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Traffic density

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Traffic density
Posted by MP173 on Friday, April 14, 2006 8:34 AM
I am always interested in how many trains operate on a section of track. To me, it seems critical to maximize operations on a fixed asset.

Often, one will find traffic density maps or charts which show "million gross ton miles/mile". I have a hard time wrapping my arms around this number, so help me out here...

Lets say you have a daily train that averages 10,000 gross tons and it runs on a segment of track 100 miles. It runs daily. So, you have (10,000*100/100)*365. According to my slide rule, that would be 3,650,000 gross ton miles/mile. Correct?

Thus that train would be 3.65 mgtm/m as typically seen on a chart or map. Ten such trains would obviously yield 36.5 mgtm/m.

Probably 10,000 gross tons is a bit high for an average train. What are the averages for certain types:

merchandise (box cars)
trailer intermodal
double stack intermodal
coal trains (one would have to factor in the return empties)

I know each track segment is different based on the traffic, the grades, sidings, signal types, etc.

Other than rrpicturesarchives, does anyone know where traffic density charts/maps can be located? Naimomo referenced a great map at Iowa DOT, that was very detailed.

I am looking for other sources.

Also, does anyone have a factor which when the gtm/m is divided by yields an approximate number of trains/day? My guess is about 1.5.

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Posted by nanaimo73 on Friday, April 14, 2006 9:19 AM
QUOTE: Originally posted by MP173

Also, does anyone have a factor which when the gtm/m is divided by yields an approximate number of trains/day? My guess is about 1.5.

ed



Ed,
It's difficult to do that because every line has a different traffic mix. MWH talked about that comparing the UP vs ex ATSF lines across the Continental Divide in the Map of the Month (page 62-63, April 02 Trains). The UP had about the same tonnage, but fewer trains because of the heavy soda a***raffic.

Other MOTMs you might find interesting are-

10-2001 Pg 72 Chicago lines tonnage 1971 vs 2000

6-03 p 29 Western mainlines 1979 vs 2001

7-04 p 64 UP system tons per train average

3-05 p 76 Mainline tonnage during the 1970s

4-05 p 54 Kansas City region tonnage 1971 vs 2003

Trains used to have system tonnage maps with articles on railroads. Tha last I remember is the KCS system tonnage in the August 2003 Trains, and one on Wisconsin Central (September 1990 ?).

The MR Index doesn't work to well for maps, so I've tried to put every interesting Trains map on a sheet of paper.

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Posted by MP173 on Friday, April 14, 2006 12:19 PM
I had forgotten about that UP system map. That was a great one.

Also, the map showing traffic into Chicago in the 70's and current was also great for me...being in Northwest Indiana.

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Posted by Kevin C. Smith on Friday, April 14, 2006 12:47 PM
If I may weigh in with a slightly off-topic question here...
In articles about WWII traffic densities, mention is always made of CTC as a godsend to RR's that needed increased line capacity quickly. The assertion was made that CTC gave a single track line 90% of the capacity of double track. With the major main lines already CTC'd and double track being laid as fast as $$ will permit, I've wondered if all this time and money is just to get that last 10%-yet isn't the Abo Canyon project on BNSF supposed to increase the number of trains by 30-50% (if I'm way off, lemme know-when it comes to numbers, I EASILY get my wires crossed). So, the big questions are: Is the 90% capacity claim still valid? If not, why not? (Longer trains? More uniform traffic mix-no locals to limiteds variety to deal with? Fewer helper districts?)

Was it really ever true-or just advertising?
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Posted by chad thomas on Friday, April 14, 2006 1:18 PM
It depends a lot on traffic type and how long & often the sideings are. I think most cases where a 90% figure would apply are cases where doubletrack (directional rule 251) is single tracked with CTC with frequent long sideings. These days doubletracking projects mostly are signaled bi-directionaly (2MT CTC) which would have much more capacity then directional track (DT ABS). The differance is in 2MT CTC territory trains can pass eachother much more fluidly then in DT ABS territory where the passing train would have to stop and line switches which is so time consumeing that it would be better to just have to follow the slower train (and with no cabooses the following next train would have to stop also to line the switches back).

In general terms single track CTC is good for 35 trains a day (depending on sideing frequency). Doubletrack ABS is good for 60-70 trains a day. And 2MT CTC is good for 100 trains a day.

