What happen to Milwaukee Road?

[Murphy Siding]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by nanaimo73

QUOTE: Originally posted by Murphy Siding

QUOTE: Originally posted by nanaimo73

I'm glad we always run a trade surplus.

It's all that Canadian lumber, I tell you![:D]

You need good wood to build sturdy houses for those Dakota winters. Southern Pine just won't do.[;)]

You know why they call it Southern Pine? Because IT GROWS IN THE SOUTH AKA DIXIE!

Sorry to yell like that, but it seems some of those GWN lumber barons are telling the WTO that all the US grows is that wimpy Southern Pine. For the record, most of the timber grown in the PMW is the same stuff BC grows. The only difference is that you guys harvest most of yours, while we destructively burn most of ours.

There are very few subjects that I could say I was an expert in. I am a lumber guy, though, and have been for 25 years.........ah........nevermind![(-D][(-D][(-D]

[MichaelSol]

QUOTE: Originally posted by greyhounds
If the MILW had 100% of the export wheat buisness to Seattle and the BN/UP split 90% of the intermodal - they'd be ahead of the MILW in revenue. It would have been long haul intermodal with the equipment moving under revenue load in both directions to a significant extent. The wheat would be shorter hauls and the cars for sure returned empty. The Milwaukee could have had 76% of the tonnage, but only 10% of the revenue.

If they did, they would, but they didn't, so they didn't.

If there was enough intermodal, they might be ahead in revenue, but not profitability by a long shot.

In 2005 dollars, wheat moved in 1974 from Great Falls Montana to Port of Seattle at about $6,500 per carload. Intermodal moved at about $2985 average to Midwestern points on a carload (not TEU) basis.

Export intermodal was less than 25% of the import intermodal through Port of Seattle on MILW, and this reflected the Port's overall figures for all railroads.

[greyhounds]

QUOTE: Originally posted by MichaelSol



MILW had 76% of all POS traffic. Neither Brodsky nor myself ever said revenue; you created that mystery all by yourself. MILW had 50% of the container traffic. That has also been specifically stated.

Indeed, you know very well that it would be extremely difficult to pry the revenue information out of other railroads to determine a revenue percentage. Maybe you don't, I don't know. But carloads can be counted.

So are you saying it was 76% of the carloads, or was it 76% of the tons? Huge difference. A grain car would have carried 100 tons, a TOFC trailer would have aveaged about 16 tons. It makes a huge difference because if the Magic Milwaukee's 76% share was simply tonnage it means nothing. You know, you really do need to become more forthcomming in your presentations.

And that "50% of the container traffic" is just another meaningless number you throw out to try to fool people. It could be four loads per day, or 14 loads per day, or 40 loads per day, or even 400 loads per day. You don't say and I'm convinced you don't say because you don't know.

And speaking of grain:

QUOTE: Originally posted by MichaelSol


It is true MILW was the primary carrier to Pier 86, Cargill, (BN did the switch there).

MILW Seattle traffic manager Doug Nighswonger: "We did have a tremendous amount of grain coming west for export. Most if not all the wheat grown west of Mobridge came west. Most of it went to Seattle and most of the balance went to Tacoma. Some went to the port of Longview but I do not recall very much going though Kalama and Portland, even though we had rate to go there."

Oh, the Magic Milwaukee had "rate to go there." Another statement that means nothing. In 1977 there was litterally a railroad rate from every rail served point to every rail served point. Just because there was "A Rate" doesn't mean a thing. The Milwaukee didn't want the grain to move through Portland, otherwise the charges would have been competivie with Seattle and grain would have moved through Portland.

And from a subsequent Sol post about wheat business:

QUOTE: Originally posted by MichaelSol



Traffic available to MILW but not carried for lack of equipment:

8,222 carloadings Cedar Rapids, Mankato, Miles City, Great Falls to "West
Coast Ports".
1,200 car Minnesota movement corn and oats to Seattle
4,331 carloads SD to Washington state ports.
900 carloads intermodal grain movement, Great Falls to Malden, then to
barge service.
316 carloads, Minnesota and Iowa to Seattle, Tacoma and Portland.

Well, this pretty much seals it in Sol's own words. The old, pathetic, broken down, malignant, but somehow "Magical" Milwaukee Road seems to have had a lot of grain tonnage to the ports such as Seattle - they just didn't make any money hauling it. Their Seattle market share seems to have been made up of crap freight, where the equipment had to be returned empty 100% of the time ,that didn't pay its own way.

