QUOTE: Originally posted by edblysard This wouldn’t happen to be the wonderful, Open Access System Mr. Sol touts in another thread? You know the one that benefits all of us.... Works just like we though it would.... (edited, as Mr Sol was correct, he didnt say it was free, he did say the benifits were free)
Originally posted by greyhounds Well, I'm a Lake County resident (temporaily relocated to Florida) and that gap is a real PITA. You still see bumper stickers that say "Build 53". But I'll argue that it wouldn't have made any difference if it had been a Federal project. The NIMBY's would still have at least tried to block it. Shoot Fire! There was a pipeline comming through to bring badly needed Canadian crude oil to the Chicago refineries and they tried to block that! A freaking underground pipeline that is out of sight and underneath everything. They fought that. A real consequence of the failure to build the safer, grade seperated, limited access route is that people are put at risk traveling the outdated road system and energy is wasted in the congestion. It also causes people to travel longer routes to avoid the congestion, literally wasting gasoline at $2.69/gallon. /quote] That stretch of road should have been built 40 years ago. The story I've heard is it would go through Kemper National golf course and/or the back yards of some very important political supporters who live in Long Grove and Hawthorne Woods. Lately it's turning into a real Pork Barrel as more and more money is spent on upgrading/bypassing junctions with other raods while the towns along it continue building strip malls, each with 2 stop lights that change against the flow of traffic whever a bird flies by the sensors. The Wisconsin segment isn't completely isolated as it connects to the freeway that runs from Milwaukee to Beloit. Reply Edit greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Sunday, August 14, 2005 10:10 AM QUOTE: Originally posted by jeaton QUOTE: Originally posted by futuremodal Jay, Don't laugh! Just a few years ago the State of Montana had a very nice two lane highway that ran up to Thompson Pass at the Idaho/Montana border. When you crossed over the border to Idaho, it basically turned into a narrow twisting logging road! They've fixed up the Idaho side of the road since then. It wasn't a joke. Wisconsin had a plan to have a freeway between the Illinois state line near Richmond, IL and Madison. It would have been part of a freeway running off I-90 at Schaumburg, IL, which would have provided an excellent short route between northwest surburban Chicago and points in the southeast Wisconsin and beyond. The route 53 freeway ends 6 miles north of the origin point because the state of Illinois bowed to political pressure from Lake County, Illinois residents that did not want to loose their "rural" environment. The Wisconsin freeway segment runs from the state line to Elkhorn, WI. and serves three communities with populations of less than 10,000, plus the odd driver that wants to take the "scenic" route. The joke is on the Lake County residents, as the population there has exploded. I have no sympathy for their complaints about traffic. Well, I'm a Lake County resident (temporaily relocated to Florida) and that gap is a real PITA. You still see bumper stickers that say "Build 53". But I'll argue that it wouldn't have made any difference if it had been a Federal project. The NIMBY's would still have at least tried to block it. Shoot Fire! There was a pipeline comming through to bring badly needed Canadian crude oil to the Chicago refineries and they tried to block that! A freaking underground pipeline that is out of sight and underneath everything. They fought that. A real consequence of the failure to build the safer, grade seperated, limited access route is that people are put at risk traveling the outdated road system and energy is wasted in the congestion. It also causes people to travel longer routes to avoid the congestion, literally wasting gasoline at $2.69/gallon. "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. Reply edblysard Member sinceMarch 2002 9,265 posts Posted by edblysard on Saturday, August 13, 2005 7:06 PM This wouldn’t happen to be the wonderful, Open Access System Mr. Sol touts in another thread? You know the one that benefits all of us.... Works just like we though it would.... (edited, as Mr Sol was correct, he didnt say it was free, he did say the benifits were free) Ed 23 17 46 11 Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Saturday, August 13, 2005 6:44 PM I don't think anyone maintains that ALL of the recent omnibus infrastructure act is made of pork, but I have heard estimates of thirty percent or more--pet projects, usually. Reply Edit jeaton Member sinceSeptember 2002 From: Rockton, IL 4,821 posts Posted by jeaton on Saturday, August 13, 2005 11:46 AM QUOTE: Originally posted by futuremodal Jay, Don't laugh! Just a few years ago the State of Montana had a very nice two lane highway that ran up to Thompson Pass at the Idaho/Montana border. When you crossed over the border to Idaho, it basically turned into a narrow twisting logging road! They've fixed up the Idaho side of the road since then. It wasn't a joke. Wisconsin had a plan to have a freeway between the Illinois state line near Richmond, IL and Madison. It would have been part of a freeway running off I-90 at Schaumburg, IL, which would have provided an excellent short route between northwest surburban Chicago and points in the southeast Wisconsin and beyond. The route 53 freeway ends 6 miles north of the origin point because the state of Illinois bowed to political pressure from Lake County, Illinois residents that did not want to loose their "rural" environment. The Wisconsin freeway segment runs from the state line to Elkhorn, WI. and serves three communities with populations of less than 10,000, plus the odd driver that wants to take the "scenic" route. The joke is on the Lake County residents, as the population there has exploded. I have no sympathy for their complaints about traffic. "We have met the enemy and he is us." Pogo Possum "We have met the anemone... and he is Russ." Bucky Katt "Prediction is very difficult, especially if it's about the future." Niels Bohr, Nobel laureate in physics Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Saturday, August 13, 2005 11:06 AM Don't laugh! Just a few years ago the State of Montana had a very nice two lane highway that ran up to Thompson Pass at the Idaho/Montana border. When you crossed over the border to Idaho, it basically turned into a narrow twisting logging road! They've fixed up the Idaho side of the road since then. Reply Edit jeaton Member sinceSeptember 2002 From: Rockton, IL 4,821 posts Posted by jeaton on Saturday, August 13, 2005 8:41 AM Gabriel Roth writes for the Cato Institute ("We're against everything.") that the Federal Government should end the Federal Gas Tax, get out of the business of building and maintaining highways and turn the whole thing over to the individual states. If that were to occure, it would be fun to see just how many highway improvement projects would produce a very nice road that would suddenly turn into a dirt trail as it crossed a state line. Anyway, he makes a note that the number of separate "earmarks" in the appropriations have gone through the roof. "Earmarks" are the provisions in the law that establish funding for a specific project and are derided as "pork" even if the project is of high value by any standard. Roth implies that the reason for the rise in the number of earmarks is strictly political. Congressman X tells his constituents that he has brought big bucks to the district and don't forget that at the next election. Not to say that the highway planners in the Department of Transportation are always going to be highly objective in prioritizing projects, but if there is a $75 billion backlog in work that should be done, should anyone be surprised that someone with the power to do so would order his project be handled first? Jay "We have met the enemy and he is us." Pogo Possum "We have met the anemone... and he is Russ." Bucky Katt "Prediction is very difficult, especially if it's about the future." Niels Bohr, Nobel laureate in physics Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Saturday, August 13, 2005 7:53 AM QUOTE: Originally posted by MichaelSol Well, here was the "pork" for Montana. Our Senior Senator stood on one of our local city bridges yesterday and presented the mayor with a "check" for $6 million to rebuild the bridge from two lane to four lane. It was a hopelessly outdated bridge that connected the Interstate, two Federal highways, state highways, and was important to city traffic flow as well. It was hopelessly outdated but the City didn't have the kind of money to rebuild it, and the bridge happened to be a "city" bridge, not a "federal" bridge, mainly by historical accident. The "pork" in the Highway Transportation bill in this instance went directly to a highway transportation improvement project which assisted the federal, state, and local highway systems all in one fell swoop. Not bad for "pure pork." Best regards, Michael Sol Not everything is pork and there are a lot of bridges that need to be rebuilt. But I wonder how many more could have been done for the money that will be spent on the new suspension bridge which will connect 2 islands in Alaska. I understand it's to be longer than the Golden Gate and the populations of the 2 islands are 2,000 and 50 people. Reply Edit bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Saturday, August 13, 2005 3:13 AM QUOTE: Originally posted by MichaelSol QUOTE: Originally posted by futuremodal QUOTE: Originally posted by smalling_60626 I have a feeling that if you dislike the BNSF's choices of what lines to serve, you'll really hate it if 535 pork-minded politicians in Washington spend the money on their "high priority" projects--just look at the new infrastrure act. At least pork projects start services and build things, as opposed to stopping services and tearing things out. Well, here was the "pork" for Montana. Our Senior Senator stood on one of our local city bridges yesterday and presented the mayor with a "check" for $6 million to rebuild the bridge from two lane to four lane. It was a hopelessly outdated bridge that connected the Interstate, two Federal highways, state highways, and was important to city traffic flow as well. It was hopelessly outdated but the City didn't have the kind of money to rebuild it, and the bridge happened to be a "city" bridge, not a "federal" bridge, mainly by historical accident. The "pork" in the Highway Transportation bill in this instance went directly to a highway transportation improvement project which assisted the federal, state, and local highway systems all in one fell swoop. Not bad for "pure pork." Best regards, Michael Sol Poor Montana, the victim state. Bob Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Friday, August 12, 2005 11:49 PM QUOTE: Originally posted by futuremodal QUOTE: Originally posted by smalling_60626 I have a feeling that if you dislike the BNSF's choices of what lines to serve, you'll really hate it if 535 pork-minded politicians in Washington spend the money on their "high priority" projects--just look at the new infrastrure act. At least pork projects start services and build things, as opposed to stopping services and tearing things out. Well, here was the "pork" for Montana. Our Senior Senator stood on one of our local city bridges yesterday and presented the mayor with a "check" for $6 million to rebuild the bridge from two lane to four lane. It was a hopelessly outdated bridge that connected the Interstate, two Federal highways, state highways, and was important to city traffic flow as well. It was hopelessly outdated but the City didn't have the kind of money to rebuild it, and the bridge happened to be a "city" bridge, not a "federal" bridge, mainly by historical accident. The "pork" in the Highway Transportation bill in this instance went directly to a highway transportation improvement project which assisted the federal, state, and local highway systems all in one fell swoop. Not bad for "pure pork." Best regards, Michael Sol Reply Murphy Siding Member sinceMay 2005 From: S.E. South Dakota 13,569 posts Posted by Murphy Siding on Friday, August 12, 2005 9:02 PM FM: Sometimes they do both. My sister worked for a contractor at a navy base that was being dismantled. They were dismantling the south end, while another contractor was building on the north end! Four years later, they got to the north end to tear down things that were only 4 years old. Sometimes, government = duh! Thanks to Chris / CopCarSS for my avatar. Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Friday, August 12, 2005 7:13 PM QUOTE: Originally posted by smalling_60626 I have a feeling that if you dislike the BNSF's choices of what lines to serve, you'll really hate it if 535 pork-minded politicians in Washington spend the money on their "high priority" projects--just look at the new infrastrure act. At least pork projects start services and build things, as opposed to stopping services and tearing things out. Reply Edit Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Thursday, August 11, 2005 9:53 PM I have a feeling that if you dislike the BNSF's choices of what lines to serve, you'll really hate it if 535 pork-minded politicians in Washington spend the money on their "high priority" projects--just look at the new infrastrure act. Reply Edit Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Tuesday, August 9, 2005 7:33 PM Murphy, The government already is engaged in developing portions of the transmission infrastructure. Up here in the PNW we have the BPA (Bonneville Power Administration) with transmission lines to supplement the utility lines. I think the TVA is the same way. Perhaps now we can focus on creating a BRA (Bonneville Rail Administration) to construct supplementary rail lines as an addendum to the PNW rail network, once it has converted to OA. Reply Edit Murphy Siding Member sinceMay 2005 From: S.E. South Dakota 13,569 posts Posted by Murphy Siding on Monday, August 8, 2005 9:05 PM FM: 1. So, BNSF could still serve their customers? What does that mean? So now if a state took over a business just to improve rates for the customers the state deemed were being gouged,wouldn't all customers claim they're being gouged? Upon reflection, communism probably isn't the correct description,fascism is probably a more correct one. 2. I don't want to go through some govenmental gcency. I don't want to follow the established rules. I don't want to get the rates that the market sets. I just want to have a state take over a huge,profitable business and run it ( or now, apparantly just some portions of it?) in a way that benefits me!!! I'm sure there are many others who feel the same way. So,after that power company gets put in line,then we can focus on BNSF for the same reasons.[}:)][:)] Note the less than serious tone in this post, and don't take it too seriously. Thanks to Chris / CopCarSS for my avatar. Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Monday, August 8, 2005 8:07 PM Murphy: 1. Even under your "communist" takeover scenario, BNSF would still be able to serve all it's traditional customers. All that is being taken from them is the right to gouge. 2. If you don't like the quality of the electricity you've been getting lately, I would encourage you to complain to the FERC. Given that your part of the country is dependent on coal fired generation, they will probably direct your complaint to those entities responsible for delivering coal to the power plants. Go ahead, knock yourself out! Reply Edit Murphy Siding Member sinceMay 2005 From: S.E. South Dakota 13,569 posts Posted by Murphy Siding on Monday, August 8, 2005 12:18 PM FM: I was thinking [:)] The electricity in my house comes from a source that has to buy power sometimes. I'm sure that some of it must come from the power company that you "consult" for. I'm just not happy with the electricity they've been sending me lately. It's just not strong enough sometimes, and ,come to think of it, it's way overpriced. In some cases, it costs nearly 100% more than electricity that costs half as much. How does one go about having the "State" buy this company (for the good of the people of course), and give it to someone else who could fix this problem?[}:)][;)] Thanks to Chris / CopCarSS for my avatar. Reply bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Sunday, August 7, 2005 9:42 PM QUOTE: Originally posted by Murphy Siding FM: That would be a first-it wouldn't be a hostile nationalization of an industry, it would be a hostile state takeover of an industry? How many years could this be tied up in court? Could Montana then "sieze" the gas stations that were charging more than the citizens thought they should?How about the seed dealers? The grocery stores? And on and on......I don't even see this as being a real cure for anything. And if some of the citizens didn't think the farmers were doing a good enough job, they could always pitch them out, and collectivise the farms right? It's been done before.[B)][;)][:)] First the BNSF then on to WalMart! Bob Reply Murphy Siding Member sinceMay 2005 From: S.E. South Dakota 13,569 posts Posted by Murphy Siding on Sunday, August 7, 2005 5:34 PM Tell me it isn't so, that we'd let a small group of (party) members sieze control of a profitable,tax paying business to turn it over to a group (The State) that offers more preferential (rate) treatment to the wounded, third party? Where did this notion come from? We're not talking about eliminating a railroad to replace it with a 500 mile long shopping mall are we?[:)] Thanks to Chris / CopCarSS for my avatar. Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Sunday, August 7, 2005 4:21 PM Communism is when they shoot the former owners of the private industry. Socialism is when they buy-out the owners. Have you guys never heard of the TVA, which took over electric generation and distribution for one-fifth the country in the 1930s and 1940s and still reigns supreme? Or Conrail, for that matter. I will concede, though, that Conrail retained enough of the appurtenences of private industry (trading shares on the NYSE, for example) that it is a poor example of "state socialism." Urban renewal is when they buy out the poor to subsidize rich corporations. In essence, it's a reverse-welfare giveaway that transfers "rents" from the poor to the rich. It also has a dubious record of rescuing poor areas. There are reasons they were poor to begin with. I don't think there is too much outcry over "eminent domain" to four-lane a highway, but many people are shocked, appalled and angry at the Supreme Court's decision, as am I. Reply Edit Murphy Siding Member sinceMay 2005 From: S.E. South Dakota 13,569 posts Posted by Murphy Siding on Sunday, August 7, 2005 4:12 PM FM: That would be a first-it wouldn't be a hostile nationalization of an industry, it would be a hostile state takeover of an industry? How many years could this be tied up in court? Could Montana then "sieze" the gas stations that were charging more than the citizens thought they should?How about the seed dealers? The grocery stores? And on and on......I don't even see this as being a real cure for anything. And if some of the citizens didn't think the farmers were doing a good enough job, they could always pitch them out, and collectivise the farms right? It's been done before.[B)][;)][:)] Thanks to Chris / CopCarSS for my avatar. Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Sunday, August 7, 2005 3:06 PM As long as Senators send newsletter to their constituents making hay of the fact that they wrote or sponsored such-and-such legislation, but the people don't realize that without House support it couldn't possibly become law, then that kind of hypocrisy will go on. Reply Edit bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Sunday, August 7, 2005 12:53 PM QUOTE: Originally posted by futuremodal Owen, Gov. Brian Schweitzer, and Sen. Conrad Burns, (R-Mont.), said they will continue to pressure the railroad... Sen. Burns burned all of his bridges to Ft. Worth many years ago. Maybee he should intoduce some more transportation bills that no one is interested in supporting? Bob Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Sunday, August 7, 2005 11:55 AM When dealing with monopolists actions, a laize faire approach does not work. Society simply has to be proactive in response, or lose any chance of enabling a free market mechanism to ameliorate the societal costs of monopoly empowerment. It is unfortunate that the State of Montana has been forced into a situation of having to construct solutions to a problem that is having a major negative effect on their economy. And the State will grow old and die before the feds come to the rescue. After all, the feds are the ones who created and allowed this situation to fester when the Milwaukee PCE was ordered torn up. Hmmmm, the Northeast gets bailed out by the creation of Conrail, while the Northern Tier gets the shaft! When the Supreme Court ruled on the eminent domain issue, they ruled that states have the right to use this power if it had a positive effect on tax revenues. Since BNSF has pushed the State of Montana to the brink of an ag recession, the state must respond in a way that best corrects the negative affects BNSF's actions will have on the State's bottom line. Using eminent domain to take over certain of BNSF's lines, an action that will result in other Class I's such as CP and UP being able to provide connections and thus play a true free market game in competing for the priviledge of hauling Montana grain, is certainly one response that will provide a viable solution. And if you think that's "communism", please tell when in the history of Marxism has there ever been an example of a communist action intended to foster competition? The answer is of course there hasn't, because fostering competition is a violation of communists tenets. Same for socialist and fascist governments. Only under a representative government can actions be taken that serve to break up monopolist power for the benefit of the free market. Reply Edit Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Saturday, August 6, 2005 10:13 PM I agree that capitalism makes more sense than communism or socialism. Still, for reasons that elude me, there are plenty of "solid citizens" and politicians out there who think that state ownership is the answer for everything. Not as many as in the Seventies, but enough! Reply Edit Murphy Siding Member sinceMay 2005 From: S.E. South Dakota 13,569 posts Posted by Murphy Siding on Saturday, August 6, 2005 8:41 PM Isn't it a little bit of a stretch of logic? Taking a piece of property to sell it to a developer who would produce more property taxes is one thing. Taking over of a profitable,up and running business by a state to "correct" percieved pricing unfairness is quite another. The first example would be eminent domain gone astray. The second example has already been tried, and doesn't work- it's called communism.[:(!] Thanks to Chris / CopCarSS for my avatar. Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Saturday, August 6, 2005 5:09 PM No, but the threat probably seems a bit more credible ever since the Supreme Court radically expanded the concept of imminent domain several weeks ago. Reply Edit Murphy Siding Member sinceMay 2005 From: S.E. South Dakota 13,569 posts Posted by Murphy Siding on Saturday, August 6, 2005 3:53 PM FM: I would have a hard time believing that Montana, or any other state would take over any railroad's tracks.[xx(] Thanks to Chris / CopCarSS for my avatar. Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Saturday, August 6, 2005 3:35 PM From the TRAINS newswire August 5, 2005: "BNSF softens some Montana grain shipping rates HELENA, Mont. – BNSF Railway said Thursday it will reduce a planned increase in grain-shipping rates at 52-car grain elevators, which are critical to many Montana agricultural towns, according to a story in the Great Falls (Mont.) Tribune. But state leaders said the railroad's concession is minimal, and that the rate increase still threatens to shut down the 52-car loading terminals. "It's better than what we had yesterday, but we still do not have a rate that would help to ensure viability of the 52-car facilities," said Richard Owen, executive vice president of the Montana Grain Growers Association. Owen, Gov. Brian Schweitzer, and Sen. Conrad Burns, (R-Mont.), said they will continue to pressure the railroad to set the 52-car shipping rates at a level that is affordable and fair. Schweitzer said even if BNSF further adjusts the 52-car rates, it's still using its monopoly status to overcharge farmers for shipping grain to Portland, Ore., for export. The immediate controversy is over BNSF's rates for grain shipped at 52-car elevators in Montana, versus what it charges for grain shipped at 110-car "shuttle" terminals. The railroad wants to move more grain traffic to the 110-car loading terminals, and announced in June it would lower the per-car rate for shipping on these longer trains. At the same time, BNSF said it would increase the rates for grain shipped from 52-car elevators, effective this month. Montana farmers and political leaders said the higher rate would kill the state's three dozen 52-car terminals, which serve towns such as Fort Benton, Big Sandy, Cut Bank, and Chester. Their demise would mean higher costs for farmers and more wear and tear on state roads, since farmers would have to truck grain to the 110-car loading facilities. The initial rate change would have made 52-car rates about 15 cents per bushel higher than the 110-car rates." Question: How hard would it be for BNSF to time the 52 car shuttle loadings so that two different 52 car trains could be loaded at the same time, then have both consists meet down the line somewhere and form a single 104 car unit train that could be handled by a single crew from that point on? Is BNSF alleging that it can't make any money on 52 car shuttles in Montana without a 15% rate increase? Meanwhile, there would be a significant loss of investment for those co-ops that built the 52 car facilties at BN(SF)'s insistence, and of course if those lines are lost then we'll have even more tonnage being reluctantly shifted to the mode of last resort, aka trucks. If BNSF doesn't want to serve the 52 car facilities, then let someone else serve them. Perhaps this is the situation that might inspire the State of Montana to finally exert the power of eminent domain over BNSF's lines and take them over for an assessed value rather than a seller's market value. It would probably be less expensive for Montana to do this than to pay the guaranteed increase in road maintenance costs to handle a whole new batch of trucks on their roads. Reply Edit Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Monday, August 1, 2005 2:01 PM Here is good old Morris, MN the BNSF West local still serves all the local elevators on this subdivision (even with just a couple cars in many cases). So from my end the BNSF still serves the small guy as well as the large shippers. Reply Edit Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Monday, August 1, 2005 1:28 PM I sometimes wonder if Mr. Rose ever gets to see these forums?? Reply Edit arbfbe Member sinceFebruary 2002 910 posts Posted by arbfbe on Thursday, July 28, 2005 9:17 AM Here's a link to a news story about the effects on the Montana economy of BNSF's actions: http://www.ble.org/pr/news/headline.asp?id=14151 BNSF's love of the larger elevators will dry up the capital investment made by the local farmers, ranchers and elevators as well as tearing up the Montana secondary and lower level roads. Fine for their profits but at the cost of many other people. I am not a fan of open access but this example of the BNSF bull in the Montana china (grain) shop sets a fine example of why such an idea is so popular amongst shippers, especially captive shippers. Fie to the BNSF and their piggish ways. Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Saturday, July 23, 2005 11:15 AM ITW is a GREAT company. They are a well managed portfolio of medium sized companies that actually manufacture stuff here. I concur with what they say. As a salesman, I often get bogged down with potential customers which really take my time and energy. The key is to stay focused on the key accounts. Not only in sales, but in life. Figure out what is important and then take care of it. ed Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Friday, July 22, 2005 9:19 PM QUOTE: Originally posted by smalling_60626 WIth all this talk about the pursuit of profit, I thought I would offer the following verbatim from the Illinois Tool Works' home site (itw dot com): About 80/20 The birth of ITW's 80/20 process dates back to the early 1980s when a handful of our businesses sought ways to improve manufacturing practices so they could stay competitive in a changing economy. Today, after more than 20 years of expansion and refinement, ITW has assembled a comprehensive 80/20 body of knowledge which touches all parts of our businesses. The concept underlying 80/20 is simple: 80 percent of a business' sales are derived from the 20 percent of its product offering being sold to key customers. Put simply, too often companies do not spend enough time on the critical 20 percent of their key customers and products and spend too much time on the less important 80 percent. This process is really about simplifying and focusing on the key parts of your business. Simplicity focuses action, while complexity often blurs what is important. In the process of simplification, we view all aspects of the business on an 80/20 basis. This includes finding ways to simplify our product lines, customer and supply base, and business processes and systems. In the end, 80/20 improves quality, productivity, delivery, innovation, market penetration, and ultimately, customer satisfaction. It's not quite the same, as manufacturers tend to align themselves with select distributors, and in the large scheme of things, all distributors will have access to some manufacturer. If manufacturer A wants to focus on distributors B and C but does not want to deal with distributors D, E, F, ......., you can bet that other manufacturers will take on those rejected distributors. I don't believe there are any distributors who are captive to any particular manufacturers. As I said before, if one entity doesn't want the business, let another entity get access to that business. Under that open access system, eventually all demand is met with corresponding supply, and the macro economy benefits as a result. Reply Edit Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Friday, July 22, 2005 8:59 PM WIth all this talk about the pursuit of profit, I thought I would offer the following verbatim from the Illinois Tool Works' home site (itw dot com): About 80/20 The birth of ITW's 80/20 process dates back to the early 1980s when a handful of our businesses sought ways to improve manufacturing practices so they could stay competitive in a changing economy. Today, after more than 20 years of expansion and refinement, ITW has assembled a comprehensive 80/20 body of knowledge which touches all parts of our businesses. The concept underlying 80/20 is simple: 80 percent of a business' sales are derived from the 20 percent of its product offering being sold to key customers. Put simply, too often companies do not spend enough time on the critical 20 percent of their key customers and products and spend too much time on the less important 80 percent. This process is really about simplifying and focusing on the key parts of your business. Simplicity focuses action, while complexity often blurs what is important. In the process of simplification, we view all aspects of the business on an 80/20 basis. This includes finding ways to simplify our product lines, customer and supply base, and business processes and systems. In the end, 80/20 improves quality, productivity, delivery, innovation, market penetration, and ultimately, customer satisfaction. Reply Edit bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Friday, July 22, 2005 6:39 AM The costs I was refering to were called long run varible costs. The hard part is determining the definition of long term. CSXT has several bridges in MD built before the Civil War! IMHO the proper treatment of these costs is a very important judgement and should be a decision reserved to senior management followed by a reveiw by the board. This costs are one part of the idea behind marginal pricing. That is, you are willing to take any business that exceeds your varible cost because it will make some contribution to overhead. The other side is you know your market and have maximized your rate. This works untill you run out of capacity. Then you are in the silly position of saying to UPS, "Your next trailer from Chicago to LA maxs out our capcity. Enjoy it because we will need a gazillion dollars for the trailer just after that one" Bob Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Friday, July 22, 2005 12:23 AM It would be interesting to define "small elevators". If "small" is defined by the inability to load a full shuttle train, there are a whole lot of "small" guys out there. I find it hard to believe these RR's want to thumb their noses at 25, 50 or even 75 car shipments. As Mr. Sol pointed out, capacity becomes an issue at some point---there is too much business for them to handle now, why go after anything else? "Let the truckers have it" seems to be their mentality. They just post the fancy sayings on the websites, etc ("We can move your world", "Building America", etc) Barf. Reply Edit Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Thursday, July 21, 2005 9:44 PM A penny of profit is profit. But if, in going after that penny, an intelligent tuppence was lost, well then you don't have very good businessmen. I don't think the people who run BNSF are inferior businessmen. GIven that railroading has (well, ever since they got built) been considered a conservative discipline, I think the folks at BNSF are doing pretty well with their resources. Reply Edit Murphy Siding Member sinceMay 2005 From: S.E. South Dakota 13,569 posts Posted by Murphy Siding on Thursday, July 21, 2005 9:33 PM Future Model: Wow! I understand, and agree completely with something you said. It might be because the post was one of your shortest? Sufficient profit is anything over 1 cent (any profit). The appropriate rate (or appropriate profit for that matter ) is, and should always be determined by the market. Thanks to Chris / CopCarSS for my avatar. Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Thursday, July 21, 2005 7:48 PM QUOTE: Originally posted by CSSHEGEWISCH Another posting has implied that the appropriate rate is one cent over costs, without going into any specifics as to which costs are to be included. Not too much return on investment or incentive to go after that business at that rate. Nice try, but very disingenuous to parse words so blatantly. What was actually said was this (cut and pasted from the previous page on this topic): "Hey, CSSH....., define "sufficient" profit. Is it 10% above costs? 20%? 100%? The answer is: Exactly one penny above all cost allocations." There's a big difference between "sufficient profit" and "appropriate rate". The former is clearly open to subjective interpretation, but if you've paid all allocated costs (which should include all salaries, interest payments, and shareholder dividends, basically anything you want to "cost out") and you still have one penny left over, you've just made "sufficient" profit. The same can be said if you made one million over, or anything in between, you've still made "sufficient" profit. Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Thursday, July 21, 2005 7:23 PM QUOTE: Originally posted by CSSHEGEWISCH The markup provided above looks considerable but even a first-year accounting major would tell you that variable costs aren't the only costs. Any rate also has to cover a proportional share of fixed costs. It may be difficult to calculate the amount of that proportional share, but it does have to be included. No. A company looks at the cost of the service. Fixed costs are irrelevant to that. If the company elects to provide no service at all, the fixed costs are still there. If the fixed costs were reported in the reports that Mr. Wilcox referred to, the reports would be well nigh meaningless for internal management purposes because fixed costs have nothing to do with the specific cost of providing the particular service. Fixed costs, when allocated proportionately, render meaningless any ability to determine the cost of the service. The cost equation makes this clear: TC=FC + (VC)*x, x being the unit number produced of the service or product. The "x" is not associated with the FC component. To do otherwise would lead to the infinitely meaningless exercise of attempting to say that the Industrial group is "responsible" for 30% of the fixed cost, CG 40%, Ag 16%, etc. and then, within those groups, to break down an allocation of fixed cost by service provided, which would be utterly meaningless BECAUSE THE COST IS FIXED. The "x" in the cost equation is not associated with the fixed cost component because that is necessarily borne by the organization as a whole, not by any particular product or service line. Certainly the rates or tariffs charged have to cumulatively pay for fixed charges. That analysis occurs at a different point in the accounting process and that analysis only occurs under a specific set of decision-making circumstances and that decision making circumstance would not likely be occuring at the profit center level. Accounting textbooks uniformly warn that absoprtion, or full cost accounting, "can be misleading for decision making. When fixed costs are allocated to each unit, under absorption costing the fixed costs appear as though they are variable. ... cost data that includes fixed costs can be misleading ...". Of course this is not from first year accounting, but Intermediate Accounting, Third Edition by Spiceland, Sepe, Tomassini, McGraw Hill/Irwin, 2005, p. 301. Naturally, the first year accounting students wouldn't know that. Best regards, Michael Sol Reply daveklepper Member sinceJune 2002 20,096 posts Posted by daveklepper on Thursday, July 21, 2005 9:31 AM A very good argument, but I am one with you that its not just avoidable costs that should be figured. My argument against Kneiling's economics on the Kankikee Belt works both ways, one has to look at both the forest and the trees. Reply CSSHEGEWISCH Member sinceMarch 2016 From: Burbank IL (near Clearing) 13,540 posts Posted by CSSHEGEWISCH on Thursday, July 21, 2005 8:04 AM The markup provided above looks considerable but even a first-year accounting major would tell you that variable costs aren't the only costs. Any rate also has to cover a proportional share of fixed costs. It may be difficult to calculate the amount of that proportional share, but it does have to be included. Another posting has implied that the appropriate rate is one cent over costs, without going into any specifics as to which costs are to be included. Not too much return on investment or incentive to go after that business at that rate. The daily commute is part of everyday life but I get two rides a day out of it. Paul Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Wednesday, July 20, 2005 6:02 PM Well, off the top of my head, from internal numbers, the lowest grain rate available on the BNSF system is, if I recall correctly, set at approximately 164% of the variable cost of the service. The highest rate that I recall was something around 267% of the variable cost of the service. Best regards, Michael Sol Reply bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Wednesday, July 20, 2005 3:50 PM QUOTE: Originally posted by MichaelSol QUOTE: Originally posted by bobwilcox The average unit/carload of ... This is just revenue, I take it there is no public data on what is left over after the operating expenses. That is not suprising but it is real important. Due you recall the source of the 80%. The BNSF, a customer group, a Senate staffer? A lot of people get to testify at a hearing but very few do not have an agenda. Of course that is the nature of the process. Well, it is important, but a little common sense might go a long ways. Other than the occasional inadvertent feeding of the bears at Glacier Park, grain is probably the simplest and most straightforward of all things railroads carry. Loading and unloading is simple and automated, the product doesn't dent or break, the product doesn't bang up the equipment like coal, gathering and distribution is simple and direct and takes place for the most part where vandalism and congestion are at a minimum, compared to any of the other profit center items. The equipment is rugged and reliable; there are no haz-mat expenses or concerns, and most of the actual handling labor is supplied by the shipper, in marked contrast, say, to intermodal. If you are making a serious suggestion that grain is more expensive to handle than industrial and consumer, in particular, I would be pleased to hear the reasoning why. Otherwise, the evidence I see, and have seen for 40 years, suggests that grain incurs probably among the lowest costs of carriage of any product group., while averaging the highest per carload revenue. Best regards, Michael Sol The data I have seen over the last forty years would place grain's r/c ratio somewhere in the middle. Export grain would be somewhat higher but you could never count on it moving. My experience was with the Rock Island, C&NW, Espee and the UP plus a very short stint at the Southern. I admit I have had an oppurtuinity to look at internal profit data on a weekly basis broken down into 100-300 commodity groups. The trees look a lot different than the forest. Bob Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Wednesday, July 20, 2005 3:39 PM QUOTE: Originally posted by bobwilcox The average unit/carload of ... This is just revenue, I take it there is no public data on what is left over after the operating expenses. That is not suprising but it is real important. Due you recall the source of the 80%. The BNSF, a customer group, a Senate staffer? A lot of people get to testify at a hearing but very few do not have an agenda. Of course that is the nature of the process. Well, it is important, but a little common sense might go a long ways. Other than the occasional inadvertent feeding of the bears at Glacier Park, grain is probably the simplest and most straightforward of all things railroads carry. Loading and unloading is simple and automated, the product doesn't dent or break, the product doesn't bang up the equipment like coal, gathering and distribution is simple and direct and takes place for the most part where vandalism and congestion are at a minimum, compared to any of the other profit center items. The equipment is rugged and reliable; there are no haz-mat expenses or concerns, and most of the actual handling labor is supplied by the shipper, in marked contrast, say, to intermodal. If you are making a serious suggestion that grain is more expensive to handle than industrial and consumer, in particular, I would be pleased to hear the reasoning why. Otherwise, the evidence I see, and have seen for 40 years, suggests that grain incurs probably among the lowest costs of carriage of any product group, while averaging the highest per carload revenue. Best regards, Michael Sol Reply bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Wednesday, July 20, 2005 3:01 PM QUOTE: Originally posted by MichaelSol The average unit/carload of grain on the BNSF system brings $1969. This compares with Consumer Group at $874, with Industrial at $1568, and Coal at $1028. The 80% figure is from Senate testimony regarding the car shortage in the Fall of 2003. I would give you the cite, but that Binder is at home. Best regards, Michael Sol The average unit/carload of ... This is just revenue, I take it there is no public data on what is left over after the operating expenses. That is not suprising but it is real important. Due you recall the source of the 80%. The BNSF, a customer group, a Senate staffer? A lot of people get to testify at a hearing but very few do not have an agenda. Of course that is the nature of the process. Bob Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Wednesday, July 20, 2005 2:43 PM Take a deep breath. See post of June 28. The average unit/carload of grain on the BNSF system brings $1969. This compares with Consumer Group at $874, with Industrial at $1568, and Coal at $1028. [BNSF Annual Report, 2004]. The 80% figure is from Senate testimony regarding the car shortage in the Fall of 2003. I would give you the cite, but that Binder is at home. However, BNSF's Steve Bobb made the following remarks to the legislature of North Dakota in March, 2001. " Mr. Bobb told the Committee that BNSF was hauling 40% of its grain volume in the 5,500 cars dedicated to shuttle train service. The other 20,000 cars picked up the rest. Strege said that much of this efficiency difference is explained by the railroad’s concentration on shuttle service, while leaving other trains and cars sit at the elevators or on sidings or in rail yards so that shuttle trains can be pushed on through. It is the railroad that controls the efficiency. He said if BNSF would spend as much time and effort on working with its current customers, for example co-loading of shuttle trains, as it does on pushing the shuttle concept into areas where it doesn’t make sense, by manipulative rate schemes, the railroad could gain efficiencies and much of the current elevator system could be maintained to service farmers. " Best regards, Michael Sol Reply bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Wednesday, July 20, 2005 2:36 PM QUOTE: Originally posted by MichaelSol However, in terms of facilities, the BNSF system has 148 shuttle elevators, out of 1525 total grain elevators. I doubt that even Kneiling would argue that serving 90% of the customers who provide over 80% of the company's most profitable traffic is quite the same thing as "going after every little bit of traffic." That's quite a lot of "little bit." Best regards, Michael Sol What is the source of your data that the 90% of the BNSF's elevators that are not shuttle elevators supply over 80% of the grain traffic? You say this is the company's "most profitable traffic". What is the source of your data comparing grain to plastics, coal, set-up autos, liquid petro-chemicals, etc. By most profitable are you talking about free cash flow our percentage mark up over operating costs? Bob Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Wednesday, July 20, 2005 2:22 PM QUOTE: Originally posted by CSSHEGEWISCH It would be interesting to see what Kneiling or a comparable out-of-the-box thinker would have to say about those who believe that a railroad is leaving money on the table by not going after every last bit of traffic, including that better served by truck. His first question might be, "who said THAT?" However, in terms of facilities, the BNSF system has 127 loading shuttle elevators, out of 1525 total grain elevators. I doubt that even Kneiling would argue that serving 92% of the customers who provide over 80% of the company's most profitable traffic is quite the same thing as "going after every little bit of traffic." That's quite a lot of "little bit." Best regards, Michael Sol Reply daveklepper Member sinceJune 2002 20,096 posts Posted by daveklepper on Wednesday, July 20, 2005 1:50 PM But John, bless his soul for letting me his trolleypole boy as a teenager, did not figure in the savings to the Central for eliminating some congestion and some switching. Like Mineta and land use. Reply CSSHEGEWISCH Member sinceMarch 2016 From: Burbank IL (near Clearing) 13,540 posts Posted by CSSHEGEWISCH on Wednesday, July 20, 2005 10:26 AM Even Rio Grande realized that the short fast train is not the answer to everything. It has its place for handling high-rated traffic but would be quite counter-productive in moving steam coal from on-line mines to power plants. The eventual goal would be optimization, the right size at the right speed for the service required. While moving coal at higher speeds in smaller blocks may be theoretically more efficient, one has to keep in mind that the mines and the power plants are pretty much set up to handle 100+ car blocks and smaller blocks would be a less efficient use of those facilities. Also, the axleloads on either size block would be the same and higher speed would be harder on the track. Mineral freight usually has a 40 MPH speed restriction on most railroads. John G Kneiling once opined during the regulated era that the branch with almost no traffic was less of a drag on the bottom line then the branch with several small to mid-size shippers. He used the comparison of the PC Joliet Branch with the Kankakee Belt. The Joliet Branch handled almost no traffic and was consequently maintained to a minimal standard, the branch generated little revenue but also little cost. The Kankakee Belt was being touted as a Chicago bypass and had some local freight and a couple of overhead run-through freights. The Kankakee Belt generated some local and some overhead revenue but also generated extra cost because the line had to be maintained to a higher standard to allow higher speeds for two run-through freights per day. It would be interesting to see what Kneiling or a comparable out-of-the-box thinker would have to say about those who believe that a railroad is leaving money on the table by not going after every last bit of traffic, including that better served by truck. The daily commute is part of everyday life but I get two rides a day out of it. Paul Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Wednesday, July 20, 2005 9:18 AM QUOTE: Originally posted by jeaton I really find it difficult to accept your statement that single or small multiple car grain shipments can be handled for less than the cost of a grain unit train running directly from a fast loading facility to a single consignee. On the margin, perhaps? There are two parts. Cost is only one. The railroads receive 12% less revenue on unit trains. The issue isn't whether they can haul a single carload cheaper, the issue is multifold. I doubt they haul a single carload more cheaply. However, the revenue gained from a carload of wheat, compared to nearly anything else, really renders the matter moot: the railroad makes good money on a carload of wheat. And, "cost" has little to do with the expenses incurred in actually handling the individual carload. Frankly, that's peanuts compared to the revenue received from that carload. Indeed, I think it looks at it backwards. The railroad gets paid to handle the single carload (and by that I mean reasonable blocks thereof) an amount significantly in excess of the unit train carload. Does the extra revenue exceed the cost of handling? Given that the differential exceeds the total cost of haul on other commodities, I would suggest that it does. Well, that's where profit comes from: revenue exceeding costs. This is a classic railroading problem -- they will lose a dollar, to save a dime. "Cost" however, is more significant in the context of the overall railroad. In the 1970s, unit trains were the response to a perplexing, even deadly, problem for the railroads. Inflation was continually accelerating expenses ahead of rate increases. Trains were labor intensive affairs. Railroads complained that labor was costly. There was plenty of excess capacity. By 1980, the "cost of capital" -- prime rate -- reached 21%. Unit trains made sense. That was thirty years ago. The railroads got all their wishes on the labor "problem." Excess capacity is a memory. Now, long slow trains represent a net cost to the system. The cost is in slower trains everywhere. The cost is inability to provide rapid service. The cost is in higher labor charges to pay train crews to poke along and sit on sidings. The cost is in longer equipment cycle times and higher investment charges, requiring larger, not smaller, car fleets. The cost is in enormously expensive roadbed investment that costs the full amount of a Class IV or Class V installation, but which run average train speeds of Class II or Class III track. Railroads are buying a very high priced physical plant, but can't get the full return on that investment because of congestion. What is the number one cause of congestion? Long slow trains. This is a classic networking problem. And the solution is not more long slow trains that bring in reduced revenue while increasing operating expenses everywhere. Best regards, Michael Sol Reply jeaton Member sinceSeptember 2002 From: Rockton, IL 4,821 posts Posted by jeaton on Tuesday, July 19, 2005 11:47 PM Michael Sol I really find it difficult to accept your statement that single or small multiple car grain shipments can be handled for less than the cost of a grain unit train running directly from a fast loading facility to a single consignee. On the margin, perhaps? That may have been an acceptable strategy when when there were locals running about to pick up and deliver cars containing a variety of other products. However, if it gets down to just grain coming out of country elevators, it's got to be a press to come up with good numbers. That business is still only going to move seasonally and that sure is a condition that will make it more dificult to make good numbers. I agree with your point that grocery business has existed for decades with profits most often less than 2%. It certainly is not easy to be an ongoing business with that level of profit, and I dare say, a great number of both small and large grocery firms have closed since WWII. That's just a side comment. I have no doubt that you understand the diffierence between a gross sales margin and a profit, but I think others here may have confused the terms. As you well know, there is no grocery store in the world that could survive with a 2% mark-up. In 2004, the Kroger reported $56 billion in sales and the cost of the merchandise, advertising, warehousing and transportation was at $42 billion or 75% of sales. That leaves a pretty good margin with which to work. I found an interesting statement on there web site where they noted that their target threshold for an investment is an 11.3% after tax return. So here is my point. From personal experience and looking at these numbers, it is clear to me that The Kroger Company is not stocking every grocery item that might make them a "profit". So why should a railroad not have the right to make decisions about the business they want to handle? No competition? I would buy that if the only option was moving the grain in a horse drawn wagon. Jay Eaton "We have met the enemy and he is us." Pogo Possum "We have met the anemone... and he is Russ." Bucky Katt "Prediction is very difficult, especially if it's about the future." Niels Bohr, Nobel laureate in physics Reply arbfbe Member sinceFebruary 2002 910 posts Posted by arbfbe on Tuesday, July 19, 2005 10:18 PM [Alan, are you going to the Retired Milw Employee's Picinic August 7 in Deer Lodge? I've got my invite/notice here on the desk. On the one hand, I still enjoy these thngs, but they get more depressing with each passing year, as the old faces grow fewer in number. With Rusty Landers' passing, I guess Allan Peterson will be the only remaining Electrification Dept guy there. Best regards, Michael Sol /
QUOTE: Originally posted by jeaton QUOTE: Originally posted by futuremodal Jay, Don't laugh! Just a few years ago the State of Montana had a very nice two lane highway that ran up to Thompson Pass at the Idaho/Montana border. When you crossed over the border to Idaho, it basically turned into a narrow twisting logging road! They've fixed up the Idaho side of the road since then. It wasn't a joke. Wisconsin had a plan to have a freeway between the Illinois state line near Richmond, IL and Madison. It would have been part of a freeway running off I-90 at Schaumburg, IL, which would have provided an excellent short route between northwest surburban Chicago and points in the southeast Wisconsin and beyond. The route 53 freeway ends 6 miles north of the origin point because the state of Illinois bowed to political pressure from Lake County, Illinois residents that did not want to loose their "rural" environment. The Wisconsin freeway segment runs from the state line to Elkhorn, WI. and serves three communities with populations of less than 10,000, plus the odd driver that wants to take the "scenic" route. The joke is on the Lake County residents, as the population there has exploded. I have no sympathy for their complaints about traffic.