If you are running the same kind of trains at the same speeds then DT ABS would probably be fine, like a coal conveyor style route. But if you are running varying types of trains from grain & coal drags to intermodal to passenger trains then you need the ability have the faster trains run around the slower ones. DT ABS is not very good for that and single tracking could even improve capacity. Capacity wise the ideal thing to do would be to take that DT ABS and upgrade it to bidirectional CTC and add crossovers (as the BNSF has recently done across the desert on the transcon) , but cost wise single tracking with CTC is the better option (for the bean counters anyway).

It might not seem like single tracking can add capacity but consider this. If you have a hundred mile streach of DT ABS (basicly two one way streets) with slow & fast trains mixed. If you have a 50mph drag freight ready to depart, but in an hour the 90 mph passenger express is due. Well you don't want to let the drag go because half way down the road the passenger train will be stuck behind the 50mph drag for the last half of the trip (and will be delayed 1/2 hour at the terminal 100 miles away). So you hold the drag freight for the passenger express to get out before you let the drag go, thus delaying the drag at least 1 hour. If the same situation occours in single track you let the drag go and before the passenger train catches up half way down the line you put the drag in the hole. The passenger train is not delayed and the drag is only delayed for the time it takes the passenger train to pass.

Of course with the single tracked line opposing traffic will force one or the other train to take the sideing and wait, unless the meet is perfectly timed. A good example of a high capacity single track is the Sunset route. They run up to 50 trains a day over long streaches of single track. Of course the sidings are plentifull, like one every 5 miles or so.
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Posted by MP173 on Friday, April 14, 2006 2:35 PM
This is evolving into a good conversation. Perhaps that is what I had in mind with the traffic density question. My thoughts are....how many trains are running on these mainlines today.

A really good case of single track CTC in our neighborhood is the NS Chicago to Fort Wayne (ex Nickel Plate) line. i am sure that the operations folks at NS would be able to give a better assessment of the line, but overall it is pretty fluid. It has sidings about every 5 to 8 miles. Siding lengths average about 7200 feet, varying from 6500 feet to 9800 feet. Those sidings are hindered by the fact the railroad runs thru Indiana, a rural state. If the trains parks in a siding for awhile, they must cut the train at the crossing.

I dont have data on the average train length and tonnage for the NS here, but most trains fit in the sidings. The problems are beginning to pop up with some fairly long auto rack trains and intermodals. It is not uncommon now for a 7000 to 8000 foot auto or intermodals, which really takes certain sidings out of play.

CTC was advertised in the old days of trains never stopping, rolling thru the sidings for the trains meets. That probably worked well with passenger trains that were 1500 feet in length or 3500 foot freight trains, but times have changed.

Today's Nickel Plate line sees about 30 trains a day, with Triple Crowns, intermodals, coal trains, empty hoppers, locals, and general manifests. I find their issue is more with terminal congestion...into and out of Chicago and the Northwest Indiana industrial complex more than line capacity.

Even with the slightly undersized sidings, they seem to move things along pretty well, until "Chicago cant take you" becomes the common word.

Chad, I would tend to agree with you regarding the 35/per day capacity for single line CTC...it seems to work pretty well here.

ed
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Posted by chad thomas on Friday, April 14, 2006 2:56 PM
Ed,
I would say that 35 figure is probably a bit higher because of the sideing density on that NS line. Typicaly single track lines have sideings spaced 15-20 miles apart. Like I said the Sunset also has a high density of single track and they run as many as 50 a day.
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Posted by Anonymous on Friday, April 14, 2006 10:13 PM
Chad,

The questions that pop to mind RE single track CTC vs DT ABS:

1. Why go to the bother of ripping out a second parallel line, e.g. why not CTC the double track with crossovers? Keep this hypothetical in that we are assuming no such thing as "over capacity" of past decades, rather that traffic will gravitate toward available capacity.

2. Following up on the idea of CTC DT, instead of using the parallel line as the siding (and temporarily blocking the opposing traffic), do/did/will any railroad that you know of use a short section of 3rd middle track as a "siding" for both tracks? I mean, how likely is it for a a typical corridor that hosts 100+ trains per day that such a middle "siding" would need to be used by both an eastbound and a westbound drag freight at the same time?