They were one pathetic outfit. In fact, somebody once told me that an Arab oil billionaire once tried to buy the Milwaukee Road. It seems he took his son to Disney World on a visit to the US. The boy got all excited and really wanted a Mickey Mouse outfit. The billionaire told his people to look in to acquiring a Mickey Mouse outfit. They came back with a plan to buy the Milwaukee Road saying "You can't get any more Mickey Mouse than this outfit."

If the wheat had made money they MILW could have, and would have, financed the equipment to haul it. You can lease grain cars easy enough. The fact that they declined to lease cars for long haul business shows that their analysis indicated that the traffic would not pay for itself. They were stuck with what they had, but they weren't going to go out and lease cars to loose more money. I mean that's what happened - in Sol's own words.

It doesn't matter if they had 76% of the Seattle port tonnage. If they didn't make money hauling the freight, and it seems they didn't or they would have leased those cars, the more they hauled the worse off they were.

So Sol! For once and for all time - was it 76% of tonnage or carloads; and 50% of what container volume. I don't think you know.

You're just throwing out meaningless numbers in support of the Milwaukee Road Cult.

Ken Strawbridge

[MichaelSol]

QUOTE: Originally posted by MichaelSol
But carloads can be counted.

QUOTE: Originally posted by greyhounds
So are you saying it was 76% of the carloads, or was it 76% of the tons?

Should be clear.

[greyhounds]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by greyhounds
If the MILW had 100% of the export wheat buisness to Seattle and the BN/UP split 90% of the intermodal - they'd be ahead of the MILW in revenue. It would have been long haul intermodal with the equipment moving under revenue load in both directions to a significant extent. The wheat would be shorter hauls and the cars for sure returned empty. The Milwaukee could have had 76% of the tonnage, but only 10% of the revenue.

If they did, they would, but they didn't, so they didn't.

If there was enough intermodal, they might be ahead in revenue, but not profitability by a long shot.

In 2005 dollars, wheat moved in 1974 from Great Falls Montana to Port of Seattle at about $6,500 per carload. Intermodal moved at about $2985 average to Midwestern points on a carload (not TEU) basis.

Export intermodal was less than 25% of the import intermodal through Port of Seattle on MILW, and this reflected the Port's overall figures for all railroads.

So Sol? What you're saying here is that in constant dollar terms the wheat rates in 1974, with the Magical Milwaukee Road 'competition' in place, were about twice as high as they are now on the BNSF without the Milwaukee Road around. Well, the folks in Montana should be showering the BNSF with praise and adulation for its efficiency and magnificence.

May I assume that you will organize the effort?

And I think you are way too high on that intermodal rate. In the mid 70's we'd ship two trailers/containers from Chicago to the West Coast for under $2,000. But that doesn't say a thing about profitabilty. Profitability can be expressed, in simple terms, as (revenue-cost) x volume. When you leave two out of three elements out of the equation, as you have done, you give the distinct appearance of attempting to mislead people.

Why would you want to appear to do such a bad thing?

Ken Strawbridge

[MichaelSol]

Attempting to mislead people?

QUOTE: Originally posted by greyhounds May 25, 2006
[And that "50% of the container traffic" is just another meaningless number you throw out to try to fool people. It could be four loads per day, or 14 loads per day, or 40 loads per day, or even 400 loads per day. You don't say and I'm convinced you don't say because you don't know.

QUOTE: Originally posted by MichaelSol, May 20, 2006:
For the period in question, 1974 or thereabouts, Port of Seattle was handling about 8,000 TEU's per month import eastbound. The Port had a defined preference for working with the Milwaukee and Milwaukee's Tokyo office seemed to develop better relationships with the ocean carriers, mostly APL, Sea-Land, Japan Six and K-Line.

Going through a bunch of data and making some extrapolations, I can suggest that BN had about 14 revenue export TEU's westbound into Seattle per day. Whether that is technically "negligble" compared to Milwaukee's 100 or more import TEU's eastbound [per day], I guess is it a matter of perspective. ["Seattle Harbor Container Traffic," Port of Seattle Planning and Research Department, January, 1978. p. 52].

[MichaelSol]

QUOTE: Originally posted by greyhounds
And I think you are way too high on that intermodal rate. In the mid 70's we'd ship two trailers/containers from Chicago to the West Coast for under $2,000.

Kind of shoots your theory that Milwaukee was price cutting to smithereens, doesn't it?

[greyhounds]

QUOTE: Originally posted by MichaelSol

Attempting to mislead people?

