps the simplest way to discourage the equity to debt transfer is to disallow deducting interest payments on debt taken to buy back stocks, though that still may leave leveraged buy-outs as a loophole.
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