Just some dumb questions for an intriguing topic.
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Posted by nanaimo73 on Saturday, April 15, 2006 1:27 AM
QUOTE: Originally posted by futuremodal

Following up on the idea of CTC DT, instead of using the parallel line as the siding (and temporarily blocking the opposing traffic), do/did/will any railroad that you know of use a short section of 3rd middle track as a "siding" for both tracks? I mean, how likely is it for a a typical corridor that hosts 100+ trains per day that such a middle "siding" would need to be used by both an eastbound and a westbound drag freight at the same time?


UP's 1986 System ETT shows the Omaha to Granger WY line to be two track CTC with sidings about 6000' long about every 10 miles. Some are to the north of the mains, some between, and some to the south. It appears to be random, probably determined by the local topography.
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Posted by mvlandsw on Saturday, April 15, 2006 5:23 AM
The CSX ex C&O line from Columbus, Oh. to Toledo, Oh. has center sidings between two main tracks.
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Posted by beaulieu on Saturday, April 15, 2006 12:02 PM
QUOTE: Originally posted by futuremodal

Chad,

The questions that pop to mind RE single track CTC vs DT ABS:

1. Why go to the bother of ripping out a second parallel line, e.g. why not CTC the double track with crossovers? Keep this hypothetical in that we are assuming no such thing as "over capacity" of past decades, rather that traffic will gravitate toward available capacity.

2. Following up on the idea of CTC DT, instead of using the parallel line as the siding (and temporarily blocking the opposing traffic), do/did/will any railroad that you know of use a short section of 3rd middle track as a "siding" for both tracks? I mean, how likely is it for a a typical corridor that hosts 100+ trains per day that such a middle "siding" would need to be used by both an eastbound and a westbound drag freight at the same time?

Just some dumb questions for an intriguing topic.


Dave, how does the property tax work in Washington state? Here in Wisconsin, the railroad would be taxed on the appraised value of the property , which would likely be higher with two tracks, bridges etc. being larger would also raise valuation. Then there is the Personal Property tax which dispite its name mainly affects businesses. The extra signalling equipment for the two tracks plus the extra switches, extra rail would all lead to higher costs for both the Real Property tax and the PP tax. Before it was abandoned the Soo Line Danbury Sub.
running through Burnett Co. where I live made the Soo Line RR. ( and later the WCL) the largest taxpayer in the county. And this was a Dark secondary mainline turned branchline with only a single siding in the county.
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Posted by Anonymous on Saturday, April 15, 2006 1:59 PM
QUOTE: Originally posted by beaulieu

QUOTE: Originally posted by futuremodal

Chad,

The questions that pop to mind RE single track CTC vs DT ABS:

1. Why go to the bother of ripping out a second parallel line, e.g. why not CTC the double track with crossovers? Keep this hypothetical in that we are assuming no such thing as "over capacity" of past decades, rather that traffic will gravitate toward available capacity.

2. Following up on the idea of CTC DT, instead of using the parallel line as the siding (and temporarily blocking the opposing traffic), do/did/will any railroad that you know of use a short section of 3rd middle track as a "siding" for both tracks? I mean, how likely is it for a a typical corridor that hosts 100+ trains per day that such a middle "siding" would need to be used by both an eastbound and a westbound drag freight at the same time?

Just some dumb questions for an intriguing topic.


Dave, how does the property tax work in Washington state? Here in Wisconsin, the railroad would be taxed on the appraised value of the property , which would likely be higher with two tracks, bridges etc. being larger would also raise valuation. Then there is the Personal Property tax which dispite its name mainly affects businesses. The extra signalling equipment for the two tracks plus the extra switches, extra rail would all lead to higher costs for both the Real Property tax and the PP tax. Before it was abandoned the Soo Line Danbury Sub.
running through Burnett Co. where I live made the Soo Line RR. ( and later the WCL) the largest taxpayer in the county. And this was a Dark secondary mainline turned branchline with only a single siding in the county.


Aren't property taxes based on both physical assets and revenue potential? Otherwise, a vacant plot in downtown Milwaukee would be assessed at the same value as an equally sized empty plot in rural Mukwonago.

If CTC single track has 90% of the capacity of ABS DT, wouldn't the local assessor have justification to tax the single track at 90% of the double track, adjusted for the physical assets?

I don't think property tax valuations play that big a role in how railroads decide to increase capacity, since valuations are going to be based on that earnings potential anyway. The more trains you run, the more the property is worth, ergo the assessments should reflect that worth. Double tracking isn't by itself going to result in a doubling of the property tax unless it also results in a doubling of capacity. But then again, I'm not sure assessors actually evaluate railroad property that way, even though they do so for normal real property.
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Posted by Hugh Jampton on Sunday, April 16, 2006 7:08 AM
Single track CTC has 90% of the capacity of double track ABS ???