QUOTE: Originally posted by futuremodal Jay, Don't laugh! Just a few years ago the State of Montana had a very nice two lane highway that ran up to Thompson Pass at the Idaho/Montana border. When you crossed over the border to Idaho, it basically turned into a narrow twisting logging road! They've fixed up the Idaho side of the road since then.
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"We have met the enemy and he is us." Pogo Possum "We have met the anemone... and he is Russ." Bucky Katt "Prediction is very difficult, especially if it's about the future." Niels Bohr, Nobel laureate in physics
QUOTE: Originally posted by MichaelSol Well, here was the "pork" for Montana. Our Senior Senator stood on one of our local city bridges yesterday and presented the mayor with a "check" for $6 million to rebuild the bridge from two lane to four lane. It was a hopelessly outdated bridge that connected the Interstate, two Federal highways, state highways, and was important to city traffic flow as well. It was hopelessly outdated but the City didn't have the kind of money to rebuild it, and the bridge happened to be a "city" bridge, not a "federal" bridge, mainly by historical accident. The "pork" in the Highway Transportation bill in this instance went directly to a highway transportation improvement project which assisted the federal, state, and local highway systems all in one fell swoop. Not bad for "pure pork." Best regards, Michael Sol
QUOTE: Originally posted by MichaelSol QUOTE: Originally posted by futuremodal QUOTE: Originally posted by smalling_60626 I have a feeling that if you dislike the BNSF's choices of what lines to serve, you'll really hate it if 535 pork-minded politicians in Washington spend the money on their "high priority" projects--just look at the new infrastrure act. At least pork projects start services and build things, as opposed to stopping services and tearing things out. Well, here was the "pork" for Montana. Our Senior Senator stood on one of our local city bridges yesterday and presented the mayor with a "check" for $6 million to rebuild the bridge from two lane to four lane. It was a hopelessly outdated bridge that connected the Interstate, two Federal highways, state highways, and was important to city traffic flow as well. It was hopelessly outdated but the City didn't have the kind of money to rebuild it, and the bridge happened to be a "city" bridge, not a "federal" bridge, mainly by historical accident. The "pork" in the Highway Transportation bill in this instance went directly to a highway transportation improvement project which assisted the federal, state, and local highway systems all in one fell swoop. Not bad for "pure pork." Best regards, Michael Sol
QUOTE: Originally posted by futuremodal QUOTE: Originally posted by smalling_60626 I have a feeling that if you dislike the BNSF's choices of what lines to serve, you'll really hate it if 535 pork-minded politicians in Washington spend the money on their "high priority" projects--just look at the new infrastrure act. At least pork projects start services and build things, as opposed to stopping services and tearing things out.
QUOTE: Originally posted by smalling_60626 I have a feeling that if you dislike the BNSF's choices of what lines to serve, you'll really hate it if 535 pork-minded politicians in Washington spend the money on their "high priority" projects--just look at the new infrastrure act.
Thanks to Chris / CopCarSS for my avatar.
QUOTE: Originally posted by Murphy Siding FM: That would be a first-it wouldn't be a hostile nationalization of an industry, it would be a hostile state takeover of an industry? How many years could this be tied up in court? Could Montana then "sieze" the gas stations that were charging more than the citizens thought they should?How about the seed dealers? The grocery stores? And on and on......I don't even see this as being a real cure for anything. And if some of the citizens didn't think the farmers were doing a good enough job, they could always pitch them out, and collectivise the farms right? It's been done before.[B)][;)][:)]
QUOTE: Originally posted by futuremodal Owen, Gov. Brian Schweitzer, and Sen. Conrad Burns, (R-Mont.), said they will continue to pressure the railroad...
QUOTE: Originally posted by smalling_60626 WIth all this talk about the pursuit of profit, I thought I would offer the following verbatim from the Illinois Tool Works' home site (itw dot com): About 80/20 The birth of ITW's 80/20 process dates back to the early 1980s when a handful of our businesses sought ways to improve manufacturing practices so they could stay competitive in a changing economy. Today, after more than 20 years of expansion and refinement, ITW has assembled a comprehensive 80/20 body of knowledge which touches all parts of our businesses. The concept underlying 80/20 is simple: 80 percent of a business' sales are derived from the 20 percent of its product offering being sold to key customers. Put simply, too often companies do not spend enough time on the critical 20 percent of their key customers and products and spend too much time on the less important 80 percent. This process is really about simplifying and focusing on the key parts of your business. Simplicity focuses action, while complexity often blurs what is important. In the process of simplification, we view all aspects of the business on an 80/20 basis. This includes finding ways to simplify our product lines, customer and supply base, and business processes and systems. In the end, 80/20 improves quality, productivity, delivery, innovation, market penetration, and ultimately, customer satisfaction.
QUOTE: Originally posted by CSSHEGEWISCH Another posting has implied that the appropriate rate is one cent over costs, without going into any specifics as to which costs are to be included. Not too much return on investment or incentive to go after that business at that rate.
QUOTE: Originally posted by CSSHEGEWISCH The markup provided above looks considerable but even a first-year accounting major would tell you that variable costs aren't the only costs. Any rate also has to cover a proportional share of fixed costs. It may be difficult to calculate the amount of that proportional share, but it does have to be included.
QUOTE: Originally posted by MichaelSol QUOTE: Originally posted by bobwilcox The average unit/carload of ... This is just revenue, I take it there is no public data on what is left over after the operating expenses. That is not suprising but it is real important. Due you recall the source of the 80%. The BNSF, a customer group, a Senate staffer? A lot of people get to testify at a hearing but very few do not have an agenda. Of course that is the nature of the process. Well, it is important, but a little common sense might go a long ways. Other than the occasional inadvertent feeding of the bears at Glacier Park, grain is probably the simplest and most straightforward of all things railroads carry. Loading and unloading is simple and automated, the product doesn't dent or break, the product doesn't bang up the equipment like coal, gathering and distribution is simple and direct and takes place for the most part where vandalism and congestion are at a minimum, compared to any of the other profit center items. The equipment is rugged and reliable; there are no haz-mat expenses or concerns, and most of the actual handling labor is supplied by the shipper, in marked contrast, say, to intermodal. If you are making a serious suggestion that grain is more expensive to handle than industrial and consumer, in particular, I would be pleased to hear the reasoning why. Otherwise, the evidence I see, and have seen for 40 years, suggests that grain incurs probably among the lowest costs of carriage of any product group., while averaging the highest per carload revenue. Best regards, Michael Sol
QUOTE: Originally posted by bobwilcox The average unit/carload of ... This is just revenue, I take it there is no public data on what is left over after the operating expenses. That is not suprising but it is real important. Due you recall the source of the 80%. The BNSF, a customer group, a Senate staffer? A lot of people get to testify at a hearing but very few do not have an agenda. Of course that is the nature of the process.
QUOTE: Originally posted by MichaelSol The average unit/carload of grain on the BNSF system brings $1969. This compares with Consumer Group at $874, with Industrial at $1568, and Coal at $1028. The 80% figure is from Senate testimony regarding the car shortage in the Fall of 2003. I would give you the cite, but that Binder is at home. Best regards, Michael Sol
QUOTE: Originally posted by MichaelSol However, in terms of facilities, the BNSF system has 148 shuttle elevators, out of 1525 total grain elevators. I doubt that even Kneiling would argue that serving 90% of the customers who provide over 80% of the company's most profitable traffic is quite the same thing as "going after every little bit of traffic." That's quite a lot of "little bit." Best regards, Michael Sol
QUOTE: Originally posted by CSSHEGEWISCH It would be interesting to see what Kneiling or a comparable out-of-the-box thinker would have to say about those who believe that a railroad is leaving money on the table by not going after every last bit of traffic, including that better served by truck.
QUOTE: Originally posted by jeaton I really find it difficult to accept your statement that single or small multiple car grain shipments can be handled for less than the cost of a grain unit train running directly from a fast loading facility to a single consignee. On the margin, perhaps?
QUOTE: Originally posted by bobwilcox QUOTE: Originally posted by futuremodal [ It is sufficiently profitable to those who deal with real competition each day. Before you continue with another rant about the evil BNSF how about letting us know exactly what real business competition you personally have ever dealt with. I think the answer is you never have but I look forward to knowing more about your business experience.
QUOTE: Originally posted by futuremodal [ It is sufficiently profitable to those who deal with real competition each day.
QUOTE: Originally posted by arbfbe The capitalization of the tracks and other facilities to all of these smaller elevators has been paid off long ago. In the example of the elevator at Big Sandy. MT these 'small' elevators are not so small either. So you have the captitalization of the grain hoppers to consider. Grain companies have shown a willingness to invest in their own fleet of cars but when they do the railroads change the rate structure wiping out the shippers investment in short order. You can see this has happpened over and over again. Where are the fleets of cars once owned or leased by Con Agra, CArgill and Pillsbury? The railroads cried underutilized grain car fleets but when the shippers bought their own cars to stand the costs of the downtime themselves the railroads bemoaned the loss of earnings from the use of their cars and cut the discount for shipper supplied cars.
QUOTE: Originally posted by MichaelSol QUOTE: Originally posted by Murphy Siding BNSF turns down the opportunity to serve smaller elevators simply because they can more money easier somewhere else. This does not appear to be true. The revenue received from the "smaller" elevators appears to be among the highest revenues received on the BNSF system. These revenues are received where operating costs are among the lowest. If your thesis is true, where is your proof? Bobwilcox wants to see "business experience." While I have seen no studies that suggest that "business experience" equates with intelligence or intelligent decision making, I am asking for data to support these "rants" because I think data is important. See footnote 1. Why is the "easier" money made elsewhere? What is your specific basis for this statement? Or is it a "rant"? See Footnote 2. Best regards, Michael Sol Footnote 1: [See, if you wish, Why Decisions Fail: Avoiding the Blunders and Traps that Lead to Debacles, by Paul McNutt, Berrett-Koehler Publishers, 2002. "Half of business decisions fail because of management blunders," new study finds. "Vast sums of money are spent to make decisons that realize no ultimate value for the organization, and managers make the same mistakes over and over again as they formulate the decisions."] Footnote 2. [ "Mergers have permitted rail networks to operate more efficiently than previously, but that those mergers have also reduced scale economies by creating firms of larger than efficient size." The largest modern class I railroads are beyond optimally efficient operating size, and are suffering significant cost penalties as a result of diseconomies of scale which are structurally inherent in transportation organizations of this size. Chapin and Schmidt, "Do Mergers Improve Efficiency?" Journal of Transportation Economics and Policy, 1998, 33:2, 147-62.] "Business experience" would tell you that these railroads are fundamentally unsound and making unsound decisions. Or is it something besides mere "business experience" that is necessary to understand that?
QUOTE: Originally posted by Murphy Siding BNSF turns down the opportunity to serve smaller elevators simply because they can more money easier somewhere else.
QUOTE: Originally posted by CSSHEGEWISCH To FM: If sufficient profit is only one cent above cost, then you don't expect as high a return on investment as most businessmen and investors. If you consider that to be sufficient return, don't expect to remain in business for too long because you're not generating enough capital to keep yourself competitive.
QUOTE: Originally posted by Murphy Siding In our part of the country, a lot of farm commodities are shipped out on trucks because the trucks are more competitive than rail. In a perfect world, every shipper in a free market country would deserve competitve bidding on the movement of their agricultural products. Competition requires 2 or more parties bidding on the price. It makes little difference if the 2 bidders are railroads,or trucks,or barges,or Great Lake freighters.
QUOTE: Originally posted by Murphy Siding They have it, unfortunately, it's called a truck.
QUOTE: Originally posted by smalling_60626 I'd love to hear what the farmers, or those with rural connections, have to say about this important and stimulating topic.
QUOTE: Originally posted by bobwilcox QUOTE: Originally posted by futuremodal The truth is, the idea of open access is new, perhaps too new to have entered into legislative debates. Part of the problem is that the entities that should be be introducing the topic into the lexicon of public debate (such as those organizations that represent captive rail shippers) seem to rather prefer to reha***he concept of reregulation, a lose-lose proposition for both sides. Meanwhile, the Class I propoganda arm (know collectively as the AAR) did a pretty good job of misrepresenting the open access debate when it was just budding during the late 1990's. If history is any lesson, it will take some kind of economic catastrophy involving railroad/shipper relations before the topic will be able to take it's rightful place in the halls of Congress. Meaning alot of people on both sides have to be hurt financially before Congress will act. So much for the idea of pre-emptive economic policy foresight. I think your correct about Congress not wanting to get involved untill there is a crisis. There was a lot of blah, blah, blah about the banckrupt Penn Central untill GM, Ford and Chrysler went to a Senate hearing and gave their lay off forecast if PC stopped operations. It was about 10,000 people in the first week with the collapse of the auto industry within 90 days. Since laid off UAW members tend to vote in their spare time, we got CR legislation very shortly after that hearing. The ideas put into Staggers were just think tank stuff untill CR management told Congress deregulation would allow CR to stand on there own and thereby reduce the Federal deficit. Since that was back in a day when someone actually cared about the deficit Staggers was passed within a few months. The 35 year soap opera concerning Amtrak funding is just absurb. Recently the Amtrak board put out a very good plan to start a serious discussion but everyone in the White House and Congress did the same old dance. I am worried that Amtrak will lose its ability to attrack good leadership and we will go back to the "glide path to self sufficiency" bipartisine silliness of the 1990s. If you do not know about Asa Whitney I suggest you look him up in David Bain's Empire Express , ISBN 0-670-80889-x. He was a tireless promoter of a transcontintal railroad from the Missouri River to the Pacific Coast. Everyone else thought it was a pipe dream. How would it be financed? In 1843 he proposed the novel idea to Congress that the government pay for a railroad with land grants. He spoke tirelessly about a Transcontiental RR. He was the force that caused the Army surveys in the 1850s. He was the one that pushed his ideas into the Republican Party's first platform. He withdrew into private life but he lived to see the golden spike at Promontory. The Class I have not made their cost of capital for over 75 years. Therefore the country is way behind in its rail plant investment. Someday it will come to a head. Asa Whitney did not have the internet to sell his ideas but you do...
QUOTE: Originally posted by futuremodal The truth is, the idea of open access is new, perhaps too new to have entered into legislative debates. Part of the problem is that the entities that should be be introducing the topic into the lexicon of public debate (such as those organizations that represent captive rail shippers) seem to rather prefer to reha***he concept of reregulation, a lose-lose proposition for both sides. Meanwhile, the Class I propoganda arm (know collectively as the AAR) did a pretty good job of misrepresenting the open access debate when it was just budding during the late 1990's. If history is any lesson, it will take some kind of economic catastrophy involving railroad/shipper relations before the topic will be able to take it's rightful place in the halls of Congress. Meaning alot of people on both sides have to be hurt financially before Congress will act. So much for the idea of pre-emptive economic policy foresight.
QUOTE: Originally posted by daveklepper Let us NOT get Amtrak into this argument, and remember that no country in the world really runs intercity passenger trains at a profit. Yes, the British have operators making a profit on running certain intercity trains, but that is only because the infrastructure is subisidized under a serparate account.
QUOTE: Originally posted by MP173 1. Clarify your use of $924 for breakeven per carload. 2. Does that $924 BE apply to grain? If I read correctly it is a system BE. 3. If that is correct, then the consumer product segment, based on your assumption of 1.6 "units" per carload would then be profitable....on the system BE point, and not unprofitable as you indicated.
QUOTE: Originally posted by arbfbe futuremodal, Now that the US Supreme court has loosened the rules against immenent domain, perhaps the states, counties or even a city or two can sieze the tracks in their neighborhood to allow public access and open access in order to increase their revenues.
QUOTE: Originally posted by greyhounds Comparing the revenue per unit on an intermodal shipment with the revenue per unit on a grain shipment is not valid.
QUOTE: Originally posted by bobwilcox QUOTE: Originally posted by futuremodal This country's rail system is still a mess, albeit a much retrenched one. Look at how much has been lost in railroad employment, relative market share (especially in terms of $$ share), customer access to rail lines, railroad responsiveness to customer demands, etc. There's enough evidence that railroading was in far better shape pre-Staggers than post-Staggers if you use these benchmarks. Indeed, if it wasn't for PRB coal and free trade policies (which have given new life to COFC) you can almost make a case that Staggers has accellerated the decline of railroading in this country, perhaps by allowing monopolistic management to hang themselves with their own rope, a rope that exists soley due to lack of head to head competition. The point I am trying to make is that neither the pre-Staggers era of comprehensive regulation, nor the post-Staggers era of comprehensive retrenchment, is doing much to guarantee that railroading will finally achieve it's promise. The only way to guarantee railroading's long term prosperity is to (1)make sure all rail customers have access to competitive rail rates and services (which will dramatically increase market share on the demand side), and (2) equalize the cost of constructing and maintaining the rail infrastructure with the cost allocation associated with constructing and maintaining highways, waterways, and airports, so that we may finally see if indeed railroads would assume a 70% natural market share. My views on how to achieve this are well known on this forum: Separate the current Class I oligarchy into infrastructure companies and transporter companies, regulate the infrastructure companies as public utilities while providing public track construction via a share of the federal fuel tax (which would be paid by all transportation modes and then reallocated to better reflect intermodal realities) and maintenance support in the form of maintenance tax credits (plus a property tax exemption, recognizing open access rail lines as public right of way by proxy), and then let the rail transporters go at it in a relatively unregulated environment, similar to trucking transporters. Market forces that have been absent since the beginning of the railroad era would finally be unleashed. Some transporters would fail, while others would prosper, and outsiders would finally be able to test their own theories of rail service innovations. The bottom line is this: If BNSF doesn't want to provide carload or small carset service offerings, then let someone else fill that void. Right now that void is being partially filled by truckers as best as the free market allows, but with predictable long term driver shortages resulting (due to the inherent inability of the trucking genre to handle large volume commodity movements on a consistent efficient basis), it is probably the consensus on this forum that some form of rail transport would be much better at filling that void, and it is a consensus that is well founded. But this can only occur if the proprietary closed acces system is opened up to competitors, or if we can somehow return to the days of multiple railroad company tracks laid into each customer's facility. Even the most ardent anti-open access opponents would probably prefer this scenario to that of pre-Stagger's regulation. You certainly have a vision but it takes a majority in each House to pass this into law. None of the 537 people involved want to do that.
QUOTE: Originally posted by futuremodal This country's rail system is still a mess, albeit a much retrenched one. Look at how much has been lost in railroad employment, relative market share (especially in terms of $$ share), customer access to rail lines, railroad responsiveness to customer demands, etc. There's enough evidence that railroading was in far better shape pre-Staggers than post-Staggers if you use these benchmarks. Indeed, if it wasn't for PRB coal and free trade policies (which have given new life to COFC) you can almost make a case that Staggers has accellerated the decline of railroading in this country, perhaps by allowing monopolistic management to hang themselves with their own rope, a rope that exists soley due to lack of head to head competition. The point I am trying to make is that neither the pre-Staggers era of comprehensive regulation, nor the post-Staggers era of comprehensive retrenchment, is doing much to guarantee that railroading will finally achieve it's promise. The only way to guarantee railroading's long term prosperity is to (1)make sure all rail customers have access to competitive rail rates and services (which will dramatically increase market share on the demand side), and (2) equalize the cost of constructing and maintaining the rail infrastructure with the cost allocation associated with constructing and maintaining highways, waterways, and airports, so that we may finally see if indeed railroads would assume a 70% natural market share. My views on how to achieve this are well known on this forum: Separate the current Class I oligarchy into infrastructure companies and transporter companies, regulate the infrastructure companies as public utilities while providing public track construction via a share of the federal fuel tax (which would be paid by all transportation modes and then reallocated to better reflect intermodal realities) and maintenance support in the form of maintenance tax credits (plus a property tax exemption, recognizing open access rail lines as public right of way by proxy), and then let the rail transporters go at it in a relatively unregulated environment, similar to trucking transporters. Market forces that have been absent since the beginning of the railroad era would finally be unleashed. Some transporters would fail, while others would prosper, and outsiders would finally be able to test their own theories of rail service innovations. The bottom line is this: If BNSF doesn't want to provide carload or small carset service offerings, then let someone else fill that void. Right now that void is being partially filled by truckers as best as the free market allows, but with predictable long term driver shortages resulting (due to the inherent inability of the trucking genre to handle large volume commodity movements on a consistent efficient basis), it is probably the consensus on this forum that some form of rail transport would be much better at filling that void, and it is a consensus that is well founded. But this can only occur if the proprietary closed acces system is opened up to competitors, or if we can somehow return to the days of multiple railroad company tracks laid into each customer's facility. Even the most ardent anti-open access opponents would probably prefer this scenario to that of pre-Stagger's regulation.
QUOTE: Originally posted by MP173 Something about the transporting of grain by rail results in higher transportation costs than other commodities.....why would that be? Perhaps the answer to that lends itself to the reasons behind this entire debate.
QUOTE: Originally posted by MP173 Without Staggers, this country's rail system would have been a MESS. Dont know about you, but I remember the 70's quite well, and not only was it not pretty, but it was financially ugly. The question still remains, how will you provide open access? ed
QUOTE: Originally posted by MP173 In comparing grain vs other commodities, it sure appears the grain rates are much higher.... Something about the transporting of grain by rail results in higher transportation costs than other commodities.....why would that be? Perhaps the answer to that lends itself to the reasons behind this entire debate.
QUOTE: Originally posted by MichaelSol I do not find the benefits anywhere in the financial statements, and never have. I do not think you will. The public documents are for investors not the railroads maketing department. They are supposed to tell the investors how the business is doing. This was one of several flaws in the old ICC Form A accounting system. It took financial data and crammed it into a cost model. A system designed to tell stockholders if Jay Gould was cheating them again just does help say what it cost to move a car from Podunck to E. Budda, TX. The traffic costing systems are competly different animals. The margins on traffic are built up from specific revenue data (ie. waybills)and specific operating costs. These measurement systems are vastly better since the old days of needing to use system wide averages for important cost components. As an examle, on the CNW thirty years ago we plugged in a system wide annual average for track maintance[:)] cost ($/MGTM). Thirty years later these types of costs are keeped at the crew distirct level. Today you we see vast cost differences for a car travelling from Houston to a S. IL Gateway vs. a car wandering up a branch in the PNW. Also, you use history better than just an annual number. Bob Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Thursday, June 30, 2005 8:16 PM QUOTE: Originally posted by MichaelSol That's the irony of this: it costs the customer more in increased transportation costs to the shuttle elevators, and increased costs to build and operate shuttle elevators, and the railroad receives less revenue. This is one bright idea. Nobody wins. I'll disagree with you on that last point. Clearly the trucking companies win, and do so at the expense of both the grain marketers and the railroads. Yet another inadvertent gift from the railroads to the so-called "enemy" aka truckers. Rather, longer, slower trains appear to result in increased system congestion, do result in increased track maintenance expenses, and do result in longer terminal dwell times as a system effect that "suggests" that increased efficiency is not the result, but rather statistically measurable inefficiency is apparently the result. That all trains are affected by the increased congestion resulting from bigger, longer, slower grain trains. It would appear that this bent toward clogging the tracks with ostensible "efficiency" consists is a disease that is systemic, hard-wired into the railroad management culture. If this idea of product consolidation onto as many cars as will fit onto a siding was developed from an economic model, it is easy to see that it was a model developed with limited variable analysis. Such is the heart and soul of the Staggers Act, on the surface a "no-brainer" while in its long term impacts a "no-brainer" of a different sort. Staggers only partially "deregulated" the railroads, providing independent rate setting and price contracting, but doing nothing to effect head to head rail competition for all rail shippers. The latter is crucially necessary to ensure innovation, the only way to keep the entire industry from homogenizing into a star-crossed bandwagon of eventual economic failure. Some of you have explicitly or implicitly infered that competition is bad for the rail industry, because if railroads are forced to compete for each and every potential customer they will not be able to achieve revenue adaquacy. This is simply circular reasoning, because without competitve incentives the customer base will be put off (via capacity reductions, service consolidations, service delays, service refusals, et al), and without an ever increasing customer base a company, any company, not just railroads will not be able to achieve revenue adaquacy. How many more examples of railroad management underachievement will this nation have to put up with before you all will concede that Staggers is ultimately a failure? It's not that deregulation is not a desirable application of government oversight, it's that partial deregulation is sometimes worse than no deregulation at all. Staggers is partial deregulation, evidenced by the railroads' balance sheets, and evidenced by the tremendous loss of railroad employment/trackage/market share over the last two decades. If we want to do this thing right, then we need to fully deregulate the industry into a competitive venture that pleases both the investors and the customers. You all know my idea for full deregulation (it goes by the initials "o" and "a"), but I am willing to consider any else's ideas for implementing full deregulation in the broadest sense of the word. If anyone has an idea for bringing back the rail saturation of the 1970's, wherein all but a few areas of the country had true head to head rail competition in the form of the private closed access system, then let's hear it. Reply Edit MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Thursday, June 30, 2005 6:43 PM But, Michael, you are quoting tariff rates. We dont know what the actual rates for the movements are, since we are not a party to the negotiations between BNSF and the owner of the wheat. I really dont want to re-enter the world of Montana wheat rates, as we did last spring. Looking at the NS's rates for grain, I find the following for 1064: rail owned equipment <5000 cf @ $4000 per car >5000 cf @ $4400 per car private equipment <5000 cf @ $3422 per car >5000 cf @ $3764 per car The rate for BNSF's movement is considerably less than NS's. Plus, the rate for private vs rail owned is quite lower. In comparing grain vs other commodities, it sure appears the grain rates are much higher....I will use the larger sized cars: Lumber and panels @ $3431 per car food oils @ $2414 per car Something about the transporting of grain by rail results in higher transportation costs than other commodities.....why would that be? Perhaps the answer to that lends itself to the reasons behind this entire debate. ed Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Thursday, June 30, 2005 5:40 PM QUOTE: 5. Average system carload revenue, as you stated, for 1064 miles of ag products was $2699 per carload. How did you determine that number? 6. What are the cycle times for the grain shuttle trains? You indicated cycle times increased from 24 to 26 days, was this for all system cars, or just grain cars, or grain shuttle cars? Well, I am trying to get out the door for the 4th. I can answer these two the fastest. The $2699 per carload for the distance comes from entering data for 2250 station points and distances for elevators on the BNSF system on an Excel Spreadsheet, and entering the associated rates for the 1-25, 26-51, 52-109 and 109-120 carload categories, as of tarifffs published 4/15/05. From this data, linear regressions were run across progressively smaller segments of distances until equations were developed which accurately described the behavior of the tariffs in question within the relevant range of data. The BNSF price structure is actually logarithmic in overall behavior, but no single logarithmic equation accurately describes certain key ranges as well as linear modelling of the same data in small segments At a given distance, then, an average, a high, and a low tariff number can be derived, as well as standard deviation that will describe the tariffs for 95% of the stations at that distance. The high and low tariffs, it turns out, very accurately describe the BNSF system "behavior" in setting prices: the high tariffs have a 98% correlation strictly with distance, and the low tariffs at a given distance have a 55% correlation with distance, and a high correlation with distance to other railroads, barge systems, etc. 6. The 26 day cycle time is for grain trains. The increase of 2 days over the past couple of months is quite significant as the loss of two days per cycle, on an annual basis, is the net loss of one entire cycle of 28,000 covered hopper cars, or, if you will, the reduction of the effective size of the car fleet to 25,667 cars. Each day of drop-off in cycle time means a loss of approximately $28,000,000 on the BNSF. Two days loss is a shade over $55 million on an annual basis. Two days may not sound like much, but It is very big news to suffer a decline like that. In this case, the increase in cycle times is likely due to very good Hard Red Spring wheat prices at the moment on the Gulf Coast, coupled with BNSF's pricing policy that provides a substantially better rate to the Gulf Coast, $1.71 per mile per 100T hopper car, compared to $3.52 per mile to Portland, both rates from Shelby, Montana (4/15/05 tariffs). This yields a greater net profit, at the moment, for the shipper in Shelby to ship 2307 miles to the Gulf, than it does to ship 785 miles to Portland, because of the market price differential between the two ports coupled with the BNSF pricing structure. You can see where the grain car cycle times go right in the dumpster as a result. The $4189 rate that the BNSF receives for the Gulf traffic, over the $2966 Portland rate is, of course, more than completely negated by the tripling of cycle times, resulting in a net loss of revenue to the BNSF of $4,709. But, that's what they offer, and these rates are considerably below the average BNSF price for a comparable distance, oddly enough. How this Company remains in business is a remarkable feat. However, what the cycle times also show is that the increasing reliance on shuttle trains just doesn't actually seem to show up anywhere. The current cycle times show no improvement -- they show deterioration -- over cycle times of 5, 10 or 20 years ago. There is no discernible positive effect. The BNSF has put a fuel tariff on everything, which is supposed to compensate for oil cost hikes, so how the net profit continues to slide anyway, with all these efficiencies coming on line, is left unexplained by this Company. I am increasingly inclined to lean to the conclusion that, like generals, railroads are preparing for the last war. In a different era, of high train crew costs and limited congestion, unit trains and shuttle trains seemed like the way to go. The new paradigm, where congestion is the enemy, unit trains and shuttle trains are dinosaurs, contributing to congestion and increasing maintenance and labor costs at a time when railroads should be benefitting enormously from crew reductions, insofar as reduced costs of operation are concerned. For grain in particular, I have yet to find an articulate description of exactly what costs are being saved, nor an explanation of how long, slow, heavy trains are good for the railroad. I do not find the benefits anywhere in the financial statements, and never have. Best regards, Michael Sol Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Thursday, June 30, 2005 4:16 PM Great to have you back Michael. A little more solid information would be great, as Bob indicated, but unfortunately it will probably not be available to us. A few questions, if you dont mind: 1. Clarify your use of $924 for breakeven per carload. 2. Does that $924 BE apply to grain? If I read correctly it is a system BE. 3. If that is correct, then the consumer product segment, based on your assumption of 1.6 "units" per carload would then be profitable....on the system BE point, and not unprofitable as you indicated. 4. What is the average mileage for the Ag carload segment? By knowing that number and the average carload revenue of $1969, we can crunch some numbers. 5. Average system carload revenue, as you stated, for 1064 miles of ag products was $2699 per carload. How did you determine that number? 6. What are the cycle times for the grain shuttle trains? You indicated cycle times increased from 24 to 26 days, was this for all system cars, or just grain cars, or grain shuttle cars? 7. Milwaukee Road's short haul grain cycle times were 6 days in the midwest in the 70's. Was that for the entire system? Or broken out for a single move? How far was that move? 8. You indicated that BNSF is driving away ag business. Perhaps it is. Ag carloadings were up 8% in 2004 vs 2003. This is not quite as healthy as the 10% increase systemwide, but not too far below. 9. You lament that the BNSF is throwing away revenue on grain shuttle movements, yet...as we all know " volume is vanity, profit is sanity "... are you saying profitability would have been higher? I dont think we have the data to crunch, again unfortunately. I seriously doubt if we will EVER see segment P&L statements from any publically, or private company. Finally, you correlate the 1998 operating income ratio of 24% (inverse of the operating ratio) and the decline in that ratio to current level of 17% (trailing 12 months) to "efficiencies" or in this case the ineffieciencies. I would suggest the decline in OI had much more to do with market dynamics than the running of larger shuttle trains. For example NS's OR dropped from 75% in 1998 to 90% in 2000 before climbing back up to 75% in 2004. Granted the Conrail integration had lots to do with that. UP's OR went frm 102 in 1998 to 89% last year. Yet, I would not say that UP is healthier today than in the late 90's. The economic slaughter of post 9-11 and the recession had much more to do with the rising OR of BNSF than shuttle trains. Granted, NS is back to where they were, but they are NS. UP keeps bouncing along from disaster to disaster. I am not an apologist for BNSF. But, they have invested very heavily into their franchise and based on resent revenue and profitability, it seems to have been wise. They are in the middle of a 6000 covered hopper car purchase which will help allieviate future problems. It would be very interesting to see a complete breakdown on different business segments, but as we know, it aint gonna happen. Good day. ed Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Thursday, June 30, 2005 3:23 PM This is nothing new. BNSF has not had any interest in serving small to medium COOP elevators since day one. This even began in the final yrs of the ATSF era. The policy is if your facility does not have the capicity to load unit trains of atleast 75 cars, you're screwed. I worked in the grain business dealing w/this rr in the 1990's and it wasn't pretty then Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Wednesday, June 29, 2005 11:36 PM QUOTE: Originally posted by Chris30 QUOTE: Lower revenues AND angry customers. How much more "efficiency" like this can a railroad handle? I mentioned it before in this thread... revenue gained from serving small elevators on deteriorating branches would have to be spent on maintenance at some point to keep the business and support the heavier cars that most deteriorating midwest grain branches can no longer support. Lower revenues? What $$. Besides, the big railroads are already stretched thin on grain car supply. They're not going to upset their biggest customers to serve the little elevator that could. It's all about $$ and car cycle times. In 1998, BNSF had 32,860 covered grain hopper cars. The demand was 408,000 carloads. On 12/20/03: 26,500 cars. The demand was 416,000 carloads. During 2004, the demand was for 450,000 carloads. Currently, BNSF fleet has 28,048 covered hopper cars available for service. Just in the past two months car cycle times have increased from 24 to 26 days. Milwaukee Road's grain car fleet had a 15 day cycle time on its "long" runs in the PNW. Milwaukee's grain car fleet was 1.7 times as profitable to that company as the BNSF fleet is to the BNSF today with shuttle trains because of significantly better utilization by Milwaukee Road without shuttle trains. Milwaukee did have shuttle type service in the Midwest on 6 day cycles. The big railroads today are "stretched thin" as a matter of policy. They have been cutting back on fleets even as grain shipment needs have been increasing. The current BNSF cycle time and car fleet size permits transportation of 394,000 carloads of wheat on an annual basis. In 1998, BNSF capacity was 461,000 carloads annually. Yet actual carload needs have steadily increased. Even the BNSF ten year average need is 431,000 carloads. The Year 2004 required 451,000 carloads. Current loadings on BNSF are running 102% of last year's loadings at this time. Now, BNSF advertises that its shuttle car cycle times are 2.4 times greater than single car, or less than shuttle, carload cycle times. Mr. Rose states that they keep shipping more and more by shuttle. That this is a great success. But overall car cycle times continue to increase, and the BNSF is significantly less able to carry the typical year's grain harvest than it was six years ago. It is true that railroads have to spend money to keep customers and provide service. Can't argue with that. Chris30, I think you are right on, on that observation. That's why it is worrisome to see examples of mainline customers seeking alternatives. The mainlines are too expensive to provide service to mainline customers? Hmmm. QUOTE: "Lower revenues?? What $$." Besides instances of lost customers? The shuttle rates are lower. The railroad receives less money per carload. Maybe that's not clear. The railroad does not make as much gross revenue off of shuttles as it does off of identical numbers of single carloads. The railroad loses close to $40,000 per train at shuttle train rates over what it would earn at single carload rates. That's the irony of this: it costs the customer more in increased transportation costs to the shuttle elevators, and increased costs to build and operate shuttle elevators, and the railroad receives less revenue. This is one bright idea. Nobody wins. If all BNSF grain tonnage were carried in shuttles, last year, compared to earnings if all BNSF grain tonnage were carried at single carload rates, the BNSF would have lost nearly $164 million in potential revenue. That's fine insofar as cost savings in excess of the reduced revenue can be demonstrated. But, that's the part that's missing. Rather, longer, slower trains appear to result in increased system congestion, do result in increased track maintenance expenses, and do result in longer terminal dwell times as a system effect that "suggests" that increased efficiency is not the result, but rather statistically measurable inefficiency is apparently the result. That all trains are affected by the increased congestion resulting from bigger, longer, slower grain trains. Overall, railroads have spent 20 years seriously converting its sometimes reluctant customers -- because it damages many of those customers economically -- to shuttle train concepts. Corporate careers have been dedicated to the concept, right or wrong. Matt Rose is one of them. Are the railroads financially better off now than they were, say, in 1998, in the area where the supposed efficiencies are supposed to show up -- the bottom line? Year _____ 1998____ 2004 Op. Income 24.14% 15.40% Net income 12.95% 7.23% OK, BNSF net profit has dropped almost by half. Where else do these alleged "efficiencies" show up? Best regards, Michael Sol Reply Chris30 Member sinceDecember 2001 From: near Chicago 937 posts Posted by Chris30 on Wednesday, June 29, 2005 8:07 PM QUOTE: Lower revenues AND angry customers. How much more "efficiency" like this can a railroad handle? I mentioned it before in this thread... revenue gained from serving small elevators on deteriorating branches would have to be spent on maintenance at some point to keep the business and support the heavier cars that most deteriorating midwest grain branches can no longer support. Lower revenues? What $$. Besides, the big railroads are already stretched thin on grain car supply. They're not going to upset their biggest customers to serve the little elevator that could. It's all about $$ and car cycle times. CC Reply bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Wednesday, June 29, 2005 7:47 PM QUOTE: Originally posted by MichaelSol Well Dave, that is certainly an interesting way to look at it. From an expense standpoint, it seems that the railroads have taken an odd view. Grain transportation is already such a streamlined operation compared to industrial or consumer traffic. No congested yards to deal with, no vandalism losses, all the traffic is out in the middle of nowhwere, where the crews stop, get the job done, and move on. Exactly what "costs" these companies are trying to "wring" out of the process is not entirely clear to me. Matt Rose does say the following: "For several years we've improved our efficiency with longer trains for coal, grain, and other commodities." Thirty years ago, I sat down with some Milwaukee people who were forward looking, with the idea of trying to envision the most "efficient" rail operation. This was before modelling was a sophisticated art/science. After a few months of chewing it over, we concluded that shorter, faster trains were more profitable than longer, slower trains. The alleged savings in crew costs with longer trains were cancelled out entirely by the increased costs of getting the train from point A to point B, and, at some point in the congestion matrix, crew productivity in the scenario with longer trains began to fall quite dramatically. The longer the trains, at a certain level of business, the more inefficient the railroad became. The point was, the longer that the trains were on the track, the less efficient the railroad became and the more expensive was overall train operation. So, BNSF proudly announces that its idea of efficiency is longer trains, on lines that are already pretty congested. Interestingly, as the Internet became more clearly understood in terms of routing efficiency, the idea was exactly the opposite, break messages and information flow into small and discrete units, send them off, and the assemble them at their destination. Networks are more efficient with small units, rather than large units . Railroads have developed the idea, that is contrary to both models and experience in other industries, that large units are most efficient to move over crowded networks. And even though its own customers don't like it, and it costs the customers more money, BNSF seems bound and deterrmined to force its customers into this idea of "efficiency." Is there any "efficiency"? BNSF grain trains are already among the slowest on the system at an average speed of 23.1 mph. A BNSF grain train of 15,000 tons is not an example of efficiency, rather, it is a slow moving bottleneck. Even though, by industry standards, BNSF is a pretty good mover of grain trains. However, its worst yard for dwell time is Pasco, with an average of 15.9 hours. Not to pick on BNSF, UP is just awful, with yard dwell times of 20-30 hours. But, Pasco happens to be where some of the longest grain trains are routed. Now, what is the breakeven on trains.? The average carload on the BNSF earns $1074. It travels 1045 miles. To breakeven, that carload would earn $924.00 on the same haul. That is, the average carload generates a profit of $150. What does BNSF earn from a carload of grain on that same line-haul? Well, Brockton, Montana is 1064 miles from Portland. A carload of wheat brings revenue to the BNSF of $3,938.00. Now, admittedly, Brockton is located in Montana and suffers from that uniquely BNSF policy that, if you ship in Montana, you will pay a lot more. The system average for 1064 miles, shipping grain, is only $2699 per carload. Either way, that is enormously profitable Compared to the BNSF average, Montana wheat is nearly 25 times as profitable per carload as BNSF earns from its typical business. Compare that to the BNSF Consumer Group which represents 40% of BNSF revenue. The average CG carload brings a yield of $874. Compared to grain, which has no real "handling" needs -- it doesn't break, it doesn't dent -- CG is a high cost operation, serving the most congested yards on the most congested routes. The CG group loses about $50 per carload carried. The average carload of grain on the BNSF system brings $1969. This compares not only with CG at $874, but with Industrial at $1568/carload, and Coal at $1028 per carload. Wheat is the most profitable item carried on the BNSF, and is likely the least costly to the Company in terms of associated operating expenses. Yet, Matt Rose says nothing about improving "efficiency" for the CG group, but only talks about coal, grain and "other commodities." But, as the numbers, and maybe even some common sense should show, "they ain't the problem." The fact is, based on profitability, BNSF should be turning sommersaults to keep those grain customers happy, and carrying as much wheat as possible, rather than losing the business entirely, as its policies have been doing. What is interesting is that the Company is offering a 12% cut in its own revenue on this profitable commodity. To make longer, most likely less efficient trains which exacerbate congestion delays on the system, increasing operating expenses overall. Naturally, someone would see it as mismanagement to make an extraordinarily good profit, because it might lead to congestion, but good business practice to carry 40% of the company traffic at a loss, even though that accounts for all of the congestion, and not do anything about it. Why on earth would a "year round customer" that loses money be so important to keep, compared to a customer that, in the season, generates a profit of 200-300%? Further, and perhaps more significantly, there is not a particular seasonality in grain shipping. Misunderstanding the difference between grain marketing and grain growing is fairly typical. In 2004, for instance, to Pacific Northwest Ports, the quarterly carloads arriving during the week of 12/31/03 were 3500, 3/24/04 -- 5200, 6/15/04 -- 4800, 9/8/04 -- 3000, 12/01/04 -- 5000, carloads. As you will note, the smallest number of carloads was during "the season" of harvest. Grain shipping is, in fact, a year round business. However, it is thinking like this, and Instances like this, that go a long way to explaining why this Company cannot earn its own cost of capital. Best regards, Michael Sol It is sad you will never see the detailed numbers. Oh well. Bob Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Wednesday, June 29, 2005 5:49 PM QUOTE: Originally posted by PNWRMNM Michael, Are you quoting revenue per car or revenue per unit? BNSF's web site talks in units, not cars. My take on this is a unit is a car or a trailer or a container. If so, revuenue per trailer/container should be at least doubled to get per car equavalent. Consumer goods is where the intermodal business resides in BNSF's structure, so one would expect low revenue per unit there. In short, I think you may be comparing apples to oranges. Mac You may be right, but the stumbling block is the somewhat contradictory way that the Annual Report refers to the unit of measure. "The increase in average revenue per unit of 4 per cent is primarily related to rate increases and increased fuel surcharges." "Average revenue per car/unit increased 5 per cent in 2004 to $1,126 from $1,074 in 2003." "Average revenue per car increased 5 percent in 2004 compared with 2003." One, or two, of these statements is contradictory to the third, if indeed the "unit" is the intermodal unit, not the carload unit, when referring to :unit" distinct from carload, since the percentage increases would not be the same if the intermodal unit is not a "carload" or vice-versa. I think you are exactly right, although some of the intermodal as it is classified by BNSF is carload, for others, not. Similarly, some ag and ind is intermodal, but that is not something the annual report describes, so the breakout of those numbers is tough to do. If a person want to get carload rate on the CG, it would be a guess of somewhere between 1.6 and 1.9 the "unit" rate assuming that the contradictions in the above statements are mild mistatements. Best regards, Michael Sol Reply PNWRMNM Member sinceMay 2003 From: US 2,593 posts Posted by PNWRMNM on Wednesday, June 29, 2005 4:33 PM Michael, Are you quoting revenue per car or revenue per unit? BNSF's web site talks in units, not cars. My take on this is a unit is a car or a trailer or a container. If so, revuenue per trailer/container should be at least doubled to get per car equavalent. Consumer goods is where the intermodal business resides in BNSF's structure, so one would expect low revenue per unit there. In short, I think you may be comparing apples to oranges. Mac Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Wednesday, June 29, 2005 1:50 PM Amen thanks Mike! Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Tuesday, June 28, 2005 12:16 PM Well Dave, that is certainly an interesting way to look at it. From an expense standpoint, it seems that the railroads have taken an odd view. Grain transportation is already such a streamlined operation compared to industrial or consumer traffic. No congested yards to deal with, no vandalism losses, all the traffic is out in the middle of nowhwere, where the crews stop, get the job done, and move on. Exactly what "costs" these companies are trying to "wring" out of the process is not entirely clear to me. Matt Rose does say the following: "For several years we've improved our efficiency with longer trains for coal, grain, and other commodities." Thirty years ago, I sat down with some Milwaukee people who were forward looking, with the idea of trying to envision the most "efficient" rail operation. This was before modelling was a sophisticated art/science. After a few months of chewing it over, we concluded that shorter, faster trains were more profitable than longer, slower trains. The alleged savings in crew costs with longer trains were cancelled out entirely by the increased costs of getting the train from point A to point B, and, at some point in the congestion matrix, crew productivity in the scenario with longer trains began to fall quite dramatically. The longer the trains, at a certain level of business, the more inefficient the railroad became. The point was, the longer that the trains were on the track, the less efficient the railroad became and the more expensive was overall train operation. So, BNSF proudly announces that its idea of efficiency is longer trains, on lines that are already pretty congested. Interestingly, as the Internet became more clearly understood in terms of routing efficiency, the idea was exactly the opposite, break messages and information flow into small and discrete units, send them off, and the assemble them at their destination. Networks are more efficient with small units, rather than large units . Railroads have developed the idea, that is contrary to both models and experience in other industries, that large units are most efficient to move over crowded networks. And even though its own customers don't like it, and it costs the customers more money, BNSF seems bound and deterrmined to force its customers into this idea of "efficiency." Is there any "efficiency"? BNSF grain trains are already among the slowest on the system at an average speed of 23.1 mph. A BNSF grain train of 15,000 tons is not an example of efficiency, rather, it is a slow moving bottleneck. Even though, by industry standards, BNSF is a pretty good mover of grain trains. However, its worst yard for dwell time is Pasco, with an average of 15.9 hours. Not to pick on BNSF, UP is just awful, with yard dwell times of 20-30 hours. But, Pasco happens to be where some of the longest grain trains are routed. Now, what is the breakeven on trains.? The average carload on the BNSF earned $1074 (2003). It traveled 1045 miles. To breakeven, that carload would earn $924.00 on the same haul. That is, the average carload generates a profit of $150. What does BNSF earn from a carload of grain on that same line-haul? Well, Brockton, Montana is 1064 miles from Portland. A carload of wheat brings revenue to the BNSF of $3,938.00. Now, admittedly, Brockton is located in Montana and suffers from that uniquely BNSF policy that, if you ship in Montana, you will pay a lot more. The system average for 1064 miles, shipping grain, is only $2699 per carload. Either way, that is enormously profitable Compared to the BNSF average, Montana wheat is nearly 25 times as profitable per carload as BNSF earns from its typical business. Compare that to the BNSF Consumer Group which represents 40% of BNSF revenue. The average CG carload brings a yield of $874. Compared to grain, which has no real "handling" needs -- it doesn't break, it doesn't dent -- CG is a high cost operation, serving the most congested yards on the most congested routes. The CG group loses about $50 per carload carried. The average carload of grain on the BNSF system brings $1969. This compares not only with CG at $874, but with Industrial at $1568/carload, and Coal at $1028 per carload. Wheat is the most profitable item carried on the BNSF, and is likely the least costly to the Company in terms of associated operating expenses. Yet, Matt Rose says nothing about improving "efficiency" for the CG group, but only talks about coal, grain and "other commodities." But, as the numbers, and maybe even some common sense should show, "they ain't the problem." The fact is, based on profitability, BNSF should be turning sommersaults to keep those grain customers happy, and carrying as much wheat as possible, rather than losing the business entirely, as its policies have been doing. What is interesting is that the Company is offering a 12% cut in its own revenue on this profitable commodity. To make longer, most likely less efficient trains which exacerbate congestion delays on the system, increasing operating expenses overall. Naturally, someone would see it as mismanagement to make an extraordinarily good profit, because it might lead to congestion, but good business practice to carry 40% of the company traffic at a loss, even though that accounts for all of the congestion, and not do anything about it. Why on earth would a "year round customer" that loses money be so important to keep, compared to a customer that, in the season, generates a profit of 200-300%? Further, and perhaps more significantly, there is not a particular seasonality in grain shipping. Misunderstanding the difference between grain marketing and grain growing is fairly typical. In 2004, for instance, to Pacific Northwest Ports, the quarterly carloads arriving during the week of 12/31/03 were 3500, 3/24/04 -- 5200, 6/15/04 -- 4800, 9/8/04 -- 3000, 12/01/04 -- 5000, carloads. As you will note, the smallest number of carloads was during "the season" of harvest. Grain shipping is, in fact, a year round business. However, it is thinking like this, and Instances like this, that go a long way to explaining why this Company cannot earn its own cost of capital. Best regards, Michael Sol Reply CSSHEGEWISCH Member sinceMarch 2016 From: Burbank IL (near Clearing) 13,540 posts Posted by CSSHEGEWISCH on Tuesday, June 28, 2005 11:33 AM QUOTE: Originally posted by daveklepper How much business does BNSF want? Maybe they have decided that getting all the business, and it is seasonal, means capacity constraints and inability to provide the service their year-round customers expect. So they are deliberately loosing the seasonal business to insure keeping the year-round business. Does this make sense? The concept makes perfect sense to me. I've known of several other businesses that turned away additional customers since they were already operating at capacity and did not wi***o alienate their existing customers. Grain traffic cannot be looked at without considering its effect on other traffic. If BNSF is already operating at close to capacity, and this appears to be the situation, I would consider any attempt to go after every last bit of grain traffic to be mismanagement. The daily commute is part of everyday life but I get two rides a day out of it. Paul Reply daveklepper Member sinceJune 2002 20,096 posts Posted by daveklepper on Tuesday, June 28, 2005 9:51 AM How much business does BNSF want? Maybe they have decided that getting all the business, and it is seasonal, means capacity constraints and inability to provide the service their year-round customers expect. So they are deliberately loosing the seasonal business to insure keeping the year-round business. Does this make sense? Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Tuesday, June 28, 2005 9:50 AM Am going to throw in a point on the fire. First off, am not a farmer, but live in a small farming community in NW ILL. Many of the smaller farmers do not have the storage or drying facilities that are required with the larger yields produced today. The semi drivers take the crop from the field to the elevator. There the farmer is paid after drying and storage fees. Then the same drivers get paid to take the "finished" crop 30 miles to larger facilities like ADM or Bunge Corp. where it is either used (ADM) or shipped out by barge to other larger facilities. All this starts at our local FS elevator which is located 50 feet from the BN Peavine line. Seems a simple siding (which there is plenty of room for) would eliminate a whole lot of semi traffic in the fall. Just my [2c] Willy Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Tuesday, June 28, 2005 9:28 AM Hi Alan, in a recent grain marketing study I participated in, we looked at Texas grain transportation patterns (hence the above quote). It is a big state. From Brownsville (the big BNSF-served Gulf Port), the most distant elevator is 1282 miles (Anthony Texas) which compares with Montana's most distant elevator, to Portland, Baker at 1272 miles. As you can see, Texas is a squeak larger than Montana in wheat terms. Texas elevator distribution is fairly similar. The median distance to port for Texas elevators is 837 miles, for Montana, it is 909 miles. However, the trucks, and other railroads have their effect in Texas. Lubbock to Brownsville, 800 miles, single carload rate, $2300. Conrad, MT to Portland, 816 miles, $3031 per carload. Indeed, if the Conrad farmer trucks his wheat to the big shuttle at Shelby, the elevator there can only get a rate of $2716 per carload for a 110 carload train, $417 MORE than the single carload rate offered to the Texas shipper. Plus, of course, the cost of trucking. Rates as of 4/15/05. Best regards, Michael Sol Reply arbfbe Member sinceFebruary 2002 910 posts Posted by arbfbe on Tuesday, June 28, 2005 1:21 AM Trucking becomes a better alternative the closer the producer is to the final market. Texas is a big state but the grower is closer to the export shipping or final producer than the Montana farmer is to the Pacific Northwest Ports. The Washington growers in the Palouse find shipping on the Columbia to be a viable alternative. Sure the Montana farmers can do the same but the costs are going to sky rocket when the back haul to the truck is considered. Rail, meaning BNSF is the only realistic means to move the quantities of grain produced to the final users. There are no large flour mills in the state and so the grain must leave. It is too bad BNSFs service orientation is focused on BNSF's service to itself instead of it's customers. A monopoly position does lead to some market distortions. Alan Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 27, 2005 11:45 PM Well, it's not just a regional problem: "The Texas elevator and feed mill surveys indicated that one-fifth of the respondents were without rail service because of rail line abandonments, while one-third of the rice driers were located on abandoned rail lines. Further, one-third of the country elevator operators observed that their truck shipments of grain had increased in the past five years by nearly 60 percent, while about 60 percent of elevator operators said that their rail shipments had decreased by about 38 percent. Thus, there is an increase in the use of trucks in the marketing of Texas grain. "Texas grain handlers believe their motor carrier service is satisfactory. By contrast, most registered some dissatisfaction with rail service. The greatest concern centers on the grain handlers' diffiiculty in obtaining railroad service and on the promptness of railroads in providing service. About half of the country elevator operators indicated that inadequate rail service had at times required them to lower their grain bid to farmers by an average of $0.14 per bushel. Country elevators and feed mills indicated the most dissatisfaction with railroads, while terminal elevators were more nearly satisfied with the service offered by railroads." Texas Grain Transportation Study by Fuller, Yu, Collier, Jamieson and Harrison. Center for Transportation Research, University of Texas at Austin and Department of Agricultural Economics, Texas A&M, January, 2001. Grain is one of BNSF's most profitable services. This isn't an area they need to cut costs, this is an area they need to haul as much as they can, however the customer wants it hauled. As a product group, ag's average carload revenue is the highest of all product groups, at about $1900. Sprague is a good example. BNSF charges a $1200 carload rate to Portland. Even though a short haul, the revenue is higher than the system wide average of all product groups, some of which are virtually all unit train. Fast cycle time, high revenue freight. The RR wants to aggravate the customers so that it can take a 12% cut in revenue, if the customer will load at a different location, and so the customer takes his grain elsewhere. Lower revenues AND angry customers. How much more "efficiency" like this can a railroad handle? Best regards, Michael Sol Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Monday, June 27, 2005 8:34 PM Michael, Your Lind reference reminds me of an observation I made a few months ago while exploring the back roads of Adams County WA. I followed an empty grain truck up State Highway 23 to Sprague WA, and when he turned into Sprague, I decided to see if he was going to stop at the Sprague elevators right there on the BNSF mainline. Sure enough, that truck plus three others had pulled into the rail side elevator waiting to load. My first inclination of their next destination was that they would simply short haul down the road to the BNSF shuttle train facility in Ritzville, since BNSF no longer provides service to the Sprague elevators despite a nice long siding there. So I waited around until the first truck was loaded and ready to go.... However, instead of heading down the road to Ritzville, this truck turned back down State Highway 23 heading toward Pullman. I followed him at a distance as far as St John, lost sight of him going out of St John, so I doubled back to St John and guessed that he had turned down the county road Endicott. Yep, I caught up with him going toward Endicott. He continued south passed Endicott, crossed over Highway 26, turned down Highway 127, and finally pulled into the riverside elevators at Central Ferry. I turned around to head back toward Sprague (since my intent was to watch the BNSF action at the Fishtrap recreation area), and on the way back I met the other three trucks that had been at the Sprague elevators, all heading the same direction as the first truck. Okay, enough of the Grandpa Simpson story line..... The conclusions from this trip is this: BNSF is losing traffic by their refusal to serve the the many mainline elevators. They probably assume that they will simply get that traffic at their Ritzville super terminal. Wrong. BNSF's decision to deny service to the line side elevators in deference to their unit train facility has cause at least some of that traffic to shift to the barge lines way down south. It is a little over 23 miles by I-90 from Sprague to Ritzville, while it is about 90 miles from Sprague to Central Ferry over a combination of State Highways and narrow county roads with alot of curvature and up and down running. My guess is that this traffic shift has more to do with service levels than with elevator price, because the party line around BNSF clones is that the unit train service from the Ritzville elevator can not only match the barge line rates, but beat them. Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 27, 2005 8:59 AM QUOTE: Originally posted by greyhounds[That's like the combine and the trucks. The farmer has to "balance his/her line". He/she has to coordinate the trucks with the combine. If the farmer has to truck his grain farther to the elevator so be it. The farmer needs to hire more trucks. There is no reason that a 105K truck can't go into a field. It's a matter of ground pressure, and that can be solved by putting more axles under the truck. "Ground pressure." Field trucks used by grain harvesters represent different economics than over the road trucks. 1) Drivers are exempt from the requirement for commercial classification in most grain producing states. This permits the farmer or his kids to operate the trucks to the elevators. 2) In some states, the farm truck enjoys an agricultural fuel tax exemption that the OTR trucks do not. This is economically significant to the grain industry. 3) Truck must be licensed at its GVW rate. No ag exception. Pretty expensive. 4) Most country roads are not built to handle the loading, many country road bridges are not built to handle the loading, and if an OTR truck exceeded the weight limits, then there's a fine, besides potentially going through a bridge. I've seen that one. Quite a mess. The fact is, OTR trucks simply can't get to many locations. On the Combine side: 1) the truck follows the Combine, the Combine doesn't come to the truck. OTR trucks are designed to be on highways, not fields. 2) Combines are not built to load OTR trucks. Either the Combine requires modification, or additional equipment, an auger, needs to be "available". "Available" meaning where the Combine needs it, not sitting somewhere else. 3) It would take the truck out of service for a day or more, just putting around the field following the Combine, to get the full load. An extremely poor use of truck time for an expensive OTR truck. Pretty expensive proposition to have a commercial license driver and expensive truck sitting around all day in a field. Not really what its designed to do. At Lind, Washington a new transloader located on Highway 385 perhaps represents new thinking. It is a small, very small elevator. It is entirely up on stilts, and I wasn't sure what it was when I first saw it. Big steel bins on stilts. Pretty cheap to construct compared to a modern grain elevator. Very modern, very automated. Local trucks bring in the grain and load the elevator. OTR trucks come through, pull underneath, load by gravity and take the grain away. Not a railroad in sight. I stopped and asked. The locals were apparently quite pleased with the results. "it gets us away from dependence on the railroad," meaning in that instance, the BNSF. "Service was never any good anyway, and this allows us to look for the best rate." The interesting point to me was that 1) this was not some crummy little branchline somewhere, but an attitude by shippers on a mainline, and 2) the idea that the BNSF had now become the means of last resort, that these shippers would look to barges or UP, or direct trucking all the way, before looking to BNSF. Some hostility there. I am sure the market will provide a solution to the reluctance of railroads to serve their customers. I'm not sure that the solution will benefit the railroads. Gives a little different meaning to the twist, "not a railroad in sight." Best regards, Michael Sol Reply greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Monday, June 27, 2005 1:20 AM Well, equipment cycle times are important to everyone. It costs money to own equipment and getting the most productive use out of that equipment is vital. They teach this in MBA classes. If you've got a machine that can perform its process in 240 seconds, and the next machine on the line takes 360 seconds to do its process, what do you do? You can't have the operator of the first machine, and his/her machine, standing idle waiting for the next guy to finish. You've got to "balance the line". In an ideal situation you'd have three of the first machines feeding two of the second machines. That's like the combine and the trucks. The farmer has to "balance his/her line". He/she has to coordinate the trucks with the combine. If the farmer has to truck his grain farther to the elevator so be it. The farmer needs to hire more trucks. There is no reason that a 105K truck can't go into a field. It's a matter of ground pressure, and that can be solved by putting more axles under the truck. I have learned that a truck is one of the most flexible machines in the world. You can do just about anything with a truck. It can be a fighting platform for the Army. It can be a work platform for a power company. It can haul produce from California to New York City. It can put out a fire. And, most importanly, it can move to where it is needed easily. Using trucks to move grain from a field is a once a year thing. Then the trucks, and their drivers, go elsewhere. A rail branch line isn't like that. It's there all the time. Costing money to own and operate. It is situation specific, but generally the grain gathering operation, which comes from a field, not from a country elevator, will be handled best by truck. Now there's a trade off. At a specific distance, you put the grain in a covered hopper. And that function will be work out best by the market forces, not by lawyers and politicians. "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. Reply bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Sunday, June 26, 2005 3:07 PM QUOTE: Originally posted by greyhounds Yes, but. The grain isn't originating at a country elevator. It's originating in a farm field. I remember watching a Wisconsin farmer harvest his corn. It was dark and the John Deere combine just went back and forth, it's headlights showing the way through the corn field. The hopper on the combine would get full, then he'd ( or she'd, I don't know which gender was driving) unload into a semi in the field. Semi's can go into farm fields where the freight originates. Trains can't. When the semi got full, it drove off. Now once you've got the grain in a truck, does it make sense to take it to a small country elevator, then transfer it to that elevator, hold it there, then transfer it to smaller rail cars for shortline movement, then transfer it again to a larger elevator, hold it there, then transfer it to a main line shuttle train? Or do you just drive the truck to the large elevator in the first place? It will depend on the specific situation, but if I had to bet ( and I do bet on things ), I'd bet that it will be generally more efficient to just drive the truck to the large elevator. You have hit the nail on the head. I base this on my experience working with real grain and fertilzer shippers at the Rock Island and C&NW from 1966 to 1982. We facilitated a lot of elevators that wanted to load 25, 50 and 75 car blocks of covered hoppers on branch lines that had a future. The elevators that stuck with single car shipments in 40' boxcars did not have a future. Bob Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Sunday, June 26, 2005 12:09 PM QUOTE: Originally posted by greyhounds Now once you've got the grain in a truck, does it make sense to take it to a small country elevator, then transfer it to that elevator, hold it there, then transfer it to smaller rail cars for shortline movement, then transfer it again to a larger elevator, hold it there, then transfer it to a main line shuttle train? Or do you just drive the truck to the large elevator in the first place? It will depend on the specific situation, but if I had to bet ( and I do bet on things ), I'd bet that it will be generally more efficient to just drive the truck to the large elevator. Greyhounds, Using this logic, we could take it one step further and say that it would make more sense just to drive the truck to the deep water port instead of transloading from truck to unit train elevator. As Michael pointed out, it's all about equipment utilization, and all other things being equal the optimal economic scenario would involve using (1)truck from farm to nearest elevator, (2)branchline hoppers from that elevator to unit train elevator (wherein the grain is either transloaed from lighter hoppers to 286k hoppers, or the 264k/286k hoppers are added to the nest unit train consist), and finally (3)264k/286k unit train hoppers from unit train elevator to deep water port (or sometimes to nearest barge port, wherein the next step (3a) is barging from river port to deep water port). For those places where the nearest grain elevator has no rail access due to either prior rail abandonment or never having had rail acess, then Step 2 involves transloading from farm truck to highway truck, a much more costly move than the branchline rail option. Sometimes it is possible to load highway trucks directly at the farm, and let the unit train elevator take care of the product quality refinements. Other times it is possible that another step (1a) will be added when grain is transloaded from farm truck to highway truck at the nearest elevator without rail access, wherein the highway truck only goes as far as an intermediate country elevator that has branchline rail access where the grain is then transloaded to the branchline hoppers. It all depends on distances and time constraints involved. Yes, there is always some product degradation when it is transloaded, but I've been told by co-op reps that the product quality losses and extra costs are insignificant compared to transportation costs. Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Sunday, June 26, 2005 9:07 AM QUOTE: Originally posted by greyhounds [Now once you've got the grain in a truck, does it make sense to take it to a small country elevator, then transfer it to that elevator, hold it there, then transfer it to smaller rail cars for shortline movement, then transfer it again to a larger elevator, hold it there, then transfer it to a main line shuttle train? Or do you just drive the truck to the large elevator in the first place? It will depend on the specific situation, but if I had to bet ( and I do bet on things ), I'd bet that it will be generally more efficient to just drive the truck to the large elevator. No. Equipment cycle times are as crucial to the farmer as to the railroad. The truck has to be back in time to transload from the Combine to the truck, or else the Combine operator just sits there waiting. On smaller farms, the Combine operator often IS the truck driver and he is not going to get his crop in if he spends his time in the truck driving cross country somewhere with a load of wheat. Time is of the essence on a grain operation. The Combines operate as near to 24/7 as operator availabilty and fatigue will permit. The trucks are by and large used only during harvest, and there are neither excess trucks nor excess teenagers sitting around to drive them. And these are NOT 105k trucks that are out working between the elevator and the Combine. Those trucks don't load from Combines. They load at elevators. This is hot and dusty work and to preserve the crop against rain, hail and insects, the crop has to get in as quickly as possible. Custom cutters make their money harvesting as quickly as possible in order to follow the crop ripening north. Ideally, the trucks and Combine operate as a unit, one Combine, two trucks, two truck drivers. Small operators don't have the luxury so time is even more critical. A truck wants to be there by the time the bin is full on the Combine. The requirement for a truck at the Combine can be as short as 45 minutes. The farther the elevator, the more trucks and the more drivers needed to keep the Combine operating continuously. The closer the elevator is to the farm, the better. There is no efficiency whatsoever in long distance driving of grain trucks off the farm to an elevator many miles distant just because it is larger. Best regards, Michael Sol Reply kenneo Member sinceDecember 2001 From: Upper Left Coast 1,796 posts Posted by kenneo on Sunday, June 26, 2005 5:39 AM In a certain aspect, the BN in Montana is simply reacting to basic economics. As Greyhounds just stated, once the farmer has the product loaded in an OTR truck, you don't want to take it out and then reload it into a covered hopper unless the cost of that transload and two transportation charges will be less than keeping it in the truck all the may to the POE. And Futuremodel is correct about the effeciencies of grain loading on branchlines. My last RR position was as a Station Agent and we had several single farmer and small grain consolidator elevators in my district. The export terminal was less than 100 miles distant (mostly between 60 and 85 miles) from the elevators, yet I could compete on single car-load rates with the EXEMPT (ie farmer owned and operated) trucker who could haul directly from the field 60-85 miles to the POE. The exempt trucker could eat my lunch and dinner getting from the field to the export elevator, but one there, he started charging "delay fees" for waiting to unload. And then, about 1/2 the time, the truckers load was rejected because of "junk" in the grain that the branchline elevator filtered out. So the truckers had to locate a new sale for the grain. $$$$$$$$$$$$$$ Some things, while seeming to be non-cost effective, perform hidden functions that create greater economies further down the production chain. The farmer and the exporter were both better served by the small local elevator and the extra cost he inserted into the system was eliminated later in the production chain as illustrated above and the net result was a better operating system costing equal or less than any alternative. Consistancy and regularly fullfilled expections sell big time. Eric Reply greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Sunday, June 26, 2005 4:33 AM Yes, but. The grain isn't originating at a country elevator. It's originating in a farm field. I remember watching a Wisconsin farmer harvest his corn. It was dark and the John Deere combine just went back and forth, it's headlights showing the way through the corn field. The hopper on the combine would get full, then he'd ( or she'd, I don't know which gender was driving) unload into a semi in the field. Semi's can go into farm fields where the freight originates. Trains can't. When the semi got full, it drove off. Now once you've got the grain in a truck, does it make sense to take it to a small country elevator, then transfer it to that elevator, hold it there, then transfer it to smaller rail cars for shortline movement, then transfer it again to a larger elevator, hold it there, then transfer it to a main line shuttle train? Or do you just drive the truck to the large elevator in the first place? It will depend on the specific situation, but if I had to bet ( and I do bet on things ), I'd bet that it will be generally more efficient to just drive the truck to the large elevator. "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. Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Saturday, June 25, 2005 9:27 PM QUOTE: Originally posted by Chris30 One thing to add to the small grain elevators that are disappearing. A lot of small elevators are/were located on old, lightweight rail that is/was maintenance deffered branch trackage. As the weight of a loaded grain car continues to get heavier, the lightweight, maintenance deffered track can no longer support the weight of those cars. To continue serving these small elevators the railroads would have to continue using smaller/lighter cars, or the branch trackage would have to be completely rebuilt at a great cost that would never be repaid to support the newer, heavier grain cars. Don't foreget about the cost of crew and equipment to serve the lightweight branches that might only produce a few cars a week for one season of the year. It just makes more sense for the small elevators take the discount offered and truck their product to a large elevator on the main line. The railroads are more than willing to give a discount to the small elevator vs. the expense of the branch lines. CC This all goes back to argument of whether it is more effective to deliver grain from country elevator to unit train terminal via a 105k truck (129k in some states) over country roads, or whether it might be better to make that same short haul using old 264k (or even older 220k) hoppers over a still intact branch line. There are some shortline guys who even claim they can haul 286k cars over lightweight trackage if they just keep it under 10 mph. So it comes down to the idea that branchlines can continue to remain functional (and thus profitable) if the branchline owner can (1) carry grain from the elevators on his line to the unit train facility in the lighter weight 220k and 264k hoppers (which probably requires access to mainline rails to get to the unit train facility), or (2) fill up 286k hoppers with branchline grain and then go real slow over the branchline rails until the shortline can reach mainlline rails wherein they can speed it up to get to the unit train facility, wherein the 286k cars are added to the unit train consist. The former could be a problem if the older cars are no longer FRA compliant off the home rails, and the whole enterprise is dependent on the shortline operator being able to gain access to the unit train facility, often over mainline rails. When the Class I's owned and operated the the branchlines, this was no problem, but if they've spun off the branchline they are probably less accomodating of the branchline consists occupying the mainline rails. The bottom line is that it is still more efficient to move grain via 220k hoppers than it is to move grain in 105k truck trailers, and unless the rail move is no more than a few hoppers per year, it should still pay to move this product via rail rather than truck. For the most part the branchline is already paid for, only maintenance required to keep it minimally functional. With diesel fuel prices looking like they'll stay high for the time being, and the truck driver shortage means current drivers will begin to earn higher wages to stop loss for trucking firms, the idea of running lightweight freight trains over the lightweight rails could make a comeback. But it will still depend on the access issue to make it work. Reply Edit broncoman Member sinceFebruary 2003 From: Gateway to Donner Summit 434 posts Posted by broncoman on Saturday, June 25, 2005 7:29 PM QUOTE: Originally posted by ericsp The grain trains I see are probably about 75 to 100 cars. All of the grain elevators around here are receivers. Do they load any grains besides rice up there? Eric rice is a big export, but I am not sure what the other grain is that is shipped. I know I have seen a lot of cars at the elevators up highway 99 above Yuba City. The cars were being loaded outside of rice season, but I didn't know with what. Anyone else care to venture a guess. Reply Chris30 Member sinceDecember 2001 From: near Chicago 937 posts Posted by Chris30 on Saturday, June 25, 2005 7:08 PM One thing to add to the small grain elevators that are disappearing. A lot of small elevators are/were located on old, lightweight rail that is/was maintenance deffered branch trackage. As the weight of a loaded grain car continues to get heavier, the lightweight, maintenance deffered track can no longer support the weight of those cars. To continue serving these small elevators the railroads would have to continue using smaller/lighter cars, or the branch trackage would have to be completely rebuilt at a great cost that would never be repaid to support the newer, heavier grain cars. Don't foreget about the cost of crew and equipment to serve the lightweight branches that might only produce a few cars a week for one season of the year. It just makes more sense for the small elevators take the discount offered and truck their product to a large elevator on the main line. The railroads are more than willing to give a discount to the small elevator vs. the expense of the branch lines. CC Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Saturday, June 25, 2005 12:51 PM Exactly—and I suppose contumelious would be a better term in the context I was using. As Dan said, in a recent post, what this will really come down to is the ability of the state courts to police properly this action. As somebody who works for a state appellate court, I am not at all convinced that there will be a uniform application of this oversight. Furthermore, in order for the State courts to properly oversee this, there is going to have to be litigation. Who do you think is going to be able to hire the better lawyer, Wal-Mart or some family farmer? Furthermore, the type of litigation involved will be complex—where the better lawyer makes even more of a difference. I am truly worried about this one. Gabe Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Saturday, June 25, 2005 11:48 AM QUOTE: Originally posted by gabe QUOTE: Originally posted by futuremodal Gabe, I'll grant you that there is a fundamental difference between the public needs of a railroad/pipeline/transmission line et al and the public needs of a big box store or new multi family dwellings. However, in spirit (and from a legal perspective) a new private development is a new private development regardless of function or intent. In other words, I'm not sure the law sees a difference between local/regional juristiction that supports UP and local/regional juristicition that supports WalMart. The Supreme Court recognized that it would be discriminatory to allow Corporation A the right to eminent domain but not allow Corporation B the same right, regardless of what it is those corporations are involved. It is up to Congress to make the distinction between those corporations which absolutely need to access certain private property to function, and those which could effectively "shop around" for the right location. Of course, I have argued in other topic lines that railroads are not the same as other private ventures, therefore it is ridiculous to allow railroads the same levels of "hands off" government approach, especially given the importance of preserving and expanding transportation infrastructure to meet the demands of an ever growing economy. If I remember correctly, even you Gabe presented the "McDonalds" analogy in defending the current railroad closed access status quo system. So therefore, if railroads are no different from McDonalds when it comes to what governments allow in terms of price or access regulation, then it can also be argued that McDonalds is no different from railroads in what governments allow when it comes to eminent domain. For the record, I am all for allowing railroads the right of eminent domain, but with that right comes the necessary oversight of regulation to assure optimal citizen access to that ROW that utilized the right of eminent domain. Otherwise, we are just granting fiefdoms to discriminatory entities. Dave, I am not trying to be contumacious, but to quote the Court in its reference to the new land use "Nor will the private lessees of the land in any sense be required to operate like common carriers, making their services available to all comers." The Court just kicked out one of the chief restrictions on the use of the doctrine. This will not only allow the greatly expanded view of public benefit to be used as a sword by the rich; it will also allow the doctrine to be used CONSIDERABLY more than it is now. Gabe Well, I'm okay with you being contumacious, as long as you don't become contumelious. I admit, I am a little bit perplexed by the Court statement regarding lessees absolvency from "common carrier" assimilation, since the particular case pertained to a developer whose end product would ostensibly be made available to the public marketplace. If this interpretation is taken at face value, then a private individual with influence could convince governments to bestow the act of eminent domain to remove another private citizen from their property, soley for the purpose of the former building their own private residence on the latter's site. Perhaps this is why the reaction from both the left and the right has been so vocal, and it begs the question as to why the Court would so drastically extend this right of eminent domain beyond the auspices of the original case. It's one thing to grant eminent domain for a project that would be made available to the public, it's entirely beyond reason to grant eminent domain for a project that is intended for private use. Reply Edit gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Saturday, June 25, 2005 11:12 AM QUOTE: Originally posted by futuremodal Gabe, I'll grant you that there is a fundamental difference between the public needs of a railroad/pipeline/transmission line et al and the public needs of a big box store or new multi family dwellings. However, in spirit (and from a legal perspective) a new private development is a new private development regardless of function or intent. In other words, I'm not sure the law sees a difference between local/regional juristiction that supports UP and local/regional juristicition that supports WalMart. The Supreme Court recognized that it would be discriminatory to allow Corporation A the right to eminent domain but not allow Corporation B the same right, regardless of what it is those corporations are involved. It is up to Congress to make the distinction between those corporations which absolutely need to access certain private property to function, and those which could effectively "shop around" for the right location. Of course, I have argued in other topic lines that railroads are not the same as other private ventures, therefore it is ridiculous to allow railroads the same levels of "hands off" government approach, especially given the importance of preserving and expanding transportation infrastructure to meet the demands of an ever growing economy. If I remember correctly, even you Gabe presented the "McDonalds" analogy in defending the current railroad closed access status quo system. So therefore, if railroads are no different from McDonalds when it comes to what governments allow in terms of price or access regulation, then it can also be argued that McDonalds is no different from railroads in what governments allow when it comes to eminent domain. For the record, I am all for allowing railroads the right of eminent domain, but with that right comes the necessary oversight of regulation to assure optimal citizen access to that ROW that utilized the right of eminent domain. Otherwise, we are just granting fiefdoms to discriminatory entities. Dave, I am not trying to be contumacious, but to quote the Court in its reference to the new land use "Nor will the private lessees of the land in any sense be required to operate like common carriers, making their services available to all comers." The Court just kicked out one of the chief restrictions on the use of the doctrine. This will not only allow the greatly expanded view of public benefit to be used as a sword by the rich; it will also allow the doctrine to be used CONSIDERABLY more than it is now. Gabe Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Saturday, June 25, 2005 11:04 AM Greyhounds, None taken. Most of my best friends are lawyers and are great people that truly entered the profession to serve the public good. That having been said, as a group, most of us can't stand lawyers. Gabe Reply greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Saturday, June 25, 2005 12:30 AM No offense to Gabe but, "Lawyers are like nuclear weapons, I got 'em because the other side's got 'em; but once you use 'em, they screw everything up." By Danny DiVito in "Other People's Money" - a really great (or "Greyt" as we fast dog folks say) movie. "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. Reply ericsp Member sinceMay 2015 5,134 posts Posted by ericsp on Friday, June 24, 2005 11:02 PM QUOTE: Originally posted by broncoman I am born and raised in the central valley of CA, so I am curious as to the "stranded" grain elevators of the midwest. There are some fairly large farms still left in the greater sacramento area but it seems that they truck the grain to a siding where it is transferred to anywhere from 2-6 cars. There are still bigger elevators around I would say you wouldn't have to go more than 60-80 mi to go from one to another from Redding almost all the way down to Los Angeles. Is this scenerio different from the midwest? I am just curious as to the scope. I am sure the distances between "train load" elevators is substantial. And out of curiosity what is the standard "train load", 30-50 cars? Thanks for the info. The grain trains I see are probably about 75 to 100 cars. All of the grain elevators around here are receivers. Do they load any grains besides rice up there? "No soup for you!" - Yev Kassem (from Seinfeld) Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Friday, June 24, 2005 8:39 PM Gabe, I'll grant you that there is a fundamental difference between the public needs of a railroad/pipeline/transmission line et al and the public needs of a big box store or new multi family dwellings. However, in spirit (and from a legal perspective) a new private development is a new private development regardless of function or intent. In other words, I'm not sure the law sees a difference between local/regional juristiction that supports UP and local/regional juristicition that supports WalMart. The Supreme Court recognized that it would be discriminatory to allow Corporation A the right to eminent domain but not allow Corporation B the same right, regardless of what it is those corporations are involved. It is up to Congress to make the distinction between those corporations which absolutely need to access certain private property to function, and those which could effectively "shop around" for the right location. Of course, I have argued in other topic lines that railroads are not the same as other private ventures, therefore it is ridiculous to allow railroads the same levels of "hands off" government approach, especially given the importance of preserving and expanding transportation infrastructure to meet the demands of an ever growing economy. If I remember correctly, even you Gabe presented the "McDonalds" analogy in defending the current railroad closed access status quo system. So therefore, if railroads are no different from McDonalds when it comes to what governments allow in terms of price or access regulation, then it can also be argued that McDonalds is no different from railroads in what governments allow when it comes to eminent domain. For the record, I am all for allowing railroads the right of eminent domain, but with that right comes the necessary oversight of regulation to assure optimal citizen access to that ROW that utilized the right of eminent domain. Otherwise, we are just granting fiefdoms to discriminatory entities. Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Friday, June 24, 2005 4:42 PM QUOTE: Originally posted by arbfbe BNSF does not want to serve small anythings. The discount for shippers using the shuttle services is about $300 in many locations, that makes it hard for the smaller elevators to be competitive. Depending upon where BNSF supports construction of a shuttle elevator it can decimate all smaller elevators in quite an area. All that investment by smaller companies, co-ops and farmers wiped out by a couple of large American conglomerates. Hi Alan, Montana shippers receive a $350 carload discount at 9 of the 10 shuttle elevators located in Montana, over single carload rates. That's about $250 over multi-carload rates. At the same time, however, they pay an average $861 above the average BNSF system rate for identical shipping services elsewhere on the system, that is, same distance, export. If a shipper shipped by the carload, from Shelby to Portland, for instance, the cost of shipping would be 18.25% of the total price received at Portland for HRSpring wheat, based on 4/15 prices, or 16.34% of the total price received at shuttle rates. A relatively small difference, 1.91% of the gross profit. In dollar terms, by shipping 110 carloads HR Spring through the enormous shuttle facility at Shelby (3.2 million bu. capacity, 162 car track capacity) the shipper saves $38,500 over single carload rates, or $27,500 over multiple carload rates on a shipment that will bring total revenue of $1.85 million in Portland. These "savings" are little more than 1% of the revenue received and are just not that significant in the overall scheme of things. Other factors are far more important to the shipper. On the other hand, in order to take advantage of shuttle rates, shippers have to construct shuttle facilities. I checked with one of the big elevator contractors today, and they confirmed that typically a new shuttle facility costs between $8 and $10 per bushel. So, for instance, to duplicate a typical Montana facility, say the Billings Peavey operation at 1.7 million bushels, the shipper must invest appoximately $15 million dollars, and probably also pay for the longer siding to be installed. On a 15 year loan, that's a $1.6 million financing obligation to handle annually, aside from increased operating costs. To justify the cost, the shipper would have to have a minimum of 58 shuttle trains per year. That's 22 million bushels of wheat from a single elevator. That would be very "unusual" (That would be one third of Montana's entire export wheat crop in Year 2001). From the railroad perspective, is it clear that the railroad is "saving" the costs of carload level handling? Well, many of the patrols that formerly picked up carloads of wheat are still out there, operating the same shifts on the same branches or the same areas. Some aren't. Exactly what is the railroad "saving"? Is there added cost due to increased wear on the track and structure? We know the answer to that is yes. Is that offset by savings elsewhere? That's just not as clear as it should be. Further, the trend to unit trains has not shown up in the bottom line at all, to the contrary, last year on BNSF, operating expenses increased faster than revenues. If there are savings in increased unit train operations, it is difficult to find them in the place they are supposed to be: operating expenses. Arguably, filtering carloads and smaller carload units into existing traffic patterns has a different effect on railroad operations than fully dedicated trains. Is the effect positive or negative? There can be an argument both ways on that. Is there an explicit downside for the railroad? According to the contractor that built the facility, the Co-op at Enderlin, ND built its new 50 car shuttle on CP, rather than BNSF partly as a response to BNSF "attitudes" on rates available to 50 car facilities. The RR suffered a net loss of the traffic and the loss of the entire amount of the revenue. It will never get it back. So, to promote shuttle service, the BNSF takes a 12% loss of revenue. It's restrictive policies which anger most of the industry involved, results in a loss of customers, on top of a 12% reduction in revenue. Operating expenses continue to increase faster than revenue. What this all suggests is that the operating efficiencies obtained are smaller than the revenue lost. The magic word "efficiency" is meaningless if there is no net return. The current satisfaction expressed by certain observers as to the perceived "efficiency" of shuttle operations is simply not justified by either the overall operating results of the railroads, nor by any discernible savings over regular operations. "Efficiency" as used by some of the Posters seems to be a "theoretical" construct that they should be more efficient, and therefore in our infinite wisdom we will just assume that in actual fact they are. One of the problems with unit train operations since their inception with coal, is the inability to properly estimate the cost of the operation. And I don't mean that operating costs were ever overestimated. Hardly. At each refinement of the cost model, unit trains have typically been more costly to the railroad than the experts initially predicted. And each refinement continues to underestimate the cost. Well, as with many assumptions, reality and theory can be quite different. There are not many specific facts offered in support of shuttle operations to show that they are, in fact, as "efficient" for the railroad from an economic perspective as the theory offered by the gentlemen suggests. Best regards, Michael Sol Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Friday, June 24, 2005 9:07 AM QUOTE: Originally posted by futuremodal RE: The recent Supreme Court Ruling - Don't forget your railroad history. When the railroads were building West in the late 1800's and early 1900's, they were granted the right of Eminent Domain to allow the ROW across established private property. This is nothing new. I wish you were right; but you are not. This is a substantial departure from previous practice. Yes, railroads have used the power of eminent domain for centuries in this country. However, there is a fundamental difference between railroads and the cases now allowed by our Supreme Court. One, of course, may argue that there is no difference between the public interest served by Wal-Mart and the public purpose served by Union Pacific. Legally, at least, it is recognized that railroads serve a direct public benefit and would not be possible to run without the use of eminent domain. In any event, the restriction to things like reservoirs, railroads, highways, etc. substantially limited the power of eminent domain in the past. No more. Now, the sanctity of the property is el finito. If Wal-Mart wants to move into a suburban neighborhood, all they have to do is say sell to us, or we will show the municipality that we have a larger tax base and will supply more votes. Trust me, your property rights have really been diminished because of this holding. Gabe Reply broncoman Member sinceFebruary 2003 From: Gateway to Donner Summit 434 posts Posted by broncoman on Thursday, June 23, 2005 9:05 PM I am born and raised in the central valley of CA, so I am curious as to the "stranded" grain elevators of the midwest. There are some fairly large farms still left in the greater sacramento area but it seems that they truck the grain to a siding where it is transferred to anywhere from 2-6 cars. There are still bigger elevators around I would say you wouldn't have to go more than 60-80 mi to go from one to another from Redding almost all the way down to Los Angeles. Is this scenerio different from the midwest? I am just curious as to the scope. I am sure the distances between "train load" elevators is substantial. And out of curiosity what is the standard "train load", 30-50 cars? Thanks for the info. Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Thursday, June 23, 2005 7:51 PM RE: The recent Supreme Court Ruling - Don't forget your railroad history. When the railroads were building West in the late 1800's and early 1900's, they were granted the right of Eminent Domain to allow the ROW across established private property. This is nothing new. RE: Unit vs carload shipments - Everything Greyhounds says is true, but in the larger picture it is possible to have a reverse macro effect. We've already hashed out the question of whether it is more "efficient" to move grain from a country elevator to a unit train terminal via truck or whether it would be more efficient to move that grain from country elevator to unit train terminal by shortline railroad. There are real world examples of shortlines being able to beat trucker's shorthaul rates in this scenario (aka Watco's opertations in the PNW). So in that vein the Class I's will participate in carload grain movements vicariously via their shortline "partners" (or shortline "slaves" depending on your particular POV). Depending on the infrastructure characteristics of a certain grain moving corridor, it is probable that shorthaul railroad companies could easily compete with truckers for carload quantities IF they could access the Class I property to get to those smaller elevators. This was one of the points made in the open access discussions, that smaller players would go after the business rejected by the Class I's if they had access to the property. Unit train dynamics are more efficient than carload dynamics, yet carload dynamics are (usually) more efficient than truckload dynamics. Thus, it is possible to have situations in which the combination of truckload hauls plus unit train hauls would be LESS efficient than carload hauls that come in 10's, 5's, or sometimes even single lots over the same corridors (from farm to port). So when Gabe bemoans the loss of individualized services, he's not just being nostalgic. Reply Edit bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Thursday, June 23, 2005 4:46 PM QUOTE: Originally posted by Peterson6868 But is this legal? Under Common carrier obligations the railroad has to traet everyone the same. Its just that the farmers dont knwo this and cant afford to hire a law firm to figure this out. Effeciant? What about all those trucks going all over the place to pick up grain from the small elevaters Railroads still have a common carrier obligation. If I call the Buckingham Branch today and say I want to ship a car of grain from Crozet to East Budda, TX they and their conections must move the car. Although they can not refuse to provide service I must pay them the rate they want for their service. In addition they will expect me to supply the covered hopper. Bob Reply SALfan Member sinceApril 2002 From: Northern Florida 1,429 posts Posted by SALfan on Thursday, June 23, 2005 4:03 PM QUOTE: Originally posted by greyhounds Of course it's legal. And farmers aren't ignorant. And they have lawyers. And farmers are going through this same process. My father worked 160 acers in central Illinois. That was what one man could handle. Today, that would be a "hobby farm". (disclaimer: I did not grow up on a farm, he was evicted the year I was born and I grew up in a small town.) The farms have gotten much larger, along with the equipment. The government can not pass a law that changes economics, just as they can not pass a law that water will run up hill. My brother put it very well last week, and I believe his quantities are about right. In the 1910's a farmer could make a decent living for his family on 40 acres. In the 1970's it took 400 acres to provide a decent living for a family. Now it takes 4000. To put it another way (I may be slightly off with these figures, but you get the idea): In 1948, Yazoo County Mississippi had 48,000 people; in 1990, it had 21,000 people. Most farmers didn't get tractors until just before or after World War II, so the vast decrease in the number of field hands and tenant farmers didn't really hit until after WWII. You can see the effect in the population changes in Yazoo County. Reply greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Thursday, June 23, 2005 2:02 PM QUOTE: Originally posted by Peterson6868 But is this legal? Under Common carrier obligations the railroad has to traet everyone the same. Its just that the farmers dont knwo this and cant afford to hire a law firm to figure this out. Effeciant? What about all those trucks going all over the place to pick up grain from the small elevaters Of course it's legal. And farmers aren't ignorant. And they have lawyers. And farmers are going through this same process. My father worked 160 acers in central Illinois. That was what one man could handle. Today, that would be a "hobby farm". (disclaimer: I did not grow up on a farm, he was evicted the year I was born and I grew up in a small town.) The farms have gotten much larger, along with the equipment. The government can not pass a law that changes economics, just as they can not pass a law that water will run up hill. As for the trucks, the economics of truckload transporation are very different from carload transportation. With trucks the unit of sale equals the unit of production. There is no need to aggregate sale units into production units. With carload there is an absolute need to aggregate the units of sale (carloads) into units of production (trainloads). There is also a need to break down trainloads of empties and distribute the cars for loading. As I said, this just destroys equipment utilization and drives up costs. These factors are not present in truckload. So smaller facilities are more efficiently served by trucks. And yes, I remember the C&IM spotting boxcars for grain loading at the elevators in Manito, IL. It's where I received my first lesson in just how inefficient that sort of thing is. The agent was muttering to himself about the grain company not ordering any cars for six months, then wanting "everthing" right away. I actaully saw this guy get on the phone with the dispatcher, get the OK, then flag down a southbound extra. I mean he was out there waving a red flag. They stopped and switched out every empty boxcar on the train. Just grabbed 'em off the train. So much for equipment utilization planning. "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. Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Thursday, June 23, 2005 1:53 PM Mookie: That is really encouraging to see it doesn't all go that way. But, my heart really goes out to all of those people who are going to lose their homes--not businesses--not for the direct public good, but another Mega store can move in. Some of the homes had been in the family for quite some time. I can't imagine how hard it would be to lose your home in such a circumstance. I am geniunely sad for them. MP-173: I do like the boxcar bit. My father worked at a grain elevator in his youth and described how much he preferred actual grain cars to box cars, as sometimes they would actually have to shovel the grain inside the box car to create more room for the grain. Thanks, Gabe Reply Mookie Member sinceJune 2001 From: US 13,488 posts Posted by Mookie on Thursday, June 23, 2005 1:16 PM Gabe - I heard it on the news and just shook my head. One bright spot - that muddy feathers can probably explain better - City of Lincoln vs a lumber company for what would have amounted to eminent domain. City 0 lumber company - 1 Moo She who has no signature! cinscocom-tmw Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Thursday, June 23, 2005 1:14 PM Gabe: DIdnt see the Supreme Court ruling, but in my opinion, it is really a bad ruling. I had a customer in Des Plaines, Il which was not a glamorous company. They are a leasing company of trailers. In fact, they are HUGE. One day I stopped in and they said they were moving. It seems as if Des Plaines condemned their property to build a hotel. Granted, this property was adjacent to I 90 and close to O'Hare and was no doubt valuable...but what gives them the right to do so? BTW...the trailer leasing company is no poor small company, it is owned by Warren Buffet's Berkshire Hathaway. Now, regarding the small elevator issue....Greyhound and Gabe, you will appreciate this one. Back in the day, I recall the IC line thru town would stop and switch boxcars of grain at the next town north (West Liberty, Il). Imagine how far we have progressed...BOX CARS of grain! ed Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Thursday, June 23, 2005 12:54 PM On a related side note, did anyone happen to notice the Supreme Court holding today saying that cities may condem property to attract private industry? Yet another blow against the little guy. This one is going to be bad. Gabe Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Thursday, June 23, 2005 12:41 PM QUOTE: Originally posted by greyhounds Increasingly, it seems the railroads are developing a business strategy that consists of running solid trains of containers, trailers, grain, whatever from point to point. This is far more efficient than traditional carload railroading. It makes sense. Serving small country grain elevators has always been inefficient. Equipment utilization is terrible and the cost of terminal handling (locals, endless switching into blocks, etc.) drives expenses through the roof. Railroads have to compete for capital in a world maket. Obtaining financing for grain cars has to compete with obtaining financing for a shirt factory in China. The investment will go to the most productive use. There is absolutely no way any corporate or government action can realistically change this. It's not a question of the BNSF not "wanting" to do something. It doesn't matter what they "want" to do. It's a question of what they have to do to remain competitive for investment funding. BNSF investors will get a better return on shuttle operations than they will on individual carload shipments. If BNSF would try to pay these investors less in order to serve the carload markets, the investors would go elsewhere. Would you rather see them invest in the US or China? If the government tries to force the BNSF to serve the inefficient small grain elevator market, they'll drive the railroad into the ground. It won't be able to attract investment and China will get a new shirt factory. You can't take pain out of the economy. Trying to do so will just make things worse over time. It's a sad thing that some people will loose money on investments they made in inefficent grain terminal facilities. But making business investments is no guarantee of success. Profit is a reward for risk, and sometimes the risk goes against the investor. And there is absolutely no way to change that. None. Greyhounds, Interesting analysis; I certainly can't disagree with it. However, I think the "pain" of the current economic trend of "super sizing" is even more painful than most realize. In the past, it took a lot less money to put one's energy and resources into a small business venture—like a 10-car grain elevator. The percentage of Americans with that much money was fairly broad and the avenue from middle class to bourgeois was attainable to those with luck, skill, dedication, and intellect. Under the consolidated super sized paradigm, the amount of people who have enough money to start a grain elevator capable of handling 110 BNSF shuttle car elevator—or other consolidated industries—are considerably less than it took to start such a business in the past. Because American industry in general seems to be following this trend, avenues toward wealth are being constricted. It is not simply a scenario of the rich getting richer. It is a scenario of the extinction of American upward mobility, which is the hallmark of the American economy and is why the American economy is renowned for reinventing itself. I think this will not only lead to permanent class divisions but will hinder the ability of the American economy to apply its entrepreneurialism in an effective manner. Nonetheless, I think you are right. It just kills me to know that you are. Gabe Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Thursday, June 23, 2005 12:24 PM But is this legal? Under Common carrier obligations the railroad has to traet everyone the same. Its just that the farmers dont knwo this and cant afford to hire a law firm to figure this out. Effeciant? What about all those trucks going all over the place to pick up grain from the small elevaters Reply Edit greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Thursday, June 23, 2005 11:51 AM Increasingly, it seems the railroads are developing a business strategy that consists of running solid trains of containers, trailers, grain, whatever from point to point. This is far more efficient than traditional carload railroading. It makes sense. Serving small country grain elevators has always been inefficient. Equipment utilization is terrible and the cost of terminal handling (locals, endless switching into blocks, etc.) drives expenses through the roof. Railroads have to compete for capital in a world maket. Obtaining financing for grain cars has to compete with obtaining financing for a shirt factory in China. The investment will go to the most productive use. There is absolutely no way any corporate or government action can realistically change this. It's not a question of the BNSF not "wanting" to do something. It doesn't matter what they "want" to do. It's a question of what they have to do to remain competitive for investment funding. BNSF investors will get a better return on shuttle operations than they will on individual carload shipments. If BNSF would try to pay these investors less in order to serve the carload markets, the investors would go elsewhere. Would you rather see them invest in the US or China? If the government tries to force the BNSF to serve the inefficient small grain elevator market, they'll drive the railroad into the ground. It won't be able to attract investment and China will get a new shirt factory. You can't take pain out of the economy. Trying to do so will just make things worse over time. It's a sad thing that some people will loose money on investments they made in inefficent grain terminal facilities. But making business investments is no guarantee of success. Profit is a reward for risk, and sometimes the risk goes against the investor. And there is absolutely no way to change that. None. "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. Reply CSSHEGEWISCH Member sinceMarch 2016 From: Burbank IL (near Clearing) 13,540 posts Posted by CSSHEGEWISCH on Thursday, June 23, 2005 11:40 AM The expense of serving small elevators that generate only a handful of cars at a time only once or twice a week is proportionally higher than serving a larger elevator that generates 25+ cars at a time daily. Smaller elevators that are generating truck-size loads are probably better served by truck. BNSF is basically giving volume discounts similar to just about any business in any line of work. The daily commute is part of everyday life but I get two rides a day out of it. Paul Reply arbfbe Member sinceFebruary 2002 910 posts Posted by arbfbe on Thursday, June 23, 2005 11:06 AM BNSF does not want to serve small anythings. The discount for shippers using the shuttle services is about $300 in many locations, that makes it hard for the smaller elevators to be competitive. Depending upon where BNSF supports construction of a shuttle elevator it can decimate all smaller elevators in quite an area. All that investment by smaller companies, co-ops and farmers wiped out by a couple of large American conglomerates. Reply 123456 Join our Community! Our community is FREE to join. To participate you must either login or register for an account. 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I do not find the benefits anywhere in the financial statements, and never have.
QUOTE: Originally posted by MichaelSol That's the irony of this: it costs the customer more in increased transportation costs to the shuttle elevators, and increased costs to build and operate shuttle elevators, and the railroad receives less revenue. This is one bright idea. Nobody wins. I'll disagree with you on that last point. Clearly the trucking companies win, and do so at the expense of both the grain marketers and the railroads. Yet another inadvertent gift from the railroads to the so-called "enemy" aka truckers. Rather, longer, slower trains appear to result in increased system congestion, do result in increased track maintenance expenses, and do result in longer terminal dwell times as a system effect that "suggests" that increased efficiency is not the result, but rather statistically measurable inefficiency is apparently the result. That all trains are affected by the increased congestion resulting from bigger, longer, slower grain trains. It would appear that this bent toward clogging the tracks with ostensible "efficiency" consists is a disease that is systemic, hard-wired into the railroad management culture. If this idea of product consolidation onto as many cars as will fit onto a siding was developed from an economic model, it is easy to see that it was a model developed with limited variable analysis. Such is the heart and soul of the Staggers Act, on the surface a "no-brainer" while in its long term impacts a "no-brainer" of a different sort. Staggers only partially "deregulated" the railroads, providing independent rate setting and price contracting, but doing nothing to effect head to head rail competition for all rail shippers. The latter is crucially necessary to ensure innovation, the only way to keep the entire industry from homogenizing into a star-crossed bandwagon of eventual economic failure. Some of you have explicitly or implicitly infered that competition is bad for the rail industry, because if railroads are forced to compete for each and every potential customer they will not be able to achieve revenue adaquacy. This is simply circular reasoning, because without competitve incentives the customer base will be put off (via capacity reductions, service consolidations, service delays, service refusals, et al), and without an ever increasing customer base a company, any company, not just railroads will not be able to achieve revenue adaquacy. How many more examples of railroad management underachievement will this nation have to put up with before you all will concede that Staggers is ultimately a failure? It's not that deregulation is not a desirable application of government oversight, it's that partial deregulation is sometimes worse than no deregulation at all. Staggers is partial deregulation, evidenced by the railroads' balance sheets, and evidenced by the tremendous loss of railroad employment/trackage/market share over the last two decades. If we want to do this thing right, then we need to fully deregulate the industry into a competitive venture that pleases both the investors and the customers. You all know my idea for full deregulation (it goes by the initials "o" and "a"), but I am willing to consider any else's ideas for implementing full deregulation in the broadest sense of the word. If anyone has an idea for bringing back the rail saturation of the 1970's, wherein all but a few areas of the country had true head to head rail competition in the form of the private closed access system, then let's hear it. Reply Edit MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Thursday, June 30, 2005 6:43 PM But, Michael, you are quoting tariff rates. We dont know what the actual rates for the movements are, since we are not a party to the negotiations between BNSF and the owner of the wheat. I really dont want to re-enter the world of Montana wheat rates, as we did last spring. Looking at the NS's rates for grain, I find the following for 1064: rail owned equipment <5000 cf @ $4000 per car >5000 cf @ $4400 per car private equipment <5000 cf @ $3422 per car >5000 cf @ $3764 per car The rate for BNSF's movement is considerably less than NS's. Plus, the rate for private vs rail owned is quite lower. In comparing grain vs other commodities, it sure appears the grain rates are much higher....I will use the larger sized cars: Lumber and panels @ $3431 per car food oils @ $2414 per car Something about the transporting of grain by rail results in higher transportation costs than other commodities.....why would that be? Perhaps the answer to that lends itself to the reasons behind this entire debate. ed Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Thursday, June 30, 2005 5:40 PM QUOTE: 5. Average system carload revenue, as you stated, for 1064 miles of ag products was $2699 per carload. How did you determine that number? 6. What are the cycle times for the grain shuttle trains? You indicated cycle times increased from 24 to 26 days, was this for all system cars, or just grain cars, or grain shuttle cars? Well, I am trying to get out the door for the 4th. I can answer these two the fastest. The $2699 per carload for the distance comes from entering data for 2250 station points and distances for elevators on the BNSF system on an Excel Spreadsheet, and entering the associated rates for the 1-25, 26-51, 52-109 and 109-120 carload categories, as of tarifffs published 4/15/05. From this data, linear regressions were run across progressively smaller segments of distances until equations were developed which accurately described the behavior of the tariffs in question within the relevant range of data. The BNSF price structure is actually logarithmic in overall behavior, but no single logarithmic equation accurately describes certain key ranges as well as linear modelling of the same data in small segments At a given distance, then, an average, a high, and a low tariff number can be derived, as well as standard deviation that will describe the tariffs for 95% of the stations at that distance. The high and low tariffs, it turns out, very accurately describe the BNSF system "behavior" in setting prices: the high tariffs have a 98% correlation strictly with distance, and the low tariffs at a given distance have a 55% correlation with distance, and a high correlation with distance to other railroads, barge systems, etc. 6. The 26 day cycle time is for grain trains. The increase of 2 days over the past couple of months is quite significant as the loss of two days per cycle, on an annual basis, is the net loss of one entire cycle of 28,000 covered hopper cars, or, if you will, the reduction of the effective size of the car fleet to 25,667 cars. Each day of drop-off in cycle time means a loss of approximately $28,000,000 on the BNSF. Two days loss is a shade over $55 million on an annual basis. Two days may not sound like much, but It is very big news to suffer a decline like that. In this case, the increase in cycle times is likely due to very good Hard Red Spring wheat prices at the moment on the Gulf Coast, coupled with BNSF's pricing policy that provides a substantially better rate to the Gulf Coast, $1.71 per mile per 100T hopper car, compared to $3.52 per mile to Portland, both rates from Shelby, Montana (4/15/05 tariffs). This yields a greater net profit, at the moment, for the shipper in Shelby to ship 2307 miles to the Gulf, than it does to ship 785 miles to Portland, because of the market price differential between the two ports coupled with the BNSF pricing structure. You can see where the grain car cycle times go right in the dumpster as a result. The $4189 rate that the BNSF receives for the Gulf traffic, over the $2966 Portland rate is, of course, more than completely negated by the tripling of cycle times, resulting in a net loss of revenue to the BNSF of $4,709. But, that's what they offer, and these rates are considerably below the average BNSF price for a comparable distance, oddly enough. How this Company remains in business is a remarkable feat. However, what the cycle times also show is that the increasing reliance on shuttle trains just doesn't actually seem to show up anywhere. The current cycle times show no improvement -- they show deterioration -- over cycle times of 5, 10 or 20 years ago. There is no discernible positive effect. The BNSF has put a fuel tariff on everything, which is supposed to compensate for oil cost hikes, so how the net profit continues to slide anyway, with all these efficiencies coming on line, is left unexplained by this Company. I am increasingly inclined to lean to the conclusion that, like generals, railroads are preparing for the last war. In a different era, of high train crew costs and limited congestion, unit trains and shuttle trains seemed like the way to go. The new paradigm, where congestion is the enemy, unit trains and shuttle trains are dinosaurs, contributing to congestion and increasing maintenance and labor costs at a time when railroads should be benefitting enormously from crew reductions, insofar as reduced costs of operation are concerned. For grain in particular, I have yet to find an articulate description of exactly what costs are being saved, nor an explanation of how long, slow, heavy trains are good for the railroad. I do not find the benefits anywhere in the financial statements, and never have. Best regards, Michael Sol Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Thursday, June 30, 2005 4:16 PM Great to have you back Michael. A little more solid information would be great, as Bob indicated, but unfortunately it will probably not be available to us. A few questions, if you dont mind: 1. Clarify your use of $924 for breakeven per carload. 2. Does that $924 BE apply to grain? If I read correctly it is a system BE. 3. If that is correct, then the consumer product segment, based on your assumption of 1.6 "units" per carload would then be profitable....on the system BE point, and not unprofitable as you indicated. 4. What is the average mileage for the Ag carload segment? By knowing that number and the average carload revenue of $1969, we can crunch some numbers. 5. Average system carload revenue, as you stated, for 1064 miles of ag products was $2699 per carload. How did you determine that number? 6. What are the cycle times for the grain shuttle trains? You indicated cycle times increased from 24 to 26 days, was this for all system cars, or just grain cars, or grain shuttle cars? 7. Milwaukee Road's short haul grain cycle times were 6 days in the midwest in the 70's. Was that for the entire system? Or broken out for a single move? How far was that move? 8. You indicated that BNSF is driving away ag business. Perhaps it is. Ag carloadings were up 8% in 2004 vs 2003. This is not quite as healthy as the 10% increase systemwide, but not too far below. 9. You lament that the BNSF is throwing away revenue on grain shuttle movements, yet...as we all know " volume is vanity, profit is sanity "... are you saying profitability would have been higher? I dont think we have the data to crunch, again unfortunately. I seriously doubt if we will EVER see segment P&L statements from any publically, or private company. Finally, you correlate the 1998 operating income ratio of 24% (inverse of the operating ratio) and the decline in that ratio to current level of 17% (trailing 12 months) to "efficiencies" or in this case the ineffieciencies. I would suggest the decline in OI had much more to do with market dynamics than the running of larger shuttle trains. For example NS's OR dropped from 75% in 1998 to 90% in 2000 before climbing back up to 75% in 2004. Granted the Conrail integration had lots to do with that. UP's OR went frm 102 in 1998 to 89% last year. Yet, I would not say that UP is healthier today than in the late 90's. The economic slaughter of post 9-11 and the recession had much more to do with the rising OR of BNSF than shuttle trains. Granted, NS is back to where they were, but they are NS. UP keeps bouncing along from disaster to disaster. I am not an apologist for BNSF. But, they have invested very heavily into their franchise and based on resent revenue and profitability, it seems to have been wise. They are in the middle of a 6000 covered hopper car purchase which will help allieviate future problems. It would be very interesting to see a complete breakdown on different business segments, but as we know, it aint gonna happen. Good day. ed Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Thursday, June 30, 2005 3:23 PM This is nothing new. BNSF has not had any interest in serving small to medium COOP elevators since day one. This even began in the final yrs of the ATSF era. The policy is if your facility does not have the capicity to load unit trains of atleast 75 cars, you're screwed. I worked in the grain business dealing w/this rr in the 1990's and it wasn't pretty then Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Wednesday, June 29, 2005 11:36 PM QUOTE: Originally posted by Chris30 QUOTE: Lower revenues AND angry customers. How much more "efficiency" like this can a railroad handle? I mentioned it before in this thread... revenue gained from serving small elevators on deteriorating branches would have to be spent on maintenance at some point to keep the business and support the heavier cars that most deteriorating midwest grain branches can no longer support. Lower revenues? What $$. Besides, the big railroads are already stretched thin on grain car supply. They're not going to upset their biggest customers to serve the little elevator that could. It's all about $$ and car cycle times. In 1998, BNSF had 32,860 covered grain hopper cars. The demand was 408,000 carloads. On 12/20/03: 26,500 cars. The demand was 416,000 carloads. During 2004, the demand was for 450,000 carloads. Currently, BNSF fleet has 28,048 covered hopper cars available for service. Just in the past two months car cycle times have increased from 24 to 26 days. Milwaukee Road's grain car fleet had a 15 day cycle time on its "long" runs in the PNW. Milwaukee's grain car fleet was 1.7 times as profitable to that company as the BNSF fleet is to the BNSF today with shuttle trains because of significantly better utilization by Milwaukee Road without shuttle trains. Milwaukee did have shuttle type service in the Midwest on 6 day cycles. The big railroads today are "stretched thin" as a matter of policy. They have been cutting back on fleets even as grain shipment needs have been increasing. The current BNSF cycle time and car fleet size permits transportation of 394,000 carloads of wheat on an annual basis. In 1998, BNSF capacity was 461,000 carloads annually. Yet actual carload needs have steadily increased. Even the BNSF ten year average need is 431,000 carloads. The Year 2004 required 451,000 carloads. Current loadings on BNSF are running 102% of last year's loadings at this time. Now, BNSF advertises that its shuttle car cycle times are 2.4 times greater than single car, or less than shuttle, carload cycle times. Mr. Rose states that they keep shipping more and more by shuttle. That this is a great success. But overall car cycle times continue to increase, and the BNSF is significantly less able to carry the typical year's grain harvest than it was six years ago. It is true that railroads have to spend money to keep customers and provide service. Can't argue with that. Chris30, I think you are right on, on that observation. That's why it is worrisome to see examples of mainline customers seeking alternatives. The mainlines are too expensive to provide service to mainline customers? Hmmm. QUOTE: "Lower revenues?? What $$." Besides instances of lost customers? The shuttle rates are lower. The railroad receives less money per carload. Maybe that's not clear. The railroad does not make as much gross revenue off of shuttles as it does off of identical numbers of single carloads. The railroad loses close to $40,000 per train at shuttle train rates over what it would earn at single carload rates. That's the irony of this: it costs the customer more in increased transportation costs to the shuttle elevators, and increased costs to build and operate shuttle elevators, and the railroad receives less revenue. This is one bright idea. Nobody wins. If all BNSF grain tonnage were carried in shuttles, last year, compared to earnings if all BNSF grain tonnage were carried at single carload rates, the BNSF would have lost nearly $164 million in potential revenue. That's fine insofar as cost savings in excess of the reduced revenue can be demonstrated. But, that's the part that's missing. Rather, longer, slower trains appear to result in increased system congestion, do result in increased track maintenance expenses, and do result in longer terminal dwell times as a system effect that "suggests" that increased efficiency is not the result, but rather statistically measurable inefficiency is apparently the result. That all trains are affected by the increased congestion resulting from bigger, longer, slower grain trains. Overall, railroads have spent 20 years seriously converting its sometimes reluctant customers -- because it damages many of those customers economically -- to shuttle train concepts. Corporate careers have been dedicated to the concept, right or wrong. Matt Rose is one of them. Are the railroads financially better off now than they were, say, in 1998, in the area where the supposed efficiencies are supposed to show up -- the bottom line? Year _____ 1998____ 2004 Op. Income 24.14% 15.40% Net income 12.95% 7.23% OK, BNSF net profit has dropped almost by half. Where else do these alleged "efficiencies" show up? Best regards, Michael Sol Reply Chris30 Member sinceDecember 2001 From: near Chicago 937 posts Posted by Chris30 on Wednesday, June 29, 2005 8:07 PM QUOTE: Lower revenues AND angry customers. How much more "efficiency" like this can a railroad handle? I mentioned it before in this thread... revenue gained from serving small elevators on deteriorating branches would have to be spent on maintenance at some point to keep the business and support the heavier cars that most deteriorating midwest grain branches can no longer support. Lower revenues? What $$. Besides, the big railroads are already stretched thin on grain car supply. They're not going to upset their biggest customers to serve the little elevator that could. It's all about $$ and car cycle times. CC Reply bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Wednesday, June 29, 2005 7:47 PM QUOTE: Originally posted by MichaelSol Well Dave, that is certainly an interesting way to look at it. From an expense standpoint, it seems that the railroads have taken an odd view. Grain transportation is already such a streamlined operation compared to industrial or consumer traffic. No congested yards to deal with, no vandalism losses, all the traffic is out in the middle of nowhwere, where the crews stop, get the job done, and move on. Exactly what "costs" these companies are trying to "wring" out of the process is not entirely clear to me. Matt Rose does say the following: "For several years we've improved our efficiency with longer trains for coal, grain, and other commodities." Thirty years ago, I sat down with some Milwaukee people who were forward looking, with the idea of trying to envision the most "efficient" rail operation. This was before modelling was a sophisticated art/science. After a few months of chewing it over, we concluded that shorter, faster trains were more profitable than longer, slower trains. The alleged savings in crew costs with longer trains were cancelled out entirely by the increased costs of getting the train from point A to point B, and, at some point in the congestion matrix, crew productivity in the scenario with longer trains began to fall quite dramatically. The longer the trains, at a certain level of business, the more inefficient the railroad became. The point was, the longer that the trains were on the track, the less efficient the railroad became and the more expensive was overall train operation. So, BNSF proudly announces that its idea of efficiency is longer trains, on lines that are already pretty congested. Interestingly, as the Internet became more clearly understood in terms of routing efficiency, the idea was exactly the opposite, break messages and information flow into small and discrete units, send them off, and the assemble them at their destination. Networks are more efficient with small units, rather than large units . Railroads have developed the idea, that is contrary to both models and experience in other industries, that large units are most efficient to move over crowded networks. And even though its own customers don't like it, and it costs the customers more money, BNSF seems bound and deterrmined to force its customers into this idea of "efficiency." Is there any "efficiency"? BNSF grain trains are already among the slowest on the system at an average speed of 23.1 mph. A BNSF grain train of 15,000 tons is not an example of efficiency, rather, it is a slow moving bottleneck. Even though, by industry standards, BNSF is a pretty good mover of grain trains. However, its worst yard for dwell time is Pasco, with an average of 15.9 hours. Not to pick on BNSF, UP is just awful, with yard dwell times of 20-30 hours. But, Pasco happens to be where some of the longest grain trains are routed. Now, what is the breakeven on trains.? The average carload on the BNSF earns $1074. It travels 1045 miles. To breakeven, that carload would earn $924.00 on the same haul. That is, the average carload generates a profit of $150. What does BNSF earn from a carload of grain on that same line-haul? Well, Brockton, Montana is 1064 miles from Portland. A carload of wheat brings revenue to the BNSF of $3,938.00. Now, admittedly, Brockton is located in Montana and suffers from that uniquely BNSF policy that, if you ship in Montana, you will pay a lot more. The system average for 1064 miles, shipping grain, is only $2699 per carload. Either way, that is enormously profitable Compared to the BNSF average, Montana wheat is nearly 25 times as profitable per carload as BNSF earns from its typical business. Compare that to the BNSF Consumer Group which represents 40% of BNSF revenue. The average CG carload brings a yield of $874. Compared to grain, which has no real "handling" needs -- it doesn't break, it doesn't dent -- CG is a high cost operation, serving the most congested yards on the most congested routes. The CG group loses about $50 per carload carried. The average carload of grain on the BNSF system brings $1969. This compares not only with CG at $874, but with Industrial at $1568/carload, and Coal at $1028 per carload. Wheat is the most profitable item carried on the BNSF, and is likely the least costly to the Company in terms of associated operating expenses. Yet, Matt Rose says nothing about improving "efficiency" for the CG group, but only talks about coal, grain and "other commodities." But, as the numbers, and maybe even some common sense should show, "they ain't the problem." The fact is, based on profitability, BNSF should be turning sommersaults to keep those grain customers happy, and carrying as much wheat as possible, rather than losing the business entirely, as its policies have been doing. What is interesting is that the Company is offering a 12% cut in its own revenue on this profitable commodity. To make longer, most likely less efficient trains which exacerbate congestion delays on the system, increasing operating expenses overall. Naturally, someone would see it as mismanagement to make an extraordinarily good profit, because it might lead to congestion, but good business practice to carry 40% of the company traffic at a loss, even though that accounts for all of the congestion, and not do anything about it. Why on earth would a "year round customer" that loses money be so important to keep, compared to a customer that, in the season, generates a profit of 200-300%? Further, and perhaps more significantly, there is not a particular seasonality in grain shipping. Misunderstanding the difference between grain marketing and grain growing is fairly typical. In 2004, for instance, to Pacific Northwest Ports, the quarterly carloads arriving during the week of 12/31/03 were 3500, 3/24/04 -- 5200, 6/15/04 -- 4800, 9/8/04 -- 3000, 12/01/04 -- 5000, carloads. As you will note, the smallest number of carloads was during "the season" of harvest. Grain shipping is, in fact, a year round business. However, it is thinking like this, and Instances like this, that go a long way to explaining why this Company cannot earn its own cost of capital. Best regards, Michael Sol It is sad you will never see the detailed numbers. Oh well. Bob Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Wednesday, June 29, 2005 5:49 PM QUOTE: Originally posted by PNWRMNM Michael, Are you quoting revenue per car or revenue per unit? BNSF's web site talks in units, not cars. My take on this is a unit is a car or a trailer or a container. If so, revuenue per trailer/container should be at least doubled to get per car equavalent. Consumer goods is where the intermodal business resides in BNSF's structure, so one would expect low revenue per unit there. In short, I think you may be comparing apples to oranges. Mac You may be right, but the stumbling block is the somewhat contradictory way that the Annual Report refers to the unit of measure. "The increase in average revenue per unit of 4 per cent is primarily related to rate increases and increased fuel surcharges." "Average revenue per car/unit increased 5 per cent in 2004 to $1,126 from $1,074 in 2003." "Average revenue per car increased 5 percent in 2004 compared with 2003." One, or two, of these statements is contradictory to the third, if indeed the "unit" is the intermodal unit, not the carload unit, when referring to :unit" distinct from carload, since the percentage increases would not be the same if the intermodal unit is not a "carload" or vice-versa. I think you are exactly right, although some of the intermodal as it is classified by BNSF is carload, for others, not. Similarly, some ag and ind is intermodal, but that is not something the annual report describes, so the breakout of those numbers is tough to do. If a person want to get carload rate on the CG, it would be a guess of somewhere between 1.6 and 1.9 the "unit" rate assuming that the contradictions in the above statements are mild mistatements. Best regards, Michael Sol Reply PNWRMNM Member sinceMay 2003 From: US 2,593 posts Posted by PNWRMNM on Wednesday, June 29, 2005 4:33 PM Michael, Are you quoting revenue per car or revenue per unit? BNSF's web site talks in units, not cars. My take on this is a unit is a car or a trailer or a container. If so, revuenue per trailer/container should be at least doubled to get per car equavalent. Consumer goods is where the intermodal business resides in BNSF's structure, so one would expect low revenue per unit there. In short, I think you may be comparing apples to oranges. Mac Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Wednesday, June 29, 2005 1:50 PM Amen thanks Mike! Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Tuesday, June 28, 2005 12:16 PM Well Dave, that is certainly an interesting way to look at it. From an expense standpoint, it seems that the railroads have taken an odd view. Grain transportation is already such a streamlined operation compared to industrial or consumer traffic. No congested yards to deal with, no vandalism losses, all the traffic is out in the middle of nowhwere, where the crews stop, get the job done, and move on. Exactly what "costs" these companies are trying to "wring" out of the process is not entirely clear to me. Matt Rose does say the following: "For several years we've improved our efficiency with longer trains for coal, grain, and other commodities." Thirty years ago, I sat down with some Milwaukee people who were forward looking, with the idea of trying to envision the most "efficient" rail operation. This was before modelling was a sophisticated art/science. After a few months of chewing it over, we concluded that shorter, faster trains were more profitable than longer, slower trains. The alleged savings in crew costs with longer trains were cancelled out entirely by the increased costs of getting the train from point A to point B, and, at some point in the congestion matrix, crew productivity in the scenario with longer trains began to fall quite dramatically. The longer the trains, at a certain level of business, the more inefficient the railroad became. The point was, the longer that the trains were on the track, the less efficient the railroad became and the more expensive was overall train operation. So, BNSF proudly announces that its idea of efficiency is longer trains, on lines that are already pretty congested. Interestingly, as the Internet became more clearly understood in terms of routing efficiency, the idea was exactly the opposite, break messages and information flow into small and discrete units, send them off, and the assemble them at their destination. Networks are more efficient with small units, rather than large units . Railroads have developed the idea, that is contrary to both models and experience in other industries, that large units are most efficient to move over crowded networks. And even though its own customers don't like it, and it costs the customers more money, BNSF seems bound and deterrmined to force its customers into this idea of "efficiency." Is there any "efficiency"? BNSF grain trains are already among the slowest on the system at an average speed of 23.1 mph. A BNSF grain train of 15,000 tons is not an example of efficiency, rather, it is a slow moving bottleneck. Even though, by industry standards, BNSF is a pretty good mover of grain trains. However, its worst yard for dwell time is Pasco, with an average of 15.9 hours. Not to pick on BNSF, UP is just awful, with yard dwell times of 20-30 hours. But, Pasco happens to be where some of the longest grain trains are routed. Now, what is the breakeven on trains.? The average carload on the BNSF earned $1074 (2003). It traveled 1045 miles. To breakeven, that carload would earn $924.00 on the same haul. That is, the average carload generates a profit of $150. What does BNSF earn from a carload of grain on that same line-haul? Well, Brockton, Montana is 1064 miles from Portland. A carload of wheat brings revenue to the BNSF of $3,938.00. Now, admittedly, Brockton is located in Montana and suffers from that uniquely BNSF policy that, if you ship in Montana, you will pay a lot more. The system average for 1064 miles, shipping grain, is only $2699 per carload. Either way, that is enormously profitable Compared to the BNSF average, Montana wheat is nearly 25 times as profitable per carload as BNSF earns from its typical business. Compare that to the BNSF Consumer Group which represents 40% of BNSF revenue. The average CG carload brings a yield of $874. Compared to grain, which has no real "handling" needs -- it doesn't break, it doesn't dent -- CG is a high cost operation, serving the most congested yards on the most congested routes. The CG group loses about $50 per carload carried. The average carload of grain on the BNSF system brings $1969. This compares not only with CG at $874, but with Industrial at $1568/carload, and Coal at $1028 per carload. Wheat is the most profitable item carried on the BNSF, and is likely the least costly to the Company in terms of associated operating expenses. Yet, Matt Rose says nothing about improving "efficiency" for the CG group, but only talks about coal, grain and "other commodities." But, as the numbers, and maybe even some common sense should show, "they ain't the problem." The fact is, based on profitability, BNSF should be turning sommersaults to keep those grain customers happy, and carrying as much wheat as possible, rather than losing the business entirely, as its policies have been doing. What is interesting is that the Company is offering a 12% cut in its own revenue on this profitable commodity. To make longer, most likely less efficient trains which exacerbate congestion delays on the system, increasing operating expenses overall. Naturally, someone would see it as mismanagement to make an extraordinarily good profit, because it might lead to congestion, but good business practice to carry 40% of the company traffic at a loss, even though that accounts for all of the congestion, and not do anything about it. Why on earth would a "year round customer" that loses money be so important to keep, compared to a customer that, in the season, generates a profit of 200-300%? Further, and perhaps more significantly, there is not a particular seasonality in grain shipping. Misunderstanding the difference between grain marketing and grain growing is fairly typical. In 2004, for instance, to Pacific Northwest Ports, the quarterly carloads arriving during the week of 12/31/03 were 3500, 3/24/04 -- 5200, 6/15/04 -- 4800, 9/8/04 -- 3000, 12/01/04 -- 5000, carloads. As you will note, the smallest number of carloads was during "the season" of harvest. Grain shipping is, in fact, a year round business. However, it is thinking like this, and Instances like this, that go a long way to explaining why this Company cannot earn its own cost of capital. Best regards, Michael Sol Reply CSSHEGEWISCH Member sinceMarch 2016 From: Burbank IL (near Clearing) 13,540 posts Posted by CSSHEGEWISCH on Tuesday, June 28, 2005 11:33 AM QUOTE: Originally posted by daveklepper How much business does BNSF want? Maybe they have decided that getting all the business, and it is seasonal, means capacity constraints and inability to provide the service their year-round customers expect. So they are deliberately loosing the seasonal business to insure keeping the year-round business. Does this make sense? The concept makes perfect sense to me. I've known of several other businesses that turned away additional customers since they were already operating at capacity and did not wi***o alienate their existing customers. Grain traffic cannot be looked at without considering its effect on other traffic. If BNSF is already operating at close to capacity, and this appears to be the situation, I would consider any attempt to go after every last bit of grain traffic to be mismanagement. The daily commute is part of everyday life but I get two rides a day out of it. Paul Reply daveklepper Member sinceJune 2002 20,096 posts Posted by daveklepper on Tuesday, June 28, 2005 9:51 AM How much business does BNSF want? Maybe they have decided that getting all the business, and it is seasonal, means capacity constraints and inability to provide the service their year-round customers expect. So they are deliberately loosing the seasonal business to insure keeping the year-round business. Does this make sense? Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Tuesday, June 28, 2005 9:50 AM Am going to throw in a point on the fire. First off, am not a farmer, but live in a small farming community in NW ILL. Many of the smaller farmers do not have the storage or drying facilities that are required with the larger yields produced today. The semi drivers take the crop from the field to the elevator. There the farmer is paid after drying and storage fees. Then the same drivers get paid to take the "finished" crop 30 miles to larger facilities like ADM or Bunge Corp. where it is either used (ADM) or shipped out by barge to other larger facilities. All this starts at our local FS elevator which is located 50 feet from the BN Peavine line. Seems a simple siding (which there is plenty of room for) would eliminate a whole lot of semi traffic in the fall. Just my [2c] Willy Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Tuesday, June 28, 2005 9:28 AM Hi Alan, in a recent grain marketing study I participated in, we looked at Texas grain transportation patterns (hence the above quote). It is a big state. From Brownsville (the big BNSF-served Gulf Port), the most distant elevator is 1282 miles (Anthony Texas) which compares with Montana's most distant elevator, to Portland, Baker at 1272 miles. As you can see, Texas is a squeak larger than Montana in wheat terms. Texas elevator distribution is fairly similar. The median distance to port for Texas elevators is 837 miles, for Montana, it is 909 miles. However, the trucks, and other railroads have their effect in Texas. Lubbock to Brownsville, 800 miles, single carload rate, $2300. Conrad, MT to Portland, 816 miles, $3031 per carload. Indeed, if the Conrad farmer trucks his wheat to the big shuttle at Shelby, the elevator there can only get a rate of $2716 per carload for a 110 carload train, $417 MORE than the single carload rate offered to the Texas shipper. Plus, of course, the cost of trucking. Rates as of 4/15/05. Best regards, Michael Sol Reply arbfbe Member sinceFebruary 2002 910 posts Posted by arbfbe on Tuesday, June 28, 2005 1:21 AM Trucking becomes a better alternative the closer the producer is to the final market. Texas is a big state but the grower is closer to the export shipping or final producer than the Montana farmer is to the Pacific Northwest Ports. The Washington growers in the Palouse find shipping on the Columbia to be a viable alternative. Sure the Montana farmers can do the same but the costs are going to sky rocket when the back haul to the truck is considered. Rail, meaning BNSF is the only realistic means to move the quantities of grain produced to the final users. There are no large flour mills in the state and so the grain must leave. It is too bad BNSFs service orientation is focused on BNSF's service to itself instead of it's customers. A monopoly position does lead to some market distortions. Alan Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 27, 2005 11:45 PM Well, it's not just a regional problem: "The Texas elevator and feed mill surveys indicated that one-fifth of the respondents were without rail service because of rail line abandonments, while one-third of the rice driers were located on abandoned rail lines. Further, one-third of the country elevator operators observed that their truck shipments of grain had increased in the past five years by nearly 60 percent, while about 60 percent of elevator operators said that their rail shipments had decreased by about 38 percent. Thus, there is an increase in the use of trucks in the marketing of Texas grain. "Texas grain handlers believe their motor carrier service is satisfactory. By contrast, most registered some dissatisfaction with rail service. The greatest concern centers on the grain handlers' diffiiculty in obtaining railroad service and on the promptness of railroads in providing service. About half of the country elevator operators indicated that inadequate rail service had at times required them to lower their grain bid to farmers by an average of $0.14 per bushel. Country elevators and feed mills indicated the most dissatisfaction with railroads, while terminal elevators were more nearly satisfied with the service offered by railroads." Texas Grain Transportation Study by Fuller, Yu, Collier, Jamieson and Harrison. Center for Transportation Research, University of Texas at Austin and Department of Agricultural Economics, Texas A&M, January, 2001. Grain is one of BNSF's most profitable services. This isn't an area they need to cut costs, this is an area they need to haul as much as they can, however the customer wants it hauled. As a product group, ag's average carload revenue is the highest of all product groups, at about $1900. Sprague is a good example. BNSF charges a $1200 carload rate to Portland. Even though a short haul, the revenue is higher than the system wide average of all product groups, some of which are virtually all unit train. Fast cycle time, high revenue freight. The RR wants to aggravate the customers so that it can take a 12% cut in revenue, if the customer will load at a different location, and so the customer takes his grain elsewhere. Lower revenues AND angry customers. How much more "efficiency" like this can a railroad handle? Best regards, Michael Sol Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Monday, June 27, 2005 8:34 PM Michael, Your Lind reference reminds me of an observation I made a few months ago while exploring the back roads of Adams County WA. I followed an empty grain truck up State Highway 23 to Sprague WA, and when he turned into Sprague, I decided to see if he was going to stop at the Sprague elevators right there on the BNSF mainline. Sure enough, that truck plus three others had pulled into the rail side elevator waiting to load. My first inclination of their next destination was that they would simply short haul down the road to the BNSF shuttle train facility in Ritzville, since BNSF no longer provides service to the Sprague elevators despite a nice long siding there. So I waited around until the first truck was loaded and ready to go.... However, instead of heading down the road to Ritzville, this truck turned back down State Highway 23 heading toward Pullman. I followed him at a distance as far as St John, lost sight of him going out of St John, so I doubled back to St John and guessed that he had turned down the county road Endicott. Yep, I caught up with him going toward Endicott. He continued south passed Endicott, crossed over Highway 26, turned down Highway 127, and finally pulled into the riverside elevators at Central Ferry. I turned around to head back toward Sprague (since my intent was to watch the BNSF action at the Fishtrap recreation area), and on the way back I met the other three trucks that had been at the Sprague elevators, all heading the same direction as the first truck. Okay, enough of the Grandpa Simpson story line..... The conclusions from this trip is this: BNSF is losing traffic by their refusal to serve the the many mainline elevators. They probably assume that they will simply get that traffic at their Ritzville super terminal. Wrong. BNSF's decision to deny service to the line side elevators in deference to their unit train facility has cause at least some of that traffic to shift to the barge lines way down south. It is a little over 23 miles by I-90 from Sprague to Ritzville, while it is about 90 miles from Sprague to Central Ferry over a combination of State Highways and narrow county roads with alot of curvature and up and down running. My guess is that this traffic shift has more to do with service levels than with elevator price, because the party line around BNSF clones is that the unit train service from the Ritzville elevator can not only match the barge line rates, but beat them. Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 27, 2005 8:59 AM QUOTE: Originally posted by greyhounds[That's like the combine and the trucks. The farmer has to "balance his/her line". He/she has to coordinate the trucks with the combine. If the farmer has to truck his grain farther to the elevator so be it. The farmer needs to hire more trucks. There is no reason that a 105K truck can't go into a field. It's a matter of ground pressure, and that can be solved by putting more axles under the truck. "Ground pressure." Field trucks used by grain harvesters represent different economics than over the road trucks. 1) Drivers are exempt from the requirement for commercial classification in most grain producing states. This permits the farmer or his kids to operate the trucks to the elevators. 2) In some states, the farm truck enjoys an agricultural fuel tax exemption that the OTR trucks do not. This is economically significant to the grain industry. 3) Truck must be licensed at its GVW rate. No ag exception. Pretty expensive. 4) Most country roads are not built to handle the loading, many country road bridges are not built to handle the loading, and if an OTR truck exceeded the weight limits, then there's a fine, besides potentially going through a bridge. I've seen that one. Quite a mess. The fact is, OTR trucks simply can't get to many locations. On the Combine side: 1) the truck follows the Combine, the Combine doesn't come to the truck. OTR trucks are designed to be on highways, not fields. 2) Combines are not built to load OTR trucks. Either the Combine requires modification, or additional equipment, an auger, needs to be "available". "Available" meaning where the Combine needs it, not sitting somewhere else. 3) It would take the truck out of service for a day or more, just putting around the field following the Combine, to get the full load. An extremely poor use of truck time for an expensive OTR truck. Pretty expensive proposition to have a commercial license driver and expensive truck sitting around all day in a field. Not really what its designed to do. At Lind, Washington a new transloader located on Highway 385 perhaps represents new thinking. It is a small, very small elevator. It is entirely up on stilts, and I wasn't sure what it was when I first saw it. Big steel bins on stilts. Pretty cheap to construct compared to a modern grain elevator. Very modern, very automated. Local trucks bring in the grain and load the elevator. OTR trucks come through, pull underneath, load by gravity and take the grain away. Not a railroad in sight. I stopped and asked. The locals were apparently quite pleased with the results. "it gets us away from dependence on the railroad," meaning in that instance, the BNSF. "Service was never any good anyway, and this allows us to look for the best rate." The interesting point to me was that 1) this was not some crummy little branchline somewhere, but an attitude by shippers on a mainline, and 2) the idea that the BNSF had now become the means of last resort, that these shippers would look to barges or UP, or direct trucking all the way, before looking to BNSF. Some hostility there. I am sure the market will provide a solution to the reluctance of railroads to serve their customers. I'm not sure that the solution will benefit the railroads. Gives a little different meaning to the twist, "not a railroad in sight." Best regards, Michael Sol Reply greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Monday, June 27, 2005 1:20 AM Well, equipment cycle times are important to everyone. It costs money to own equipment and getting the most productive use out of that equipment is vital. They teach this in MBA classes. If you've got a machine that can perform its process in 240 seconds, and the next machine on the line takes 360 seconds to do its process, what do you do? You can't have the operator of the first machine, and his/her machine, standing idle waiting for the next guy to finish. You've got to "balance the line". In an ideal situation you'd have three of the first machines feeding two of the second machines. That's like the combine and the trucks. The farmer has to "balance his/her line". He/she has to coordinate the trucks with the combine. If the farmer has to truck his grain farther to the elevator so be it. The farmer needs to hire more trucks. There is no reason that a 105K truck can't go into a field. It's a matter of ground pressure, and that can be solved by putting more axles under the truck. I have learned that a truck is one of the most flexible machines in the world. You can do just about anything with a truck. It can be a fighting platform for the Army. It can be a work platform for a power company. It can haul produce from California to New York City. It can put out a fire. And, most importanly, it can move to where it is needed easily. Using trucks to move grain from a field is a once a year thing. Then the trucks, and their drivers, go elsewhere. A rail branch line isn't like that. It's there all the time. Costing money to own and operate. It is situation specific, but generally the grain gathering operation, which comes from a field, not from a country elevator, will be handled best by truck. Now there's a trade off. At a specific distance, you put the grain in a covered hopper. And that function will be work out best by the market forces, not by lawyers and politicians. "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. Reply bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Sunday, June 26, 2005 3:07 PM QUOTE: Originally posted by greyhounds Yes, but. The grain isn't originating at a country elevator. It's originating in a farm field. I remember watching a Wisconsin farmer harvest his corn. It was dark and the John Deere combine just went back and forth, it's headlights showing the way through the corn field. The hopper on the combine would get full, then he'd ( or she'd, I don't know which gender was driving) unload into a semi in the field. Semi's can go into farm fields where the freight originates. Trains can't. When the semi got full, it drove off. Now once you've got the grain in a truck, does it make sense to take it to a small country elevator, then transfer it to that elevator, hold it there, then transfer it to smaller rail cars for shortline movement, then transfer it again to a larger elevator, hold it there, then transfer it to a main line shuttle train? Or do you just drive the truck to the large elevator in the first place? It will depend on the specific situation, but if I had to bet ( and I do bet on things ), I'd bet that it will be generally more efficient to just drive the truck to the large elevator. You have hit the nail on the head. I base this on my experience working with real grain and fertilzer shippers at the Rock Island and C&NW from 1966 to 1982. We facilitated a lot of elevators that wanted to load 25, 50 and 75 car blocks of covered hoppers on branch lines that had a future. The elevators that stuck with single car shipments in 40' boxcars did not have a future. Bob Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Sunday, June 26, 2005 12:09 PM QUOTE: Originally posted by greyhounds Now once you've got the grain in a truck, does it make sense to take it to a small country elevator, then transfer it to that elevator, hold it there, then transfer it to smaller rail cars for shortline movement, then transfer it again to a larger elevator, hold it there, then transfer it to a main line shuttle train? Or do you just drive the truck to the large elevator in the first place? It will depend on the specific situation, but if I had to bet ( and I do bet on things ), I'd bet that it will be generally more efficient to just drive the truck to the large elevator. Greyhounds, Using this logic, we could take it one step further and say that it would make more sense just to drive the truck to the deep water port instead of transloading from truck to unit train elevator. As Michael pointed out, it's all about equipment utilization, and all other things being equal the optimal economic scenario would involve using (1)truck from farm to nearest elevator, (2)branchline hoppers from that elevator to unit train elevator (wherein the grain is either transloaed from lighter hoppers to 286k hoppers, or the 264k/286k hoppers are added to the nest unit train consist), and finally (3)264k/286k unit train hoppers from unit train elevator to deep water port (or sometimes to nearest barge port, wherein the next step (3a) is barging from river port to deep water port). For those places where the nearest grain elevator has no rail access due to either prior rail abandonment or never having had rail acess, then Step 2 involves transloading from farm truck to highway truck, a much more costly move than the branchline rail option. Sometimes it is possible to load highway trucks directly at the farm, and let the unit train elevator take care of the product quality refinements. Other times it is possible that another step (1a) will be added when grain is transloaded from farm truck to highway truck at the nearest elevator without rail access, wherein the highway truck only goes as far as an intermediate country elevator that has branchline rail access where the grain is then transloaded to the branchline hoppers. It all depends on distances and time constraints involved. Yes, there is always some product degradation when it is transloaded, but I've been told by co-op reps that the product quality losses and extra costs are insignificant compared to transportation costs. Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Sunday, June 26, 2005 9:07 AM QUOTE: Originally posted by greyhounds [Now once you've got the grain in a truck, does it make sense to take it to a small country elevator, then transfer it to that elevator, hold it there, then transfer it to smaller rail cars for shortline movement, then transfer it again to a larger elevator, hold it there, then transfer it to a main line shuttle train? Or do you just drive the truck to the large elevator in the first place? It will depend on the specific situation, but if I had to bet ( and I do bet on things ), I'd bet that it will be generally more efficient to just drive the truck to the large elevator. No. Equipment cycle times are as crucial to the farmer as to the railroad. The truck has to be back in time to transload from the Combine to the truck, or else the Combine operator just sits there waiting. On smaller farms, the Combine operator often IS the truck driver and he is not going to get his crop in if he spends his time in the truck driving cross country somewhere with a load of wheat. Time is of the essence on a grain operation. The Combines operate as near to 24/7 as operator availabilty and fatigue will permit. The trucks are by and large used only during harvest, and there are neither excess trucks nor excess teenagers sitting around to drive them. And these are NOT 105k trucks that are out working between the elevator and the Combine. Those trucks don't load from Combines. They load at elevators. This is hot and dusty work and to preserve the crop against rain, hail and insects, the crop has to get in as quickly as possible. Custom cutters make their money harvesting as quickly as possible in order to follow the crop ripening north. Ideally, the trucks and Combine operate as a unit, one Combine, two trucks, two truck drivers. Small operators don't have the luxury so time is even more critical. A truck wants to be there by the time the bin is full on the Combine. The requirement for a truck at the Combine can be as short as 45 minutes. The farther the elevator, the more trucks and the more drivers needed to keep the Combine operating continuously. The closer the elevator is to the farm, the better. There is no efficiency whatsoever in long distance driving of grain trucks off the farm to an elevator many miles distant just because it is larger. Best regards, Michael Sol Reply kenneo Member sinceDecember 2001 From: Upper Left Coast 1,796 posts Posted by kenneo on Sunday, June 26, 2005 5:39 AM In a certain aspect, the BN in Montana is simply reacting to basic economics. As Greyhounds just stated, once the farmer has the product loaded in an OTR truck, you don't want to take it out and then reload it into a covered hopper unless the cost of that transload and two transportation charges will be less than keeping it in the truck all the may to the POE. And Futuremodel is correct about the effeciencies of grain loading on branchlines. My last RR position was as a Station Agent and we had several single farmer and small grain consolidator elevators in my district. The export terminal was less than 100 miles distant (mostly between 60 and 85 miles) from the elevators, yet I could compete on single car-load rates with the EXEMPT (ie farmer owned and operated) trucker who could haul directly from the field 60-85 miles to the POE. The exempt trucker could eat my lunch and dinner getting from the field to the export elevator, but one there, he started charging "delay fees" for waiting to unload. And then, about 1/2 the time, the truckers load was rejected because of "junk" in the grain that the branchline elevator filtered out. So the truckers had to locate a new sale for the grain. $$$$$$$$$$$$$$ Some things, while seeming to be non-cost effective, perform hidden functions that create greater economies further down the production chain. The farmer and the exporter were both better served by the small local elevator and the extra cost he inserted into the system was eliminated later in the production chain as illustrated above and the net result was a better operating system costing equal or less than any alternative. Consistancy and regularly fullfilled expections sell big time. Eric Reply greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Sunday, June 26, 2005 4:33 AM Yes, but. The grain isn't originating at a country elevator. It's originating in a farm field. I remember watching a Wisconsin farmer harvest his corn. It was dark and the John Deere combine just went back and forth, it's headlights showing the way through the corn field. The hopper on the combine would get full, then he'd ( or she'd, I don't know which gender was driving) unload into a semi in the field. Semi's can go into farm fields where the freight originates. Trains can't. When the semi got full, it drove off. Now once you've got the grain in a truck, does it make sense to take it to a small country elevator, then transfer it to that elevator, hold it there, then transfer it to smaller rail cars for shortline movement, then transfer it again to a larger elevator, hold it there, then transfer it to a main line shuttle train? Or do you just drive the truck to the large elevator in the first place? It will depend on the specific situation, but if I had to bet ( and I do bet on things ), I'd bet that it will be generally more efficient to just drive the truck to the large elevator. "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. Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Saturday, June 25, 2005 9:27 PM QUOTE: Originally posted by Chris30 One thing to add to the small grain elevators that are disappearing. A lot of small elevators are/were located on old, lightweight rail that is/was maintenance deffered branch trackage. As the weight of a loaded grain car continues to get heavier, the lightweight, maintenance deffered track can no longer support the weight of those cars. To continue serving these small elevators the railroads would have to continue using smaller/lighter cars, or the branch trackage would have to be completely rebuilt at a great cost that would never be repaid to support the newer, heavier grain cars. Don't foreget about the cost of crew and equipment to serve the lightweight branches that might only produce a few cars a week for one season of the year. It just makes more sense for the small elevators take the discount offered and truck their product to a large elevator on the main line. The railroads are more than willing to give a discount to the small elevator vs. the expense of the branch lines. CC This all goes back to argument of whether it is more effective to deliver grain from country elevator to unit train terminal via a 105k truck (129k in some states) over country roads, or whether it might be better to make that same short haul using old 264k (or even older 220k) hoppers over a still intact branch line. There are some shortline guys who even claim they can haul 286k cars over lightweight trackage if they just keep it under 10 mph. So it comes down to the idea that branchlines can continue to remain functional (and thus profitable) if the branchline owner can (1) carry grain from the elevators on his line to the unit train facility in the lighter weight 220k and 264k hoppers (which probably requires access to mainline rails to get to the unit train facility), or (2) fill up 286k hoppers with branchline grain and then go real slow over the branchline rails until the shortline can reach mainlline rails wherein they can speed it up to get to the unit train facility, wherein the 286k cars are added to the unit train consist. The former could be a problem if the older cars are no longer FRA compliant off the home rails, and the whole enterprise is dependent on the shortline operator being able to gain access to the unit train facility, often over mainline rails. When the Class I's owned and operated the the branchlines, this was no problem, but if they've spun off the branchline they are probably less accomodating of the branchline consists occupying the mainline rails. The bottom line is that it is still more efficient to move grain via 220k hoppers than it is to move grain in 105k truck trailers, and unless the rail move is no more than a few hoppers per year, it should still pay to move this product via rail rather than truck. For the most part the branchline is already paid for, only maintenance required to keep it minimally functional. With diesel fuel prices looking like they'll stay high for the time being, and the truck driver shortage means current drivers will begin to earn higher wages to stop loss for trucking firms, the idea of running lightweight freight trains over the lightweight rails could make a comeback. But it will still depend on the access issue to make it work. Reply Edit broncoman Member sinceFebruary 2003 From: Gateway to Donner Summit 434 posts Posted by broncoman on Saturday, June 25, 2005 7:29 PM QUOTE: Originally posted by ericsp The grain trains I see are probably about 75 to 100 cars. All of the grain elevators around here are receivers. Do they load any grains besides rice up there? Eric rice is a big export, but I am not sure what the other grain is that is shipped. I know I have seen a lot of cars at the elevators up highway 99 above Yuba City. The cars were being loaded outside of rice season, but I didn't know with what. Anyone else care to venture a guess. Reply Chris30 Member sinceDecember 2001 From: near Chicago 937 posts Posted by Chris30 on Saturday, June 25, 2005 7:08 PM One thing to add to the small grain elevators that are disappearing. A lot of small elevators are/were located on old, lightweight rail that is/was maintenance deffered branch trackage. As the weight of a loaded grain car continues to get heavier, the lightweight, maintenance deffered track can no longer support the weight of those cars. To continue serving these small elevators the railroads would have to continue using smaller/lighter cars, or the branch trackage would have to be completely rebuilt at a great cost that would never be repaid to support the newer, heavier grain cars. Don't foreget about the cost of crew and equipment to serve the lightweight branches that might only produce a few cars a week for one season of the year. It just makes more sense for the small elevators take the discount offered and truck their product to a large elevator on the main line. The railroads are more than willing to give a discount to the small elevator vs. the expense of the branch lines. CC Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Saturday, June 25, 2005 12:51 PM Exactly—and I suppose contumelious would be a better term in the context I was using. As Dan said, in a recent post, what this will really come down to is the ability of the state courts to police properly this action. As somebody who works for a state appellate court, I am not at all convinced that there will be a uniform application of this oversight. Furthermore, in order for the State courts to properly oversee this, there is going to have to be litigation. Who do you think is going to be able to hire the better lawyer, Wal-Mart or some family farmer? Furthermore, the type of litigation involved will be complex—where the better lawyer makes even more of a difference. I am truly worried about this one. Gabe Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Saturday, June 25, 2005 11:48 AM QUOTE: Originally posted by gabe QUOTE: Originally posted by futuremodal Gabe, I'll grant you that there is a fundamental difference between the public needs of a railroad/pipeline/transmission line et al and the public needs of a big box store or new multi family dwellings. However, in spirit (and from a legal perspective) a new private development is a new private development regardless of function or intent. In other words, I'm not sure the law sees a difference between local/regional juristiction that supports UP and local/regional juristicition that supports WalMart. The Supreme Court recognized that it would be discriminatory to allow Corporation A the right to eminent domain but not allow Corporation B the same right, regardless of what it is those corporations are involved. It is up to Congress to make the distinction between those corporations which absolutely need to access certain private property to function, and those which could effectively "shop around" for the right location. Of course, I have argued in other topic lines that railroads are not the same as other private ventures, therefore it is ridiculous to allow railroads the same levels of "hands off" government approach, especially given the importance of preserving and expanding transportation infrastructure to meet the demands of an ever growing economy. If I remember correctly, even you Gabe presented the "McDonalds" analogy in defending the current railroad closed access status quo system. So therefore, if railroads are no different from McDonalds when it comes to what governments allow in terms of price or access regulation, then it can also be argued that McDonalds is no different from railroads in what governments allow when it comes to eminent domain. For the record, I am all for allowing railroads the right of eminent domain, but with that right comes the necessary oversight of regulation to assure optimal citizen access to that ROW that utilized the right of eminent domain. Otherwise, we are just granting fiefdoms to discriminatory entities. Dave, I am not trying to be contumacious, but to quote the Court in its reference to the new land use "Nor will the private lessees of the land in any sense be required to operate like common carriers, making their services available to all comers." The Court just kicked out one of the chief restrictions on the use of the doctrine. This will not only allow the greatly expanded view of public benefit to be used as a sword by the rich; it will also allow the doctrine to be used CONSIDERABLY more than it is now. Gabe Well, I'm okay with you being contumacious, as long as you don't become contumelious. I admit, I am a little bit perplexed by the Court statement regarding lessees absolvency from "common carrier" assimilation, since the particular case pertained to a developer whose end product would ostensibly be made available to the public marketplace. If this interpretation is taken at face value, then a private individual with influence could convince governments to bestow the act of eminent domain to remove another private citizen from their property, soley for the purpose of the former building their own private residence on the latter's site. Perhaps this is why the reaction from both the left and the right has been so vocal, and it begs the question as to why the Court would so drastically extend this right of eminent domain beyond the auspices of the original case. It's one thing to grant eminent domain for a project that would be made available to the public, it's entirely beyond reason to grant eminent domain for a project that is intended for private use. Reply Edit gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Saturday, June 25, 2005 11:12 AM QUOTE: Originally posted by futuremodal Gabe, I'll grant you that there is a fundamental difference between the public needs of a railroad/pipeline/transmission line et al and the public needs of a big box store or new multi family dwellings. However, in spirit (and from a legal perspective) a new private development is a new private development regardless of function or intent. In other words, I'm not sure the law sees a difference between local/regional juristiction that supports UP and local/regional juristicition that supports WalMart. The Supreme Court recognized that it would be discriminatory to allow Corporation A the right to eminent domain but not allow Corporation B the same right, regardless of what it is those corporations are involved. It is up to Congress to make the distinction between those corporations which absolutely need to access certain private property to function, and those which could effectively "shop around" for the right location. Of course, I have argued in other topic lines that railroads are not the same as other private ventures, therefore it is ridiculous to allow railroads the same levels of "hands off" government approach, especially given the importance of preserving and expanding transportation infrastructure to meet the demands of an ever growing economy. If I remember correctly, even you Gabe presented the "McDonalds" analogy in defending the current railroad closed access status quo system. So therefore, if railroads are no different from McDonalds when it comes to what governments allow in terms of price or access regulation, then it can also be argued that McDonalds is no different from railroads in what governments allow when it comes to eminent domain. For the record, I am all for allowing railroads the right of eminent domain, but with that right comes the necessary oversight of regulation to assure optimal citizen access to that ROW that utilized the right of eminent domain. Otherwise, we are just granting fiefdoms to discriminatory entities. Dave, I am not trying to be contumacious, but to quote the Court in its reference to the new land use "Nor will the private lessees of the land in any sense be required to operate like common carriers, making their services available to all comers." The Court just kicked out one of the chief restrictions on the use of the doctrine. This will not only allow the greatly expanded view of public benefit to be used as a sword by the rich; it will also allow the doctrine to be used CONSIDERABLY more than it is now. Gabe Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Saturday, June 25, 2005 11:04 AM Greyhounds, None taken. Most of my best friends are lawyers and are great people that truly entered the profession to serve the public good. That having been said, as a group, most of us can't stand lawyers. Gabe Reply greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Saturday, June 25, 2005 12:30 AM No offense to Gabe but, "Lawyers are like nuclear weapons, I got 'em because the other side's got 'em; but once you use 'em, they screw everything up." By Danny DiVito in "Other People's Money" - a really great (or "Greyt" as we fast dog folks say) movie. "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. Reply ericsp Member sinceMay 2015 5,134 posts Posted by ericsp on Friday, June 24, 2005 11:02 PM QUOTE: Originally posted by broncoman I am born and raised in the central valley of CA, so I am curious as to the "stranded" grain elevators of the midwest. There are some fairly large farms still left in the greater sacramento area but it seems that they truck the grain to a siding where it is transferred to anywhere from 2-6 cars. There are still bigger elevators around I would say you wouldn't have to go more than 60-80 mi to go from one to another from Redding almost all the way down to Los Angeles. Is this scenerio different from the midwest? I am just curious as to the scope. I am sure the distances between "train load" elevators is substantial. And out of curiosity what is the standard "train load", 30-50 cars? Thanks for the info. The grain trains I see are probably about 75 to 100 cars. All of the grain elevators around here are receivers. Do they load any grains besides rice up there? "No soup for you!" - Yev Kassem (from Seinfeld) Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Friday, June 24, 2005 8:39 PM Gabe, I'll grant you that there is a fundamental difference between the public needs of a railroad/pipeline/transmission line et al and the public needs of a big box store or new multi family dwellings. However, in spirit (and from a legal perspective) a new private development is a new private development regardless of function or intent. In other words, I'm not sure the law sees a difference between local/regional juristiction that supports UP and local/regional juristicition that supports WalMart. The Supreme Court recognized that it would be discriminatory to allow Corporation A the right to eminent domain but not allow Corporation B the same right, regardless of what it is those corporations are involved. It is up to Congress to make the distinction between those corporations which absolutely need to access certain private property to function, and those which could effectively "shop around" for the right location. Of course, I have argued in other topic lines that railroads are not the same as other private ventures, therefore it is ridiculous to allow railroads the same levels of "hands off" government approach, especially given the importance of preserving and expanding transportation infrastructure to meet the demands of an ever growing economy. If I remember correctly, even you Gabe presented the "McDonalds" analogy in defending the current railroad closed access status quo system. So therefore, if railroads are no different from McDonalds when it comes to what governments allow in terms of price or access regulation, then it can also be argued that McDonalds is no different from railroads in what governments allow when it comes to eminent domain. For the record, I am all for allowing railroads the right of eminent domain, but with that right comes the necessary oversight of regulation to assure optimal citizen access to that ROW that utilized the right of eminent domain. Otherwise, we are just granting fiefdoms to discriminatory entities. Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Friday, June 24, 2005 4:42 PM QUOTE: Originally posted by arbfbe BNSF does not want to serve small anythings. The discount for shippers using the shuttle services is about $300 in many locations, that makes it hard for the smaller elevators to be competitive. Depending upon where BNSF supports construction of a shuttle elevator it can decimate all smaller elevators in quite an area. All that investment by smaller companies, co-ops and farmers wiped out by a couple of large American conglomerates. Hi Alan, Montana shippers receive a $350 carload discount at 9 of the 10 shuttle elevators located in Montana, over single carload rates. That's about $250 over multi-carload rates. At the same time, however, they pay an average $861 above the average BNSF system rate for identical shipping services elsewhere on the system, that is, same distance, export. If a shipper shipped by the carload, from Shelby to Portland, for instance, the cost of shipping would be 18.25% of the total price received at Portland for HRSpring wheat, based on 4/15 prices, or 16.34% of the total price received at shuttle rates. A relatively small difference, 1.91% of the gross profit. In dollar terms, by shipping 110 carloads HR Spring through the enormous shuttle facility at Shelby (3.2 million bu. capacity, 162 car track capacity) the shipper saves $38,500 over single carload rates, or $27,500 over multiple carload rates on a shipment that will bring total revenue of $1.85 million in Portland. These "savings" are little more than 1% of the revenue received and are just not that significant in the overall scheme of things. Other factors are far more important to the shipper. On the other hand, in order to take advantage of shuttle rates, shippers have to construct shuttle facilities. I checked with one of the big elevator contractors today, and they confirmed that typically a new shuttle facility costs between $8 and $10 per bushel. So, for instance, to duplicate a typical Montana facility, say the Billings Peavey operation at 1.7 million bushels, the shipper must invest appoximately $15 million dollars, and probably also pay for the longer siding to be installed. On a 15 year loan, that's a $1.6 million financing obligation to handle annually, aside from increased operating costs. To justify the cost, the shipper would have to have a minimum of 58 shuttle trains per year. That's 22 million bushels of wheat from a single elevator. That would be very "unusual" (That would be one third of Montana's entire export wheat crop in Year 2001). From the railroad perspective, is it clear that the railroad is "saving" the costs of carload level handling? Well, many of the patrols that formerly picked up carloads of wheat are still out there, operating the same shifts on the same branches or the same areas. Some aren't. Exactly what is the railroad "saving"? Is there added cost due to increased wear on the track and structure? We know the answer to that is yes. Is that offset by savings elsewhere? That's just not as clear as it should be. Further, the trend to unit trains has not shown up in the bottom line at all, to the contrary, last year on BNSF, operating expenses increased faster than revenues. If there are savings in increased unit train operations, it is difficult to find them in the place they are supposed to be: operating expenses. Arguably, filtering carloads and smaller carload units into existing traffic patterns has a different effect on railroad operations than fully dedicated trains. Is the effect positive or negative? There can be an argument both ways on that. Is there an explicit downside for the railroad? According to the contractor that built the facility, the Co-op at Enderlin, ND built its new 50 car shuttle on CP, rather than BNSF partly as a response to BNSF "attitudes" on rates available to 50 car facilities. The RR suffered a net loss of the traffic and the loss of the entire amount of the revenue. It will never get it back. So, to promote shuttle service, the BNSF takes a 12% loss of revenue. It's restrictive policies which anger most of the industry involved, results in a loss of customers, on top of a 12% reduction in revenue. Operating expenses continue to increase faster than revenue. What this all suggests is that the operating efficiencies obtained are smaller than the revenue lost. The magic word "efficiency" is meaningless if there is no net return. The current satisfaction expressed by certain observers as to the perceived "efficiency" of shuttle operations is simply not justified by either the overall operating results of the railroads, nor by any discernible savings over regular operations. "Efficiency" as used by some of the Posters seems to be a "theoretical" construct that they should be more efficient, and therefore in our infinite wisdom we will just assume that in actual fact they are. One of the problems with unit train operations since their inception with coal, is the inability to properly estimate the cost of the operation. And I don't mean that operating costs were ever overestimated. Hardly. At each refinement of the cost model, unit trains have typically been more costly to the railroad than the experts initially predicted. And each refinement continues to underestimate the cost. Well, as with many assumptions, reality and theory can be quite different. There are not many specific facts offered in support of shuttle operations to show that they are, in fact, as "efficient" for the railroad from an economic perspective as the theory offered by the gentlemen suggests. Best regards, Michael Sol Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Friday, June 24, 2005 9:07 AM QUOTE: Originally posted by futuremodal RE: The recent Supreme Court Ruling - Don't forget your railroad history. When the railroads were building West in the late 1800's and early 1900's, they were granted the right of Eminent Domain to allow the ROW across established private property. This is nothing new. I wish you were right; but you are not. This is a substantial departure from previous practice. Yes, railroads have used the power of eminent domain for centuries in this country. However, there is a fundamental difference between railroads and the cases now allowed by our Supreme Court. One, of course, may argue that there is no difference between the public interest served by Wal-Mart and the public purpose served by Union Pacific. Legally, at least, it is recognized that railroads serve a direct public benefit and would not be possible to run without the use of eminent domain. In any event, the restriction to things like reservoirs, railroads, highways, etc. substantially limited the power of eminent domain in the past. No more. Now, the sanctity of the property is el finito. If Wal-Mart wants to move into a suburban neighborhood, all they have to do is say sell to us, or we will show the municipality that we have a larger tax base and will supply more votes. Trust me, your property rights have really been diminished because of this holding. Gabe Reply broncoman Member sinceFebruary 2003 From: Gateway to Donner Summit 434 posts Posted by broncoman on Thursday, June 23, 2005 9:05 PM I am born and raised in the central valley of CA, so I am curious as to the "stranded" grain elevators of the midwest. There are some fairly large farms still left in the greater sacramento area but it seems that they truck the grain to a siding where it is transferred to anywhere from 2-6 cars. There are still bigger elevators around I would say you wouldn't have to go more than 60-80 mi to go from one to another from Redding almost all the way down to Los Angeles. Is this scenerio different from the midwest? I am just curious as to the scope. I am sure the distances between "train load" elevators is substantial. And out of curiosity what is the standard "train load", 30-50 cars? Thanks for the info. Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Thursday, June 23, 2005 7:51 PM RE: The recent Supreme Court Ruling - Don't forget your railroad history. When the railroads were building West in the late 1800's and early 1900's, they were granted the right of Eminent Domain to allow the ROW across established private property. This is nothing new. RE: Unit vs carload shipments - Everything Greyhounds says is true, but in the larger picture it is possible to have a reverse macro effect. We've already hashed out the question of whether it is more "efficient" to move grain from a country elevator to a unit train terminal via truck or whether it would be more efficient to move that grain from country elevator to unit train terminal by shortline railroad. There are real world examples of shortlines being able to beat trucker's shorthaul rates in this scenario (aka Watco's opertations in the PNW). So in that vein the Class I's will participate in carload grain movements vicariously via their shortline "partners" (or shortline "slaves" depending on your particular POV). Depending on the infrastructure characteristics of a certain grain moving corridor, it is probable that shorthaul railroad companies could easily compete with truckers for carload quantities IF they could access the Class I property to get to those smaller elevators. This was one of the points made in the open access discussions, that smaller players would go after the business rejected by the Class I's if they had access to the property. Unit train dynamics are more efficient than carload dynamics, yet carload dynamics are (usually) more efficient than truckload dynamics. Thus, it is possible to have situations in which the combination of truckload hauls plus unit train hauls would be LESS efficient than carload hauls that come in 10's, 5's, or sometimes even single lots over the same corridors (from farm to port). So when Gabe bemoans the loss of individualized services, he's not just being nostalgic. Reply Edit bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Thursday, June 23, 2005 4:46 PM QUOTE: Originally posted by Peterson6868 But is this legal? Under Common carrier obligations the railroad has to traet everyone the same. Its just that the farmers dont knwo this and cant afford to hire a law firm to figure this out. Effeciant? What about all those trucks going all over the place to pick up grain from the small elevaters Railroads still have a common carrier obligation. If I call the Buckingham Branch today and say I want to ship a car of grain from Crozet to East Budda, TX they and their conections must move the car. Although they can not refuse to provide service I must pay them the rate they want for their service. In addition they will expect me to supply the covered hopper. Bob Reply SALfan Member sinceApril 2002 From: Northern Florida 1,429 posts Posted by SALfan on Thursday, June 23, 2005 4:03 PM QUOTE: Originally posted by greyhounds Of course it's legal. And farmers aren't ignorant. And they have lawyers. And farmers are going through this same process. My father worked 160 acers in central Illinois. That was what one man could handle. Today, that would be a "hobby farm". (disclaimer: I did not grow up on a farm, he was evicted the year I was born and I grew up in a small town.) The farms have gotten much larger, along with the equipment. The government can not pass a law that changes economics, just as they can not pass a law that water will run up hill. My brother put it very well last week, and I believe his quantities are about right. In the 1910's a farmer could make a decent living for his family on 40 acres. In the 1970's it took 400 acres to provide a decent living for a family. Now it takes 4000. To put it another way (I may be slightly off with these figures, but you get the idea): In 1948, Yazoo County Mississippi had 48,000 people; in 1990, it had 21,000 people. Most farmers didn't get tractors until just before or after World War II, so the vast decrease in the number of field hands and tenant farmers didn't really hit until after WWII. You can see the effect in the population changes in Yazoo County. Reply greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Thursday, June 23, 2005 2:02 PM QUOTE: Originally posted by Peterson6868 But is this legal? Under Common carrier obligations the railroad has to traet everyone the same. Its just that the farmers dont knwo this and cant afford to hire a law firm to figure this out. Effeciant? What about all those trucks going all over the place to pick up grain from the small elevaters Of course it's legal. And farmers aren't ignorant. And they have lawyers. And farmers are going through this same process. My father worked 160 acers in central Illinois. That was what one man could handle. Today, that would be a "hobby farm". (disclaimer: I did not grow up on a farm, he was evicted the year I was born and I grew up in a small town.) The farms have gotten much larger, along with the equipment. The government can not pass a law that changes economics, just as they can not pass a law that water will run up hill. As for the trucks, the economics of truckload transporation are very different from carload transportation. With trucks the unit of sale equals the unit of production. There is no need to aggregate sale units into production units. With carload there is an absolute need to aggregate the units of sale (carloads) into units of production (trainloads). There is also a need to break down trainloads of empties and distribute the cars for loading. As I said, this just destroys equipment utilization and drives up costs. These factors are not present in truckload. So smaller facilities are more efficiently served by trucks. And yes, I remember the C&IM spotting boxcars for grain loading at the elevators in Manito, IL. It's where I received my first lesson in just how inefficient that sort of thing is. The agent was muttering to himself about the grain company not ordering any cars for six months, then wanting "everthing" right away. I actaully saw this guy get on the phone with the dispatcher, get the OK, then flag down a southbound extra. I mean he was out there waving a red flag. They stopped and switched out every empty boxcar on the train. Just grabbed 'em off the train. So much for equipment utilization planning. "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. Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Thursday, June 23, 2005 1:53 PM Mookie: That is really encouraging to see it doesn't all go that way. But, my heart really goes out to all of those people who are going to lose their homes--not businesses--not for the direct public good, but another Mega store can move in. Some of the homes had been in the family for quite some time. I can't imagine how hard it would be to lose your home in such a circumstance. I am geniunely sad for them. MP-173: I do like the boxcar bit. My father worked at a grain elevator in his youth and described how much he preferred actual grain cars to box cars, as sometimes they would actually have to shovel the grain inside the box car to create more room for the grain. Thanks, Gabe Reply Mookie Member sinceJune 2001 From: US 13,488 posts Posted by Mookie on Thursday, June 23, 2005 1:16 PM Gabe - I heard it on the news and just shook my head. One bright spot - that muddy feathers can probably explain better - City of Lincoln vs a lumber company for what would have amounted to eminent domain. City 0 lumber company - 1 Moo She who has no signature! cinscocom-tmw Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Thursday, June 23, 2005 1:14 PM Gabe: DIdnt see the Supreme Court ruling, but in my opinion, it is really a bad ruling. I had a customer in Des Plaines, Il which was not a glamorous company. They are a leasing company of trailers. In fact, they are HUGE. One day I stopped in and they said they were moving. It seems as if Des Plaines condemned their property to build a hotel. Granted, this property was adjacent to I 90 and close to O'Hare and was no doubt valuable...but what gives them the right to do so? BTW...the trailer leasing company is no poor small company, it is owned by Warren Buffet's Berkshire Hathaway. Now, regarding the small elevator issue....Greyhound and Gabe, you will appreciate this one. Back in the day, I recall the IC line thru town would stop and switch boxcars of grain at the next town north (West Liberty, Il). Imagine how far we have progressed...BOX CARS of grain! ed Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Thursday, June 23, 2005 12:54 PM On a related side note, did anyone happen to notice the Supreme Court holding today saying that cities may condem property to attract private industry? Yet another blow against the little guy. This one is going to be bad. Gabe Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Thursday, June 23, 2005 12:41 PM QUOTE: Originally posted by greyhounds Increasingly, it seems the railroads are developing a business strategy that consists of running solid trains of containers, trailers, grain, whatever from point to point. This is far more efficient than traditional carload railroading. It makes sense. Serving small country grain elevators has always been inefficient. Equipment utilization is terrible and the cost of terminal handling (locals, endless switching into blocks, etc.) drives expenses through the roof. Railroads have to compete for capital in a world maket. Obtaining financing for grain cars has to compete with obtaining financing for a shirt factory in China. The investment will go to the most productive use. There is absolutely no way any corporate or government action can realistically change this. It's not a question of the BNSF not "wanting" to do something. It doesn't matter what they "want" to do. It's a question of what they have to do to remain competitive for investment funding. BNSF investors will get a better return on shuttle operations than they will on individual carload shipments. If BNSF would try to pay these investors less in order to serve the carload markets, the investors would go elsewhere. Would you rather see them invest in the US or China? If the government tries to force the BNSF to serve the inefficient small grain elevator market, they'll drive the railroad into the ground. It won't be able to attract investment and China will get a new shirt factory. You can't take pain out of the economy. Trying to do so will just make things worse over time. It's a sad thing that some people will loose money on investments they made in inefficent grain terminal facilities. But making business investments is no guarantee of success. Profit is a reward for risk, and sometimes the risk goes against the investor. And there is absolutely no way to change that. None. Greyhounds, Interesting analysis; I certainly can't disagree with it. However, I think the "pain" of the current economic trend of "super sizing" is even more painful than most realize. In the past, it took a lot less money to put one's energy and resources into a small business venture—like a 10-car grain elevator. The percentage of Americans with that much money was fairly broad and the avenue from middle class to bourgeois was attainable to those with luck, skill, dedication, and intellect. Under the consolidated super sized paradigm, the amount of people who have enough money to start a grain elevator capable of handling 110 BNSF shuttle car elevator—or other consolidated industries—are considerably less than it took to start such a business in the past. Because American industry in general seems to be following this trend, avenues toward wealth are being constricted. It is not simply a scenario of the rich getting richer. It is a scenario of the extinction of American upward mobility, which is the hallmark of the American economy and is why the American economy is renowned for reinventing itself. I think this will not only lead to permanent class divisions but will hinder the ability of the American economy to apply its entrepreneurialism in an effective manner. Nonetheless, I think you are right. It just kills me to know that you are. Gabe Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Thursday, June 23, 2005 12:24 PM But is this legal? Under Common carrier obligations the railroad has to traet everyone the same. Its just that the farmers dont knwo this and cant afford to hire a law firm to figure this out. Effeciant? What about all those trucks going all over the place to pick up grain from the small elevaters Reply Edit greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Thursday, June 23, 2005 11:51 AM Increasingly, it seems the railroads are developing a business strategy that consists of running solid trains of containers, trailers, grain, whatever from point to point. This is far more efficient than traditional carload railroading. It makes sense. Serving small country grain elevators has always been inefficient. Equipment utilization is terrible and the cost of terminal handling (locals, endless switching into blocks, etc.) drives expenses through the roof. Railroads have to compete for capital in a world maket. Obtaining financing for grain cars has to compete with obtaining financing for a shirt factory in China. The investment will go to the most productive use. There is absolutely no way any corporate or government action can realistically change this. It's not a question of the BNSF not "wanting" to do something. It doesn't matter what they "want" to do. It's a question of what they have to do to remain competitive for investment funding. BNSF investors will get a better return on shuttle operations than they will on individual carload shipments. If BNSF would try to pay these investors less in order to serve the carload markets, the investors would go elsewhere. Would you rather see them invest in the US or China? If the government tries to force the BNSF to serve the inefficient small grain elevator market, they'll drive the railroad into the ground. It won't be able to attract investment and China will get a new shirt factory. You can't take pain out of the economy. Trying to do so will just make things worse over time. It's a sad thing that some people will loose money on investments they made in inefficent grain terminal facilities. But making business investments is no guarantee of success. Profit is a reward for risk, and sometimes the risk goes against the investor. And there is absolutely no way to change that. None. "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. Reply CSSHEGEWISCH Member sinceMarch 2016 From: Burbank IL (near Clearing) 13,540 posts Posted by CSSHEGEWISCH on Thursday, June 23, 2005 11:40 AM The expense of serving small elevators that generate only a handful of cars at a time only once or twice a week is proportionally higher than serving a larger elevator that generates 25+ cars at a time daily. Smaller elevators that are generating truck-size loads are probably better served by truck. BNSF is basically giving volume discounts similar to just about any business in any line of work. The daily commute is part of everyday life but I get two rides a day out of it. Paul Reply arbfbe Member sinceFebruary 2002 910 posts Posted by arbfbe on Thursday, June 23, 2005 11:06 AM BNSF does not want to serve small anythings. The discount for shippers using the shuttle services is about $300 in many locations, that makes it hard for the smaller elevators to be competitive. Depending upon where BNSF supports construction of a shuttle elevator it can decimate all smaller elevators in quite an area. All that investment by smaller companies, co-ops and farmers wiped out by a couple of large American conglomerates. Reply 123456 Join our Community! Our community is FREE to join. To participate you must either login or register for an account. 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I'll disagree with you on that last point. Clearly the trucking companies win, and do so at the expense of both the grain marketers and the railroads. Yet another inadvertent gift from the railroads to the so-called "enemy" aka truckers. Rather, longer, slower trains appear to result in increased system congestion, do result in increased track maintenance expenses, and do result in longer terminal dwell times as a system effect that "suggests" that increased efficiency is not the result, but rather statistically measurable inefficiency is apparently the result. That all trains are affected by the increased congestion resulting from bigger, longer, slower grain trains. It would appear that this bent toward clogging the tracks with ostensible "efficiency" consists is a disease that is systemic, hard-wired into the railroad management culture. If this idea of product consolidation onto as many cars as will fit onto a siding was developed from an economic model, it is easy to see that it was a model developed with limited variable analysis. Such is the heart and soul of the Staggers Act, on the surface a "no-brainer" while in its long term impacts a "no-brainer" of a different sort. Staggers only partially "deregulated" the railroads, providing independent rate setting and price contracting, but doing nothing to effect head to head rail competition for all rail shippers. The latter is crucially necessary to ensure innovation, the only way to keep the entire industry from homogenizing into a star-crossed bandwagon of eventual economic failure. Some of you have explicitly or implicitly infered that competition is bad for the rail industry, because if railroads are forced to compete for each and every potential customer they will not be able to achieve revenue adaquacy. This is simply circular reasoning, because without competitve incentives the customer base will be put off (via capacity reductions, service consolidations, service delays, service refusals, et al), and without an ever increasing customer base a company, any company, not just railroads will not be able to achieve revenue adaquacy. How many more examples of railroad management underachievement will this nation have to put up with before you all will concede that Staggers is ultimately a failure? It's not that deregulation is not a desirable application of government oversight, it's that partial deregulation is sometimes worse than no deregulation at all. Staggers is partial deregulation, evidenced by the railroads' balance sheets, and evidenced by the tremendous loss of railroad employment/trackage/market share over the last two decades. If we want to do this thing right, then we need to fully deregulate the industry into a competitive venture that pleases both the investors and the customers. You all know my idea for full deregulation (it goes by the initials "o" and "a"), but I am willing to consider any else's ideas for implementing full deregulation in the broadest sense of the word. If anyone has an idea for bringing back the rail saturation of the 1970's, wherein all but a few areas of the country had true head to head rail competition in the form of the private closed access system, then let's hear it. Reply Edit MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Thursday, June 30, 2005 6:43 PM But, Michael, you are quoting tariff rates. We dont know what the actual rates for the movements are, since we are not a party to the negotiations between BNSF and the owner of the wheat. I really dont want to re-enter the world of Montana wheat rates, as we did last spring. Looking at the NS's rates for grain, I find the following for 1064: rail owned equipment <5000 cf @ $4000 per car >5000 cf @ $4400 per car private equipment <5000 cf @ $3422 per car >5000 cf @ $3764 per car The rate for BNSF's movement is considerably less than NS's. Plus, the rate for private vs rail owned is quite lower. In comparing grain vs other commodities, it sure appears the grain rates are much higher....I will use the larger sized cars: Lumber and panels @ $3431 per car food oils @ $2414 per car Something about the transporting of grain by rail results in higher transportation costs than other commodities.....why would that be? Perhaps the answer to that lends itself to the reasons behind this entire debate. ed Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Thursday, June 30, 2005 5:40 PM QUOTE: 5. Average system carload revenue, as you stated, for 1064 miles of ag products was $2699 per carload. How did you determine that number? 6. What are the cycle times for the grain shuttle trains? You indicated cycle times increased from 24 to 26 days, was this for all system cars, or just grain cars, or grain shuttle cars? Well, I am trying to get out the door for the 4th. I can answer these two the fastest. The $2699 per carload for the distance comes from entering data for 2250 station points and distances for elevators on the BNSF system on an Excel Spreadsheet, and entering the associated rates for the 1-25, 26-51, 52-109 and 109-120 carload categories, as of tarifffs published 4/15/05. From this data, linear regressions were run across progressively smaller segments of distances until equations were developed which accurately described the behavior of the tariffs in question within the relevant range of data. The BNSF price structure is actually logarithmic in overall behavior, but no single logarithmic equation accurately describes certain key ranges as well as linear modelling of the same data in small segments At a given distance, then, an average, a high, and a low tariff number can be derived, as well as standard deviation that will describe the tariffs for 95% of the stations at that distance. The high and low tariffs, it turns out, very accurately describe the BNSF system "behavior" in setting prices: the high tariffs have a 98% correlation strictly with distance, and the low tariffs at a given distance have a 55% correlation with distance, and a high correlation with distance to other railroads, barge systems, etc. 6. The 26 day cycle time is for grain trains. The increase of 2 days over the past couple of months is quite significant as the loss of two days per cycle, on an annual basis, is the net loss of one entire cycle of 28,000 covered hopper cars, or, if you will, the reduction of the effective size of the car fleet to 25,667 cars. Each day of drop-off in cycle time means a loss of approximately $28,000,000 on the BNSF. Two days loss is a shade over $55 million on an annual basis. Two days may not sound like much, but It is very big news to suffer a decline like that. In this case, the increase in cycle times is likely due to very good Hard Red Spring wheat prices at the moment on the Gulf Coast, coupled with BNSF's pricing policy that provides a substantially better rate to the Gulf Coast, $1.71 per mile per 100T hopper car, compared to $3.52 per mile to Portland, both rates from Shelby, Montana (4/15/05 tariffs). This yields a greater net profit, at the moment, for the shipper in Shelby to ship 2307 miles to the Gulf, than it does to ship 785 miles to Portland, because of the market price differential between the two ports coupled with the BNSF pricing structure. You can see where the grain car cycle times go right in the dumpster as a result. The $4189 rate that the BNSF receives for the Gulf traffic, over the $2966 Portland rate is, of course, more than completely negated by the tripling of cycle times, resulting in a net loss of revenue to the BNSF of $4,709. But, that's what they offer, and these rates are considerably below the average BNSF price for a comparable distance, oddly enough. How this Company remains in business is a remarkable feat. However, what the cycle times also show is that the increasing reliance on shuttle trains just doesn't actually seem to show up anywhere. The current cycle times show no improvement -- they show deterioration -- over cycle times of 5, 10 or 20 years ago. There is no discernible positive effect. The BNSF has put a fuel tariff on everything, which is supposed to compensate for oil cost hikes, so how the net profit continues to slide anyway, with all these efficiencies coming on line, is left unexplained by this Company. I am increasingly inclined to lean to the conclusion that, like generals, railroads are preparing for the last war. In a different era, of high train crew costs and limited congestion, unit trains and shuttle trains seemed like the way to go. The new paradigm, where congestion is the enemy, unit trains and shuttle trains are dinosaurs, contributing to congestion and increasing maintenance and labor costs at a time when railroads should be benefitting enormously from crew reductions, insofar as reduced costs of operation are concerned. For grain in particular, I have yet to find an articulate description of exactly what costs are being saved, nor an explanation of how long, slow, heavy trains are good for the railroad. I do not find the benefits anywhere in the financial statements, and never have. Best regards, Michael Sol Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Thursday, June 30, 2005 4:16 PM Great to have you back Michael. A little more solid information would be great, as Bob indicated, but unfortunately it will probably not be available to us. A few questions, if you dont mind: 1. Clarify your use of $924 for breakeven per carload. 2. Does that $924 BE apply to grain? If I read correctly it is a system BE. 3. If that is correct, then the consumer product segment, based on your assumption of 1.6 "units" per carload would then be profitable....on the system BE point, and not unprofitable as you indicated. 4. What is the average mileage for the Ag carload segment? By knowing that number and the average carload revenue of $1969, we can crunch some numbers. 5. Average system carload revenue, as you stated, for 1064 miles of ag products was $2699 per carload. How did you determine that number? 6. What are the cycle times for the grain shuttle trains? You indicated cycle times increased from 24 to 26 days, was this for all system cars, or just grain cars, or grain shuttle cars? 7. Milwaukee Road's short haul grain cycle times were 6 days in the midwest in the 70's. Was that for the entire system? Or broken out for a single move? How far was that move? 8. You indicated that BNSF is driving away ag business. Perhaps it is. Ag carloadings were up 8% in 2004 vs 2003. This is not quite as healthy as the 10% increase systemwide, but not too far below. 9. You lament that the BNSF is throwing away revenue on grain shuttle movements, yet...as we all know " volume is vanity, profit is sanity "... are you saying profitability would have been higher? I dont think we have the data to crunch, again unfortunately. I seriously doubt if we will EVER see segment P&L statements from any publically, or private company. Finally, you correlate the 1998 operating income ratio of 24% (inverse of the operating ratio) and the decline in that ratio to current level of 17% (trailing 12 months) to "efficiencies" or in this case the ineffieciencies. I would suggest the decline in OI had much more to do with market dynamics than the running of larger shuttle trains. For example NS's OR dropped from 75% in 1998 to 90% in 2000 before climbing back up to 75% in 2004. Granted the Conrail integration had lots to do with that. UP's OR went frm 102 in 1998 to 89% last year. Yet, I would not say that UP is healthier today than in the late 90's. The economic slaughter of post 9-11 and the recession had much more to do with the rising OR of BNSF than shuttle trains. Granted, NS is back to where they were, but they are NS. UP keeps bouncing along from disaster to disaster. I am not an apologist for BNSF. But, they have invested very heavily into their franchise and based on resent revenue and profitability, it seems to have been wise. They are in the middle of a 6000 covered hopper car purchase which will help allieviate future problems. It would be very interesting to see a complete breakdown on different business segments, but as we know, it aint gonna happen. Good day. ed Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Thursday, June 30, 2005 3:23 PM This is nothing new. BNSF has not had any interest in serving small to medium COOP elevators since day one. This even began in the final yrs of the ATSF era. The policy is if your facility does not have the capicity to load unit trains of atleast 75 cars, you're screwed. I worked in the grain business dealing w/this rr in the 1990's and it wasn't pretty then Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Wednesday, June 29, 2005 11:36 PM QUOTE: Originally posted by Chris30 QUOTE: Lower revenues AND angry customers. How much more "efficiency" like this can a railroad handle? I mentioned it before in this thread... revenue gained from serving small elevators on deteriorating branches would have to be spent on maintenance at some point to keep the business and support the heavier cars that most deteriorating midwest grain branches can no longer support. Lower revenues? What $$. Besides, the big railroads are already stretched thin on grain car supply. They're not going to upset their biggest customers to serve the little elevator that could. It's all about $$ and car cycle times. In 1998, BNSF had 32,860 covered grain hopper cars. The demand was 408,000 carloads. On 12/20/03: 26,500 cars. The demand was 416,000 carloads. During 2004, the demand was for 450,000 carloads. Currently, BNSF fleet has 28,048 covered hopper cars available for service. Just in the past two months car cycle times have increased from 24 to 26 days. Milwaukee Road's grain car fleet had a 15 day cycle time on its "long" runs in the PNW. Milwaukee's grain car fleet was 1.7 times as profitable to that company as the BNSF fleet is to the BNSF today with shuttle trains because of significantly better utilization by Milwaukee Road without shuttle trains. Milwaukee did have shuttle type service in the Midwest on 6 day cycles. The big railroads today are "stretched thin" as a matter of policy. They have been cutting back on fleets even as grain shipment needs have been increasing. The current BNSF cycle time and car fleet size permits transportation of 394,000 carloads of wheat on an annual basis. In 1998, BNSF capacity was 461,000 carloads annually. Yet actual carload needs have steadily increased. Even the BNSF ten year average need is 431,000 carloads. The Year 2004 required 451,000 carloads. Current loadings on BNSF are running 102% of last year's loadings at this time. Now, BNSF advertises that its shuttle car cycle times are 2.4 times greater than single car, or less than shuttle, carload cycle times. Mr. Rose states that they keep shipping more and more by shuttle. That this is a great success. But overall car cycle times continue to increase, and the BNSF is significantly less able to carry the typical year's grain harvest than it was six years ago. It is true that railroads have to spend money to keep customers and provide service. Can't argue with that. Chris30, I think you are right on, on that observation. That's why it is worrisome to see examples of mainline customers seeking alternatives. The mainlines are too expensive to provide service to mainline customers? Hmmm. QUOTE: "Lower revenues?? What $$." Besides instances of lost customers? The shuttle rates are lower. The railroad receives less money per carload. Maybe that's not clear. The railroad does not make as much gross revenue off of shuttles as it does off of identical numbers of single carloads. The railroad loses close to $40,000 per train at shuttle train rates over what it would earn at single carload rates. That's the irony of this: it costs the customer more in increased transportation costs to the shuttle elevators, and increased costs to build and operate shuttle elevators, and the railroad receives less revenue. This is one bright idea. Nobody wins. If all BNSF grain tonnage were carried in shuttles, last year, compared to earnings if all BNSF grain tonnage were carried at single carload rates, the BNSF would have lost nearly $164 million in potential revenue. That's fine insofar as cost savings in excess of the reduced revenue can be demonstrated. But, that's the part that's missing. Rather, longer, slower trains appear to result in increased system congestion, do result in increased track maintenance expenses, and do result in longer terminal dwell times as a system effect that "suggests" that increased efficiency is not the result, but rather statistically measurable inefficiency is apparently the result. That all trains are affected by the increased congestion resulting from bigger, longer, slower grain trains. Overall, railroads have spent 20 years seriously converting its sometimes reluctant customers -- because it damages many of those customers economically -- to shuttle train concepts. Corporate careers have been dedicated to the concept, right or wrong. Matt Rose is one of them. Are the railroads financially better off now than they were, say, in 1998, in the area where the supposed efficiencies are supposed to show up -- the bottom line? Year _____ 1998____ 2004 Op. Income 24.14% 15.40% Net income 12.95% 7.23% OK, BNSF net profit has dropped almost by half. Where else do these alleged "efficiencies" show up? Best regards, Michael Sol Reply Chris30 Member sinceDecember 2001 From: near Chicago 937 posts Posted by Chris30 on Wednesday, June 29, 2005 8:07 PM QUOTE: Lower revenues AND angry customers. How much more "efficiency" like this can a railroad handle? I mentioned it before in this thread... revenue gained from serving small elevators on deteriorating branches would have to be spent on maintenance at some point to keep the business and support the heavier cars that most deteriorating midwest grain branches can no longer support. Lower revenues? What $$. Besides, the big railroads are already stretched thin on grain car supply. They're not going to upset their biggest customers to serve the little elevator that could. It's all about $$ and car cycle times. CC Reply bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Wednesday, June 29, 2005 7:47 PM QUOTE: Originally posted by MichaelSol Well Dave, that is certainly an interesting way to look at it. From an expense standpoint, it seems that the railroads have taken an odd view. Grain transportation is already such a streamlined operation compared to industrial or consumer traffic. No congested yards to deal with, no vandalism losses, all the traffic is out in the middle of nowhwere, where the crews stop, get the job done, and move on. Exactly what "costs" these companies are trying to "wring" out of the process is not entirely clear to me. Matt Rose does say the following: "For several years we've improved our efficiency with longer trains for coal, grain, and other commodities." Thirty years ago, I sat down with some Milwaukee people who were forward looking, with the idea of trying to envision the most "efficient" rail operation. This was before modelling was a sophisticated art/science. After a few months of chewing it over, we concluded that shorter, faster trains were more profitable than longer, slower trains. The alleged savings in crew costs with longer trains were cancelled out entirely by the increased costs of getting the train from point A to point B, and, at some point in the congestion matrix, crew productivity in the scenario with longer trains began to fall quite dramatically. The longer the trains, at a certain level of business, the more inefficient the railroad became. The point was, the longer that the trains were on the track, the less efficient the railroad became and the more expensive was overall train operation. So, BNSF proudly announces that its idea of efficiency is longer trains, on lines that are already pretty congested. Interestingly, as the Internet became more clearly understood in terms of routing efficiency, the idea was exactly the opposite, break messages and information flow into small and discrete units, send them off, and the assemble them at their destination. Networks are more efficient with small units, rather than large units . Railroads have developed the idea, that is contrary to both models and experience in other industries, that large units are most efficient to move over crowded networks. And even though its own customers don't like it, and it costs the customers more money, BNSF seems bound and deterrmined to force its customers into this idea of "efficiency." Is there any "efficiency"? BNSF grain trains are already among the slowest on the system at an average speed of 23.1 mph. A BNSF grain train of 15,000 tons is not an example of efficiency, rather, it is a slow moving bottleneck. Even though, by industry standards, BNSF is a pretty good mover of grain trains. However, its worst yard for dwell time is Pasco, with an average of 15.9 hours. Not to pick on BNSF, UP is just awful, with yard dwell times of 20-30 hours. But, Pasco happens to be where some of the longest grain trains are routed. Now, what is the breakeven on trains.? The average carload on the BNSF earns $1074. It travels 1045 miles. To breakeven, that carload would earn $924.00 on the same haul. That is, the average carload generates a profit of $150. What does BNSF earn from a carload of grain on that same line-haul? Well, Brockton, Montana is 1064 miles from Portland. A carload of wheat brings revenue to the BNSF of $3,938.00. Now, admittedly, Brockton is located in Montana and suffers from that uniquely BNSF policy that, if you ship in Montana, you will pay a lot more. The system average for 1064 miles, shipping grain, is only $2699 per carload. Either way, that is enormously profitable Compared to the BNSF average, Montana wheat is nearly 25 times as profitable per carload as BNSF earns from its typical business. Compare that to the BNSF Consumer Group which represents 40% of BNSF revenue. The average CG carload brings a yield of $874. Compared to grain, which has no real "handling" needs -- it doesn't break, it doesn't dent -- CG is a high cost operation, serving the most congested yards on the most congested routes. The CG group loses about $50 per carload carried. The average carload of grain on the BNSF system brings $1969. This compares not only with CG at $874, but with Industrial at $1568/carload, and Coal at $1028 per carload. Wheat is the most profitable item carried on the BNSF, and is likely the least costly to the Company in terms of associated operating expenses. Yet, Matt Rose says nothing about improving "efficiency" for the CG group, but only talks about coal, grain and "other commodities." But, as the numbers, and maybe even some common sense should show, "they ain't the problem." The fact is, based on profitability, BNSF should be turning sommersaults to keep those grain customers happy, and carrying as much wheat as possible, rather than losing the business entirely, as its policies have been doing. What is interesting is that the Company is offering a 12% cut in its own revenue on this profitable commodity. To make longer, most likely less efficient trains which exacerbate congestion delays on the system, increasing operating expenses overall. Naturally, someone would see it as mismanagement to make an extraordinarily good profit, because it might lead to congestion, but good business practice to carry 40% of the company traffic at a loss, even though that accounts for all of the congestion, and not do anything about it. Why on earth would a "year round customer" that loses money be so important to keep, compared to a customer that, in the season, generates a profit of 200-300%? Further, and perhaps more significantly, there is not a particular seasonality in grain shipping. Misunderstanding the difference between grain marketing and grain growing is fairly typical. In 2004, for instance, to Pacific Northwest Ports, the quarterly carloads arriving during the week of 12/31/03 were 3500, 3/24/04 -- 5200, 6/15/04 -- 4800, 9/8/04 -- 3000, 12/01/04 -- 5000, carloads. As you will note, the smallest number of carloads was during "the season" of harvest. Grain shipping is, in fact, a year round business. However, it is thinking like this, and Instances like this, that go a long way to explaining why this Company cannot earn its own cost of capital. Best regards, Michael Sol It is sad you will never see the detailed numbers. Oh well. Bob Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Wednesday, June 29, 2005 5:49 PM QUOTE: Originally posted by PNWRMNM Michael, Are you quoting revenue per car or revenue per unit? BNSF's web site talks in units, not cars. My take on this is a unit is a car or a trailer or a container. If so, revuenue per trailer/container should be at least doubled to get per car equavalent. Consumer goods is where the intermodal business resides in BNSF's structure, so one would expect low revenue per unit there. In short, I think you may be comparing apples to oranges. Mac You may be right, but the stumbling block is the somewhat contradictory way that the Annual Report refers to the unit of measure. "The increase in average revenue per unit of 4 per cent is primarily related to rate increases and increased fuel surcharges." "Average revenue per car/unit increased 5 per cent in 2004 to $1,126 from $1,074 in 2003." "Average revenue per car increased 5 percent in 2004 compared with 2003." One, or two, of these statements is contradictory to the third, if indeed the "unit" is the intermodal unit, not the carload unit, when referring to :unit" distinct from carload, since the percentage increases would not be the same if the intermodal unit is not a "carload" or vice-versa. I think you are exactly right, although some of the intermodal as it is classified by BNSF is carload, for others, not. Similarly, some ag and ind is intermodal, but that is not something the annual report describes, so the breakout of those numbers is tough to do. If a person want to get carload rate on the CG, it would be a guess of somewhere between 1.6 and 1.9 the "unit" rate assuming that the contradictions in the above statements are mild mistatements. Best regards, Michael Sol Reply PNWRMNM Member sinceMay 2003 From: US 2,593 posts Posted by PNWRMNM on Wednesday, June 29, 2005 4:33 PM Michael, Are you quoting revenue per car or revenue per unit? BNSF's web site talks in units, not cars. My take on this is a unit is a car or a trailer or a container. If so, revuenue per trailer/container should be at least doubled to get per car equavalent. Consumer goods is where the intermodal business resides in BNSF's structure, so one would expect low revenue per unit there. In short, I think you may be comparing apples to oranges. Mac Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Wednesday, June 29, 2005 1:50 PM Amen thanks Mike! Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Tuesday, June 28, 2005 12:16 PM Well Dave, that is certainly an interesting way to look at it. From an expense standpoint, it seems that the railroads have taken an odd view. Grain transportation is already such a streamlined operation compared to industrial or consumer traffic. No congested yards to deal with, no vandalism losses, all the traffic is out in the middle of nowhwere, where the crews stop, get the job done, and move on. Exactly what "costs" these companies are trying to "wring" out of the process is not entirely clear to me. Matt Rose does say the following: "For several years we've improved our efficiency with longer trains for coal, grain, and other commodities." Thirty years ago, I sat down with some Milwaukee people who were forward looking, with the idea of trying to envision the most "efficient" rail operation. This was before modelling was a sophisticated art/science. After a few months of chewing it over, we concluded that shorter, faster trains were more profitable than longer, slower trains. The alleged savings in crew costs with longer trains were cancelled out entirely by the increased costs of getting the train from point A to point B, and, at some point in the congestion matrix, crew productivity in the scenario with longer trains began to fall quite dramatically. The longer the trains, at a certain level of business, the more inefficient the railroad became. The point was, the longer that the trains were on the track, the less efficient the railroad became and the more expensive was overall train operation. So, BNSF proudly announces that its idea of efficiency is longer trains, on lines that are already pretty congested. Interestingly, as the Internet became more clearly understood in terms of routing efficiency, the idea was exactly the opposite, break messages and information flow into small and discrete units, send them off, and the assemble them at their destination. Networks are more efficient with small units, rather than large units . Railroads have developed the idea, that is contrary to both models and experience in other industries, that large units are most efficient to move over crowded networks. And even though its own customers don't like it, and it costs the customers more money, BNSF seems bound and deterrmined to force its customers into this idea of "efficiency." Is there any "efficiency"? BNSF grain trains are already among the slowest on the system at an average speed of 23.1 mph. A BNSF grain train of 15,000 tons is not an example of efficiency, rather, it is a slow moving bottleneck. Even though, by industry standards, BNSF is a pretty good mover of grain trains. However, its worst yard for dwell time is Pasco, with an average of 15.9 hours. Not to pick on BNSF, UP is just awful, with yard dwell times of 20-30 hours. But, Pasco happens to be where some of the longest grain trains are routed. Now, what is the breakeven on trains.? The average carload on the BNSF earned $1074 (2003). It traveled 1045 miles. To breakeven, that carload would earn $924.00 on the same haul. That is, the average carload generates a profit of $150. What does BNSF earn from a carload of grain on that same line-haul? Well, Brockton, Montana is 1064 miles from Portland. A carload of wheat brings revenue to the BNSF of $3,938.00. Now, admittedly, Brockton is located in Montana and suffers from that uniquely BNSF policy that, if you ship in Montana, you will pay a lot more. The system average for 1064 miles, shipping grain, is only $2699 per carload. Either way, that is enormously profitable Compared to the BNSF average, Montana wheat is nearly 25 times as profitable per carload as BNSF earns from its typical business. Compare that to the BNSF Consumer Group which represents 40% of BNSF revenue. The average CG carload brings a yield of $874. Compared to grain, which has no real "handling" needs -- it doesn't break, it doesn't dent -- CG is a high cost operation, serving the most congested yards on the most congested routes. The CG group loses about $50 per carload carried. The average carload of grain on the BNSF system brings $1969. This compares not only with CG at $874, but with Industrial at $1568/carload, and Coal at $1028 per carload. Wheat is the most profitable item carried on the BNSF, and is likely the least costly to the Company in terms of associated operating expenses. Yet, Matt Rose says nothing about improving "efficiency" for the CG group, but only talks about coal, grain and "other commodities." But, as the numbers, and maybe even some common sense should show, "they ain't the problem." The fact is, based on profitability, BNSF should be turning sommersaults to keep those grain customers happy, and carrying as much wheat as possible, rather than losing the business entirely, as its policies have been doing. What is interesting is that the Company is offering a 12% cut in its own revenue on this profitable commodity. To make longer, most likely less efficient trains which exacerbate congestion delays on the system, increasing operating expenses overall. Naturally, someone would see it as mismanagement to make an extraordinarily good profit, because it might lead to congestion, but good business practice to carry 40% of the company traffic at a loss, even though that accounts for all of the congestion, and not do anything about it. Why on earth would a "year round customer" that loses money be so important to keep, compared to a customer that, in the season, generates a profit of 200-300%? Further, and perhaps more significantly, there is not a particular seasonality in grain shipping. Misunderstanding the difference between grain marketing and grain growing is fairly typical. In 2004, for instance, to Pacific Northwest Ports, the quarterly carloads arriving during the week of 12/31/03 were 3500, 3/24/04 -- 5200, 6/15/04 -- 4800, 9/8/04 -- 3000, 12/01/04 -- 5000, carloads. As you will note, the smallest number of carloads was during "the season" of harvest. Grain shipping is, in fact, a year round business. However, it is thinking like this, and Instances like this, that go a long way to explaining why this Company cannot earn its own cost of capital. Best regards, Michael Sol Reply CSSHEGEWISCH Member sinceMarch 2016 From: Burbank IL (near Clearing) 13,540 posts Posted by CSSHEGEWISCH on Tuesday, June 28, 2005 11:33 AM QUOTE: Originally posted by daveklepper How much business does BNSF want? Maybe they have decided that getting all the business, and it is seasonal, means capacity constraints and inability to provide the service their year-round customers expect. So they are deliberately loosing the seasonal business to insure keeping the year-round business. Does this make sense? The concept makes perfect sense to me. I've known of several other businesses that turned away additional customers since they were already operating at capacity and did not wi***o alienate their existing customers. Grain traffic cannot be looked at without considering its effect on other traffic. If BNSF is already operating at close to capacity, and this appears to be the situation, I would consider any attempt to go after every last bit of grain traffic to be mismanagement. The daily commute is part of everyday life but I get two rides a day out of it. Paul Reply daveklepper Member sinceJune 2002 20,096 posts Posted by daveklepper on Tuesday, June 28, 2005 9:51 AM How much business does BNSF want? Maybe they have decided that getting all the business, and it is seasonal, means capacity constraints and inability to provide the service their year-round customers expect. So they are deliberately loosing the seasonal business to insure keeping the year-round business. Does this make sense? Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Tuesday, June 28, 2005 9:50 AM Am going to throw in a point on the fire. First off, am not a farmer, but live in a small farming community in NW ILL. Many of the smaller farmers do not have the storage or drying facilities that are required with the larger yields produced today. The semi drivers take the crop from the field to the elevator. There the farmer is paid after drying and storage fees. Then the same drivers get paid to take the "finished" crop 30 miles to larger facilities like ADM or Bunge Corp. where it is either used (ADM) or shipped out by barge to other larger facilities. All this starts at our local FS elevator which is located 50 feet from the BN Peavine line. Seems a simple siding (which there is plenty of room for) would eliminate a whole lot of semi traffic in the fall. Just my [2c] Willy Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Tuesday, June 28, 2005 9:28 AM Hi Alan, in a recent grain marketing study I participated in, we looked at Texas grain transportation patterns (hence the above quote). It is a big state. From Brownsville (the big BNSF-served Gulf Port), the most distant elevator is 1282 miles (Anthony Texas) which compares with Montana's most distant elevator, to Portland, Baker at 1272 miles. As you can see, Texas is a squeak larger than Montana in wheat terms. Texas elevator distribution is fairly similar. The median distance to port for Texas elevators is 837 miles, for Montana, it is 909 miles. However, the trucks, and other railroads have their effect in Texas. Lubbock to Brownsville, 800 miles, single carload rate, $2300. Conrad, MT to Portland, 816 miles, $3031 per carload. Indeed, if the Conrad farmer trucks his wheat to the big shuttle at Shelby, the elevator there can only get a rate of $2716 per carload for a 110 carload train, $417 MORE than the single carload rate offered to the Texas shipper. Plus, of course, the cost of trucking. Rates as of 4/15/05. Best regards, Michael Sol Reply arbfbe Member sinceFebruary 2002 910 posts Posted by arbfbe on Tuesday, June 28, 2005 1:21 AM Trucking becomes a better alternative the closer the producer is to the final market. Texas is a big state but the grower is closer to the export shipping or final producer than the Montana farmer is to the Pacific Northwest Ports. The Washington growers in the Palouse find shipping on the Columbia to be a viable alternative. Sure the Montana farmers can do the same but the costs are going to sky rocket when the back haul to the truck is considered. Rail, meaning BNSF is the only realistic means to move the quantities of grain produced to the final users. There are no large flour mills in the state and so the grain must leave. It is too bad BNSFs service orientation is focused on BNSF's service to itself instead of it's customers. A monopoly position does lead to some market distortions. Alan Reply MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 27, 2005 11:45 PM Well, it's not just a regional problem: "The Texas elevator and feed mill surveys indicated that one-fifth of the respondents were without rail service because of rail line abandonments, while one-third of the rice driers were located on abandoned rail lines. Further, one-third of the country elevator operators observed that their truck shipments of grain had increased in the past five years by nearly 60 percent, while about 60 percent of elevator operators said that their rail shipments had decreased by about 38 percent. Thus, there is an increase in the use of trucks in the marketing of Texas grain. "Texas grain handlers believe their motor carrier service is satisfactory. By contrast, most registered some dissatisfaction with rail service. The greatest concern centers on the grain handlers' diffiiculty in obtaining railroad service and on the promptness of railroads in providing service. About half of the country elevator operators indicated that inadequate rail service had at times required them to lower their grain bid to farmers by an average of $0.14 per bushel. Country elevators and feed mills indicated the most dissatisfaction with railroads, while terminal elevators were more nearly satisfied with the service offered by railroads." Texas Grain Transportation Study by Fuller, Yu, Collier, Jamieson and Harrison. Center for Transportation Research, University of Texas at Austin and Department of Agricultural Economics, Texas A&M, January, 2001. Grain is one of BNSF's most profitable services. This isn't an area they need to cut costs, this is an area they need to haul as much as they can, however the customer wants it hauled. As a product group, ag's average carload revenue is the highest of all product groups, at about $1900. Sprague is a good example. BNSF charges a $1200 carload rate to Portland. Even though a short haul, the revenue is higher than the system wide average of all product groups, some of which are virtually all unit train. Fast cycle time, high revenue freight. The RR wants to aggravate the customers so that it can take a 12% cut in revenue, if the customer will load at a different location, and so the customer takes his grain elsewhere. Lower revenues AND angry customers. How much more "efficiency" like this can a railroad handle? Best regards, Michael Sol Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Monday, June 27, 2005 8:34 PM Michael, Your Lind reference reminds me of an observation I made a few months ago while exploring the back roads of Adams County WA. I followed an empty grain truck up State Highway 23 to Sprague WA, and when he turned into Sprague, I decided to see if he was going to stop at the Sprague elevators right there on the BNSF mainline. Sure enough, that truck plus three others had pulled into the rail side elevator waiting to load. My first inclination of their next destination was that they would simply short haul down the road to the BNSF shuttle train facility in Ritzville, since BNSF no longer provides service to the Sprague elevators despite a nice long siding there. So I waited around until the first truck was loaded and ready to go.... However, instead of heading down the road to Ritzville, this truck turned back down State Highway 23 heading toward Pullman. I followed him at a distance as far as St John, lost sight of him going out of St John, so I doubled back to St John and guessed that he had turned down the county road Endicott. Yep, I caught up with him going toward Endicott. He continued south passed Endicott, crossed over Highway 26, turned down Highway 127, and finally pulled into the riverside elevators at Central Ferry. I turned around to head back toward Sprague (since my intent was to watch the BNSF action at the Fishtrap recreation area), and on the way back I met the other three trucks that had been at the Sprague elevators, all heading the same direction as the first truck. Okay, enough of the Grandpa Simpson story line..... The conclusions from this trip is this: BNSF is losing traffic by their refusal to serve the the many mainline elevators. They probably assume that they will simply get that traffic at their Ritzville super terminal. Wrong. BNSF's decision to deny service to the line side elevators in deference to their unit train facility has cause at least some of that traffic to shift to the barge lines way down south. It is a little over 23 miles by I-90 from Sprague to Ritzville, while it is about 90 miles from Sprague to Central Ferry over a combination of State Highways and narrow county roads with alot of curvature and up and down running. My guess is that this traffic shift has more to do with service levels than with elevator price, because the party line around BNSF clones is that the unit train service from the Ritzville elevator can not only match the barge line rates, but beat them. Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Monday, June 27, 2005 8:59 AM QUOTE: Originally posted by greyhounds[That's like the combine and the trucks. The farmer has to "balance his/her line". He/she has to coordinate the trucks with the combine. If the farmer has to truck his grain farther to the elevator so be it. The farmer needs to hire more trucks. There is no reason that a 105K truck can't go into a field. It's a matter of ground pressure, and that can be solved by putting more axles under the truck. "Ground pressure." Field trucks used by grain harvesters represent different economics than over the road trucks. 1) Drivers are exempt from the requirement for commercial classification in most grain producing states. This permits the farmer or his kids to operate the trucks to the elevators. 2) In some states, the farm truck enjoys an agricultural fuel tax exemption that the OTR trucks do not. This is economically significant to the grain industry. 3) Truck must be licensed at its GVW rate. No ag exception. Pretty expensive. 4) Most country roads are not built to handle the loading, many country road bridges are not built to handle the loading, and if an OTR truck exceeded the weight limits, then there's a fine, besides potentially going through a bridge. I've seen that one. Quite a mess. The fact is, OTR trucks simply can't get to many locations. On the Combine side: 1) the truck follows the Combine, the Combine doesn't come to the truck. OTR trucks are designed to be on highways, not fields. 