QUOTE: Originally posted by greyhounds May 25, 2006
[And that "50% of the container traffic" is just another meaningless number you throw out to try to fool people. It could be four loads per day, or 14 loads per day, or 40 loads per day, or even 400 loads per day. You don't say and I'm convinced you don't say because you don't know.

QUOTE: Originally posted by MichaelSol, May 20, 2006:
For the period in question, 1974 or thereabouts, Port of Seattle was handling about 8,000 TEU's per month import eastbound. The Port had a defined preference for working with the Milwaukee and Milwaukee's Tokyo office seemed to develop better relationships with the ocean carriers, mostly APL, Sea-Land, Japan Six and K-Line.

Going through a bunch of data and making some extrapolations, I can suggest that BN had about 14 revenue export TEU's westbound into Seattle per day. Whether that is technically "negligble" compared to Milwaukee's 100 or more import TEU's eastbound, I guess is it a matter of perspective. ["Seattle Harbor Container Traffic," Port of Seattle Planning and Research Department, January, 1978. p. 52].

Oh, so now you're saying that the Magical Milwaukee Road had "100 or more" TEU's per day eastbound from Seattle. (You did say that!) Since the railroads couldn't generally put 4 loaded 20's on a flatcar back then, (they'd exceept the load limit) and double stacks didn't exist then, that would have been a trainload. That'd be a a 50+ car intermodal train back then - and that would have been a large intermodal train for that day.

So did the MILW originate a 50 car intermodal train daily in Seattle? Got a picture? I don't think so. You're blowing more smoke.

That 8,000 containers per month imported through Seattle is yet another attempt on your part to mislead. Here's clue. They didn't all leave Seattle by rail. Containers were unloaded locally, and some went down to Portland, along with other destinations, by truck. A good number of containers landed don't ever leave the local port area with their loads. But you evidently don't know this.

You just extrapolate numbers with no reason or rational. You're deluding yourself, and attempting to take others with you.

Ken Strawbridge

[MichaelSol]

QUOTE: Originally posted by greyhounds
Got a picture? I don't think so. You're blowing more smoke.

Counted 115 flatcars (230 containers/trailers) on this train, Milwaukee #262S (Seattle), in February, 1974. Milwaukee #262T (Tacoma, (included a Kansas City Block)) was about 45 minutes behind it. These trains had rolling crew changes -- didn't stop. Average train speed Tacoma-Chicago about 38 mph. Average westbound Milwaukee #261C (Chicago) and #261TC (Twin Cities), 42 mph. Compare to BNSF's current intermodal average train speed of 32.9 mph, or UP's 25.0 mph.



Boots on the ground.

[MichaelSol]

QUOTE: Originally posted by greyhounds
That 8,000 containers per month imported through Seattle is yet another attempt on your part to mislead. Here's clue. They didn't all leave Seattle by rail. Containers were unloaded locally, and some went down to Portland, along with other destinations, by truck.

It was Port of Seattle's rail capacity study. Obviously you haven't read it. Additional containers left via truck. These were the containers that left, eastbound, via MILW, UP, BN. I've got the study. You're making this stuff up.

[greyhounds]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by greyhounds
That 8,000 containers per month imported through Seattle is yet another attempt on your part to mislead. Here's clue. They didn't all leave Seattle by rail. Containers were unloaded locally, and some went down to Portland, along with other destinations, by truck.

It was Port of Seattle's rail capacity study. Obviously you haven't read it. Additional containers left via truck. These were the containers that left, eastbound, via MILW, UP, BN. I've got the study. You're making this stuff up.

But Sol, that's not what you said. You said there were 8,000 per month imported through Seattle - Now you've changed it to 8,000 per month leaving Seattle on trains. Which is it?

Were you miseading again? Seems to be.

Ken Strawbridge

[MichaelSol]

There were 8000 containers arriving. It is correct that 40% of that went by truck or "local".

[MichaelSol]

QUOTE: Originally posted by greyhounds
If the wheat had made money they MILW could have, and would have, financed the equipment to haul it. You can lease grain cars easy enough.

I am sure you simply forgot that there was a general car shortage, and especially a Grain Car shortage on all roads beginning in that year. Railroads couldn't get enough of them, notwithstanding they were so "unprofitable" and yet they were clamoring for every car they could lay their hands on. Was not, in fact, "easy" to lease grain cars at the time. You have probably forgotten all about the massive Russian wheat sales which strained the grain carrying capacity of the US rail system. Or maybe it just makes a better story if you leave that information out.

You might recall, Railbox was started in 1974 precisely because railroads were suffering persistent shortages.