I find that hard to believe,, please explain.....
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Posted by daveklepper on Sunday, April 16, 2006 8:05 AM
I think that 90% figure is only under certain conditions, as gleaned from above postings. But yes, one reason the New York Central did rip out the second track of the Boston and Albany was property taxes, and the other was maintenance. It is easier to maintain a single track than two, because frost heaves and drainage problems do not depend on traffic density, and the electronis and switch maintanenace and are small items compaired to just the length of track installed. Often the decision to go to single track came when major track maintenance and rail replacement was required.
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Posted by jeaton on Sunday, April 16, 2006 9:42 AM
The assesment of the value of property in Wisconsin has two elements-land and improvements. Vacant land will be assesed at the sale price of the property, if recent, or recent sales of comparable properties. Improvements added to property may be assesed at cost or market value if there are recent sales of comparable property.

There is no direct connection between the earning capacity of a property and its assesed value. If the business on a rail line suddenly dried up, the property tax would not drop, any more than the property tax would drop on a manufacturing plant that was shut down. Pick up the track or tear down the plant, and then the taxes will drop. It also works the other way. Start up a business in a vacant building, making much more money than the previous occupant and the assesed value of the property will not suddenly jump.

Not saying it is the only factor, but property taxes are certainly an element in the decision to add, remove or abandon track.

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Posted by MichaelSol on Sunday, April 16, 2006 10:10 AM
QUOTE: Originally posted by jeaton

The assesment of the value of property in Wisconsin has two elements-land and improvements.

Not for railroad property.

Railroads do not pay a "property tax" in Wisconsin, rather they pay an "ad valorem" tax, which is an accounting tax, that is, based on accounting values, not property assessments.

This is because rolling stock is part of the "property," and that can't be assessed on a "land" or "improvement" basis by reference to local valuations. Railroads are quite different entities because so much of the "property" moves around.

Wisconsin is typical on its tax treatment of railroad property, and it is not based on an appraisal system like most real property.

"Wisconsin imposes gross revenues or ad valorem taxes on utilities in lieu of local property taxes on these businesses. Carlines, electric cooperative associations, and municipal and private light, heat, and power companies pay taxes on their gross revenues. Airlines, conservation and regulation companies, municipal electric association projects, pipelines, railroads, and telephone companies pay an ad valorem tax."
....
[For Gross Revenue Taxpayers], "under this tax regime, a company's tax liability equals its gross revenues allocated to Wisconsin multiplied by a specified tax rate. Carlines are taxed at 3% of their gross revenues, electric cooperative associations at 3.19%, and private light, heat, and power companies at 0.97% of their revenues from gas services and 3.19% of their revenues from electric and other services (primarily steam and water)."
...
[For Ad Valorem taxpayers], the Department of Revenue determines the taxable value of utility companies operating in the state. Utilities other than telephone companies are taxed on the basis of the portion of their unit (total company) value allocated to Wisconsin. This method is applied to railroads, airlines, pipelines, and conservation and regulation companies. Municipal electric association projects (power systems owned by two or more municipal light, heat, and power companies) make an in-lieu of tax payment based on this method. The utility's value allocated to Wisconsin is multiplied by the net statewide average tax rate to determine the utility's tax liability. The net statewide average tax rate is calculated by dividing the total statewide property taxes levy minus the school levies credit by the statewide full market value of taxable property."

Wisconsin Department of Revenue, Division of Research and Policy, December 9, 2002.

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Posted by MichaelSol on Sunday, April 16, 2006 10:29 AM
Just as a "for example."

Most typically, railroad business property, including railroad real property, is assessed on the basis of cost, plus improvements, minus depreciation. Very much an accounting, rather than assessment, procedure.

C&NW paid about 3% of its gross revenues in the 60s and 70s to property taxes. Nearly three quarters of that was on buildings, facilities, warehouses, and rolling stock. The tax burden assignable to ROW and track was less than 1.0% of gross revenues.

By the time the tax cost of a typical branchline was extracted from the overall tax burden, based on "cost" plus improvements, minus depreciation, it could be surprisingly low, about $50-$100 per mile of track, even less.

