If you've always wanted to start a shortline.....

[Limitedclear]

An interesting rumor has the NS about to shed quite a few miles...

As many as 1,000...

Interesting potential...

LC

[Limitedclear]

QUOTE: Originally posted by tormadel

So LC if you are lucky you get the lines, spurs, yards related maintence facilities and maybe an old Depot you can use as your company HQ?

Something like that. Don't count on the depot or maintenance facilities though, most have been sold off long ago. You'll need to build your own buildings. Luckily they aren't that expensive. One good steel building can give you a one stall enginehouse/carshop and some office space. With luck you can put that up for less than $60,000 with financing from the steel building company...

LC

[tormadel]

So LC if you are lucky you get the lines, spurs, yards related maintence facilities and maybe an old Depot you can use as your company HQ?

[txhighballer]

The SP abandoned one line in particular that they wi***hey could get back.and ripped up another they wi***hey had. They thought it was the smart play to abandon the Beaumont-Lufkin trackage run everything through Englewood in Houston. History has shown that tearing up that track was a bad move,and selling the Victoria Subdivision,abeit without rails , to KCS as a result of the merger will bite them badly just as soon as KCS can put tack on it again.

[Anonymous]

QUOTE: Originally posted by DPD1

QUOTE: Originally posted by Limitedclear

QUOTE: Originally posted by DPD1

QUOTE: Originally posted by Limitedclear

Andrew -
I was being a bit flip with my response above, but just like with any new business opportunity, transloading, putting in a new switch, siding for a customer or team track; the cost benefit has to pencil out. Can't tell you more without specifics...

There can also be other non-rail factors involved... Many railroads still own a lot of the properties next to their mains... In that scenario, the new business as a whole might make them the real money. The track, or even the rail service itself, might only be something to sweeten the real deal... Which is in the real-estate.

Dave
http://www.dpdproductions.com
- Featuring the TrainTenna Railroad Scanner Antennas -

It is extremely rare in this day and age to have a line sold to a short line with any significant amount of property. Those days are long gone. Usually the line is stripped to its bare essentials and any outparcels sold before the line is even offered for sale.

LC

Maybe we are talking about different scenarios. I know of a shortline in the Chicago area that just sold some land for millions, and still has plenty to sell. Yes, getting a trackside customer out of it would be icing on the cake. But how many carloads would you have to move to make that money? In today's business world, most railroads would be sold to a different owner before that would happen. If given the opportunity to make millions, I don't think many companies would turn somebody down because they weren't going to have a rail based business there.

Dave
http://www.dpdproductions.com
- Featuring the TrainTenna Railroad Scanner Antennas -

Dave -

I have no doubt railroads can make money selling land they already own. All I am saying is that if you are buying a short line from a Class 1 railroad nowadays don't expect that any property other than the ROW will go with the sale. Class 1s have whole departments that manage their real estate and long before a line is spun off, these folks have already sold any excess property beyond that absolutely necessary to operate the line.

LC

[tormadel]

Well it's more about short sightedness. In the '80's SP sold alot of it's valuable lands in Cali and the pacific coast. It went for alot of money but all it really did was temporarily alleviate company losses. So actually it was a foolish move, but the company was abit desperate. Selling assests is a very temporary fix for finacial problems. In reality companies need to be more far sighted. Find new ways to increase traffic and effeciency, reduce debt load and related interest payments. Often debt is the only way to expand business but debt is also the anti-christ and should be gotten rid of as soon as wisely possible.

[DPD1]

QUOTE: Originally posted by Limitedclear

QUOTE: Originally posted by DPD1

QUOTE: Originally posted by Limitedclear

Andrew -
I was being a bit flip with my response above, but just like with any new business opportunity, transloading, putting in a new switch, siding for a customer or team track; the cost benefit has to pencil out. Can't tell you more without specifics...

There can also be other non-rail factors involved... Many railroads still own a lot of the properties next to their mains... In that scenario, the new business as a whole might make them the real money. The track, or even the rail service itself, might only be something to sweeten the real deal... Which is in the real-estate.

Dave
http://www.dpdproductions.com
- Featuring the TrainTenna Railroad Scanner Antennas -

It is extremely rare in this day and age to have a line sold to a short line with any significant amount of property. Those days are long gone. Usually the line is stripped to its bare essentials and any outparcels sold before the line is even offered for sale.

LC

Maybe we are talking about different scenarios. I know of a shortline in the Chicago area that just sold some land for millions, and still has plenty to sell. Yes, getting a trackside customer out of it would be icing on the cake. But how many carloads would you have to move to make that money? In today's business world, most railroads would be sold to a different owner before that would happen. If given the opportunity to make millions, I don't think many companies would turn somebody down because they weren't going to have a rail based business there.

Dave
http://www.dpdproductions.com
- Featuring the TrainTenna Railroad Scanner Antennas -

[tormadel]

Yep yep, all market climate. Things will keep changing, but not likly to go back to those days anytime soon I don't think.

[txhighballer]

Like Limited Clear,i've run and started a couple of short lines myself, and you have to love what you do. You have to be a politician,a hustler, bookkeeper as well as know the railroad from the ballast up.
I just got a note across my desk that a guy is looking to sell four SD40-2's for 300K each. A few years ago I could have gotten them for 75K. Man times have changed!

[tormadel]

Yeah you would have to convince the entity you are purchasing from that selling you the whole franchise (rail, land et al) is good for them. How giving you the tools for success would benefit they're company. And if it doesn't they are going to do what's best for them, not you. It does sometimes happen, but don't count on it, or on just goodwill to carry the day.

[Anonymous]

QUOTE: Originally posted by DPD1

QUOTE: Originally posted by Limitedclear

Andrew -
I was being a bit flip with my response above, but just like with any new business opportunity, transloading, putting in a new switch, siding for a customer or team track; the cost benefit has to pencil out. Can't tell you more without specifics...

There can also be other non-rail factors involved... Many railroads still own a lot of the properties next to their mains... In that scenario, the new business as a whole might make them the real money. The track, or even the rail service itself, might only be something to sweeten the real deal... Which is in the real-estate.

Dave
http://www.dpdproductions.com
- Featuring the TrainTenna Railroad Scanner Antennas -

It is extremely rare in this day and age to have a line sold to a short line with any significant amount of property. Those days are long gone. Usually the line is stripped to its bare essentials and any outparcels sold before the line is even offered for sale.

LC

[tormadel]

Yeah, like I said it's crazy. But, not that I want to say the upswing in railroading is a bad thing. Also likly that there has been an increase in older/ marginal condition freight cars going to scrap because it just isn't worth fixing them. The negative side is the loss of inexpensive second hand equipment.

Now I'm sure the marketing people for the manufacterers<sp> could be giddy with the idea of returning shortlines to the mindset of the 40's and 50's. Shortlines buying brand new gear. In some cases new cars is an acceptable probablity. But new locomotives are still rather cost prohibative, being up to 6-7 times more then the expensive used locomotives we're talking about. SD70ace's may be a wonder of fuel and maintence savings but I think they would be alittle much for say the Twin Cities & Western. Now granted both EMD and GE took a shot at the low end market and it didn't work. But I think the failure of those projects had more to do with market climate then weather or not they were good ideas. If you could get used power on the cheap why consider the cost of even low end new? Despite the better performance.

[Anonymous]

And lets not forget the issues with getting cars from the Class 1s to service customers. It is nearly impossible to get lease cars to supplement fleets as the leasing companies are demanding higher rates AND long term deals (60 months+) for ordinary cars such as centerbeam flats, woodchip hoppers, all kinds of gons, coal hoppers and gons, and larger boxcars (Plate F). $400 to $500/car/month plus car accounting backoffice costs are very difficult fior short lines to bear. The end result is customers shifting freight to trucks...

LC

[Anonymous]

QUOTE: Originally posted by tormadel

Yeah that is crazy LC. $140k wouldn't be a bad deal for a package deal of 3-4 of them heh. Now those same prices for a GP40 I could find more palitable. But come on if it's pretty FUBAR and doesn't run it shouldn't be worth more then scrap value. And I had thought it would have been bad in the late 80's when CNW, SP and everyones uncle was leasing power to overcome shortages.

Those days are gone. The high flying price of steel for the last few years has resulted in most older units sitting around without a home melted down for scrap. That coupled with the steep growth in traffic has soaked up the remaining running units even ones that larger roads would like to phase out. Finding a running GP40 for less than $300,000 in the existing market is unlikely. Running SD40-2s are going for $300,000 each now as well. Everyone is leasing power now as well. CSX is running units as old as U18Bs in some places. Power is extremely tight right now.

LC

[tormadel]

Yeah that is crazy LC. $140k wouldn't be a bad deal for a package deal of 3-4 of them heh. Now those same prices for a GP40 I could find more palitable. But come on if it's pretty FUBAR and doesn't run it shouldn't be worth more then scrap value. And I had thought it would have been bad in the late 80's when CNW, SP and everyones uncle was leasing power to overcome shortages.

[Anonymous]

QUOTE: Originally posted by tormadel

Also, is it a big price difference between an unmodified GP9 and say a paducah built GP10?

I've seen GP38-3's, did anyone try fooling with the new traction technology with a GP9 rebuild? or would it even help? heh. Always new spins on old reliable tech.

Recent market update. I was just offered two GP9/10s just run through the shop and qualified for a mere $139,000 each.

I also received an opportunity to buy several rewired GP7s and 9s in various condition for a mere $95,000 each (and some don't even run!!)

In short, the market is going crazy just now...glad I don't need power at the moment...

LC

[tormadel]

Yeah selling land simply for the cash would be a mistake in most instances. I agree with MC you are much better off trying to develope something on it that will use you're rails and hopefully use them alot.

[mudchicken]

QUOTE: Originally posted by DPD1

QUOTE: Originally posted by Limitedclear

Andrew -
I was being a bit flip with my response above, but just like with any new business opportunity, transloading, putting in a new switch, siding for a customer or team track; the cost benefit has to pencil out. Can't tell you more without specifics...

There can also be other non-rail factors involved... Many railroads still own a lot of the properties next to their mains... In that scenario, the new business as a whole might make them the real money. The track, or even the rail service itself, might only be something to sweeten the real deal... Which is in the real-estate.

Dave
http://www.dpdproductions.com
- Featuring the TrainTenna Railroad Scanner Antennas -

To quote an old & very wise field engineer: "you can only sell it once". Better hope that sale comes with carloadings or don't sell.

[DPD1]

QUOTE: Originally posted by Limitedclear

Andrew -
I was being a bit flip with my response above, but just like with any new business opportunity, transloading, putting in a new switch, siding for a customer or team track; the cost benefit has to pencil out. Can't tell you more without specifics...

