BNSF shuttle grain trains, Does this mean that BNSF does not want to serve small elevators?

[gabe]

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

[Anonymous]

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

[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.

[CSSHEGEWISCH]

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.

[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.

[Anonymous]

BNSF lists numerous Grain Train Shuttles on there scedules. I assume the BNSF wants to haul unit trains only. This was a problem in Canada were CN was cutting out service to small Silo operaters in Alberta. If someone wants two or 3 cars set out on there silo will BNSF serve them?. Right now there is 2 grain cars parked in Kennedy NY at Agway but they are served by a shortline.