2) Combines are not built to load OTR trucks. Either the Combine requires modification, or additional equipment, an auger, needs to be "available". "Available" meaning where the Combine needs it, not sitting somewhere else. 3) It would take the truck out of service for a day or more, just putting around the field following the Combine, to get the full load. An extremely poor use of truck time for an expensive OTR truck. Pretty expensive proposition to have a commercial license driver and expensive truck sitting around all day in a field. Not really what its designed to do. At Lind, Washington a new transloader located on Highway 385 perhaps represents new thinking. It is a small, very small elevator. It is entirely up on stilts, and I wasn't sure what it was when I first saw it. Big steel bins on stilts. Pretty cheap to construct compared to a modern grain elevator. Very modern, very automated. Local trucks bring in the grain and load the elevator. OTR trucks come through, pull underneath, load by gravity and take the grain away. Not a railroad in sight. I stopped and asked. The locals were apparently quite pleased with the results. "it gets us away from dependence on the railroad," meaning in that instance, the BNSF. "Service was never any good anyway, and this allows us to look for the best rate." The interesting point to me was that 1) this was not some crummy little branchline somewhere, but an attitude by shippers on a mainline, and 2) the idea that the BNSF had now become the means of last resort, that these shippers would look to barges or UP, or direct trucking all the way, before looking to BNSF. Some hostility there. I am sure the market will provide a solution to the reluctance of railroads to serve their customers. I'm not sure that the solution will benefit the railroads. Gives a little different meaning to the twist, "not a railroad in sight." Best regards, Michael Sol Reply greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Monday, June 27, 2005 1:20 AM Well, equipment cycle times are important to everyone. It costs money to own equipment and getting the most productive use out of that equipment is vital. They teach this in MBA classes. If you've got a machine that can perform its process in 240 seconds, and the next machine on the line takes 360 seconds to do its process, what do you do? You can't have the operator of the first machine, and his/her machine, standing idle waiting for the next guy to finish. You've got to "balance the line". In an ideal situation you'd have three of the first machines feeding two of the second machines. That's like the combine and the trucks. The farmer has to "balance his/her line". He/she has to coordinate the trucks with the combine. If the farmer has to truck his grain farther to the elevator so be it. The farmer needs to hire more trucks. There is no reason that a 105K truck can't go into a field. It's a matter of ground pressure, and that can be solved by putting more axles under the truck. I have learned that a truck is one of the most flexible machines in the world. You can do just about anything with a truck. It can be a fighting platform for the Army. It can be a work platform for a power company. It can haul produce from California to New York City. It can put out a fire. And, most importanly, it can move to where it is needed easily. Using trucks to move grain from a field is a once a year thing. Then the trucks, and their drivers, go elsewhere. A rail branch line isn't like that. It's there all the time. Costing money to own and operate. It is situation specific, but generally the grain gathering operation, which comes from a field, not from a country elevator, will be handled best by truck. Now there's a trade off. At a specific distance, you put the grain in a covered hopper. And that function will be work out best by the market forces, not by lawyers and politicians. "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. Reply bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Sunday, June 26, 2005 3:07 PM QUOTE: Originally posted by greyhounds Yes, but. The grain isn't originating at a country elevator. It's originating in a farm field. I remember watching a Wisconsin farmer harvest his corn. It was dark and the John Deere combine just went back and forth, it's headlights showing the way through the corn field. The hopper on the combine would get full, then he'd ( or she'd, I don't know which gender was driving) unload into a semi in the field. Semi's can go into farm fields where the freight originates. Trains can't. When the semi got full, it drove off. Now once you've got the grain in a truck, does it make sense to take it to a small country elevator, then transfer it to that elevator, hold it there, then transfer it to smaller rail cars for shortline movement, then transfer it again to a larger elevator, hold it there, then transfer it to a main line shuttle train? Or do you just drive the truck to the large elevator in the first place? It will depend on the specific situation, but if I had to bet ( and I do bet on things ), I'd bet that it will be generally more efficient to just drive the truck to the large elevator. You have hit the nail on the head. I base this on my experience working with real grain and fertilzer shippers at the Rock Island and C&NW from 1966 to 1982. We facilitated a lot of elevators that wanted to load 25, 50 and 75 car blocks of covered hoppers on branch lines that had a future. The elevators that stuck with single car shipments in 40' boxcars did not have a future. Bob Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Sunday, June 26, 2005 12:09 PM QUOTE: Originally posted by greyhounds Now once you've got the grain in a truck, does it make sense to take it to a small country elevator, then transfer it to that elevator, hold it there, then transfer it to smaller rail cars for shortline movement, then transfer it again to a larger elevator, hold it there, then transfer it to a main line shuttle train? Or do you just drive the truck to the large elevator in the first place? It will depend on the specific situation, but if I had to bet ( and I do bet on things ), I'd bet that it will be generally more efficient to just drive the truck to the large elevator. Greyhounds, Using this logic, we could take it one step further and say that it would make more sense just to drive the truck to the deep water port instead of transloading from truck to unit train elevator. As Michael pointed out, it's all about equipment utilization, and all other things being equal the optimal economic scenario would involve using (1)truck from farm to nearest elevator, (2)branchline hoppers from that elevator to unit train elevator (wherein the grain is either transloaed from lighter hoppers to 286k hoppers, or the 264k/286k hoppers are added to the nest unit train consist), and finally (3)264k/286k unit train hoppers from unit train elevator to deep water port (or sometimes to nearest barge port, wherein the next step (3a) is barging from river port to deep water port). For those places where the nearest grain elevator has no rail access due to either prior rail abandonment or never having had rail acess, then Step 2 involves transloading from farm truck to highway truck, a much more costly move than the branchline rail option. Sometimes it is possible to load highway trucks directly at the farm, and let the unit train elevator take care of the product quality refinements. Other times it is possible that another step (1a) will be added when grain is transloaded from farm truck to highway truck at the nearest elevator without rail access, wherein the highway truck only goes as far as an intermediate country elevator that has branchline rail access where the grain is then transloaded to the branchline hoppers. It all depends on distances and time constraints involved. Yes, there is always some product degradation when it is transloaded, but I've been told by co-op reps that the product quality losses and extra costs are insignificant compared to transportation costs. Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Sunday, June 26, 2005 9:07 AM QUOTE: Originally posted by greyhounds [Now once you've got the grain in a truck, does it make sense to take it to a small country elevator, then transfer it to that elevator, hold it there, then transfer it to smaller rail cars for shortline movement, then transfer it again to a larger elevator, hold it there, then transfer it to a main line shuttle train? Or do you just drive the truck to the large elevator in the first place? It will depend on the specific situation, but if I had to bet ( and I do bet on things ), I'd bet that it will be generally more efficient to just drive the truck to the large elevator. No. Equipment cycle times are as crucial to the farmer as to the railroad. The truck has to be back in time to transload from the Combine to the truck, or else the Combine operator just sits there waiting. On smaller farms, the Combine operator often IS the truck driver and he is not going to get his crop in if he spends his time in the truck driving cross country somewhere with a load of wheat. Time is of the essence on a grain operation. The Combines operate as near to 24/7 as operator availabilty and fatigue will permit. The trucks are by and large used only during harvest, and there are neither excess trucks nor excess teenagers sitting around to drive them. And these are NOT 105k trucks that are out working between the elevator and the Combine. Those trucks don't load from Combines. They load at elevators. This is hot and dusty work and to preserve the crop against rain, hail and insects, the crop has to get in as quickly as possible. Custom cutters make their money harvesting as quickly as possible in order to follow the crop ripening north. Ideally, the trucks and Combine operate as a unit, one Combine, two trucks, two truck drivers. Small operators don't have the luxury so time is even more critical. A truck wants to be there by the time the bin is full on the Combine. The requirement for a truck at the Combine can be as short as 45 minutes. The farther the elevator, the more trucks and the more drivers needed to keep the Combine operating continuously. The closer the elevator is to the farm, the better. There is no efficiency whatsoever in long distance driving of grain trucks off the farm to an elevator many miles distant just because it is larger. Best regards, Michael Sol Reply kenneo Member sinceDecember 2001 From: Upper Left Coast 1,796 posts Posted by kenneo on Sunday, June 26, 2005 5:39 AM In a certain aspect, the BN in Montana is simply reacting to basic economics. As Greyhounds just stated, once the farmer has the product loaded in an OTR truck, you don't want to take it out and then reload it into a covered hopper unless the cost of that transload and two transportation charges will be less than keeping it in the truck all the may to the POE. And Futuremodel is correct about the effeciencies of grain loading on branchlines. My last RR position was as a Station Agent and we had several single farmer and small grain consolidator elevators in my district. The export terminal was less than 100 miles distant (mostly between 60 and 85 miles) from the elevators, yet I could compete on single car-load rates with the EXEMPT (ie farmer owned and operated) trucker who could haul directly from the field 60-85 miles to the POE. The exempt trucker could eat my lunch and dinner getting from the field to the export elevator, but one there, he started charging "delay fees" for waiting to unload. And then, about 1/2 the time, the truckers load was rejected because of "junk" in the grain that the branchline elevator filtered out. So the truckers had to locate a new sale for the grain. $$$$$$$$$$$$$$ Some things, while seeming to be non-cost effective, perform hidden functions that create greater economies further down the production chain. The farmer and the exporter were both better served by the small local elevator and the extra cost he inserted into the system was eliminated later in the production chain as illustrated above and the net result was a better operating system costing equal or less than any alternative. Consistancy and regularly fullfilled expections sell big time. Eric Reply greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Sunday, June 26, 2005 4:33 AM Yes, but. The grain isn't originating at a country elevator. It's originating in a farm field. I remember watching a Wisconsin farmer harvest his corn. It was dark and the John Deere combine just went back and forth, it's headlights showing the way through the corn field. The hopper on the combine would get full, then he'd ( or she'd, I don't know which gender was driving) unload into a semi in the field. Semi's can go into farm fields where the freight originates. Trains can't. When the semi got full, it drove off. Now once you've got the grain in a truck, does it make sense to take it to a small country elevator, then transfer it to that elevator, hold it there, then transfer it to smaller rail cars for shortline movement, then transfer it again to a larger elevator, hold it there, then transfer it to a main line shuttle train? Or do you just drive the truck to the large elevator in the first place? It will depend on the specific situation, but if I had to bet ( and I do bet on things ), I'd bet that it will be generally more efficient to just drive the truck to the large elevator. "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. Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Saturday, June 25, 2005 9:27 PM QUOTE: Originally posted by Chris30 One thing to add to the small grain elevators that are disappearing. A lot of small elevators are/were located on old, lightweight rail that is/was maintenance deffered branch trackage. As the weight of a loaded grain car continues to get heavier, the lightweight, maintenance deffered track can no longer support the weight of those cars. To continue serving these small elevators the railroads would have to continue using smaller/lighter cars, or the branch trackage would have to be completely rebuilt at a great cost that would never be repaid to support the newer, heavier grain cars. Don't foreget about the cost of crew and equipment to serve the lightweight branches that might only produce a few cars a week for one season of the year. It just makes more sense for the small elevators take the discount offered and truck their product to a large elevator on the main line. The railroads are more than willing to give a discount to the small elevator vs. the expense of the branch lines. CC This all goes back to argument of whether it is more effective to deliver grain from country elevator to unit train terminal via a 105k truck (129k in some states) over country roads, or whether it might be better to make that same short haul using old 264k (or even older 220k) hoppers over a still intact branch line. There are some shortline guys who even claim they can haul 286k cars over lightweight trackage if they just keep it under 10 mph. So it comes down to the idea that branchlines can continue to remain functional (and thus profitable) if the branchline owner can (1) carry grain from the elevators on his line to the unit train facility in the lighter weight 220k and 264k hoppers (which probably requires access to mainline rails to get to the unit train facility), or (2) fill up 286k hoppers with branchline grain and then go real slow over the branchline rails until the shortline can reach mainlline rails wherein they can speed it up to get to the unit train facility, wherein the 286k cars are added to the unit train consist. The former could be a problem if the older cars are no longer FRA compliant off the home rails, and the whole enterprise is dependent on the shortline operator being able to gain access to the unit train facility, often over mainline rails. When the Class I's owned and operated the the branchlines, this was no problem, but if they've spun off the branchline they are probably less accomodating of the branchline consists occupying the mainline rails. The bottom line is that it is still more efficient to move grain via 220k hoppers than it is to move grain in 105k truck trailers, and unless the rail move is no more than a few hoppers per year, it should still pay to move this product via rail rather than truck. For the most part the branchline is already paid for, only maintenance required to keep it minimally functional. With diesel fuel prices looking like they'll stay high for the time being, and the truck driver shortage means current drivers will begin to earn higher wages to stop loss for trucking firms, the idea of running lightweight freight trains over the lightweight rails could make a comeback. But it will still depend on the access issue to make it work. Reply Edit broncoman Member sinceFebruary 2003 From: Gateway to Donner Summit 434 posts Posted by broncoman on Saturday, June 25, 2005 7:29 PM QUOTE: Originally posted by ericsp The grain trains I see are probably about 75 to 100 cars. All of the grain elevators around here are receivers. Do they load any grains besides rice up there? Eric rice is a big export, but I am not sure what the other grain is that is shipped. I know I have seen a lot of cars at the elevators up highway 99 above Yuba City. The cars were being loaded outside of rice season, but I didn't know with what. Anyone else care to venture a guess. Reply Chris30 Member sinceDecember 2001 From: near Chicago 937 posts Posted by Chris30 on Saturday, June 25, 2005 7:08 PM One thing to add to the small grain elevators that are disappearing. A lot of small elevators are/were located on old, lightweight rail that is/was maintenance deffered branch trackage. As the weight of a loaded grain car continues to get heavier, the lightweight, maintenance deffered track can no longer support the weight of those cars. To continue serving these small elevators the railroads would have to continue using smaller/lighter cars, or the branch trackage would have to be completely rebuilt at a great cost that would never be repaid to support the newer, heavier grain cars. Don't foreget about the cost of crew and equipment to serve the lightweight branches that might only produce a few cars a week for one season of the year. It just makes more sense for the small elevators take the discount offered and truck their product to a large elevator on the main line. The railroads are more than willing to give a discount to the small elevator vs. the expense of the branch lines. CC Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Saturday, June 25, 2005 12:51 PM Exactly—and I suppose contumelious would be a better term in the context I was using. As Dan said, in a recent post, what this will really come down to is the ability of the state courts to police properly this action. As somebody who works for a state appellate court, I am not at all convinced that there will be a uniform application of this oversight. Furthermore, in order for the State courts to properly oversee this, there is going to have to be litigation. Who do you think is going to be able to hire the better lawyer, Wal-Mart or some family farmer? Furthermore, the type of litigation involved will be complex—where the better lawyer makes even more of a difference. I am truly worried about this one. Gabe Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Saturday, June 25, 2005 11:48 AM QUOTE: Originally posted by gabe QUOTE: Originally posted by futuremodal Gabe, I'll grant you that there is a fundamental difference between the public needs of a railroad/pipeline/transmission line et al and the public needs of a big box store or new multi family dwellings. However, in spirit (and from a legal perspective) a new private development is a new private development regardless of function or intent. In other words, I'm not sure the law sees a difference between local/regional juristiction that supports UP and local/regional juristicition that supports WalMart. The Supreme Court recognized that it would be discriminatory to allow Corporation A the right to eminent domain but not allow Corporation B the same right, regardless of what it is those corporations are involved. It is up to Congress to make the distinction between those corporations which absolutely need to access certain private property to function, and those which could effectively "shop around" for the right location. Of course, I have argued in other topic lines that railroads are not the same as other private ventures, therefore it is ridiculous to allow railroads the same levels of "hands off" government approach, especially given the importance of preserving and expanding transportation infrastructure to meet the demands of an ever growing economy. If I remember correctly, even you Gabe presented the "McDonalds" analogy in defending the current railroad closed access status quo system. So therefore, if railroads are no different from McDonalds when it comes to what governments allow in terms of price or access regulation, then it can also be argued that McDonalds is no different from railroads in what governments allow when it comes to eminent domain. For the record, I am all for allowing railroads the right of eminent domain, but with that right comes the necessary oversight of regulation to assure optimal citizen access to that ROW that utilized the right of eminent domain. Otherwise, we are just granting fiefdoms to discriminatory entities. Dave, I am not trying to be contumacious, but to quote the Court in its reference to the new land use "Nor will the private lessees of the land in any sense be required to operate like common carriers, making their services available to all comers." The Court just kicked out one of the chief restrictions on the use of the doctrine. This will not only allow the greatly expanded view of public benefit to be used as a sword by the rich; it will also allow the doctrine to be used CONSIDERABLY more than it is now. Gabe Well, I'm okay with you being contumacious, as long as you don't become contumelious. I admit, I am a little bit perplexed by the Court statement regarding lessees absolvency from "common carrier" assimilation, since the particular case pertained to a developer whose end product would ostensibly be made available to the public marketplace. If this interpretation is taken at face value, then a private individual with influence could convince governments to bestow the act of eminent domain to remove another private citizen from their property, soley for the purpose of the former building their own private residence on the latter's site. Perhaps this is why the reaction from both the left and the right has been so vocal, and it begs the question as to why the Court would so drastically extend this right of eminent domain beyond the auspices of the original case. It's one thing to grant eminent domain for a project that would be made available to the public, it's entirely beyond reason to grant eminent domain for a project that is intended for private use. Reply Edit gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Saturday, June 25, 2005 11:12 AM QUOTE: Originally posted by futuremodal Gabe, I'll grant you that there is a fundamental difference between the public needs of a railroad/pipeline/transmission line et al and the public needs of a big box store or new multi family dwellings. However, in spirit (and from a legal perspective) a new private development is a new private development regardless of function or intent. In other words, I'm not sure the law sees a difference between local/regional juristiction that supports UP and local/regional juristicition that supports WalMart. The Supreme Court recognized that it would be discriminatory to allow Corporation A the right to eminent domain but not allow Corporation B the same right, regardless of what it is those corporations are involved. It is up to Congress to make the distinction between those corporations which absolutely need to access certain private property to function, and those which could effectively "shop around" for the right location. Of course, I have argued in other topic lines that railroads are not the same as other private ventures, therefore it is ridiculous to allow railroads the same levels of "hands off" government approach, especially given the importance of preserving and expanding transportation infrastructure to meet the demands of an ever growing economy. If I remember correctly, even you Gabe presented the "McDonalds" analogy in defending the current railroad closed access status quo system. So therefore, if railroads are no different from McDonalds when it comes to what governments allow in terms of price or access regulation, then it can also be argued that McDonalds is no different from railroads in what governments allow when it comes to eminent domain. For the record, I am all for allowing railroads the right of eminent domain, but with that right comes the necessary oversight of regulation to assure optimal citizen access to that ROW that utilized the right of eminent domain. Otherwise, we are just granting fiefdoms to discriminatory entities. Dave, I am not trying to be contumacious, but to quote the Court in its reference to the new land use "Nor will the private lessees of the land in any sense be required to operate like common carriers, making their services available to all comers." The Court just kicked out one of the chief restrictions on the use of the doctrine. This will not only allow the greatly expanded view of public benefit to be used as a sword by the rich; it will also allow the doctrine to be used CONSIDERABLY more than it is now. Gabe Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Saturday, June 25, 2005 11:04 AM Greyhounds, None taken. Most of my best friends are lawyers and are great people that truly entered the profession to serve the public good. That having been said, as a group, most of us can't stand lawyers. Gabe Reply greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Saturday, June 25, 2005 12:30 AM No offense to Gabe but, "Lawyers are like nuclear weapons, I got 'em because the other side's got 'em; but once you use 'em, they screw everything up." By Danny DiVito in "Other People's Money" - a really great (or "Greyt" as we fast dog folks say) movie. "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. Reply ericsp Member sinceMay 2015 5,134 posts Posted by ericsp on Friday, June 24, 2005 11:02 PM QUOTE: Originally posted by broncoman I am born and raised in the central valley of CA, so I am curious as to the "stranded" grain elevators of the midwest. There are some fairly large farms still left in the greater sacramento area but it seems that they truck the grain to a siding where it is transferred to anywhere from 2-6 cars. There are still bigger elevators around I would say you wouldn't have to go more than 60-80 mi to go from one to another from Redding almost all the way down to Los Angeles. Is this scenerio different from the midwest? I am just curious as to the scope. I am sure the distances between "train load" elevators is substantial. And out of curiosity what is the standard "train load", 30-50 cars? Thanks for the info. The grain trains I see are probably about 75 to 100 cars. All of the grain elevators around here are receivers. Do they load any grains besides rice up there? "No soup for you!" - Yev Kassem (from Seinfeld) Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Friday, June 24, 2005 8:39 PM Gabe, I'll grant you that there is a fundamental difference between the public needs of a railroad/pipeline/transmission line et al and the public needs of a big box store or new multi family dwellings. However, in spirit (and from a legal perspective) a new private development is a new private development regardless of function or intent. In other words, I'm not sure the law sees a difference between local/regional juristiction that supports UP and local/regional juristicition that supports WalMart. The Supreme Court recognized that it would be discriminatory to allow Corporation A the right to eminent domain but not allow Corporation B the same right, regardless of what it is those corporations are involved. It is up to Congress to make the distinction between those corporations which absolutely need to access certain private property to function, and those which could effectively "shop around" for the right location. Of course, I have argued in other topic lines that railroads are not the same as other private ventures, therefore it is ridiculous to allow railroads the same levels of "hands off" government approach, especially given the importance of preserving and expanding transportation infrastructure to meet the demands of an ever growing economy. If I remember correctly, even you Gabe presented the "McDonalds" analogy in defending the current railroad closed access status quo system. So therefore, if railroads are no different from McDonalds when it comes to what governments allow in terms of price or access regulation, then it can also be argued that McDonalds is no different from railroads in what governments allow when it comes to eminent domain. For the record, I am all for allowing railroads the right of eminent domain, but with that right comes the necessary oversight of regulation to assure optimal citizen access to that ROW that utilized the right of eminent domain. Otherwise, we are just granting fiefdoms to discriminatory entities. Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Friday, June 24, 2005 4:42 PM QUOTE: Originally posted by arbfbe BNSF does not want to serve small anythings. The discount for shippers using the shuttle services is about $300 in many locations, that makes it hard for the smaller elevators to be competitive. Depending upon where BNSF supports construction of a shuttle elevator it can decimate all smaller elevators in quite an area. All that investment by smaller companies, co-ops and farmers wiped out by a couple of large American conglomerates. Hi Alan, Montana shippers receive a $350 carload discount at 9 of the 10 shuttle elevators located in Montana, over single carload rates. That's about $250 over multi-carload rates. At the same time, however, they pay an average $861 above the average BNSF system rate for identical shipping services elsewhere on the system, that is, same distance, export. If a shipper shipped by the carload, from Shelby to Portland, for instance, the cost of shipping would be 18.25% of the total price received at Portland for HRSpring wheat, based on 4/15 prices, or 16.34% of the total price received at shuttle rates. A relatively small difference, 1.91% of the gross profit. In dollar terms, by shipping 110 carloads HR Spring through the enormous shuttle facility at Shelby (3.2 million bu. capacity, 162 car track capacity) the shipper saves $38,500 over single carload rates, or $27,500 over multiple carload rates on a shipment that will bring total revenue of $1.85 million in Portland. These "savings" are little more than 1% of the revenue received and are just not that significant in the overall scheme of things. Other factors are far more important to the shipper. On the other hand, in order to take advantage of shuttle rates, shippers have to construct shuttle facilities. I checked with one of the big elevator contractors today, and they confirmed that typically a new shuttle facility costs between $8 and $10 per bushel. So, for instance, to duplicate a typical Montana facility, say the Billings Peavey operation at 1.7 million bushels, the shipper must invest appoximately $15 million dollars, and probably also pay for the longer siding to be installed. On a 15 year loan, that's a $1.6 million financing obligation to handle annually, aside from increased operating costs. To justify the cost, the shipper would have to have a minimum of 58 shuttle trains per year. That's 22 million bushels of wheat from a single elevator. That would be very "unusual" (That would be one third of Montana's entire export wheat crop in Year 2001). From the railroad perspective, is it clear that the railroad is "saving" the costs of carload level handling? Well, many of the patrols that formerly picked up carloads of wheat are still out there, operating the same shifts on the same branches or the same areas. Some aren't. Exactly what is the railroad "saving"? Is there added cost due to increased wear on the track and structure? We know the answer to that is yes. Is that offset by savings elsewhere? That's just not as clear as it should be. Further, the trend to unit trains has not shown up in the bottom line at all, to the contrary, last year on BNSF, operating expenses increased faster than revenues. If there are savings in increased unit train operations, it is difficult to find them in the place they are supposed to be: operating expenses. Arguably, filtering carloads and smaller carload units into existing traffic patterns has a different effect on railroad operations than fully dedicated trains. Is the effect positive or negative? There can be an argument both ways on that. Is there an explicit downside for the railroad? According to the contractor that built the facility, the Co-op at Enderlin, ND built its new 50 car shuttle on CP, rather than BNSF partly as a response to BNSF "attitudes" on rates available to 50 car facilities. The RR suffered a net loss of the traffic and the loss of the entire amount of the revenue. It will never get it back. So, to promote shuttle service, the BNSF takes a 12% loss of revenue. It's restrictive policies which anger most of the industry involved, results in a loss of customers, on top of a 12% reduction in revenue. Operating expenses continue to increase faster than revenue. What this all suggests is that the operating efficiencies obtained are smaller than the revenue lost. The magic word "efficiency" is meaningless if there is no net return. The current satisfaction expressed by certain observers as to the perceived "efficiency" of shuttle operations is simply not justified by either the overall operating results of the railroads, nor by any discernible savings over regular operations. "Efficiency" as used by some of the Posters seems to be a "theoretical" construct that they should be more efficient, and therefore in our infinite wisdom we will just assume that in actual fact they are. One of the problems with unit train operations since their inception with coal, is the inability to properly estimate the cost of the operation. And I don't mean that operating costs were ever overestimated. Hardly. At each refinement of the cost model, unit trains have typically been more costly to the railroad than the experts initially predicted. And each refinement continues to underestimate the cost. Well, as with many assumptions, reality and theory can be quite different. There are not many specific facts offered in support of shuttle operations to show that they are, in fact, as "efficient" for the railroad from an economic perspective as the theory offered by the gentlemen suggests. Best regards, Michael Sol Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Friday, June 24, 2005 9:07 AM QUOTE: Originally posted by futuremodal RE: The recent Supreme Court Ruling - Don't forget your railroad history. When the railroads were building West in the late 1800's and early 1900's, they were granted the right of Eminent Domain to allow the ROW across established private property. This is nothing new. I wish you were right; but you are not. This is a substantial departure from previous practice. Yes, railroads have used the power of eminent domain for centuries in this country. However, there is a fundamental difference between railroads and the cases now allowed by our Supreme Court. One, of course, may argue that there is no difference between the public interest served by Wal-Mart and the public purpose served by Union Pacific. Legally, at least, it is recognized that railroads serve a direct public benefit and would not be possible to run without the use of eminent domain. In any event, the restriction to things like reservoirs, railroads, highways, etc. substantially limited the power of eminent domain in the past. No more. Now, the sanctity of the property is el finito. If Wal-Mart wants to move into a suburban neighborhood, all they have to do is say sell to us, or we will show the municipality that we have a larger tax base and will supply more votes. Trust me, your property rights have really been diminished because of this holding. Gabe Reply broncoman Member sinceFebruary 2003 From: Gateway to Donner Summit 434 posts Posted by broncoman on Thursday, June 23, 2005 9:05 PM I am born and raised in the central valley of CA, so I am curious as to the "stranded" grain elevators of the midwest. There are some fairly large farms still left in the greater sacramento area but it seems that they truck the grain to a siding where it is transferred to anywhere from 2-6 cars. There are still bigger elevators around I would say you wouldn't have to go more than 60-80 mi to go from one to another from Redding almost all the way down to Los Angeles. Is this scenerio different from the midwest? I am just curious as to the scope. I am sure the distances between "train load" elevators is substantial. And out of curiosity what is the standard "train load", 30-50 cars? Thanks for the info. Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Thursday, June 23, 2005 7:51 PM RE: The recent Supreme Court Ruling - Don't forget your railroad history. When the railroads were building West in the late 1800's and early 1900's, they were granted the right of Eminent Domain to allow the ROW across established private property. This is nothing new. RE: Unit vs carload shipments - Everything Greyhounds says is true, but in the larger picture it is possible to have a reverse macro effect. We've already hashed out the question of whether it is more "efficient" to move grain from a country elevator to a unit train terminal via truck or whether it would be more efficient to move that grain from country elevator to unit train terminal by shortline railroad. There are real world examples of shortlines being able to beat trucker's shorthaul rates in this scenario (aka Watco's opertations in the PNW). So in that vein the Class I's will participate in carload grain movements vicariously via their shortline "partners" (or shortline "slaves" depending on your particular POV). Depending on the infrastructure characteristics of a certain grain moving corridor, it is probable that shorthaul railroad companies could easily compete with truckers for carload quantities IF they could access the Class I property to get to those smaller elevators. This was one of the points made in the open access discussions, that smaller players would go after the business rejected by the Class I's if they had access to the property. Unit train dynamics are more efficient than carload dynamics, yet carload dynamics are (usually) more efficient than truckload dynamics. Thus, it is possible to have situations in which the combination of truckload hauls plus unit train hauls would be LESS efficient than carload hauls that come in 10's, 5's, or sometimes even single lots over the same corridors (from farm to port). So when Gabe bemoans the loss of individualized services, he's not just being nostalgic. Reply Edit bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Thursday, June 23, 2005 4:46 PM QUOTE: Originally posted by Peterson6868 But is this legal? Under Common carrier obligations the railroad has to traet everyone the same. Its just that the farmers dont knwo this and cant afford to hire a law firm to figure this out. Effeciant? What about all those trucks going all over the place to pick up grain from the small elevaters Railroads still have a common carrier obligation. If I call the Buckingham Branch today and say I want to ship a car of grain from Crozet to East Budda, TX they and their conections must move the car. Although they can not refuse to provide service I must pay them the rate they want for their service. In addition they will expect me to supply the covered hopper. Bob Reply SALfan Member sinceApril 2002 From: Northern Florida 1,429 posts Posted by SALfan on Thursday, June 23, 2005 4:03 PM QUOTE: Originally posted by greyhounds Of course it's legal. And farmers aren't ignorant. And they have lawyers. And farmers are going through this same process. My father worked 160 acers in central Illinois. That was what one man could handle. Today, that would be a "hobby farm". (disclaimer: I did not grow up on a farm, he was evicted the year I was born and I grew up in a small town.) The farms have gotten much larger, along with the equipment. The government can not pass a law that changes economics, just as they can not pass a law that water will run up hill. My brother put it very well last week, and I believe his quantities are about right. In the 1910's a farmer could make a decent living for his family on 40 acres. In the 1970's it took 400 acres to provide a decent living for a family. Now it takes 4000. To put it another way (I may be slightly off with these figures, but you get the idea): In 1948, Yazoo County Mississippi had 48,000 people; in 1990, it had 21,000 people. Most farmers didn't get tractors until just before or after World War II, so the vast decrease in the number of field hands and tenant farmers didn't really hit until after WWII. You can see the effect in the population changes in Yazoo County. Reply greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Thursday, June 23, 2005 2:02 PM QUOTE: Originally posted by Peterson6868 But is this legal? Under Common carrier obligations the railroad has to traet everyone the same. Its just that the farmers dont knwo this and cant afford to hire a law firm to figure this out. Effeciant? What about all those trucks going all over the place to pick up grain from the small elevaters Of course it's legal. And farmers aren't ignorant. And they have lawyers. And farmers are going through this same process. My father worked 160 acers in central Illinois. That was what one man could handle. Today, that would be a "hobby farm". (disclaimer: I did not grow up on a farm, he was evicted the year I was born and I grew up in a small town.) The farms have gotten much larger, along with the equipment. The government can not pass a law that changes economics, just as they can not pass a law that water will run up hill. As for the trucks, the economics of truckload transporation are very different from carload transportation. With trucks the unit of sale equals the unit of production. There is no need to aggregate sale units into production units. With carload there is an absolute need to aggregate the units of sale (carloads) into units of production (trainloads). There is also a need to break down trainloads of empties and distribute the cars for loading. As I said, this just destroys equipment utilization and drives up costs. These factors are not present in truckload. So smaller facilities are more efficiently served by trucks. And yes, I remember the C&IM spotting boxcars for grain loading at the elevators in Manito, IL. It's where I received my first lesson in just how inefficient that sort of thing is. The agent was muttering to himself about the grain company not ordering any cars for six months, then wanting "everthing" right away. I actaully saw this guy get on the phone with the dispatcher, get the OK, then flag down a southbound extra. I mean he was out there waving a red flag. They stopped and switched out every empty boxcar on the train. Just grabbed 'em off the train. So much for equipment utilization planning. "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. Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Thursday, June 23, 2005 1:53 PM Mookie: That is really encouraging to see it doesn't all go that way. But, my heart really goes out to all of those people who are going to lose their homes--not businesses--not for the direct public good, but another Mega store can move in. Some of the homes had been in the family for quite some time. I can't imagine how hard it would be to lose your home in such a circumstance. I am geniunely sad for them. MP-173: I do like the boxcar bit. My father worked at a grain elevator in his youth and described how much he preferred actual grain cars to box cars, as sometimes they would actually have to shovel the grain inside the box car to create more room for the grain. Thanks, Gabe Reply Mookie Member sinceJune 2001 From: US 13,488 posts Posted by Mookie on Thursday, June 23, 2005 1:16 PM Gabe - I heard it on the news and just shook my head. One bright spot - that muddy feathers can probably explain better - City of Lincoln vs a lumber company for what would have amounted to eminent domain. City 0 lumber company - 1 Moo She who has no signature! cinscocom-tmw Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Thursday, June 23, 2005 1:14 PM Gabe: DIdnt see the Supreme Court ruling, but in my opinion, it is really a bad ruling. I had a customer in Des Plaines, Il which was not a glamorous company. They are a leasing company of trailers. In fact, they are HUGE. One day I stopped in and they said they were moving. It seems as if Des Plaines condemned their property to build a hotel. Granted, this property was adjacent to I 90 and close to O'Hare and was no doubt valuable...but what gives them the right to do so? BTW...the trailer leasing company is no poor small company, it is owned by Warren Buffet's Berkshire Hathaway. Now, regarding the small elevator issue....Greyhound and Gabe, you will appreciate this one. Back in the day, I recall the IC line thru town would stop and switch boxcars of grain at the next town north (West Liberty, Il). Imagine how far we have progressed...BOX CARS of grain! ed Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Thursday, June 23, 2005 12:54 PM On a related side note, did anyone happen to notice the Supreme Court holding today saying that cities may condem property to attract private industry? Yet another blow against the little guy. This one is going to be bad. Gabe Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Thursday, June 23, 2005 12:41 PM QUOTE: Originally posted by greyhounds Increasingly, it seems the railroads are developing a business strategy that consists of running solid trains of containers, trailers, grain, whatever from point to point. This is far more efficient than traditional carload railroading. It makes sense. Serving small country grain elevators has always been inefficient. Equipment utilization is terrible and the cost of terminal handling (locals, endless switching into blocks, etc.) drives expenses through the roof. Railroads have to compete for capital in a world maket. Obtaining financing for grain cars has to compete with obtaining financing for a shirt factory in China. The investment will go to the most productive use. There is absolutely no way any corporate or government action can realistically change this. It's not a question of the BNSF not "wanting" to do something. It doesn't matter what they "want" to do. It's a question of what they have to do to remain competitive for investment funding. BNSF investors will get a better return on shuttle operations than they will on individual carload shipments. If BNSF would try to pay these investors less in order to serve the carload markets, the investors would go elsewhere. Would you rather see them invest in the US or China? If the government tries to force the BNSF to serve the inefficient small grain elevator market, they'll drive the railroad into the ground. It won't be able to attract investment and China will get a new shirt factory. You can't take pain out of the economy. Trying to do so will just make things worse over time. It's a sad thing that some people will loose money on investments they made in inefficent grain terminal facilities. But making business investments is no guarantee of success. Profit is a reward for risk, and sometimes the risk goes against the investor. And there is absolutely no way to change that. None. Greyhounds, Interesting analysis; I certainly can't disagree with it. However, I think the "pain" of the current economic trend of "super sizing" is even more painful than most realize. In the past, it took a lot less money to put one's energy and resources into a small business venture—like a 10-car grain elevator. The percentage of Americans with that much money was fairly broad and the avenue from middle class to bourgeois was attainable to those with luck, skill, dedication, and intellect. Under the consolidated super sized paradigm, the amount of people who have enough money to start a grain elevator capable of handling 110 BNSF shuttle car elevator—or other consolidated industries—are considerably less than it took to start such a business in the past. Because American industry in general seems to be following this trend, avenues toward wealth are being constricted. It is not simply a scenario of the rich getting richer. It is a scenario of the extinction of American upward mobility, which is the hallmark of the American economy and is why the American economy is renowned for reinventing itself. I think this will not only lead to permanent class divisions but will hinder the ability of the American economy to apply its entrepreneurialism in an effective manner. Nonetheless, I think you are right. It just kills me to know that you are. Gabe Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Thursday, June 23, 2005 12:24 PM But is this legal? Under Common carrier obligations the railroad has to traet everyone the same. Its just that the farmers dont knwo this and cant afford to hire a law firm to figure this out. Effeciant? What about all those trucks going all over the place to pick up grain from the small elevaters Reply Edit greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Thursday, June 23, 2005 11:51 AM Increasingly, it seems the railroads are developing a business strategy that consists of running solid trains of containers, trailers, grain, whatever from point to point. This is far more efficient than traditional carload railroading. It makes sense. Serving small country grain elevators has always been inefficient. Equipment utilization is terrible and the cost of terminal handling (locals, endless switching into blocks, etc.) drives expenses through the roof. Railroads have to compete for capital in a world maket. Obtaining financing for grain cars has to compete with obtaining financing for a shirt factory in China. The investment will go to the most productive use. There is absolutely no way any corporate or government action can realistically change this. It's not a question of the BNSF not "wanting" to do something. It doesn't matter what they "want" to do. It's a question of what they have to do to remain competitive for investment funding. BNSF investors will get a better return on shuttle operations than they will on individual carload shipments. If BNSF would try to pay these investors less in order to serve the carload markets, the investors would go elsewhere. Would you rather see them invest in the US or China? If the government tries to force the BNSF to serve the inefficient small grain elevator market, they'll drive the railroad into the ground. It won't be able to attract investment and China will get a new shirt factory. You can't take pain out of the economy. Trying to do so will just make things worse over time. It's a sad thing that some people will loose money on investments they made in inefficent grain terminal facilities. But making business investments is no guarantee of success. Profit is a reward for risk, and sometimes the risk goes against the investor. And there is absolutely no way to change that. None. "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. Reply CSSHEGEWISCH Member sinceMarch 2016 From: Burbank IL (near Clearing) 13,540 posts Posted by CSSHEGEWISCH on Thursday, June 23, 2005 11:40 AM The expense of serving small elevators that generate only a handful of cars at a time only once or twice a week is proportionally higher than serving a larger elevator that generates 25+ cars at a time daily. Smaller elevators that are generating truck-size loads are probably better served by truck. BNSF is basically giving volume discounts similar to just about any business in any line of work. The daily commute is part of everyday life but I get two rides a day out of it. Paul Reply arbfbe Member sinceFebruary 2002 910 posts Posted by arbfbe on Thursday, June 23, 2005 11:06 AM BNSF does not want to serve small anythings. The discount for shippers using the shuttle services is about $300 in many locations, that makes it hard for the smaller elevators to be competitive. Depending upon where BNSF supports construction of a shuttle elevator it can decimate all smaller elevators in quite an area. All that investment by smaller companies, co-ops and farmers wiped out by a couple of large American conglomerates. Reply 123456 Join our Community! Our community is FREE to join. To participate you must either login or register for an account. 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Rather, longer, slower trains appear to result in increased system congestion, do result in increased track maintenance expenses, and do result in longer terminal dwell times as a system effect that "suggests" that increased efficiency is not the result, but rather statistically measurable inefficiency is apparently the result. That all trains are affected by the increased congestion resulting from bigger, longer, slower grain trains.
QUOTE: 5. Average system carload revenue, as you stated, for 1064 miles of ag products was $2699 per carload. How did you determine that number? 6. What are the cycle times for the grain shuttle trains? You indicated cycle times increased from 24 to 26 days, was this for all system cars, or just grain cars, or grain shuttle cars?
QUOTE: Originally posted by Chris30 QUOTE: Lower revenues AND angry customers. How much more "efficiency" like this can a railroad handle? I mentioned it before in this thread... revenue gained from serving small elevators on deteriorating branches would have to be spent on maintenance at some point to keep the business and support the heavier cars that most deteriorating midwest grain branches can no longer support. Lower revenues? What $$. Besides, the big railroads are already stretched thin on grain car supply. They're not going to upset their biggest customers to serve the little elevator that could. It's all about $$ and car cycle times.
QUOTE: Lower revenues AND angry customers. How much more "efficiency" like this can a railroad handle?
QUOTE: "Lower revenues?? What $$."