There can also be other non-rail factors involved... Many railroads still own a lot of the properties next to their mains... In that scenario, the new business as a whole might make them the real money. The track, or even the rail service itself, might only be something to sweeten the real deal... Which is in the real-estate.

Dave
http://www.dpdproductions.com
- Featuring the TrainTenna Railroad Scanner Antennas -

[tormadel]

True. Some businesses like food service don't expect most of they're employees to stay longer then the duration of college. But, it is always unpleasent to replace people.

[Anonymous]

QUOTE: Originally posted by tormadel

Someday you will run out of seasoned railroaders if you don't start seasoning new ones :).

It's a catch22 these days in every industry. Everyone wants experiance but no one wants to be burdened with being the one to provide the experiance.

Working at a large regional or Class 1 is the best way to gain experience. If you know what kind of experience you are seeking, you can plan your career accordingly.

In my experience it is not so much the difficulty of finding someone to "give" you experience, as it is your willingness to take the chance and grasp the experience for yourself. That said, there is a general reluctance of employers to hire someone they feel is using their company as a "stepping stone" to further their career.

LC

[tormadel]

Someday you will run out of seasoned railroaders if you don't start seasoning new ones :).

It's a catch22 these days in every industry. Everyone wants experiance but no one wants to be burdened with being the one to provide the experiance.

[sd24b]

QUOTE: Originally posted by tormadel

SD24, I think the problem is with people who don't know how to respect other peoples property (that would get into the proper raising of children thread but I digress). My father is a railfan, and I practically grew up in Hobson yard in Lincoln, NE. But my father made a very big deal of teaching me how to behave while we were there. Don't play with the switches, put stuff on the track or really even go near any of the equipment (well without a employee saying it's ok) Yes dad would drive through the yard, but he would stick to the road and not venture more then a couple feet from the car to get a picture. It's the idoits who try to race the train to a crossing <even the dirt one in the yard> that make you grind you're teeth.

I think railfaning is a very positive pubic relations and even marketing tool for the railroad industry. But it sounds strange that it almost seems there needs to be a class on how to be a railfan and not be a pain in the ***.

This Owner i know, respects me, because i know my way around my railroad, because my father is well connected with the local railroads, and i know my stuff, or at least he thinks i do,
but he still doesn't like to hire or deal with younger people, because i belive he sees the the learning curve, and the time it takes anyone to become a seasoned railroader

[Anonymous]

QUOTE: Originally posted by tormadel

QUOTE: Originally posted by Limitedclear

QUOTE: Originally posted by Limitedclear

Andrew -

I was being a bit flip with my response above, but just like with any new business opportunity, transloading, putting in a new switch, siding for a customer or team track; the cost benefit has to pencil out. Can't tell you more without specifics....

LC

That a hint you want the specifics from him? hehe

Nope

LC

[tormadel]

QUOTE: Originally posted by Limitedclear

QUOTE: Originally posted by Limitedclear

Andrew -

I was being a bit flip with my response above, but just like with any new business opportunity, transloading, putting in a new switch, siding for a customer or team track; the cost benefit has to pencil out. Can't tell you more without specifics....

LC

That a hint you want the specifics from him? hehe

[tormadel]

SD24, I think the problem is with people who don't know how to respect other peoples property (that would get into the proper raising of children thread but I digress). My father is a railfan, and I practically grew up in Hobson yard in Lincoln, NE. But my father made a very big deal of teaching me how to behave while we were there. Don't play with the switches, put stuff on the track or really even go near any of the equipment (well without a employee saying it's ok) Yes dad would drive through the yard, but he would stick to the road and not venture more then a couple feet from the car to get a picture. It's the idoits who try to race the train to a crossing <even the dirt one in the yard> that make you grind you're teeth.

I think railfaning is a very positive pubic relations and even marketing tool for the railroad industry. But it sounds strange that it almost seems there needs to be a class on how to be a railfan and not be a pain in the ***.

[sd24b]

i have thought of starting my own short line when i am old,
like 40
just kidding

but i think by getting into railroad managment at a Class 1 or something with some creditblity will get people to listen to my plan
to relay the western maryland
accros Pa
again just kidding

the problem is that even the smaller guys don't want any thing to do with getting people in the bussness

i have personaly talked to the owner of a rather large ohio line
and he is very anti-youth
and by that i mean anyone under 30

lawyers if you are not one
will haunt your dreams

and there will be days you hate railfans
even if you have a rather large rail road junk collection in your rather large basement

this is what scares me about getting envolved with railroading career wise

[Anonymous]

Andrew -

I was being a bit flip with my response above, but just like with any new business opportunity, transloading, putting in a new switch, siding for a customer or team track; the cost benefit has to pencil out. Can't tell you more without specifics...

LC

[Anonymous]

Math.

LC

QUOTE: Originally posted by Junctionfan

LOL LC, yep wrong thread. However to attempt to stay on topic, how does a shortline incorporate a brand new aspect of the particular shortline such as transloading operation successfully? If the railroad hasn't done this before and now wants to, what needs to be done in order to guarantee investors a decent ROI?

[Junctionfan]

LOL LC, yep wrong thread. However to attempt to stay on topic, how does a shortline incorporate a brand new aspect of the particular shortline such as transloading operation successfully? If the railroad hasn't done this before and now wants to, what needs to be done in order to guarantee investors a decent ROI?

[tormadel]

Bad day LC?

(I guess all that talk of tittles, deeds and insurance would throw a wet blanket on my enthusiasm too)

[Anonymous]

There are times I'd really like to start a new short line...

Today is not one of those days...

LC

[tormadel]

hehe [8D]

[Anonymous]

QUOTE: Originally posted by tormadel

I think we may have confused him LC, I'm sorry.

No problem, that's just Andrew, you'll get used to him...lol...

LC

[tormadel]

I think we may have confused him LC, I'm sorry.

[Anonymous]

QUOTE: Originally posted by Junctionfan

What kind of basic transloading opportunities would there be? Would that make the shortline more profitable and more attractive for investors?

Huh??? Are you in the right thread Andrew?

LC

[Junctionfan]

What kind of basic transloading opportunities would there be? Would that make the shortline more profitable and more attractive for investors?

[tormadel]

Yeah I had looked at that book at the local hobby store. But, it didn't look like it had much in it more then the one my father had in the 80's. Just didn't seem as "updated" as I wanted. But I could be wrong ,I'll take another look at it.

[tormadel]

Interesting stuff [8D]

[Anonymous]

QUOTE: Originally posted by tormadel

Also, is it a big price difference between an unmodified GP9 and say a paducah built GP10?

I've seen GP38-3's, did anyone try fooling with the new traction technology with a GP9 rebuild? or would it even help? heh. Always new spins on old reliable tech.

Most GP10s were remanufactured from GP7s and GP9s in the early 70s so they are getting pretty long in the tooth. There is not much of a price difference these days, but then again there are very few unmodified GP9s left. Almost all still running have at least been rewired and had their original controls and braking systems updated and been low nosed.

Given the age and condition of the GP9s most folks wisely have decided not to reconfigure GP9s with traction control. There have been some remanufacturing efforts such as the IC GP11s that added Dash 2 electronics to GP9s... If you don't already own it kalmbachs 4th Edition of the Shortline Guide has a lot about the various rebuilding programs...

LC

[tormadel]

Also, is it a big price difference between an unmodified GP9 and say a paducah built GP10?

I've seen GP38-3's, did anyone try fooling with the new traction technology with a GP9 rebuild? or would it even help? heh. Always new spins on old reliable tech.

[tormadel]

Ah yes. But there is more to consider then just what roadswitcher can you get for the least money. It's also about the bang for you're buck. Northern Plains has a handfull of GP9's but has twice as many GP35's. Stating that it was the best buy for the horsepower they could get, and much better with they're heavy grain drags then the 9's. But would GP38's work better for the lower maintence by lack of the turbochargers? Is there a benefit worth haveing from the new -3 specs on some of these lease locomotives? Adding new microprocessor tech to tried and true models.

Now given that even 2nd hand locomotives are not "The Goodwill store" kinds of bargains <usually> is there any point in eventually considering brand new power? I have to say I have a distaste for railpower products new units. But, GE and EMD both have alot of cost saving through maintence and fuel consumption in they're new product lines. Could it be possible to work with either or both on a non-class 1 model? A B-B or even C-C scaled down version of they're current top of the lines? Perhaps stick with DC traction motors (AC sounds great on paper but not so good for stop and go small railroad action) and 12 cylinders instead of 16. (As a side admission I do not even know if a roots blown version of a 710 engine is possible, but it would be ruled out on GE's 4 cycle engines).

[Anonymous]

QUOTE: Originally posted by powderkeg

ok i want to know how much a train engine costs?

Now you're thinkin'.

All depends upon type, size, age etc.

A GP9 goes for $45,000 to $100,000 for starters...

LC

[Anonymous]

ok i want to know how much a train engine costs?

[tormadel]

The actual experiance brings together all the peices of what you've learned. Book learning help to keep you from feeling completely lost, but the hands on allows you to refine yourself.

[Anonymous]

It is all very well to come in from the outside, but unless you are in a Class 1 or large Class2 you had better have something to contribute and knowledge of how the RR works. The best way is to study it through educating yourself and to learn by living it. All the charts and diagrams in the world are useless if you don't understand how the business drives the finances.

Also, I'm not suggesting you should start the MRL as your first venture. You'll need to start a LOT smaller than that, unless you have some serious backers, which is unlikely unless you have significant real world RR experience. Investors only follow management teams that have a good chance to succeed in my experience. If the investor doesn't see it that way, I don't want them to back me, that is just a lawsuit waiting to happen.

LC

[tormadel]

It also sucks to hear the hold BNSF has on MRL. My partial memory I had thought BN had owned a share in MRL or something like that. As part of anyones plan to relay the coast extension should include taking over MRL to cut a good stretch of miles off the rebuild <muwhahahahaha, cough>

Of course this also could relate to the political savy part that was refered to. From what was posted in another thread about the government of montana it could be possible to get them to leveage against BNSF to make them let go.

[tormadel]

Another good viewpoint you offer there Micheal. I am glad to have heard it from you. I agree that if you have money to back you then business accumen would indeed behoove you more then 30 years riding the rails. But I do think that a couple years in the trench's to give you some basic knowledge and understanding could not be bad. As well as some time in low or middle management ( I say that because I think at upper management it's more like any other company) you just need to keep you're mind open. Realize that there have been alot of mistakes because of old fashioned thinking (PennCentral and the recent faux pas in UP, CSX & NS) So new ideas and common sense could make all the difference in the world. As for roles in the company I wouldn't try to do everything myself ( I do have some management experiance and I know better then that) but I would multi-task some. I do not think LC is suggesting you do everything yourself, just that you need to understand whats going on when most anything comes at you unexpectedly. I would think of myself as the CEO and also one of the train crew(s). No not just to snatch hours from other people (got to keep the Union hounds off my back) but to help out. (Sounds kind of whacked out for the CEO to be permanent extra boarder eh?)

