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

[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

[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

[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

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]

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

[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.

[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]

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

[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.

[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]

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.

[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]

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]

[Anonymous]

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

LC

[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 :)

[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!

[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

[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

[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.

[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.

[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]

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.

[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?

[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

[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

[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]

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]

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

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

[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.