QUOTE: Originally posted by MichaelSol Well Dave, that is certainly an interesting way to look at it. From an expense standpoint, it seems that the railroads have taken an odd view. Grain transportation is already such a streamlined operation compared to industrial or consumer traffic. No congested yards to deal with, no vandalism losses, all the traffic is out in the middle of nowhwere, where the crews stop, get the job done, and move on. Exactly what "costs" these companies are trying to "wring" out of the process is not entirely clear to me. Matt Rose does say the following: "For several years we've improved our efficiency with longer trains for coal, grain, and other commodities." Thirty years ago, I sat down with some Milwaukee people who were forward looking, with the idea of trying to envision the most "efficient" rail operation. This was before modelling was a sophisticated art/science. After a few months of chewing it over, we concluded that shorter, faster trains were more profitable than longer, slower trains. The alleged savings in crew costs with longer trains were cancelled out entirely by the increased costs of getting the train from point A to point B, and, at some point in the congestion matrix, crew productivity in the scenario with longer trains began to fall quite dramatically. The longer the trains, at a certain level of business, the more inefficient the railroad became. The point was, the longer that the trains were on the track, the less efficient the railroad became and the more expensive was overall train operation. So, BNSF proudly announces that its idea of efficiency is longer trains, on lines that are already pretty congested. Interestingly, as the Internet became more clearly understood in terms of routing efficiency, the idea was exactly the opposite, break messages and information flow into small and discrete units, send them off, and the assemble them at their destination. Networks are more efficient with small units, rather than large units . Railroads have developed the idea, that is contrary to both models and experience in other industries, that large units are most efficient to move over crowded networks. And even though its own customers don't like it, and it costs the customers more money, BNSF seems bound and deterrmined to force its customers into this idea of "efficiency." Is there any "efficiency"? BNSF grain trains are already among the slowest on the system at an average speed of 23.1 mph. A BNSF grain train of 15,000 tons is not an example of efficiency, rather, it is a slow moving bottleneck. Even though, by industry standards, BNSF is a pretty good mover of grain trains. However, its worst yard for dwell time is Pasco, with an average of 15.9 hours. Not to pick on BNSF, UP is just awful, with yard dwell times of 20-30 hours. But, Pasco happens to be where some of the longest grain trains are routed. Now, what is the breakeven on trains.? The average carload on the BNSF earns $1074. It travels 1045 miles. To breakeven, that carload would earn $924.00 on the same haul. That is, the average carload generates a profit of $150. What does BNSF earn from a carload of grain on that same line-haul? Well, Brockton, Montana is 1064 miles from Portland. A carload of wheat brings revenue to the BNSF of $3,938.00. Now, admittedly, Brockton is located in Montana and suffers from that uniquely BNSF policy that, if you ship in Montana, you will pay a lot more. The system average for 1064 miles, shipping grain, is only $2699 per carload. Either way, that is enormously profitable Compared to the BNSF average, Montana wheat is nearly 25 times as profitable per carload as BNSF earns from its typical business. Compare that to the BNSF Consumer Group which represents 40% of BNSF revenue. The average CG carload brings a yield of $874. Compared to grain, which has no real "handling" needs -- it doesn't break, it doesn't dent -- CG is a high cost operation, serving the most congested yards on the most congested routes. The CG group loses about $50 per carload carried. The average carload of grain on the BNSF system brings $1969. This compares not only with CG at $874, but with Industrial at $1568/carload, and Coal at $1028 per carload. Wheat is the most profitable item carried on the BNSF, and is likely the least costly to the Company in terms of associated operating expenses. Yet, Matt Rose says nothing about improving "efficiency" for the CG group, but only talks about coal, grain and "other commodities." But, as the numbers, and maybe even some common sense should show, "they ain't the problem." The fact is, based on profitability, BNSF should be turning sommersaults to keep those grain customers happy, and carrying as much wheat as possible, rather than losing the business entirely, as its policies have been doing. What is interesting is that the Company is offering a 12% cut in its own revenue on this profitable commodity. To make longer, most likely less efficient trains which exacerbate congestion delays on the system, increasing operating expenses overall. Naturally, someone would see it as mismanagement to make an extraordinarily good profit, because it might lead to congestion, but good business practice to carry 40% of the company traffic at a loss, even though that accounts for all of the congestion, and not do anything about it. Why on earth would a "year round customer" that loses money be so important to keep, compared to a customer that, in the season, generates a profit of 200-300%? Further, and perhaps more significantly, there is not a particular seasonality in grain shipping. Misunderstanding the difference between grain marketing and grain growing is fairly typical. In 2004, for instance, to Pacific Northwest Ports, the quarterly carloads arriving during the week of 12/31/03 were 3500, 3/24/04 -- 5200, 6/15/04 -- 4800, 9/8/04 -- 3000, 12/01/04 -- 5000, carloads. As you will note, the smallest number of carloads was during "the season" of harvest. Grain shipping is, in fact, a year round business. However, it is thinking like this, and Instances like this, that go a long way to explaining why this Company cannot earn its own cost of capital. Best regards, Michael Sol
QUOTE: Originally posted by PNWRMNM Michael, Are you quoting revenue per car or revenue per unit? BNSF's web site talks in units, not cars. My take on this is a unit is a car or a trailer or a container. If so, revuenue per trailer/container should be at least doubled to get per car equavalent. Consumer goods is where the intermodal business resides in BNSF's structure, so one would expect low revenue per unit there. In short, I think you may be comparing apples to oranges. Mac
QUOTE: Originally posted by daveklepper How much business does BNSF want? Maybe they have decided that getting all the business, and it is seasonal, means capacity constraints and inability to provide the service their year-round customers expect. So they are deliberately loosing the seasonal business to insure keeping the year-round business. Does this make sense?
QUOTE: Originally posted by greyhounds[That's like the combine and the trucks. The farmer has to "balance his/her line". He/she has to coordinate the trucks with the combine. If the farmer has to truck his grain farther to the elevator so be it. The farmer needs to hire more trucks. There is no reason that a 105K truck can't go into a field. It's a matter of ground pressure, and that can be solved by putting more axles under the truck.
QUOTE: Originally posted by greyhounds Yes, but. The grain isn't originating at a country elevator. It's originating in a farm field. I remember watching a Wisconsin farmer harvest his corn. It was dark and the John Deere combine just went back and forth, it's headlights showing the way through the corn field. The hopper on the combine would get full, then he'd ( or she'd, I don't know which gender was driving) unload into a semi in the field. Semi's can go into farm fields where the freight originates. Trains can't. When the semi got full, it drove off. Now once you've got the grain in a truck, does it make sense to take it to a small country elevator, then transfer it to that elevator, hold it there, then transfer it to smaller rail cars for shortline movement, then transfer it again to a larger elevator, hold it there, then transfer it to a main line shuttle train? Or do you just drive the truck to the large elevator in the first place? It will depend on the specific situation, but if I had to bet ( and I do bet on things ), I'd bet that it will be generally more efficient to just drive the truck to the large elevator.
QUOTE: Originally posted by greyhounds Now once you've got the grain in a truck, does it make sense to take it to a small country elevator, then transfer it to that elevator, hold it there, then transfer it to smaller rail cars for shortline movement, then transfer it again to a larger elevator, hold it there, then transfer it to a main line shuttle train? Or do you just drive the truck to the large elevator in the first place? It will depend on the specific situation, but if I had to bet ( and I do bet on things ), I'd bet that it will be generally more efficient to just drive the truck to the large elevator.
QUOTE: Originally posted by greyhounds [Now once you've got the grain in a truck, does it make sense to take it to a small country elevator, then transfer it to that elevator, hold it there, then transfer it to smaller rail cars for shortline movement, then transfer it again to a larger elevator, hold it there, then transfer it to a main line shuttle train? Or do you just drive the truck to the large elevator in the first place? It will depend on the specific situation, but if I had to bet ( and I do bet on things ), I'd bet that it will be generally more efficient to just drive the truck to the large elevator.
QUOTE: Originally posted by Chris30 One thing to add to the small grain elevators that are disappearing. A lot of small elevators are/were located on old, lightweight rail that is/was maintenance deffered branch trackage. As the weight of a loaded grain car continues to get heavier, the lightweight, maintenance deffered track can no longer support the weight of those cars. To continue serving these small elevators the railroads would have to continue using smaller/lighter cars, or the branch trackage would have to be completely rebuilt at a great cost that would never be repaid to support the newer, heavier grain cars. Don't foreget about the cost of crew and equipment to serve the lightweight branches that might only produce a few cars a week for one season of the year. It just makes more sense for the small elevators take the discount offered and truck their product to a large elevator on the main line. The railroads are more than willing to give a discount to the small elevator vs. the expense of the branch lines. CC
QUOTE: Originally posted by ericsp The grain trains I see are probably about 75 to 100 cars. All of the grain elevators around here are receivers. Do they load any grains besides rice up there? Eric rice is a big export, but I am not sure what the other grain is that is shipped. I know I have seen a lot of cars at the elevators up highway 99 above Yuba City. The cars were being loaded outside of rice season, but I didn't know with what. Anyone else care to venture a guess. Reply Chris30 Member sinceDecember 2001 From: near Chicago 937 posts Posted by Chris30 on Saturday, June 25, 2005 7:08 PM One thing to add to the small grain elevators that are disappearing. A lot of small elevators are/were located on old, lightweight rail that is/was maintenance deffered branch trackage. As the weight of a loaded grain car continues to get heavier, the lightweight, maintenance deffered track can no longer support the weight of those cars. To continue serving these small elevators the railroads would have to continue using smaller/lighter cars, or the branch trackage would have to be completely rebuilt at a great cost that would never be repaid to support the newer, heavier grain cars. Don't foreget about the cost of crew and equipment to serve the lightweight branches that might only produce a few cars a week for one season of the year. It just makes more sense for the small elevators take the discount offered and truck their product to a large elevator on the main line. The railroads are more than willing to give a discount to the small elevator vs. the expense of the branch lines. CC Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Saturday, June 25, 2005 12:51 PM Exactly—and I suppose contumelious would be a better term in the context I was using. As Dan said, in a recent post, what this will really come down to is the ability of the state courts to police properly this action. As somebody who works for a state appellate court, I am not at all convinced that there will be a uniform application of this oversight. Furthermore, in order for the State courts to properly oversee this, there is going to have to be litigation. Who do you think is going to be able to hire the better lawyer, Wal-Mart or some family farmer? Furthermore, the type of litigation involved will be complex—where the better lawyer makes even more of a difference. I am truly worried about this one. Gabe Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Saturday, June 25, 2005 11:48 AM QUOTE: Originally posted by gabe QUOTE: Originally posted by futuremodal Gabe, I'll grant you that there is a fundamental difference between the public needs of a railroad/pipeline/transmission line et al and the public needs of a big box store or new multi family dwellings. However, in spirit (and from a legal perspective) a new private development is a new private development regardless of function or intent. In other words, I'm not sure the law sees a difference between local/regional juristiction that supports UP and local/regional juristicition that supports WalMart. The Supreme Court recognized that it would be discriminatory to allow Corporation A the right to eminent domain but not allow Corporation B the same right, regardless of what it is those corporations are involved. It is up to Congress to make the distinction between those corporations which absolutely need to access certain private property to function, and those which could effectively "shop around" for the right location. Of course, I have argued in other topic lines that railroads are not the same as other private ventures, therefore it is ridiculous to allow railroads the same levels of "hands off" government approach, especially given the importance of preserving and expanding transportation infrastructure to meet the demands of an ever growing economy. If I remember correctly, even you Gabe presented the "McDonalds" analogy in defending the current railroad closed access status quo system. So therefore, if railroads are no different from McDonalds when it comes to what governments allow in terms of price or access regulation, then it can also be argued that McDonalds is no different from railroads in what governments allow when it comes to eminent domain. For the record, I am all for allowing railroads the right of eminent domain, but with that right comes the necessary oversight of regulation to assure optimal citizen access to that ROW that utilized the right of eminent domain. Otherwise, we are just granting fiefdoms to discriminatory entities. Dave, I am not trying to be contumacious, but to quote the Court in its reference to the new land use "Nor will the private lessees of the land in any sense be required to operate like common carriers, making their services available to all comers." The Court just kicked out one of the chief restrictions on the use of the doctrine. This will not only allow the greatly expanded view of public benefit to be used as a sword by the rich; it will also allow the doctrine to be used CONSIDERABLY more than it is now. Gabe Well, I'm okay with you being contumacious, as long as you don't become contumelious. I admit, I am a little bit perplexed by the Court statement regarding lessees absolvency from "common carrier" assimilation, since the particular case pertained to a developer whose end product would ostensibly be made available to the public marketplace. If this interpretation is taken at face value, then a private individual with influence could convince governments to bestow the act of eminent domain to remove another private citizen from their property, soley for the purpose of the former building their own private residence on the latter's site. Perhaps this is why the reaction from both the left and the right has been so vocal, and it begs the question as to why the Court would so drastically extend this right of eminent domain beyond the auspices of the original case. It's one thing to grant eminent domain for a project that would be made available to the public, it's entirely beyond reason to grant eminent domain for a project that is intended for private use. Reply Edit gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Saturday, June 25, 2005 11:12 AM QUOTE: Originally posted by futuremodal Gabe, I'll grant you that there is a fundamental difference between the public needs of a railroad/pipeline/transmission line et al and the public needs of a big box store or new multi family dwellings. However, in spirit (and from a legal perspective) a new private development is a new private development regardless of function or intent. In other words, I'm not sure the law sees a difference between local/regional juristiction that supports UP and local/regional juristicition that supports WalMart. The Supreme Court recognized that it would be discriminatory to allow Corporation A the right to eminent domain but not allow Corporation B the same right, regardless of what it is those corporations are involved. It is up to Congress to make the distinction between those corporations which absolutely need to access certain private property to function, and those which could effectively "shop around" for the right location. Of course, I have argued in other topic lines that railroads are not the same as other private ventures, therefore it is ridiculous to allow railroads the same levels of "hands off" government approach, especially given the importance of preserving and expanding transportation infrastructure to meet the demands of an ever growing economy. If I remember correctly, even you Gabe presented the "McDonalds" analogy in defending the current railroad closed access status quo system. So therefore, if railroads are no different from McDonalds when it comes to what governments allow in terms of price or access regulation, then it can also be argued that McDonalds is no different from railroads in what governments allow when it comes to eminent domain. For the record, I am all for allowing railroads the right of eminent domain, but with that right comes the necessary oversight of regulation to assure optimal citizen access to that ROW that utilized the right of eminent domain. Otherwise, we are just granting fiefdoms to discriminatory entities. Dave, I am not trying to be contumacious, but to quote the Court in its reference to the new land use "Nor will the private lessees of the land in any sense be required to operate like common carriers, making their services available to all comers." The Court just kicked out one of the chief restrictions on the use of the doctrine. This will not only allow the greatly expanded view of public benefit to be used as a sword by the rich; it will also allow the doctrine to be used CONSIDERABLY more than it is now. Gabe Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Saturday, June 25, 2005 11:04 AM Greyhounds, None taken. Most of my best friends are lawyers and are great people that truly entered the profession to serve the public good. That having been said, as a group, most of us can't stand lawyers. Gabe Reply greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Saturday, June 25, 2005 12:30 AM No offense to Gabe but, "Lawyers are like nuclear weapons, I got 'em because the other side's got 'em; but once you use 'em, they screw everything up." By Danny DiVito in "Other People's Money" - a really great (or "Greyt" as we fast dog folks say) movie. "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. Reply ericsp Member sinceMay 2015 5,134 posts Posted by ericsp on Friday, June 24, 2005 11:02 PM QUOTE: Originally posted by broncoman I am born and raised in the central valley of CA, so I am curious as to the "stranded" grain elevators of the midwest. There are some fairly large farms still left in the greater sacramento area but it seems that they truck the grain to a siding where it is transferred to anywhere from 2-6 cars. There are still bigger elevators around I would say you wouldn't have to go more than 60-80 mi to go from one to another from Redding almost all the way down to Los Angeles. Is this scenerio different from the midwest? I am just curious as to the scope. I am sure the distances between "train load" elevators is substantial. And out of curiosity what is the standard "train load", 30-50 cars? Thanks for the info. The grain trains I see are probably about 75 to 100 cars. All of the grain elevators around here are receivers. Do they load any grains besides rice up there? "No soup for you!" - Yev Kassem (from Seinfeld) Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Friday, June 24, 2005 8:39 PM Gabe, I'll grant you that there is a fundamental difference between the public needs of a railroad/pipeline/transmission line et al and the public needs of a big box store or new multi family dwellings. However, in spirit (and from a legal perspective) a new private development is a new private development regardless of function or intent. In other words, I'm not sure the law sees a difference between local/regional juristiction that supports UP and local/regional juristicition that supports WalMart. The Supreme Court recognized that it would be discriminatory to allow Corporation A the right to eminent domain but not allow Corporation B the same right, regardless of what it is those corporations are involved. It is up to Congress to make the distinction between those corporations which absolutely need to access certain private property to function, and those which could effectively "shop around" for the right location. Of course, I have argued in other topic lines that railroads are not the same as other private ventures, therefore it is ridiculous to allow railroads the same levels of "hands off" government approach, especially given the importance of preserving and expanding transportation infrastructure to meet the demands of an ever growing economy. If I remember correctly, even you Gabe presented the "McDonalds" analogy in defending the current railroad closed access status quo system. So therefore, if railroads are no different from McDonalds when it comes to what governments allow in terms of price or access regulation, then it can also be argued that McDonalds is no different from railroads in what governments allow when it comes to eminent domain. For the record, I am all for allowing railroads the right of eminent domain, but with that right comes the necessary oversight of regulation to assure optimal citizen access to that ROW that utilized the right of eminent domain. Otherwise, we are just granting fiefdoms to discriminatory entities. Reply Edit MichaelSol Member sinceOctober 2004 3,190 posts Posted by MichaelSol on Friday, June 24, 2005 4:42 PM QUOTE: Originally posted by arbfbe BNSF does not want to serve small anythings. The discount for shippers using the shuttle services is about $300 in many locations, that makes it hard for the smaller elevators to be competitive. Depending upon where BNSF supports construction of a shuttle elevator it can decimate all smaller elevators in quite an area. All that investment by smaller companies, co-ops and farmers wiped out by a couple of large American conglomerates. Hi Alan, Montana shippers receive a $350 carload discount at 9 of the 10 shuttle elevators located in Montana, over single carload rates. That's about $250 over multi-carload rates. At the same time, however, they pay an average $861 above the average BNSF system rate for identical shipping services elsewhere on the system, that is, same distance, export. If a shipper shipped by the carload, from Shelby to Portland, for instance, the cost of shipping would be 18.25% of the total price received at Portland for HRSpring wheat, based on 4/15 prices, or 16.34% of the total price received at shuttle rates. A relatively small difference, 1.91% of the gross profit. In dollar terms, by shipping 110 carloads HR Spring through the enormous shuttle facility at Shelby (3.2 million bu. capacity, 162 car track capacity) the shipper saves $38,500 over single carload rates, or $27,500 over multiple carload rates on a shipment that will bring total revenue of $1.85 million in Portland. These "savings" are little more than 1% of the revenue received and are just not that significant in the overall scheme of things. Other factors are far more important to the shipper. On the other hand, in order to take advantage of shuttle rates, shippers have to construct shuttle facilities. I checked with one of the big elevator contractors today, and they confirmed that typically a new shuttle facility costs between $8 and $10 per bushel. So, for instance, to duplicate a typical Montana facility, say the Billings Peavey operation at 1.7 million bushels, the shipper must invest appoximately $15 million dollars, and probably also pay for the longer siding to be installed. On a 15 year loan, that's a $1.6 million financing obligation to handle annually, aside from increased operating costs. To justify the cost, the shipper would have to have a minimum of 58 shuttle trains per year. That's 22 million bushels of wheat from a single elevator. That would be very "unusual" (That would be one third of Montana's entire export wheat crop in Year 2001). From the railroad perspective, is it clear that the railroad is "saving" the costs of carload level handling? Well, many of the patrols that formerly picked up carloads of wheat are still out there, operating the same shifts on the same branches or the same areas. Some aren't. Exactly what is the railroad "saving"? Is there added cost due to increased wear on the track and structure? We know the answer to that is yes. Is that offset by savings elsewhere? That's just not as clear as it should be. Further, the trend to unit trains has not shown up in the bottom line at all, to the contrary, last year on BNSF, operating expenses increased faster than revenues. If there are savings in increased unit train operations, it is difficult to find them in the place they are supposed to be: operating expenses. Arguably, filtering carloads and smaller carload units into existing traffic patterns has a different effect on railroad operations than fully dedicated trains. Is the effect positive or negative? There can be an argument both ways on that. Is there an explicit downside for the railroad? According to the contractor that built the facility, the Co-op at Enderlin, ND built its new 50 car shuttle on CP, rather than BNSF partly as a response to BNSF "attitudes" on rates available to 50 car facilities. The RR suffered a net loss of the traffic and the loss of the entire amount of the revenue. It will never get it back. So, to promote shuttle service, the BNSF takes a 12% loss of revenue. It's restrictive policies which anger most of the industry involved, results in a loss of customers, on top of a 12% reduction in revenue. Operating expenses continue to increase faster than revenue. What this all suggests is that the operating efficiencies obtained are smaller than the revenue lost. The magic word "efficiency" is meaningless if there is no net return. The current satisfaction expressed by certain observers as to the perceived "efficiency" of shuttle operations is simply not justified by either the overall operating results of the railroads, nor by any discernible savings over regular operations. "Efficiency" as used by some of the Posters seems to be a "theoretical" construct that they should be more efficient, and therefore in our infinite wisdom we will just assume that in actual fact they are. One of the problems with unit train operations since their inception with coal, is the inability to properly estimate the cost of the operation. And I don't mean that operating costs were ever overestimated. Hardly. At each refinement of the cost model, unit trains have typically been more costly to the railroad than the experts initially predicted. And each refinement continues to underestimate the cost. Well, as with many assumptions, reality and theory can be quite different. There are not many specific facts offered in support of shuttle operations to show that they are, in fact, as "efficient" for the railroad from an economic perspective as the theory offered by the gentlemen suggests. Best regards, Michael Sol Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Friday, June 24, 2005 9:07 AM QUOTE: Originally posted by futuremodal RE: The recent Supreme Court Ruling - Don't forget your railroad history. When the railroads were building West in the late 1800's and early 1900's, they were granted the right of Eminent Domain to allow the ROW across established private property. This is nothing new. I wish you were right; but you are not. This is a substantial departure from previous practice. Yes, railroads have used the power of eminent domain for centuries in this country. However, there is a fundamental difference between railroads and the cases now allowed by our Supreme Court. One, of course, may argue that there is no difference between the public interest served by Wal-Mart and the public purpose served by Union Pacific. Legally, at least, it is recognized that railroads serve a direct public benefit and would not be possible to run without the use of eminent domain. In any event, the restriction to things like reservoirs, railroads, highways, etc. substantially limited the power of eminent domain in the past. No more. Now, the sanctity of the property is el finito. If Wal-Mart wants to move into a suburban neighborhood, all they have to do is say sell to us, or we will show the municipality that we have a larger tax base and will supply more votes. Trust me, your property rights have really been diminished because of this holding. Gabe Reply broncoman Member sinceFebruary 2003 From: Gateway to Donner Summit 434 posts Posted by broncoman on Thursday, June 23, 2005 9:05 PM I am born and raised in the central valley of CA, so I am curious as to the "stranded" grain elevators of the midwest. There are some fairly large farms still left in the greater sacramento area but it seems that they truck the grain to a siding where it is transferred to anywhere from 2-6 cars. There are still bigger elevators around I would say you wouldn't have to go more than 60-80 mi to go from one to another from Redding almost all the way down to Los Angeles. Is this scenerio different from the midwest? I am just curious as to the scope. I am sure the distances between "train load" elevators is substantial. And out of curiosity what is the standard "train load", 30-50 cars? Thanks for the info. Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Thursday, June 23, 2005 7:51 PM RE: The recent Supreme Court Ruling - Don't forget your railroad history. When the railroads were building West in the late 1800's and early 1900's, they were granted the right of Eminent Domain to allow the ROW across established private property. This is nothing new. RE: Unit vs carload shipments - Everything Greyhounds says is true, but in the larger picture it is possible to have a reverse macro effect. We've already hashed out the question of whether it is more "efficient" to move grain from a country elevator to a unit train terminal via truck or whether it would be more efficient to move that grain from country elevator to unit train terminal by shortline railroad. There are real world examples of shortlines being able to beat trucker's shorthaul rates in this scenario (aka Watco's opertations in the PNW). So in that vein the Class I's will participate in carload grain movements vicariously via their shortline "partners" (or shortline "slaves" depending on your particular POV). Depending on the infrastructure characteristics of a certain grain moving corridor, it is probable that shorthaul railroad companies could easily compete with truckers for carload quantities IF they could access the Class I property to get to those smaller elevators. This was one of the points made in the open access discussions, that smaller players would go after the business rejected by the Class I's if they had access to the property. Unit train dynamics are more efficient than carload dynamics, yet carload dynamics are (usually) more efficient than truckload dynamics. Thus, it is possible to have situations in which the combination of truckload hauls plus unit train hauls would be LESS efficient than carload hauls that come in 10's, 5's, or sometimes even single lots over the same corridors (from farm to port). So when Gabe bemoans the loss of individualized services, he's not just being nostalgic. Reply Edit bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Thursday, June 23, 2005 4:46 PM QUOTE: Originally posted by Peterson6868 But is this legal? Under Common carrier obligations the railroad has to traet everyone the same. Its just that the farmers dont knwo this and cant afford to hire a law firm to figure this out. Effeciant? What about all those trucks going all over the place to pick up grain from the small elevaters Railroads still have a common carrier obligation. If I call the Buckingham Branch today and say I want to ship a car of grain from Crozet to East Budda, TX they and their conections must move the car. Although they can not refuse to provide service I must pay them the rate they want for their service. In addition they will expect me to supply the covered hopper. Bob Reply SALfan Member sinceApril 2002 From: Northern Florida 1,429 posts Posted by SALfan on Thursday, June 23, 2005 4:03 PM QUOTE: Originally posted by greyhounds Of course it's legal. And farmers aren't ignorant. And they have lawyers. And farmers are going through this same process. My father worked 160 acers in central Illinois. That was what one man could handle. Today, that would be a "hobby farm". (disclaimer: I did not grow up on a farm, he was evicted the year I was born and I grew up in a small town.) The farms have gotten much larger, along with the equipment. The government can not pass a law that changes economics, just as they can not pass a law that water will run up hill. My brother put it very well last week, and I believe his quantities are about right. In the 1910's a farmer could make a decent living for his family on 40 acres. In the 1970's it took 400 acres to provide a decent living for a family. Now it takes 4000. To put it another way (I may be slightly off with these figures, but you get the idea): In 1948, Yazoo County Mississippi had 48,000 people; in 1990, it had 21,000 people. Most farmers didn't get tractors until just before or after World War II, so the vast decrease in the number of field hands and tenant farmers didn't really hit until after WWII. You can see the effect in the population changes in Yazoo County. Reply greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Thursday, June 23, 2005 2:02 PM QUOTE: Originally posted by Peterson6868 But is this legal? Under Common carrier obligations the railroad has to traet everyone the same. Its just that the farmers dont knwo this and cant afford to hire a law firm to figure this out. Effeciant? What about all those trucks going all over the place to pick up grain from the small elevaters Of course it's legal. And farmers aren't ignorant. And they have lawyers. And farmers are going through this same process. My father worked 160 acers in central Illinois. That was what one man could handle. Today, that would be a "hobby farm". (disclaimer: I did not grow up on a farm, he was evicted the year I was born and I grew up in a small town.) The farms have gotten much larger, along with the equipment. The government can not pass a law that changes economics, just as they can not pass a law that water will run up hill. As for the trucks, the economics of truckload transporation are very different from carload transportation. With trucks the unit of sale equals the unit of production. There is no need to aggregate sale units into production units. With carload there is an absolute need to aggregate the units of sale (carloads) into units of production (trainloads). There is also a need to break down trainloads of empties and distribute the cars for loading. As I said, this just destroys equipment utilization and drives up costs. These factors are not present in truckload. So smaller facilities are more efficiently served by trucks. And yes, I remember the C&IM spotting boxcars for grain loading at the elevators in Manito, IL. It's where I received my first lesson in just how inefficient that sort of thing is. The agent was muttering to himself about the grain company not ordering any cars for six months, then wanting "everthing" right away. I actaully saw this guy get on the phone with the dispatcher, get the OK, then flag down a southbound extra. I mean he was out there waving a red flag. They stopped and switched out every empty boxcar on the train. Just grabbed 'em off the train. So much for equipment utilization planning. "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. Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Thursday, June 23, 2005 1:53 PM Mookie: That is really encouraging to see it doesn't all go that way. But, my heart really goes out to all of those people who are going to lose their homes--not businesses--not for the direct public good, but another Mega store can move in. Some of the homes had been in the family for quite some time. I can't imagine how hard it would be to lose your home in such a circumstance. I am geniunely sad for them. MP-173: I do like the boxcar bit. My father worked at a grain elevator in his youth and described how much he preferred actual grain cars to box cars, as sometimes they would actually have to shovel the grain inside the box car to create more room for the grain. Thanks, Gabe Reply Mookie Member sinceJune 2001 From: US 13,488 posts Posted by Mookie on Thursday, June 23, 2005 1:16 PM Gabe - I heard it on the news and just shook my head. One bright spot - that muddy feathers can probably explain better - City of Lincoln vs a lumber company for what would have amounted to eminent domain. City 0 lumber company - 1 Moo She who has no signature! cinscocom-tmw Reply MP173 Member sinceMay 2004 From: Valparaiso, In 5,921 posts Posted by MP173 on Thursday, June 23, 2005 1:14 PM Gabe: DIdnt see the Supreme Court ruling, but in my opinion, it is really a bad ruling. I had a customer in Des Plaines, Il which was not a glamorous company. They are a leasing company of trailers. In fact, they are HUGE. One day I stopped in and they said they were moving. It seems as if Des Plaines condemned their property to build a hotel. Granted, this property was adjacent to I 90 and close to O'Hare and was no doubt valuable...but what gives them the right to do so? BTW...the trailer leasing company is no poor small company, it is owned by Warren Buffet's Berkshire Hathaway. Now, regarding the small elevator issue....Greyhound and Gabe, you will appreciate this one. Back in the day, I recall the IC line thru town would stop and switch boxcars of grain at the next town north (West Liberty, Il). Imagine how far we have progressed...BOX CARS of grain! ed Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Thursday, June 23, 2005 12:54 PM On a related side note, did anyone happen to notice the Supreme Court holding today saying that cities may condem property to attract private industry? Yet another blow against the little guy. This one is going to be bad. Gabe Reply gabe Member sinceMarch 2004 From: Indianapolis, Indiana 2,434 posts Posted by gabe on Thursday, June 23, 2005 12:41 PM QUOTE: Originally posted by greyhounds Increasingly, it seems the railroads are developing a business strategy that consists of running solid trains of containers, trailers, grain, whatever from point to point. This is far more efficient than traditional carload railroading. It makes sense. Serving small country grain elevators has always been inefficient. Equipment utilization is terrible and the cost of terminal handling (locals, endless switching into blocks, etc.) drives expenses through the roof. Railroads have to compete for capital in a world maket. Obtaining financing for grain cars has to compete with obtaining financing for a shirt factory in China. The investment will go to the most productive use. There is absolutely no way any corporate or government action can realistically change this. It's not a question of the BNSF not "wanting" to do something. It doesn't matter what they "want" to do. It's a question of what they have to do to remain competitive for investment funding. BNSF investors will get a better return on shuttle operations than they will on individual carload shipments. If BNSF would try to pay these investors less in order to serve the carload markets, the investors would go elsewhere. Would you rather see them invest in the US or China? If the government tries to force the BNSF to serve the inefficient small grain elevator market, they'll drive the railroad into the ground. It won't be able to attract investment and China will get a new shirt factory. You can't take pain out of the economy. Trying to do so will just make things worse over time. It's a sad thing that some people will loose money on investments they made in inefficent grain terminal facilities. But making business investments is no guarantee of success. Profit is a reward for risk, and sometimes the risk goes against the investor. And there is absolutely no way to change that. None. Greyhounds, Interesting analysis; I certainly can't disagree with it. However, I think the "pain" of the current economic trend of "super sizing" is even more painful than most realize. In the past, it took a lot less money to put one's energy and resources into a small business venture—like a 10-car grain elevator. The percentage of Americans with that much money was fairly broad and the avenue from middle class to bourgeois was attainable to those with luck, skill, dedication, and intellect. Under the consolidated super sized paradigm, the amount of people who have enough money to start a grain elevator capable of handling 110 BNSF shuttle car elevator—or other consolidated industries—are considerably less than it took to start such a business in the past. Because American industry in general seems to be following this trend, avenues toward wealth are being constricted. It is not simply a scenario of the rich getting richer. It is a scenario of the extinction of American upward mobility, which is the hallmark of the American economy and is why the American economy is renowned for reinventing itself. I think this will not only lead to permanent class divisions but will hinder the ability of the American economy to apply its entrepreneurialism in an effective manner. Nonetheless, I think you are right. It just kills me to know that you are. Gabe Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Thursday, June 23, 2005 12:24 PM But is this legal? Under Common carrier obligations the railroad has to traet everyone the same. Its just that the farmers dont knwo this and cant afford to hire a law firm to figure this out. Effeciant? What about all those trucks going all over the place to pick up grain from the small elevaters Reply Edit greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Thursday, June 23, 2005 11:51 AM Increasingly, it seems the railroads are developing a business strategy that consists of running solid trains of containers, trailers, grain, whatever from point to point. This is far more efficient than traditional carload railroading. It makes sense. Serving small country grain elevators has always been inefficient. Equipment utilization is terrible and the cost of terminal handling (locals, endless switching into blocks, etc.) drives expenses through the roof. Railroads have to compete for capital in a world maket. Obtaining financing for grain cars has to compete with obtaining financing for a shirt factory in China. The investment will go to the most productive use. There is absolutely no way any corporate or government action can realistically change this. It's not a question of the BNSF not "wanting" to do something. It doesn't matter what they "want" to do. It's a question of what they have to do to remain competitive for investment funding. BNSF investors will get a better return on shuttle operations than they will on individual carload shipments. If BNSF would try to pay these investors less in order to serve the carload markets, the investors would go elsewhere. Would you rather see them invest in the US or China? If the government tries to force the BNSF to serve the inefficient small grain elevator market, they'll drive the railroad into the ground. It won't be able to attract investment and China will get a new shirt factory. You can't take pain out of the economy. Trying to do so will just make things worse over time. It's a sad thing that some people will loose money on investments they made in inefficent grain terminal facilities. But making business investments is no guarantee of success. Profit is a reward for risk, and sometimes the risk goes against the investor. And there is absolutely no way to change that. None. "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. Reply CSSHEGEWISCH Member sinceMarch 2016 From: Burbank IL (near Clearing) 13,540 posts Posted by CSSHEGEWISCH on Thursday, June 23, 2005 11:40 AM The expense of serving small elevators that generate only a handful of cars at a time only once or twice a week is proportionally higher than serving a larger elevator that generates 25+ cars at a time daily. Smaller elevators that are generating truck-size loads are probably better served by truck. BNSF is basically giving volume discounts similar to just about any business in any line of work. The daily commute is part of everyday life but I get two rides a day out of it. Paul Reply arbfbe Member sinceFebruary 2002 910 posts Posted by arbfbe on Thursday, June 23, 2005 11:06 AM BNSF does not want to serve small anythings. The discount for shippers using the shuttle services is about $300 in many locations, that makes it hard for the smaller elevators to be competitive. Depending upon where BNSF supports construction of a shuttle elevator it can decimate all smaller elevators in quite an area. All that investment by smaller companies, co-ops and farmers wiped out by a couple of large American conglomerates. Reply 123456 Join our Community! Our community is FREE to join. To participate you must either login or register for an account. 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The grain trains I see are probably about 75 to 100 cars. All of the grain elevators around here are receivers. Do they load any grains besides rice up there?
QUOTE: Originally posted by gabe QUOTE: Originally posted by futuremodal Gabe, I'll grant you that there is a fundamental difference between the public needs of a railroad/pipeline/transmission line et al and the public needs of a big box store or new multi family dwellings. However, in spirit (and from a legal perspective) a new private development is a new private development regardless of function or intent. In other words, I'm not sure the law sees a difference between local/regional juristiction that supports UP and local/regional juristicition that supports WalMart. The Supreme Court recognized that it would be discriminatory to allow Corporation A the right to eminent domain but not allow Corporation B the same right, regardless of what it is those corporations are involved. It is up to Congress to make the distinction between those corporations which absolutely need to access certain private property to function, and those which could effectively "shop around" for the right location. Of course, I have argued in other topic lines that railroads are not the same as other private ventures, therefore it is ridiculous to allow railroads the same levels of "hands off" government approach, especially given the importance of preserving and expanding transportation infrastructure to meet the demands of an ever growing economy. If I remember correctly, even you Gabe presented the "McDonalds" analogy in defending the current railroad closed access status quo system. So therefore, if railroads are no different from McDonalds when it comes to what governments allow in terms of price or access regulation, then it can also be argued that McDonalds is no different from railroads in what governments allow when it comes to eminent domain. For the record, I am all for allowing railroads the right of eminent domain, but with that right comes the necessary oversight of regulation to assure optimal citizen access to that ROW that utilized the right of eminent domain. Otherwise, we are just granting fiefdoms to discriminatory entities. Dave, I am not trying to be contumacious, but to quote the Court in its reference to the new land use "Nor will the private lessees of the land in any sense be required to operate like common carriers, making their services available to all comers." The Court just kicked out one of the chief restrictions on the use of the doctrine. This will not only allow the greatly expanded view of public benefit to be used as a sword by the rich; it will also allow the doctrine to be used CONSIDERABLY more than it is now. Gabe
QUOTE: Originally posted by futuremodal Gabe, I'll grant you that there is a fundamental difference between the public needs of a railroad/pipeline/transmission line et al and the public needs of a big box store or new multi family dwellings. However, in spirit (and from a legal perspective) a new private development is a new private development regardless of function or intent. In other words, I'm not sure the law sees a difference between local/regional juristiction that supports UP and local/regional juristicition that supports WalMart. The Supreme Court recognized that it would be discriminatory to allow Corporation A the right to eminent domain but not allow Corporation B the same right, regardless of what it is those corporations are involved. It is up to Congress to make the distinction between those corporations which absolutely need to access certain private property to function, and those which could effectively "shop around" for the right location. Of course, I have argued in other topic lines that railroads are not the same as other private ventures, therefore it is ridiculous to allow railroads the same levels of "hands off" government approach, especially given the importance of preserving and expanding transportation infrastructure to meet the demands of an ever growing economy. If I remember correctly, even you Gabe presented the "McDonalds" analogy in defending the current railroad closed access status quo system. So therefore, if railroads are no different from McDonalds when it comes to what governments allow in terms of price or access regulation, then it can also be argued that McDonalds is no different from railroads in what governments allow when it comes to eminent domain. For the record, I am all for allowing railroads the right of eminent domain, but with that right comes the necessary oversight of regulation to assure optimal citizen access to that ROW that utilized the right of eminent domain. Otherwise, we are just granting fiefdoms to discriminatory entities.
QUOTE: Originally posted by broncoman I am born and raised in the central valley of CA, so I am curious as to the "stranded" grain elevators of the midwest. There are some fairly large farms still left in the greater sacramento area but it seems that they truck the grain to a siding where it is transferred to anywhere from 2-6 cars. There are still bigger elevators around I would say you wouldn't have to go more than 60-80 mi to go from one to another from Redding almost all the way down to Los Angeles. Is this scenerio different from the midwest? I am just curious as to the scope. I am sure the distances between "train load" elevators is substantial. And out of curiosity what is the standard "train load", 30-50 cars? Thanks for the info.
"No soup for you!" - Yev Kassem (from Seinfeld)
QUOTE: Originally posted by arbfbe BNSF does not want to serve small anythings. The discount for shippers using the shuttle services is about $300 in many locations, that makes it hard for the smaller elevators to be competitive. Depending upon where BNSF supports construction of a shuttle elevator it can decimate all smaller elevators in quite an area. All that investment by smaller companies, co-ops and farmers wiped out by a couple of large American conglomerates.
QUOTE: Originally posted by futuremodal RE: The recent Supreme Court Ruling - Don't forget your railroad history. When the railroads were building West in the late 1800's and early 1900's, they were granted the right of Eminent Domain to allow the ROW across established private property. This is nothing new.
QUOTE: Originally posted by Peterson6868 But is this legal? Under Common carrier obligations the railroad has to traet everyone the same. Its just that the farmers dont knwo this and cant afford to hire a law firm to figure this out. Effeciant? What about all those trucks going all over the place to pick up grain from the small elevaters
QUOTE: Originally posted by greyhounds Of course it's legal. And farmers aren't ignorant. And they have lawyers. And farmers are going through this same process. My father worked 160 acers in central Illinois. That was what one man could handle. Today, that would be a "hobby farm". (disclaimer: I did not grow up on a farm, he was evicted the year I was born and I grew up in a small town.) The farms have gotten much larger, along with the equipment. The government can not pass a law that changes economics, just as they can not pass a law that water will run up hill.
She who has no signature! cinscocom-tmw
QUOTE: Originally posted by greyhounds Increasingly, it seems the railroads are developing a business strategy that consists of running solid trains of containers, trailers, grain, whatever from point to point. This is far more efficient than traditional carload railroading. It makes sense. Serving small country grain elevators has always been inefficient. Equipment utilization is terrible and the cost of terminal handling (locals, endless switching into blocks, etc.) drives expenses through the roof. Railroads have to compete for capital in a world maket. Obtaining financing for grain cars has to compete with obtaining financing for a shirt factory in China. The investment will go to the most productive use. There is absolutely no way any corporate or government action can realistically change this. It's not a question of the BNSF not "wanting" to do something. It doesn't matter what they "want" to do. It's a question of what they have to do to remain competitive for investment funding. BNSF investors will get a better return on shuttle operations than they will on individual carload shipments. If BNSF would try to pay these investors less in order to serve the carload markets, the investors would go elsewhere. Would you rather see them invest in the US or China? If the government tries to force the BNSF to serve the inefficient small grain elevator market, they'll drive the railroad into the ground. It won't be able to attract investment and China will get a new shirt factory. You can't take pain out of the economy. Trying to do so will just make things worse over time. It's a sad thing that some people will loose money on investments they made in inefficent grain terminal facilities. But making business investments is no guarantee of success. Profit is a reward for risk, and sometimes the risk goes against the investor. And there is absolutely no way to change that. None.
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