[MichaelSol]

QUOTE: Originally posted by zardoz

QUOTE: Originally posted by MichaelSol
[ After Nick Temple created the Washington Central out of a purchase from the BN and started making money at it, his famous quote was "I am now convinced, based on my experiences, that railroaders don't know how to run railroads. You have to be from outside that industry in order to do anything right." [Paraphrase] I am sure he was referring to the business side of things. That was before he sold the operation back to BN at an enormous profit.

Just curious...do you have any idea of how well the BN did with the operation after they bought it back? Did the BN operate with their "business as usual" philosophy (the one they used before they sold it), or did they operate it in a similar fashion to how Mr. Temple ran it?

Didn't follow it very closely after that. Assumed it all had something to do with the Stampede Pass rebuilding.

QUOTE: Posted by futuremodal
Another good example of buying a former piece of mainline for future capital gains is the Montana Western (the former BN nee-NP section from Garrison to Silver Bow near Butte), which BNSF just bought back (ostensibly to keep UP and MRL from interchanging). Again, the original shortline owners were crying all the way to the bank. It is also interesting to note that the tracks over Homestake Pass are still in place and owned by BNSF, thought they haven't seen action in decades.

Odd historical facts. The line from Garrison to Butte was originally built by the OWR&N, as part of a project to build through Missoula, down Lolo Pass, and into the Palouse. After looking at the costs of the Lolo Pass tunnel project, the idea was abandoned, and NP got a long-term lease on the part of the line that was built. BN has ruthlessly exercised control of that lease to firmly keep Montana Rail Link out of Butte and away from the Union Pacific connection there. The line, however, does still technically belong to the OWR&N.

Best regards, Michael Sol

[Anonymous]

For what it's worth, DM&E is privately held, but if you've read the papers lately they are interested in investment partners if not actual stockholders.

On that PCE thing, a few years back after the Milwaukee retrenchment, there were pieces of the line that were bought up by regional business people with the intent of maintaining the option of reviving future operations. One guy bought the tracks from Avery to Haugen over St Paul Pass, while the local timber company bought the main from Avery to Plummer. Unfortunately for railfans (but not so unfortunate for the ones that bought the lines) the Forest Service went to court to force the sale of these ROW's to them so they could build a highway over the ROW from St Maries to Avery, create a new gravel road over the ROW from Avery to Pearson, and build the mountain bike trail from Pearson to Haugen over St Paul Pass. Too bad, but it should be noted that both buyers made significant capital gains, perhaps more in the short run than they ever could have hoped to make actually running a railroad. The difference for the one guy was that he wanted to eventually use the ROW as a bridge line for either BN or UP, which if it would have come to fruition really could have made him some money if he could have held out through the dry 80's and 90's until now.

Another good example of buying a former piece of mainline for future capital gains is the Montana Western (the former BN nee-NP section from Garrison to Silver Bow near Butte), which BNSF just bought back (ostensibly to keep UP and MRL from interchanging). Again, the original shortline owners were crying all the way to the bank. It is also interesting to note that the tracks over Homestake Pass are still in place and owned by BNSF, thought they haven't seen action in decades.

That's why it is not so far fetched that the ex-Milwaukee line from Lombard through Sixteenmile Canyon to the Harlowtown area would have made a good "rail banking" investment. If nothing else, you would have had a preferable route between Billings and Helena for BN/BNSF/MRL bridge traffic, since this ROW has superior gradient and alignment to the ex-NP line over Bozeman Pass.

Therefore, as much as the idea of owning and running a quaint shortline is to you, you should never discount the prospect of your shortline becoming part of a secondary main, especially today with current mainline capacity at the breaking point. That overhead revenue will trump anything you can make online.

[zardoz]

QUOTE: Originally posted by MichaelSol
[ After Nick Temple created the Washington Central out of a purchase from the BN and started making money at it, his famous quote was "I am now convinced, based on my experiences, that railroaders don't know how to run railroads. You have to be from outside that industry in order to do anything right." [Paraphrase] I am sure he was referring to the business side of things. That was before he sold the operation back to BN at an enormous profit.

Just curious...do you have any idea of how well the BN did with the operation after they bought it back? Did the BN operate with their "business as usual" philosophy (the one they used before they sold it), or did they operate it in a similar fashion to how Mr. Temple ran it?

[MichaelSol]

QUOTE: Originally posted by Limitedclear
In my own humble experience it will literally take years for someone coming from the outside to penetrate the industry to the point where a Class 1 will seriously consider leasing or worse selling a line to an unknown. Anything they do offer, LOOK OUT, it is probably something all the "real" players have turned down.

Interesting. The guys that did come from outside the rail industry have noted that their advantages in the transactions were in the fact that they were able to view railroading without "the blinders," as one put it, that railroaders have about railroading. That's their viewpoint. After Nick Temple created the Washington Central out of a purchase from the BN and started making money at it, his famous quote was "I am now convinced, based on my experiences, that railroaders don't know how to run railroads. You have to be from outside that industry in order to do anything right." [Paraphrase] I am sure he was referring to the business side of things. That was before he sold the operation back to BN at an enormous profit.

At Montana Rail Link, Denny Washington of course had zero railroad experience when he decided to take a jump at creating Montana Rail Link. The advice he received on the proposition was interesting in light of the actual results. Railroad people generally thought he was out of his mind. There were a few key exceptions. His attorneys asked my opinion -- not in a consulting sort of way, but in a "having coffee" sort of way . I thought it would work notwithstanding key structural handicaps in the deal. I did not think it would be as successful as it was. The BNSF "Required Minimum Use" provision in the lease was a key to that, as was the unexpected loss of the Conoco pipeline which put considerable traffic on the rails between Missoula and Thompson Falls.

I can't agree that you need to go out and read magazines and books in order to know how to create a Shortline. For the most part, articles and books are not written by people who actually do these things.

A good business background and sound business judgment are key requisites. Those are more important than a railroad background. You can hire that experience.

Business judgment is something you can't hire -- the idea of risk analysis, personal comittment of funds, a reflexive sense of P&L and Balance sheet considerations, understanding the needs of the shippers, business revenue and cost drivers. Can you ask yourself the question, "where's the country going?" in relation to the location of the shortline. You have to be a bit of an economist, a historian, and a seer. That's the dreamer part. The dream has to be about the place you're at, not the railroad.

If you were to be serving Forest Products industries, you need to get a handle on business and pricing cycles in that industry. They're dramatic. Can your railroad survive those cycles? If you're going to serve a Wheat area, you need to know more about Wheat than the growers, much more.

You need to know how to play some "politics." You cannot overestimate the importance of having the kind of experience and personality to be able to sit down with a local shipper over a cup of coffee, to be able to go to Minneapolis and the VP at Cargill is glad to see you and calls you by your first name because you've been there before and left a good impression, and you can go up the State Capitol and talk to the Governor about the state's committment to rail transportation.

Stay away from the Operating Department guys. They don't know how to do any of that and so they consistently underestimate the importance of those things. All they can tell you is cost. And that's the easy part. What you really need to know has surprisingly little to do with actual "railroading". Perhaps more accurately, there is much more to "railroading" than tracks and engines. My specific advice is to go and talk to some Shortline operators. The ones I know would be glad to talk candidly about mistakes they made, and how the decision making process works.

The key barrier is capital. A useful paper on the topic was published by the Research and Traffic Group for the Canada Transportation Act Review project, February, 2001: Sustaining Capital Requirements for the Short Line Railway Industry. There are some useful numbers in there.

Best regards, Michael Sol

[tormadel]

I would like to say I was surprised that its complicated LC, but sadly I'm not surprised heh. And we'll have to see how it goes Scooby, you could win the lottery and found scooby snacks first who knows.

[scooby1]

hey if you get a shoetline going,can I have a job

[Anonymous]

QUOTE: Originally posted by tormadel

Oh yes, and can someone explain to me how senority works? I have never had to deal with a union situation before.

This is a subject that can and has filled several threads. You might want to try the search function on this site to learn more as well or even start a new thread on the subject if you can't learn what you want through the research.

Seniority like many things around the railroad can be complicated, but the important part is it is based upon a date or sometimes a series of dates. Different railroads choose the seniority date differently. For most it is the date you first are "on the property" working. Others use the date you take your physical for the job. You should find out how the date is determined for each railroad you apply to as that date will control what jobs you can hold. The difference of a day, or sometimes even hours or minutes can have a real impact. Most seniority rosters are slowly consolidating as the crafts are consolidated. For example, at one time there were rosters for trainmen and conductors. After the caboose was eliminated, on many Class 1s those rosters have been combined so each person has a single date, not one for each craft. Likewise, fireman's rosters have been combined into Locomotive Engineer rosters as the elimination of the fireman's job caused realignment. Now it is fairly common to have a trainman/conductor date and an engineer's date as most are still separate rosters, althougth most Class 1s are giving new hires a single "system" date.

Senority is woven into a complex weave with the labor - management relationship of the railroad you work for and is something that must be learned on the property as each has slightly different rules.

LC

[tormadel]

Oh yes, and can someone explain to me how senority works? I have never had to deal with a union situation before.

[tormadel]

Thanks LC. That was the other one I was going to say, I best not go to the casino today heh. Was kinda weird I got 5 topic reply notifications on that little note.

[Anonymous]

QUOTE: Originally posted by tormadel

QUOTE: Originally posted by Limitedclear

QUOTE: Originally posted by tormadel

Indeed I have read it. I was just saying it was abit of a bore. My little family here has a savings of about $700 so I would say my dream is in the infant stage where it hasn't even learned to crawl yet. I'll keep working hard and crawling up the ladder. I will get there someday.

Well, since cash is an issue I'd suggest a job with a railroad where you can learn while you earn as I mentioned above. I'd look at T&E service as you can make pretty good money there and hopefully put some away. It will be difficult on the family but if you establish a seniority date early and get your RTC and Engineer training done ASAP you'll have decent seniority and should be able to hold a decent job. In your area I'd check with the Wisconsin Southern and perhaps the UP and\or CN if they have terminals close by. At least that way you will get hired out and get your training paid for by the RR. I have no idea what you make at Dominos but I am certain the RR is better.

LC

Oh for sure. I've been trying to keep tabs on W&S and CN they are the most local, UP or CP would be quite a decent move from here thou. Is T&E track and equipment service?