One of the pervasive mythologies of the "excess rail capacity" theory regarding branchlines is the "enormous" tax cost of a line that is generating little business revenue. By and large, that was never true. If the railroad wasn't putting any money in, the tax burden was almost ridiculously low. The property tax system generally used for the most part provided very favorable treatment to little used rail properties -- they were practically railbanked, from a property tax standpoint.

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Posted by zardoz on Sunday, April 16, 2006 11:12 AM
Now THIS is an example of a good thread: lots of intelligent questions, intelligent answers, and no shouting.

THIS is the kind of stuff I visit the forums for.
----------------------------------------------------------------------------------------------------------------
quoted from futuremodal:
2. Following up on the idea of CTC DT, instead of using the parallel line as the siding (and temporarily blocking the opposing traffic), do/did/will any railroad that you know of use a short section of 3rd middle track as a "siding" for both tracks? I mean, how likely is it for a a typical corridor that hosts 100+ trains per day that such a middle "siding" would need to be used by both an eastbound and a westbound drag freight at the same time?

fm: Would not the triple-track line through Nebraska meet your criteria?
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Posted by Anonymous on Sunday, April 16, 2006 11:41 AM
QUOTE: Originally posted by zardoz

Now THIS is an example of a good thread: lots of intelligent questions, intelligent answers, and no shouting.

THIS is the kind of stuff I visit the forums for.
----------------------------------------------------------------------------------------------------------------
quoted from futuremodal:
2. Following up on the idea of CTC DT, instead of using the parallel line as the siding (and temporarily blocking the opposing traffic), do/did/will any railroad that you know of use a short section of 3rd middle track as a "siding" for both tracks? I mean, how likely is it for a a typical corridor that hosts 100+ trains per day that such a middle "siding" would need to be used by both an eastbound and a westbound drag freight at the same time?

fm: Would not the triple-track line through Nebraska meet your criteria?


I would think de facto triple track is "more" than the idea of double track with middle shared sidings. I am not familiar with how UP's triple track through Nebraska is managed in terms of crossovers and holding tracks. Is the middle track the designated holding track?
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Posted by MichaelSol on Sunday, April 16, 2006 1:07 PM
Here's a hypothetical conversation regarding a proposal to single track a double track mainline.

I am going to pretend for a moment that I am Vice President, Finance, Milwaukee Road, and a masochist, but ... I am being redundant.

It's 1968, and Greg McGinn, Vice President, Operations, walks in the door. He has decided that Milwaukee Road's high capacity mainline, 135 MGT, between Chicago and St. Paul, ought to be single-tracked. "We can save a lot of money."

"A lot, huh?" I reply. Greg has never particularly liked me. I'm not Irish and I'm not Catholic and so how I got to an executive level at Milwaukee Road is a complete mystery to Greg, and he doesn't like mysteries.

We go into the figures. It costs about $12,000 per mile for Milwaukee to maintain a Class IV track, and probably about $20,000 per mile for that double track mainline. Overall, we spend about $8-$10 million on that line annually, mostly for maintenance, probably a couple of million of it in ties and rail and other "capitalized" expenses.

"Well," I ask, "what do you think it'll cost?"

He answers: "We estimate that for $200 million, we can rebuild the whole line, single track, CTC, take out some curves, improve some grades, continuous welded rail. A first class line."

"What will that do to our schedules?" I ask.

"Well, the "Roaring 90's" intermodal trains will be slowed by about 45 minutes, but we'll be able to save about $3 to $4 million per year in maintenance and capital expenditures."

I remark, "so, we spend a boatload of money and lose our advantage over our competitors. Our schedules slow down, and we pay good money for that achievement."

Greg responds, "no we are saving money by doing this."

"OK," I say, "let's look at this. Right now, our capital expenditures are just about equal to our depreciation expense, and we raise that capital out of operating cash flow. We can keep that up just about forever. This $200 million bothers me."

Greg wonders why this is. I'm the VP of Finance, isn't that my job? To go finance things that he wants to do?

This is where I start.

"We are paying property taxes based on cost of acquisition or construction that, in some cases, goes back over a century. With depreciation, our book value is only about $700 million. Our replacement cost is about $7 billion.