Train & Engine Service (Conductors and Engineers)

LC

[tormadel]

QUOTE: Originally posted by Limitedclear

QUOTE: Originally posted by futuremodal

Interesting thread. Some comments...

1. Why a shortline? Shortlines are usually contractually mandated to get all their traffic and have their share of the revenue dictated by the former Class I owner, e.g. you are captive. Which would be fine, except now you start to realize why the Class I gave up on the line in the first place - low traffic levels, terminal consolidation, etc. Why do you think the former owner will effectively want to reverse course and refocus on that traffic?

2. But if you are committed to such a dream, try to find a shortline that has access to quasi-unit train potential, e.g. a coal mine, a large wheat growing area, etc., or that has access to a transload alternative to interchange with a Class I, e.g. a barge port, or best yet both. If you can originate and terminate a good portion of your traffic base potential in the form of multiple car lots at a time, you will have as good a shot as any for success because then you can control part of your own business destiny, not the Class I connection.

3. Also, look for lines that have the potenial to become at least a secondary mainline in the future, and not just a dead end line. You remember the Washington Central? They bought the ex-NP Cascade line through the Yakima Valley to run as a shortline, then about 10 years later BN decided they might need that line again as a secondary main to the Stevens Pass and Columbia Gorge routes, and ended up paying WC a lot more to take it back than they sold it for in the first place. Needless to say, the WC owners ended up with quite a capital gain!

4. Take a page from the Watco Companies and try to pawn off as much of the infrastructural responsibility as possible onto the local and/or state governments (while retaining operating rights). The more you can absolve yourself of needless liability, the better off your chances of success.

5. For those still interested in all or parts of abandoned mainlines, take a good look at the ex-Milwaukee PCE. That grade is probably the best potential for rebuild in the nation, because it offers the easiest prospect of rebuilding a new east-west transcon with all that international trade potential. By all means, if you can get your hands on parts of that property go for it, even if you have no immediate plans to actually start up a shortline or regional. There is a growing national awareness for just how usefull it is to have new rail capacity available in the next few decades to capture both domestic and international trade growth, and there is no other ex-Class I gradient with as good a profile and geographic proximity to market optimization as the PCE.

6. Finally, if you want in of the ground floor of what it is like to be involved in a new rail project, start investing in the DM&E. That'll give you a first hand taste of all the particulars you would have to go through in starting up your own railroad.

I have to admit that, for once, I don't completely disagree with FM.

That said, I don't entirely agree with him either.

1. Why a short line?

It is the only place you can really have your own business in the railroad business that has any chance of longevity. You can run a real railroad. You can have a better life than is possible working for a Class 1. How many jobs on a Class 1 can be 9 to 5 or so monday thru friday, not many and by the time you can hold them you probably have more than 25 on the job. Traffic can be grown with good marketing and good service.

2. Are you committed to the dream?

Well, you'd better be because when it gets bad there isn't the backup of the Class 1 to babysit for you. Locomotive break down? No power room to call for mechanical help. Maybe the mechanic can come help you, but you need to be capable of basic troubleshooting on your own. You'll need to be capable of pretty much all the basics. Having an engineer's license, a conductor's qualification, a track inspector's qualification and some basic mechanical knowledge is a good start. A little business savvy, some legal knowledge, knowledge of handling employees and some spare cash will help a lot. Maximum personal commitment is an absolute.

Would it be nice to have unit trains, sure, but such lines don't grow on trees and most have too much traffic to be spin off candidates unless there is something seriously wrong with them such as environmental issues or HUGE maintenance costs due to many bridges, tunnels, curves or other features that greatly increase the costs of operations and maintenance. It is always worth looking, because there is an occasional opportunity which has great potential. Of course, remember, there are many bigger and more experienced short line groups looking for lines too and a new player has little chance.

3. Look for a Secondary Main Line.

Not a bad idea, but the Class 1s are on to this one. Very few such sales have happened lately. Where they have the Class 1s have used paper barriers or lease agreements to restrict any flow of overhead traffic. Recently, most Class 1s have been leasing lines to short line operators under some pretty onerous terms so not only will there be no capital gains (the Class 1 gets to keep that along with title to the line) but the short line has to pay for not only maintenance but capital improvements to an agreed level. Take a look at the "Heads I win, Tails you lose" article in the December 2004 Transportation Newsletter at the following law firm site for an example:

http://www.wbsk.com/

4. Pawning off infrastructure on localities has the nasty side effect of giving those localities far too mach control over the short line. Also, you don't lose much liability this way, most municipalities are very good at making the short line shojulder all the responsibility through agreements for indemnity and contribution. Besides, joint and several liability usually means that hoped for liability savings are illusory at best.

5. Buying an old mainline with no track on the extreme speculation that it will someday be relaid is crazy. Even if it does work, the new railroad would simply pay you fair market value based upon the condemnation of the property. Your appreciation factored over the time you wold need to hold the property would be extremely low even if a major RR took an interest in such an uncertain and risky project today. As an example look at the many years it has take the DM&E to even get to the verge of a much smaller project as guidance. You can do much better buying bonds and clipping the coupons to say nothing of the stock market or simple real estate investments.

6. I wasn't aware that the DM&E was offering shares to the public, certainly it isn't mentioned on their website.

LC

1. Exactly LC. Plus there are a great many lines with traffic and earning potential that cannot be realized with the realities of overhead that class 1's must deal with. Kyle Railway is a good example. They do alot of grain business in the northern part of kansas that is alot of bulk work that doesn't pay alot individually. But they haul alot of it and do it far cheaper switching out all those small stops then the Class 1's would, so they origionate alot of traffic, but connecting class 1's benefit from the hauling of all that to processing plants and for shipment overseas at the ports (I do believe we stil export a great deal of our agricultural output in this country) Or say Wisconsin Central that actually solicited and made profit on pulpwood which was discussed as something big roads avoid as not worth it.

2. Which is the basis of my desire to broaden my knowledge, learn and License in as many different relevant trades as my brain will hold and not melt down. Phase 1 to study up myself while I work on convincing the wife that this is a good idea to get myself ready. (And also I figure the more knowledgeable I am the more promising prospect I become to my potential employers here) Phase 2 Certify myself through class's paid for the traditional college way or let the RR pay for it (we will see where the cards fall on that one) Phase 3 build up hands on knowledge, reputation, friends in the trade & cash. Phase 4 take the leap.

While I am not adverse to the bigger dream of the regional railway (as I think that's what you're hinting at) I think that would be more of a difficult <shall we say> dream to realize. As you can see my mentality is to take manageable chunks and goals. I would have to say that setting out with the first goal of reforgeing the Erie Lackawanna as a Class 2 regional would be a bit Napoleonic complex of me.

3. Look for a secondary mainline. This assumes that I am in this to get rich, and I am not. I would like to do well, but if I create my dream and it is successfull I wil defend it as if it were my child. Now perhaps if my holding company were to become something like rail american with multiple properties maybe I would sell some peices to realize the next bigger step. The Wisconsin Central being reborn was something that put a smile on my face, and them selling out to CN 15 (ish) years later offended me more then Metallica sueing napster (Metallica was able to make the big time with young people trading garage copies of they're music untill they got noticed so being against music sharing seems very hypicritcal to me.)

4. I have to agree with LC here. But dealing with government and truely with the other big companies (and probably the small ones too) is very much like a dance. Alot of give and take and watching you're back. Charisma is a big plus in these dealings to help you schmooze you're way, but you have to know what you're getting into so you dont' accidently screw yourself. This statement could be applied to the lease agreements with Class 1's or dealing with government. W&S had to wrangle for a few years to get the funding they needed from the state of wisconsin just to upgrade they're lines to 25mph class 2 standard. Partly to deal with increasing car weights and traffic. But, mostly due to the big seller to the policiticans for saftey. It will be a big step in reducing derailments, injuries and such.

5. Buying old mainline (and you're example of the pacific extension is probably one of the most applicable examples) should only be done if you intend to relay it yourself. Now like you say, alot of the big expensive nasty work was done by the CMSTP&P along time ago. But if you were to do this it would behoove you make improvements. More longer tunnels, reduce the curves and grades even further (if you're going to do it do it RIGHT). And after you've gotten Montana (From another thread here sounds like you might have a chance for help there) private investors and the US gov to help you fund what would have to be at LEAST a $100billion project let us know, we want to pin a medal on you and erect a statue in you're honor. This is not to say that I think it shouldn't be done just that it is only slightly easier to digest then the plan to go to Mars.

6. Go to work for the DM&E maybe (But that's to far away at the moment). And if they were selling stock the time to buy it would have been before the powder river project recieved approval. I'm sure the go ahead would have shot the value of the stock up alot.


On a side note, I like that Milwaukee & Northwestern name [8D].
And isn't it just too bad that we don't have much to say on this thread? <grin>

[tormadel]

QUOTE: Originally posted by Limitedclear

QUOTE: Originally posted by tormadel

Indeed I have read it. I was just saying it was abit of a bore. My little family here has a savings of about $700 so I would say my dream is in the infant stage where it hasn't even learned to crawl yet. I'll keep working hard and crawling up the ladder. I will get there someday.

Well, since cash is an issue I'd suggest a job with a railroad where you can learn while you earn as I mentioned above. I'd look at T&E service as you can make pretty good money there and hopefully put some away. It will be difficult on the family but if you establish a seniority date early and get your RTC and Engineer training done ASAP you'll have decent seniority and should be able to hold a decent job. In your area I'd check with the Wisconsin Southern and perhaps the UP and\or CN if they have terminals close by. At least that way you will get hired out and get your training paid for by the RR. I have no idea what you make at Dominos but I am certain the RR is better.

LC

Oh for sure. I've been trying to keep tabs on W&S and CN they are the most local, UP or CP would be quite a decent move from here thou. Is T&E track and equipment service?

[Anonymous]

QUOTE: Originally posted by futuremodal

Interesting thread. Some comments...

1. Why a shortline? Shortlines are usually contractually mandated to get all their traffic and have their share of the revenue dictated by the former Class I owner, e.g. you are captive. Which would be fine, except now you start to realize why the Class I gave up on the line in the first place - low traffic levels, terminal consolidation, etc. Why do you think the former owner will effectively want to reverse course and refocus on that traffic?

2. But if you are committed to such a dream, try to find a shortline that has access to quasi-unit train potential, e.g. a coal mine, a large wheat growing area, etc., or that has access to a transload alternative to interchange with a Class I, e.g. a barge port, or best yet both. If you can originate and terminate a good portion of your traffic base potential in the form of multiple car lots at a time, you will have as good a shot as any for success because then you can control part of your own business destiny, not the Class I connection.

3. Also, look for lines that have the potenial to become at least a secondary mainline in the future, and not just a dead end line. You remember the Washington Central? They bought the ex-NP Cascade line through the Yakima Valley to run as a shortline, then about 10 years later BN decided they might need that line again as a secondary main to the Stevens Pass and Columbia Gorge routes, and ended up paying WC a lot more to take it back than they sold it for in the first place. Needless to say, the WC owners ended up with quite a capital gain!

4. Take a page from the Watco Companies and try to pawn off as much of the infrastructural responsibility as possible onto the local and/or state governments (while retaining operating rights). The more you can absolve yourself of needless liability, the better off your chances of success.

5. For those still interested in all or parts of abandoned mainlines, take a good look at the ex-Milwaukee PCE. That grade is probably the best potential for rebuild in the nation, because it offers the easiest prospect of rebuilding a new east-west transcon with all that international trade potential. By all means, if you can get your hands on parts of that property go for it, even if you have no immediate plans to actually start up a shortline or regional. There is a growing national awareness for just how usefull it is to have new rail capacity available in the next few decades to capture both domestic and international trade growth, and there is no other ex-Class I gradient with as good a profile and geographic proximity to market optimization as the PCE.

6. Finally, if you want in of the ground floor of what it is like to be involved in a new rail project, start investing in the DM&E. That'll give you a first hand taste of all the particulars you would have to go through in starting up your own railroad.

I have to admit that, for once, I don't completely disagree with FM.

That said, I don't entirely agree with him either.

1. Why a short line?

It is the only place you can really have your own business in the railroad business that has any chance of longevity. You can run a real railroad. You can have a better life than is possible working for a Class 1. How many jobs on a Class 1 can be 9 to 5 or so monday thru friday, not many and by the time you can hold them you probably have more than 25 on the job. Traffic can be grown with good marketing and good service.

2. Are you committed to the dream?

Well, you'd better be because when it gets bad there isn't the backup of the Class 1 to babysit for you. Locomotive break down? No power room to call for mechanical help. Maybe the mechanic can come help you, but you need to be capable of basic troubleshooting on your own. You'll need to be capable of pretty much all the basics. Having an engineer's license, a conductor's qualification, a track inspector's qualification and some basic mechanical knowledge is a good start. A little business savvy, some legal knowledge, knowledge of handling employees and some spare cash will help a lot. Maximum personal commitment is an absolute.

Would it be nice to have unit trains, sure, but such lines don't grow on trees and most have too much traffic to be spin off candidates unless there is something seriously wrong with them such as environmental issues or HUGE maintenance costs due to many bridges, tunnels, curves or other features that greatly increase the costs of operations and maintenance. It is always worth looking, because there is an occasional opportunity which has great potential. Of course, remember, there are many bigger and more experienced short line groups looking for lines too and a new player has little chance.

3. Look for a Secondary Main Line.

Not a bad idea, but the Class 1s are on to this one. Very few such sales have happened lately. Where they have the Class 1s have used paper barriers or lease agreements to restrict any flow of overhead traffic. Recently, most Class 1s have been leasing lines to short line operators under some pretty onerous terms so not only will there be no capital gains (the Class 1 gets to keep that along with title to the line) but the short line has to pay for not only maintenance but capital improvements to an agreed level. Take a look at the "Heads I win, Tails you lose" article in the December 2004 Transportation Newsletter at the following law firm site for an example:

http://www.wbsk.com/

4. Pawning off infrastructure on localities has the nasty side effect of giving those localities far too much control over the short line. Also, you don't lose much liability this way, most municipalities are very good at making the short line shoulder all the responsibility through agreements for indemnity and contribution. Besides, joint and several liability usually means that hoped for liability savings are illusory at best.

5. Buying an old mainline with no track on the extreme speculation that it will someday be relaid is crazy. Even if it does work, the new railroad would simply pay you fair market value based upon the condemnation of the property. Your appreciation factored over the time you wold need to hold the property would be extremely low even if a major RR took an interest in such an uncertain and risky project today. As an example look at the many years it has take the DM&E to even get to the verge of a much smaller project as guidance. You can do much better buying bonds and clipping the coupons to say nothing of the stock market or simple real estate investments.

6. I wasn't aware that the DM&E was offering shares to the public, certainly it isn't mentioned on their website.

LC

[Anonymous]

Interesting thread. Some comments...

1. Why a shortline? Shortlines are usually contractually mandated to get all their traffic and have their share of the revenue dictated by the former Class I owner, e.g. you are captive. Which would be fine, except now you start to realize why the Class I gave up on the line in the first place - low traffic levels, terminal consolidation, etc. Why do you think the former owner will effectively want to reverse course and refocus on that traffic?

2. But if you are committed to such a dream, try to find a shortline that has access to quasi-unit train potential, e.g. a coal mine, a large wheat growing area, etc., or that has access to a transload alternative to interchange with a Class I, e.g. a barge port, or best yet both. If you can originate and terminate a good portion of your traffic base potential in the form of multiple car lots at a time, you will have as good a shot as any for success because then you can control part of your own business destiny, not the Class I connection.

3. Also, look for lines that have the potenial to become at least a secondary mainline in the future, and not just a dead end line. You remember the Washington Central? They bought the ex-NP Cascade line through the Yakima Valley to run as a shortline, then about 10 years later BN decided they might need that line again as a secondary main to the Stevens Pass and Columbia Gorge routes, and ended up paying WC a lot more to take it back than they sold it for in the first place. Needless to say, the WC owners ended up with quite a capital gain!

4. Take a page from the Watco Companies and try to pawn off as much of the infrastructural responsibility as possible onto the local and/or state governments (while retaining operating rights). The more you can absolve yourself of needless liability, the better off your chances of success.

5. For those still interested in all or parts of abandoned mainlines, take a good look at the ex-Milwaukee PCE. That grade is probably the best potential for rebuild in the nation, because it offers the easiest prospect of rebuilding a new east-west transcon with all that international trade potential. By all means, if you can get your hands on parts of that property go for it, even if you have no immediate plans to actually start up a shortline or regional. There is a growing national awareness for just how usefull it is to have new rail capacity available in the next few decades to capture both domestic and international trade growth, and there is no other ex-Class I gradient with as good a profile and geographic proximity to market optimization as the PCE.

6. Finally, if you want in of the ground floor of what it is like to be involved in a new rail project, start investing in the DM&E. That'll give you a first hand taste of all the particulars you would have to go through in starting up your own railroad.

[Anonymous]

QUOTE: Originally posted by tormadel

Indeed I have read it. I was just saying it was abit of a bore. My little family here has a savings of about $700 so I would say my dream is in the infant stage where it hasn't even learned to crawl yet. I'll keep working hard and crawling up the ladder. I will get there someday.

Well, since cash is an issue I'd suggest a job with a railroad where you can learn while you earn as I mentioned above. I'd look at T&E service as you can make pretty good money there and hopefully put some away. It will be difficult on the family but if you establish a seniority date early and get your RTC and Engineer training done ASAP you'll have decent seniority and should be able to hold a decent job. In your area I'd check with the Wisconsin Southern and perhaps the UP and\or CN if they have terminals close by. At least that way you will get hired out and get your training paid for by the RR. I have no idea what you make at Dominos but I am certain the RR is better.

LC

[tormadel]

Indeed I have read it. I was just saying it was abit of a bore. My little family here has a savings of about $700 so I would say my dream is in the infant stage where it hasn't even learned to crawl yet. I'll keep working hard and crawling up the ladder. I will get there someday. But at least the baby is not in the womb anymore <smile>

[Anonymous]

QUOTE: Originally posted by tormadel

Yeah I have seen that. It is where I got the orgional "so you want to start a railroad" pamphlet I refered to. But, unfortuneatly its about as good as curling up in front of a fire with the detailed version of sterio instructions hehe. Technically valuable information it's not really relevent untill you are at that point where < We've organized the company, sold the stock, arranged financeing, picked out the line we want at started talks with the owner to acqure it> then you'd need that info heh.

That is partially true, but the booklet contains a lot of information about how short lines can be evaluated. Read the "The Railroad, What it is, What it Does" book and then read the STB pamphlet. I also recommend reading the STB Abandonment guide mentioned on the same page. There are a few worthwhile lines being abandoned now and knowing how to put in an Offer of Financial Assistance is valuable in getting such lines. There are plenty of consultants who will charge you for what I have told you in this thread already.

Besides, you need to start finding lines and learning how to evaluate them or get started applying for RR jobs. If you want to get on the RR you need to do so ASAP. The longer you wait the lower your seniority will be.

LC

[tormadel]

Yeah I have seen that. It is where I got the orgional "so you want to start a railroad" pamphlet I refered to. But, unfortuneatly its about as good as curling up in front of a fire with the detailed version of sterio instructions hehe. Technically valuable information it's not really relevent untill you are at that point where < We've organized the company, sold the stock, arranged financeing, picked out the line we want at started talks with the owner to acqure it> then you'd need that info heh.

[Anonymous]

Here's the link to the STB page on line sales you might also want to look at, if you haven't already. http://www.stb.dot.gov/stb/public/resources_railsales.html

LC

[Anonymous]

QUOTE: Originally posted by tormadel

On another note LC. Would you argue for leasing or purchasing you're locomotives? As I understand it there are tax and accounting reasons that make leasing desireable. Or does it depend alot on the terms of the lease?

This needs to be part of your overall business plan and will depend upon many factors including your opportunity, need for power based upon customers, rail line, and traffic levels and what structure best suits you and your investors. The tax aspect is really quite minimal as most leases must be capitalized these days rather than expensed so it really doesn't matter nearly as much.

LC

[tormadel]

On another note LC. Would you argue for leasing or purchasing you're locomotives? As I understand it there are tax and accounting reasons that make leasing desireable. Or does it depend alot on the terms of the lease?

[tormadel]

Yeah that sounds like mostly good reasoning. As I have said somewhere else if people don't like trains roaring through they're neighborhood they shouldn't have moved there. I've seen refrences as far back as early 1900's talking about elimination of grade crossings. So high speed answer is what France did where they raised the mainline and there are no grade crossings at all. Anyone care to guess what kind of crazy costs this would have? I seem to also recall reading something about the former Lackawanna in New Jersey having some elevated line (built up soil not like the L) and that it had a greatly increase cost of maintence for some reason inherent of the big hill it was running on. But wouldn't this mean that UP's cutoff accross Omaha would cost a fortune to maintain? It crosses through most of Omaha on some VERY large fills and bridges.