"If we borrow that $200 million, that will show as increased capitalization entirely. Our property tax average, system wide, is about 2%. Our existing double track is just about depreciated out, we don't pay much tax on that line. If we single track it, that will add significantly to our overall taxable book value, especially in Wisconsin where we pay an ad valorem tax. The taxes we pay will increase by about $4 million per year. Further, at 6%, our interest charges on the loan will be $12 million per year over the next 15 years. That's $16 million off of our revenues in direct deductions. Further, the average depreciation of 50 years on the new track structure will add a $4 million operating expense/deduction each year over the next 50 years.

"What you're saying, Greg, is that your department can save up to $4 million per year, but it will cost us $16 million in increased costs paid annually out of cash flow, and $20 million in overall increased expenses including depreciation. In addition, we will have to take a write-off of the remaining undepreciated value of the double track mainline, which will hurt our profit and loss statement even further."

Greg gets up and leaves. He is shaking his head. It's obvious the finance guys just don't understand operations. He can cut $4 million a year out of his budget, and no one will let him.

Now, this is a hypothetical, based on numbers the best I can recollect on the spur of the moment without going and looking them up. It's the analytical process that I am attempting to walk through, and why single-tracking a double track mainline can, without great care in the process, increase taxes and overall operating costs, rather than decrease them.

Best regards, Michael Sol
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Posted by nanaimo73 on Sunday, April 16, 2006 1:23 PM
Michael-
Under the CMSP&P, could the 135 MGT be for the Chicago-Milwaukee portion (CTC?) while the ABS Milwaukee-St. Paul was 100 MGT ?
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Posted by jeaton on Sunday, April 16, 2006 4:37 PM
So the CP did just what had been blocked by the MILW VP finance. What was the difference?

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Posted by beaulieu on Monday, April 17, 2006 1:14 PM
QUOTE: Originally posted by jeaton

So the CP did just what had been blocked by the MILW VP finance. What was the difference?


Changed situation, MILW may have had a 135 MGT capacity mainline but by the late '70s, early '80s is was being used nowhere near capacity. The limiting factors were the single tracked sections over the Mississippi River bridges and through the tunnel at Tunnel City. These were also the locations of the only CTC west of the Milwaukee area. What changed was CP/Soo's traffic was skewed away from merchandise and heavier to bulk, along with an increase in number of trains and their weight. The Eastbound track was being pounded to death, culminating with the derailment of an eastbound freight that hit the WB Empire Builder. Needing to replace the EB main right down to the subgrade CP decided to go with mostly (but not completely) Single track CTC which would facilitate higher speed trains passing the slower drags. At the end the MILW was only running 5-6 trains per day each way, plus Amtrak. CP is running a bit better than twice that, and the trains are much heavier.
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Posted by samfp1943 on Monday, April 17, 2006 9:29 PM
QUOTE: Originally posted by MichaelSol

Here's a hypothetical conversation regarding a proposal to single track a double track mainline.

I am going to pretend for a moment that I am Vice President, Finance, Milwaukee Road, and a masochist, but ... I am being redundant.

It's 1968, and Greg McGinn, Vice President, Operations, walks in the door. He has decided that Milwaukee Road's high capacity mainline, 135 MGT, between Chicago and St. Paul, ought to be single-tracked. "We can save a lot of money."

"A lot, huh?" I reply. Greg has never particularly liked me. I'm not Irish and I'm not Catholic and so how I got to an executive level at Milwaukee Road is a complete mystery to Greg, and he doesn't like mysteries.

We go into the figures. It costs about $12,000 per mile for Milwaukee to maintain a Class IV track, and probably about $20,000 per mile for that double track mainline. Overall, we spend about $8-$10 million on that line annually, mostly for maintenance, probably a couple of million of it in ties and rail and other "capitalized" expenses.

"Well," I ask, "what do you think it'll cost?"

He answers: "We estimate that for $200 million, we can rebuild the whole line, single track, CTC, take out some curves, improve some grades, continuous welded rail. A first class line."

"What will that do to our schedules?" I ask.

"Well, the "Roaring 90's" intermodal trains will be slowed by about 45 minutes, but we'll be able to save about $3 to $4 million per year in maintenance and capital expenditures."

I remark, "so, we spend a boatload of money and lose our advantage over our competitors. Our schedules slow down, and we pay good money for that achievement."

Greg responds, "no we are saving money by doing this."

"OK," I say, "let's look at this. Right now, our capital expenditures are just about equal to our depreciation expense, and we raise that capital out of operating cash flow. We can keep that up just about forever. This $200 million bothers me."