[canazar]

QUOTE: Originally posted by tormadel

Looking at some of these magazine's website have brought another question to my mind. Around 1900 NYC had trains blazing along at 100mph (not all of them granted but some) today <over 100 years of technology later> railroads seem excited to have mainlines running 50mph. This seems to me to be far below what they should expect. I'm sure the underlying reason is the money. How much it costs to keep things moving at that kind of speeds. Coupled with congestion problems of just keeping things moving. But part of my mind still is saying to me that part of the leverage railroads should have on trucking is the ability to move it faster then is allowed on highways. It's not practical anymoe to build railspurs to every supplier and destination. Trucks may be able to roll you're delivery right up to you're door, but the railroads should be at least able to deliver it to you're town faster.

I have often wondered that too, but I do think, those were the good old days. Out here (In Arizona) in the wide open desert, it is not uncommom for the trains to get up to 70-75. But just about anywhere else, you deal with ALOT of grade crossings that didnt used to be there. Heck, there are whole towns that didnt exsist 50 years ago. In the eastern US along with alot of the south and far west coast, its just too congested. Doing 80MPH behind a neighboorhood just doesnt fly.

Also, even though trains may be advanced, you cant argue with physics. The rails are the same, wheels are the same and today's trains just cant stop due to the weight. Modern trains are so much heavier then what they used to be, both in load and in car type.

Anways, my crack at the theroy[:)]

[tormadel]

QUOTE: Originally posted by Limitedclear

QUOTE: Originally posted by tormadel

Thank you LC. I think I have that one bookmarked but I will check. Couple of weeks ago I spent a few nights doing web searches (google and such) for "locomotive sale & locomotive lease" as I researched the value of locomotives. Found alot of websites for contact but veeeeeery little in the way of hard information. I'm reluctant to send direct inquireies to any of these companies as at this point I am merely education myself and I do not wi***o be a pest when I am not ready to talk contract at this time. I have more respect for business people then that (Lord I hate telemarketers, so mean to them).

Ok nope, upon review that is a new one to me. Thanks again :)

Prices on just about everything is sky high right now. I just got a note concerning a GP9 in running condition for $75K. A GP38 will run you over $250K and even GEs are going for unheard of numbers as demand for them in South America and Eastern Europe increases. Track equipment prices are also heading up in a BIG way as new projects such as the DM&E and others demand available equipment. It is a difficult time to start a short line from a capital investment standpoint. Of course there are plenty of leasing companies willing to take your $$.

LC

Yeah $75k for a GP9 is one of the few things I found out <can look up my notes if you want details :)> But as you say, economic conditions are like a rollercoaster, everything could change in the years before I am ready. I saw a press release that Iowa Interstate asked for a $9.something FFRA loan to buy the 22 GP39-2's they have been leaseing. I figured that to something close to $450k ea. For 25 year old (granted rebuilt) Geeps. That had my mind going ***, that's what they should have been worth brand new! Makes that functional RS11 for $35k I found sound like a deal heh.

I suppose it should be gospel that any small operation should always be on the lookout for a good deal from a reputable source.

[tormadel]

True Lee that's basically the advice I've been given and the approach I'm currently working toward.

But also some of those operations cut down on costs by the few employees they have doing more then one job. Including the owner(s) being part of the road crew. Also could depend how much you bite off. Differnce in magnitude of headache between starting the DM&E or the Omaha, Lincoln & Beatrice.

[Anonymous]

QUOTE: Originally posted by Lee Koch

While I myself have dreamed of starting my own railroad, and while I am convinced that the best railroad managers are also railfans, I fear that owning and running your own branchline RR would be as big a disappointment as a challenge. As many have remarked on this thread, when you start a business, you are married to it, putting in 80+ workhours a week. You never really get to ride the trains, and you may not be able to implement everything you feel to be desireable due to economic restraints.

I would think the best path would be to start working for one of the shortline holding companies, gathering experience and getting to know the terrain. That way you wouldn't be starting from scratch!

Lee -

Most of your sentiments are right on. It is a difficult balance and any railroad is a tough mistress. That said, at least running a short line you have some control of your own destiny. I'd like to get out and do it again. And yes everyday there are significant financial constraints.

I disagree with your assertion that the best way to get started is with a short line holding company. I'd either start with a short line directly or a Class 1. Most of the folks at the holding companies come from the Class 1s and having had both experiences the Class 1 is definitely more difficult but also more intensive training for any sort of railroading.

LC

[Anonymous]

QUOTE: Originally posted by tormadel

Thank you LC. I think I have that one bookmarked but I will check. Couple of weeks ago I spent a few nights doing web searches (google and such) for "locomotive sale & locomotive lease" as I researched the value of locomotives. Found alot of websites for contact but veeeeeery little in the way of hard information. I'm reluctant to send direct inquireies to any of these companies as at this point I am merely education myself and I do not wi***o be a pest when I am not ready to talk contract at this time. I have more respect for business people then that (Lord I hate telemarketers, so mean to them).

Ok nope, upon review that is a new one to me. Thanks again :)

Prices on just about everything are sky high right now. I just got a note concerning a GP9 in running condition for $75K. A GP38 will run you over $250K and even GEs are going for unheard of numbers as demand for them in South America and Eastern Europe increases. Track equipment prices are also heading up in a BIG way as new projects such as the DM&E and others demand available equipment. It is a difficult time to start a short line from a capital investment standpoint. Of course there are plenty of leasing companies willing to take your $$.

LC

[Flint Hills Tex]

While I myself have dreamed of starting my own railroad, and while I am convinced that the best railroad managers are also railfans, I fear that owning and running your own branchline RR would be as big a disappointment as a challenge. As many have remarked on this thread, when you start a business, you are married to it, putting in 80+ workhours a week. You never really get to ride the trains, and you may not be able to implement everything you feel to be desireable due to economic restraints.

I would think the best path would be to start working for one of the shortline holding companies, gathering experience and getting to know the terrain. That way you wouldn't be starting from scratch!

[tormadel]

Thank you LC. I think I have that one bookmarked but I will check. Couple of weeks ago I spent a few nights doing web searches (google and such) for "locomotive sale & locomotive lease" as I researched the value of locomotives. Found alot of websites for contact but veeeeeery little in the way of hard information. I'm reluctant to send direct inquireies to any of these companies as at this point I am merely education myself and I do not wi***o be a pest when I am not ready to talk contract at this time. I have more respect for business people then that (Lord I hate telemarketers, so mean to them).

Ok nope, upon review that is a new one to me. Thanks again :)

[Anonymous]

Useful info on locomotives and other equipment are on www.railswap.com

LC

[tormadel]

Hehe, I'll get right on that [:D]

Sorry I had a negative moment there, worked through it now. I'll take one day at a time, do what I can do and see what life and I can do together [8D]

[cpbloom]

When you do take over RailAmerica don't forget about your "friends"
at Trains.com when it comes time for free cab rides. [:p][:o)][:)][8D]

[tormadel]

Important heads up there. Sometimes I may get too many James Hill nothing to something dreams in my head, so it's important I get reminded of reality. Had the first fight with the wife tonight about how she already doesn't see me enough as I manage a Domino's pizza. So I guess she's alittle against the idea heh. In a way it almost seems easier to make a name for myself into money (weather it's a business my hearts into or not) and stage a hostile take over of Railamerica (for sake of example) then to go the way we've been talking about. But, we shall see.

[Anonymous]

QUOTE: Originally posted by tormadel

Ordered the book you suggested [:)] thanx again LC. May take me awhile to get my certifications while I manage my restaraunt and wife and child. But at least I'm doing something other then wallowing in a career that doesn't sit well with me.

Railroading is a job best earned and learned. Don't think that a peice of paper from a school will get you too far in this business. You will need some skills and I strongly recommend a four year degree if nothing else for credibility when you have to deal with banks, investors, etc. Railroaders won't judge you on your education as much as on your abilites. As far as certifications, the ones I believe in is your qualification as a Conductor, your promotion to Engineer (and 49 CFR 240 Certification that goes with it) and enough track work experience to qualify you as a track inspector (requires both hands on and supervisory experience). Other extras I find useful are my advanced degree and bar membership, but they are not required by any means. Remember, although the qualifications are nice, railroading is a team sport. Make sure you have good business/RR partners to fill out your weak spots. The three most important short line people are an operating guy, a track/bridge guy and a financial guy. Everybody markets/sells so a marketing person comes later....

LC

[tormadel]

Ordered the book you suggested [:)] thanx again LC. May take me awhile to get my certifications while I manage my restaraunt and wife and child. But at least I'm doing something other then wallowing in a career that doesn't sit well with me.

[tormadel]

Interesting points Jock. There will always be people like me trying to make things work "the old fashioned way".

[jockellis]

G'day, Y'all,
I'm not a railroad person, I only play one on a piece of plywood. But I have talked to the proper railroad folks on some things and my guess is that railroads, first and foremost, decide whether to sell based on some liability they might incur. Lawyers love to sue railroads and juries seem to love to award money to those who are injured, even by their own lack of attention. I know one shortline owner who quit hauling people on flatcars behind his SW-1 because a bunch of Boy Scouts acted badly. However, I called NS to see what was available for purchase and got the feeling that they would like to sell a lot of branches they still have. Maybe I'm wrong, though. But with the business model that the Transcon has given BNSF, I would imagine that all the Class 1s see that the high speed, long haul business is the most successful because it allows them to employ fewer people. Shortlines and regionals, as Trains pointed out several months ago, often have to go back to the basics on track maintenance because they cannot afford to buy the necessary equipment to do the services efficiently. But there are always people who want to be C.P. Huntingtons and Thomas Durants who will take over these tracks which are headaches to the Class 1s but the backbone of the railroad industry.
Jock Ellis
Cumming, GA US of A
Georgia Association of Railroad Passengers

[tormadel]

Looking at some of these magazine's website have brought another question to my mind. Around 1900 NYC had trains blazing along at 100mph (not all of them granted but some) today <over 100 years of technology later> railroads seem excited to have mainlines running 50mph. This seems to me to be far below what they should expect. I'm sure the underlying reason is the money. How much it costs to keep things moving at that kind of speeds. Coupled with congestion problems of just keeping things moving. But part of my mind still is saying to me that part of the leverage railroads should have on trucking is the ability to move it faster then is allowed on highways. It's not practical anymoe to build railspurs to every supplier and destination. Trucks may be able to roll you're delivery right up to you're door, but the railroads should be at least able to deliver it to you're town faster.

[tormadel]

Bah, I've seen to many bank teller windows, screwed up my guess :)

[Anonymous]

QUOTE: Originally posted by tormadel

QUOTE: Originally posted by mackb4

Wonder how long it took the I&O to buy the Cinn. to Columbus route off the CSX ? And for a mere $8.5 million .That seems like a bargin.

I would say big reasons would be track condition and the likelyhood that CSX wanted to get rid of it. For some reason, not based on traffic density, NS does not appear willing to sell it's Portsmouth - Cincinatti line. Could be anything from strategic planning, to nostalgia or just plain stubborness heh. Give them time.


Thanx again Limited Clear(ance)

Actually, Limited Clear is a signal indication and not a reference to clearance which is generaly referred to as "Close Clearance" or CC.

LC

[tormadel]

QUOTE: Originally posted by mackb4

Wonder how long it took the I&O to buy the Cinn. to Columbus route off the CSX ? And for a mere $8.5 million .That seems like a bargin.

I would say big reasons would be track condition and the likelyhood that CSX wanted to get rid of it. For some reason, not based on traffic density, NS does not appear willing to sell it's Portsmouth - Cincinatti line. Could be anything from strategic planning, to nostalgia or just plain stubborness heh. Give them time.


Thanx again Limited Clear(ance)

[Anonymous]

QUOTE: Originally posted by tormadel

Very true. There are many things to consider, but I don't know them all which is my problem.
Also true I would intend to acquire my track from a Class 1. Building entirely new raillines in this day and age would require divine intervention as I see it. It's costing BNSF and UP billions just to double track and add sidings new CTC etc. This gives me the feeling that going to Mars may be cheaper then trying to build say the "Great Northern" for sake of example in todays world.
But also to form a business plan I need to know where to get information, and I don't know where to get it. How much do locomotives cost? Which ones are the best bang for the dollar? Buy or lease the locomotives?(it seems the wiser choice is to lease the motivepower for financial reasons) How much does it cost to maintain them? Who will maintain them? What kinds of insurance will I need? How much will that cost?
How do you figure the value of the railline? Buy or lease?(I have seen several mentions in recent years of new railways leasing they're right of way rather then out right buying it) To hire my own maintence people (perhaps the very ones that used to work it for the Class 1) or contract maintence? Buy our own fright cars or wait and see on demand for that. Will I need online car repair? (A rip track maybe) <Here's a big one> Will I have to accept expensive unionized labor I inherit from the class 1? Or will i be able to be more competitive with non-union labor hence lower overhead and better shipping rates.

And worst of all I don't want to make a pain in the butt of myself and start Harrassing BNSF or NS for detials about parts of they're property I may be interested in without haveing some credability to back me up first. I'm sure they all have the crazy guy who calls saying there's a devil in that crossing gate downtown. <smile>

Most of these questions are resolved on a case by case basis. There is no cookie cutter in the RR business. You will need to weigh the pros and cons based upon your individual situation. The best thing you can do now is begin researching the many subjects you will need to know something about. Realize also that RRing is a team sport. You can never know everything yourself. You MUST know enough about everything to be able to supervise it adequately. I strongly recommend that you spend some time working for other RRs large and small before taking the plunge, if possible. The education alone is worth it, and although there are some down sides you are, after all learning on someone else's dime.

LC

[Anonymous]

QUOTE: Originally posted by tormadel

But you didn't know what it takes. What would you do?

Reading alot of trade magazines and books can teach you alot. Especially about history how's and whys. But it doesn't teach you how in modern times the peices fall into place.

So what I'm looking for I guess is advice from people wiser then I in the "Trains" community.

You'll need to read the real trade magazines before you learn much, and even they are only a small beginning. Invest in a subscription to Railway Age and Progressive Railroading. You may also want to look at Railway Track & Structures to begin your MW training. Unlike R&R and even TRAINS (which at least has some industry information and focus) the trades are not primarily railfan oriented. Also, get a copy of the most recent edition of "The Railroad, What it is, What it does" by the late John H. Armstrong. It is available through Simmons Boardman Books as are a lot of other interesting and useful railroad texts. It is a good basic text to get you used to railroads and how they really work.

LC

[mackb4]

Wonder how long it took the I&O to buy the Cinn. to Columbus route off the CSX ? And for a mere $8.5 million .That seems like a bargin.

[tormadel]

Thanks LC, it's great to hear from you (since I didn't know if you were a person or a webpage <smile>). Good words of wisdom.

[Anonymous]

QUOTE: Originally posted by mudchicken

(1) Talk to Limited Clear
(2) If you want to fail like so many do, go in there thinking about just running trains and ignore the track structure[}:)]

(3) look for income outside of train operation's carload billing[}:)][}:)] and find people that know how to work/ take pride in what they do. (work for the Company with a capital "C"!)

Thanks for the plug MC.

BTW, for those who don't know, I am Limited Clear, for all that is worth.

I have been around for the start of quite a few short lines, I've even sat in a senior and not so senior management chair. As has been said above, it is not a pursuit for the faint of heart nor is it one for those who don't expect to bring ca***o the table. In my own humble experience it will literally take years for someone coming from the outside to penetrate the industry to the point where a Class 1 will seriously consider leasing or worse selling a line to an unknown. Anything they do offer, LOOK OUT, it is probably something all the "real" players have turned down.

As to cash, you'll need a minimum of $100,000 in just working capital to start with, and that's assuming you can lease your property from someone and lease or contract out pretty much everything else. If you are buying a line, you'll probably have to bid against others and the Net Liquidation value (NLV) is a place to start. That is usually well into the millions these days. But, if you want to get in, you have to buy a ticket and there are people willing to invest in a good deal with the right management team. It does take more than just managers and a business plan. You'll need industry credibility as I mentioned above.

Before you decide to go this route I'd recommend you attend one of the ASLRRA's annual meetings which has all sorts of short line folks and Class 1 people (usually those dealing directly with the SLs there and a trade show with all sorts of vendors, so you can figure out how to price all your equipment and contractors or at least get a feel for it. Go to www.aslrra.org and look under meetings. I think this year it'll be in Orlando in April, but look for yourself. It isn't cheap, but it is a great place to start, if you are really serious.

Oh, and a word about the STB book. It is out of date as is the set Eric is referring to. Most of the rules have changed since the ICCTA of 1997. Before you run out and start looking, you need to learn the business. Remember, even those of us who've gone this route don't always stick with it. Some of us have other jobs to pay the rent too...

LC

[tormadel]

QUOTE: Originally posted by wboatner

I have watched the ATRR start up the CSX sub Gadsden,AL to Birmingham, Al and Gad to Guntersville, AL . Omnitrax won the bid to operate this branch and called it Alabama and Tennessee River Railroad (ATRR). Seeing what it takes to start up in experienced men and equipment and the pressure on all involved, I can't imagine any entity except those already established with short line operational experience being able to take on a new venture, and even then the success (bottom line) is not for sure.

wboatner

These companies haven't even been in existance as long as I've been alive, everyone starts somewhere. So seems reasonable that it could still be done. Alot of the people that did it in the past have sold out to the larger shortline conglomerates <for lack of a better term.>

[Anonymous]

I have watched the ATRR start up the CSX sub Gadsden,AL to Birmingham, Al and Gad to Guntersville, AL . Omnitrax won the bid to operate this branch and called it Alabama and Tennessee River Railroad (ATRR). Seeing what it takes to start up in experienced men and equipment and the pressure on all involved, I can't imagine any entity except those already established with short line operational experience being able to take on a new venture, and even then the success (bottom line) is not for sure.

wboatner

[tormadel]

QUOTE: Originally posted by kenneo

QUOTE: Originally posted by jeaton

$5 million??? I can hear the NS guy laughing all the way from Norfolk.

Even all of the way back to Norfolk and still laughing! Maybe that was a per mile price, but with the price of scrap being what it is, the NSV would certainly exceed 5 millions be a large amount.

I agree that is low, but stranger things have happened. Tillamook got they're railway from SP for $2.8 mill including 3 SD9's.

[tormadel]

QUOTE: Originally posted by mackb4

The NS has had two offers to by the old "P-vine" route from Portsmoth to Cinncinatti Ohio and refused.One was a local Portsmouth trucking outfit (I talked to his negotiator).The other the I&O R.R.There has been several business' who have asked for new service and refused.Also the local Scioto county goverment agencies have tried to get the service restored to no avail.Shortlines are good in a sense that if it helps the local economy and the major railroad that once owned them absolutely refuses to run the route.But on the bad side most shortlines spur up from the loss of good union paying jobs.But to start one requires alot of money.I was told that a $5 million dollar offer was refused for the 100 miles of track mentioned.That was all,no engines,freight cars or anything.So imagine the price when you add all that plus your charter fees and taxes on all that property.Because if you use a piece of track one time in a year.You pay the whole years taxes on that property.

If you start up with only $10million in initial outly you have gotten off cheap. Also, I don't know Ohio law, but here in Wisconsin if the Class 1 keeps refusing to sell and refusing to offer service, the state will take it away from them. The railroad will get paid what the state deems fair market value, but generally the politicians will not let service continue to lapse. Most of what the Wisconsin & Southern runs on is state owned rail.

[kenneo]

QUOTE: Originally posted by jeaton

$5 million??? I can hear the NS guy laughing all the way from Norfolk.

Even all of the way back to Norfolk and still laughing! Maybe that was a per mile price, but with the price of scrap being what it is, the NSV would certainly exceed 5 millions be a large amount.

[jeaton]

$5 million??? I can hear the NS guy laughing all the way from Norfolk.

[mackb4]

The NS has had two offers to by the old "P-vine" route from Portsmoth to Cinncinatti Ohio and refused.One was a local Portsmouth trucking outfit (I talked to his negotiator).The other the I&O R.R.There has been several business' who have asked for new service and refused.Also the local Scioto county goverment agencies have tried to get the service restored to no avail.Shortlines are good in a sense that if it helps the local economy and the major railroad that once owned them absolutely refuses to run the route.But on the bad side most shortlines spur up from the loss of good union paying jobs.But to start one requires alot of money.I was told that a $5 million dollar offer was refused for the 100 miles of track mentioned.That was all,no engines,freight cars or anything.So imagine the price when you add all that plus your charter fees and taxes on all that property.Because if you use a piece of track one time in a year.You pay the whole years taxes on that property.

[oltmannd]

I would get in touch with Roy Blanchard and subscribe to his newsletter.

http://www.rblanchard.com/index.html

[chad thomas]

In most cases the class one that leases out a line will make sure there is a clause prohibiting the leasee from interchanging with any other railroad. Like the leasor will retain the last mile or so of track and give the leasee track rights over that mile to interchange with the leasor only.

[tormadel]

I agree Canzar, there would be many advantages to leaseing. Just have to be carefull. You don't want to get a 5 year lease and then have the class 1 decide they aren't going to renew it and they're going to take back over the business you built. And who cares for the leased line? you or the class 1? I would think you would but I read that CP does the maintence on Northern Plains and they lease the lines.

And I think part of the solution of getting someone to accept my traffic is to connect to a couple of the roads, you have more leverage if you're customers have options.