Greg wonders why this is. I'm the VP of Finance, isn't that my job? To go finance things that he wants to do?

This is where I start.

"We are paying property taxes based on cost of acquisition or construction that, in some cases, goes back over a century. With depreciation, our book value is only about $700 million. Our replacement cost is about $7 billion.

"If we borrow that $200 million, that will show as increased capitalization entirely. Our property tax average, system wide, is about 2%. Our existing double track is just about depreciated out, we don't pay much tax on that line. If we single track it, that will add significantly to our overall taxable book value, especially in Wisconsin where we pay an ad valorem tax. The taxes we pay will increase by about $4 million per year. Further, at 6%, our interest charges on the loan will be $12 million per year over the next 15 years. That's $16 million off of our revenues in direct deductions. Further, the average depreciation of 50 years on the new track structure will add a $4 million operating expense/deduction each year over the next 50 years.

"What you're saying, Greg, is that your department can save up to $4 million per year, but it will cost us $16 million in increased costs paid annually out of cash flow, and $20 million in overall increased expenses including depreciation. In addition, we will have to take a write-off of the remaining undepreciated value of the double track mainline, which will hurt our profit and loss statement even further."

Greg gets up and leaves. He is shaking his head. It's obvious the finance guys just don't understand operations. He can cut $4 million a year out of his budget, and no one will let him.

Now, this is a hypothetical, based on numbers the best I can recollect on the spur of the moment without going and looking them up. It's the analytical process that I am attempting to walk through, and why single-tracking a double track mainline can, without great care in the process, increase taxes and overall operating costs, rather than decrease them.

Best regards, Michael Sol



Michael:
It is quite possible to imagine a similar senario for the same argument took place at the Illinois Central when the decision was made to take out half of its double tracked Main Line between Chicago and New Orleans? In the aftermath of that decision, I am sure the term "Dwell time" took on a whole new meaning for the Operating Department.
Sam

 

 


 

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Posted by Kevin C. Smith on Tuesday, April 18, 2006 4:03 AM


Michael:
It is quite possible to imagine a similar senario for the same argument took place at the Illinois Central when the decision was made to take out half of its double tracked Main Line between Chicago and New Orleans? In the aftermath of that decision, I am sure the term "Dwell time" took on a whole new meaning for the Operating Department.
Sam


At the time, I recall Modern Railroads running an article-"Single Track, Double Trouble?" I think was the name-wondering about the wisdom of that decision. I have long since misplaced my copy but I think it talked mostly about increased maintenence (and decreased track availability to do it) but probably addressed the schedules, etc., too.
"Look at those high cars roll-finest sight in the world."
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Posted by daveklepper on Tuesday, April 18, 2006 4:19 AM
When the New York Central rebuilt the Harlem River Lift Bridge on the Park Avenue approach to Grand Central Terminal the State quadrupled the property tax, even though passenger operations into GCT were mostly commuter and operating at a loss. The Central went to court and won. This was in the 1960's if I remember correctly.
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Posted by SALfan on Tuesday, April 18, 2006 10:47 AM
During the preparations for the ACL-SAL merger, one of the factors in the decisions on which lines to abandon and which lines to keep was the property tax rates in the counties where the lines ran. At least that's what I was told.
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Posted by oldyardgoat on Tuesday, April 18, 2006 3:51 PM
Just as an historical footnote, UP installed center sidings when their Nebraska-Wyoming main line was double tracked in the early 1900s. Along with the "signature" US&S Type 'B' Semaphore signals of the "Harriman" era, the line was designed for ABS operations, with the sidings bi-directional. It has worked pretty good for a hundred years. And they figured it all out without computers, too.
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Posted by Anonymous on Tuesday, April 18, 2006 10:08 PM
Of course, if all trains ran at the same speed, then ABS double track could probably host 3 or 4 times the traffic of single track CTC. Just run one right after the other, and don't stop 'til you get there.

After all, trucks all run at the same speed over level ground on the Interstates no matter what they are hauling. So why can't railroads.

I wonder to what degree the single track CTC projects have contributed to railroads lethargic average velocity? Again, with double track ABS, you'd see average velocity probably double.
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Posted by Anonymous on Wednesday, April 19, 2006 9:27 AM
The balancing act also includes yard and terminal conditions, too. I picture an entire operation as trying to keep many plates spinning on dowels in the midst of the domino effect.

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