[tormadel]

First of all Mud, I would have prefered to send you a private message rather then make another post, but it doesn't seem like Trains forum allows that . So I'm sorry all that my questions I have for 1 person I have to put in public (some may think that unseamly)

QUOTE: Originally posted by mudchicken

(1) Talk to Limited Clear
(2) If you want to fail like so many do, go in there thinking about just running trains and ignore the track structure[}:)]

(3) look for income outside of train operation's carload billing[}:)][}:)] and find people that know how to work/ take pride in what they do. (work for the Company with a capital "C"!)

1. (what is Limited Clear? A company?)
2. That's why I'm trying to study up and ask people, such as yourself, the questions about what I'm missing. Talk to me all day about the infrastructure and the details =). I would love to hear it.
3. You have hit the nail on the head here Mud. It is wise to think of other ways the company can keep itself in the black. Opening a Chain of blockbusters doesn't seem like a proper way to go about supporting ourselves. But I would like to consider things that relate to the business. The transloading facilities perhaps? What other things relate or work with the railroad operation that are not nessarily part of car load income?

I'm telling you people, in me you have found a sponge that will greedily soak up all the knowledge and wisdom you have to offer [8D].

And you're second point I agree with also Mud. I want people who love what they do. Quote "People with railroad in they're blood". I want my company to be a place people want to work. To make things (the railway) flow they way it should. To have people think, alright I'm off to another day at work and it's going to be a good time. Not, <ring> aww*** it's the crew caller again.

[canazar]

Being one that has started and been running my own business from the ground up, I would fibbin through my teeth if I said I have never dreamed about it. Hell of a dream. I wont get past my own railroad in the garage.. So, I live with that.


A couple of things though to think about as I have thought of....

I am not sure what kind of money backing you have or resoucres, but one option is to buy out right, or buy into a exsting short line. There are 100's of them all across the US. Might be eaiser way in.

I would lease up front and out right. Several reasons... Much cheaper in startup. Easeir to come up with 10,000 then 100,000. Also, chances are if you lease, they will only be too happy to provide personal for service. (they get to keep an eye or thier goods plus, get more cash from you)
It could also make it easier to get money from a bank or investors. Canceling a service in one thing, getting stuck with a yard with half-a-dozen 30 year old engines does not go over well with the bank or investors. If it cant float, make drinks, or go on a golf course, they wont want it.

And the last big thing, lets say you find a route, or an aera, (prefferably that used to have rail service. I think of a good place out in Casa Grande, AZ UP yanked up local service) so some of the infastructure is all ready there. If rail service has been gone for awhile, then so has the business.

I would take a guess at 2 to 5 years before you could reseaonably expect to get business to come back. Would have wait for them to return, plus you would have to prove to them you are going to be around for awhile. Again leasing could be a good thing, definatly if there is a healthy prectange of seasonal traffic. (Buidling materails, farming, produce)

Then there is still that little pesky issue of getting a Class 1 to accept your traffic.[V]

[mudchicken]

(1) Talk to Limited Clear
(2) If you want to fail like so many do, go in there thinking about just running trains and ignore the track structure[}:)]

(3) look for income outside of train operation's carload billing[}:)][}:)] and find people that know how to work/ take pride in what they do. (work for the Company with a capital "C"!)

[tormadel]

Never stop dreaming CMSTPP. Alot of railroads (and other things) were built on dreams. That and I also have had some thoughts about fallen flags like that. I have thought it would be neat to pay homage to fallen flags buy operating some locomotives in they're colors. I know there would be legalities involved. And perhaps go the route of buying some units that used to belong to said road and "historically" restore them to origional paint. There are still some Ex Rock Island and Ex Erie Lackawanna locomotives floating around for example.

[tormadel]

Very true. There are many things to consider, but I don't know them all which is my problem.
Also true I would intend to acquire my track from a Class 1. Building entirely new raillines in this day and age would require divine intervention as I see it. It's costing BNSF and UP billions just to double track and add sidings new CTC etc. This gives me the feeling that going to Mars may be cheaper then trying to build say the "Great Northern" for sake of example in todays world.
But also to form a business plan I need to know where to get information, and I don't know where to get it. How much do locomotives cost? Which ones are the best bang for the dollar? Buy or lease the locomotives?(it seems the wiser choice is to lease the motivepower for financial reasons) How much does it cost to maintain them? Who will maintain them? What kinds of insurance will I need? How much will that cost?
How do you figure the value of the railline? Buy or lease?(I have seen several mentions in recent years of new railways leasing they're right of way rather then out right buying it) To hire my own maintence people (perhaps the very ones that used to work it for the Class 1) or contract maintence? Buy our own fright cars or wait and see on demand for that. Will I need online car repair? (A rip track maybe) <Here's a big one> Will I have to accept expensive unionized labor I inherit from the class 1? Or will i be able to be more competitive with non-union labor hence lower overhead and better shipping rates.

And worst of all I don't want to make a pain in the butt of myself and start Harrassing BNSF or NS for detials about parts of they're property I may be interested in without haveing some credability to back me up first. I'm sure they all have the crazy guy who calls saying there's a devil in that crossing gate downtown. <smile>

[CMSTPP]

I have always wanted to start a passenger line that ran between Butte and Harlowton Montana. This where the milwaukee road ran and I have always thought of going out there and starting up that passenger line.

The first thing I would do is win the lottery.[(-D] What a laugh.
After that I would go to the CP ( CP owning the name of the milwaukee road and the land) and ask them if I could build.
Then I would go and purchase the locomotives and the passenger cars and start building the line back up.
After thats all done have the stations built and then the fun begins.

James

[CSSHEGEWISCH]

If you plan on going into business for yourself, be it a shortline railroad, video rental store, hobby shop or anything else, expect to kiss your free time goodbye for the foreseeable future and a while after that. The railroad will own you, not the other way around.
Also, some of the Class 1's, especially NS, are getting very particular about to whom they sell their branches. Experience in railroad operations is expected.

[pmsteamman]

Dont forget the track. Most shortlines were started from class 1s that did little or no maintence. The trains will make money as long as they stay on the track, one hazmat derailment can put a railroad under for good.

[Anonymous]

I'm glad someone else asked the question because I have been toying with the same idea- and no, I didn't win the powerball either.

How likely are railroads (the Norfolk Southern, in my case) to turn over property and facilities they want to abandon? Here in Georgia it looks like some of the rail lines have been taken over by the state.

I too would like to know the name of the volumes of books you have out there, because reading up on a subject is best for me.

Erik

[tree68]

Just like any start-up, first thing to do is put together a business plan. What's the income, and what's the outgo? While you can't ignore all the regulatory stuff, you also can't start up a business like a railroad with an insufficient customer base.

Also, unlike a business that can rent facilities that suit its needs, you start out with X miles of real estate, unless someone else (say a city) owns it and you are simply operating it.

[tormadel]

QUOTE: Originally posted by kenneo

And about that book set I have. It is out of print and has been for many years. If you can find a set, it will cost you thousands. And I doubt that you can find it in any library, but now having said that, some library will certainly have one.

Ah, well I still don't know what it's called <smile>. But yeah, anything would help as I've seen naught about it. But being long out of print could also be very out of date too....

And starting any business is a huge investment of yourself. Time, money and Soul I would have to say.
But like I said, I would at least like the chance to learn.

And yes Joby you are correct, life would be easier if you had a corperate sponser (for lack of a better way to put it). And I'm not ruleing that (or anything else) out at this point. I'm in touch with the fact that it will probably take me years of learning so I have to think long term anyway. I've dreamed and planed things like regionals since I was a teanager, and the plans changed a million times and will continue to do so I'm sure as the world evolves around me. =) But I feel much better at least having a place to talk about it now, ain't the internet a wonderful thing?

[Joby]

Anyway, I've always thought that it's probably be wise to go in with a "partner-corporation", ie a logging mill, coal mine, copper mine, etc. While you'd probably be dependent on one customer, it'd be a lot easier than trying to get existing traffic from the trucks.
Look at the Copper Basin in Arizona. It hauls ore from a mine to the smelter, and sulfuric acid from UP to the smelter. It seems (to the uneducated) to be a lot more strait forwars that other short lines.
Also, I hear a law degree would be great. Fred w frailey went into this in his book ROLLING THUNDER when he talked about the Susqhehana(u kno what i mean) coming up from nothing to having a strong bussiness.

[kenneo]

I'm not trying to discourage you. But if you think that working for a Class 1 is hell (and it is - I used to for 28 years), working for a Class 1 is a picnic compared to starting up a railroad of any size - or even managing a Class 1.

Call me silly if you wish, but 80 hours a week on the job and on call the balance is just not my choice.

And about that book set I have. It is out of print and has been for many years. If you can find a set, it will cost you thousands. And I doubt that you can find it in any library, but now having said that, some library will certainly have one.

And, no, you can't have mine.

[tormadel]

If you are starting from square zero, believe me, you don't want to do this unless you can hire it done for you. You say you just won the 300 million dollar (after taxes) Power Ball???

[tormadel]

Hehe, thank you Eric. But just because you're dream is hard doesn't mean you don't try. I have started to read the STB's informational "So you want to start a shortline". Now, informational as it is, it's not the start of the learning that I'm looking for. I've gotten some correspondence on course's to learn to be an engineer, coductor, trainmaster etc. And while I'd like to learn these things, I don't see them as the end of the line for me either. Now (and I'm not meaning to be insulting) from some of the testimonials that have been in Trains, I'm personally thinking that working for a class 1 sounds like a nice slice of hell. (Silly me I like to sleep for 8hrs in a stretch). But reading about other operations like "Northern Plains RR" sounds much more like the life I've envisioned. If it's possible could you PM me a message about that bookset you refer to? If I can find the fortitude within myself to read that hefty chunk of reading and ingest it I will have passed my first personal hurdel as to weather or not I have the fortitude for what I want. (Ok thanks, sermon over now <grin>)

[kenneo]

It takes someone who has administrative experience at (at least) the Division level. Having been in on the formation of one of these businesses, I can tell you that 60% of your time and energies (not to mention money) will be spent on FRA matters, then there is the STB (not in the picture when I did this), insurance (you will need to have to have at least 100% of the purchase price and any upgrade costs(for the banks well being) and then at least 10 millions of deep pockets liability, plus wreck and washout protection. And this is only where it starts.

It's a business like no other. It is transportation, it is warehousing, it is logistics, you get to carry your costomers transportations for at least 60 days so you need to also be a "bank".

I have a set of books that detail just how to do this. It is about 10,000 pages long, in 13 volumes plus 2 volumes for the index.

If you are starting from square zero, believe me, you don't want to do this unless you can hire it done for you. You say you just won the 300 million dollar (after taxes) Power Ball???