By 1978, 10 million tons of coal could not be shipped from Montana mines because of lack of rail resources, and in 1979 the railroads were 8,000 grain cars short of being able to meet the Montana shipping needs. Pat Williams, Representative, Letter to Neil Goldschmidt, Secretary of Transportation, September 12, 1979.

[MichaelSol]

QUOTE: Originally posted by greyhounds

QUOTE: Originally posted by MichaelSol
In 2005 dollars, wheat moved in 1974 from Great Falls Montana to Port of Seattle at about $6,500 per carload. Intermodal moved at about $2985 average to Midwestern points on a carload (not TEU) basis.

So Sol? What you're saying here is that in constant dollar terms the wheat rates in 1974, with the Magical Milwaukee Road 'competition' in place, were about twice as high as they are now on the BNSF without the Milwaukee Road around. Well, the folks in Montana should be showering the BNSF with praise and adulation for its efficiency and magnificence.

May I assume that you will organize the effort?

Think about it for ten seconds. Then rest.

In 1974, Montana wheat growers had the natural advantages of a superior product and location to market. At $4.50 a bushel, a carload would bring $15,750, with a shipping cost to Seattle of $1,550 [1974 dollars]. Just about 10% of the gross revenue went to transportation. Yes, that is $6500 in 2005 dollars, but then you have to measure the equivalent of the gross revenue in 2005 dollars as well.

This all changed under deregulation. Instead of enjoying natural market advantages, Montana farmers were penalized on one hand by rates that did not decline but actually increased relative to those offered to other wheat shippers, but more importantly, those lower rates encouraged much more wheat to ship to Seattle and Portland than under regulated rates. As a result, the market price for wheat there (and everywhere as a result of the policy) is substantially lower in constant dollar terms than it was in the 1970s. That is to say, the $4.50 ($3.50-$4.50) price received then is the same $4.50 price today, notwithstanding the depreciation of the dollar over that time period.

The carload of wheat brings just about the same price today as a result of this. Thirty years later, the farmer still receives $15,550 carload revenue of wheat at Seattle or Portland. But instead of the 1974 shipping cost of $1,550, the shipping charge is now around $3,300 per carload.

In actual, not constant, dollars, the cost of transporation has doubled to Montana wheat farmers, while the actual dollar cost for nearly every other shipper, including wheat shippers, has declined.

The $6,500 transportation cost per carload 2005 dollar equivalent would also suggest that the 1974 carload value of the wheat would be $64,443 at Seattle or Portland, measured in 2005 dollars.

In part due to railroad pricing policy post-Staggers, it isn't.

[Murphy Siding]

[(-D] Now you're just throwing around numbers for the heck of it to prove nothing. Economics and the reletive price of grain/cost of transportation must certainly change on a daily basis. What's your point? All businesses, railroads included, have to compete daily for survival. The Milwaukee Road lost, and it's gone.

[chad thomas]

The point....well.....

[MichaelSol]

QUOTE: Originally posted by Murphy Siding

[(-D] Now you're just throwing around numbers for the heck of it to prove nothing. Economics and the reletive price of grain/cost of transportation must certainly change on a daily basis. What's your point?

There are reasons they change on a daily basis, and there are reasons they change over broader time periods. In this instance, the opening of a market to a much broader range of producers has substantially eroded the price of the commodity. Happens all the time. Classic Adam Smith. This happens to be an instance where it can be associated to some degree with specific changes in the rail industry.

The problem underscored by these changes is that while wheat shippers, as a whole, benefitted from lower rates by having far larger market access, their industry as a whole, suffered and those same shippers pay a substantial market penalty for their shipping "advantage." In this instance, there is a specific class of shippers who did not "benefit" from the price reductions in transportation cost, rather were penalized for it by higher rates, but at the same time they suffered along with the rest of the industry by the lower market prices resulting from larger market access to producers.

It is representative of the classic conundrum of deregulation: rail revenues were put under pressure, and shippers got lower rates, but then received lower market prices permitted by lower rates.

Except some shippers who got hit coming and going by the process.

[Murphy Siding]

The shippers who had the advantage under regulation lost it under de-regulation. That would lead me to believe that they shouldn't have been given that advantage by the regulations in the first place. The same appears to be somewhat true with the Milwaukee Road. They had advantages. They lost them. They are gone.

[MichaelSol]

Well, if the "advantage" was fair and impartial rates, you're exactly right. They lost them.

[SALfan]

QUOTE: Originally posted by MichaelSol

Think about it for ten seconds. Then rest.

In 1974, Montana wheat growers had the natural advantages of a superior product and location to market. At $4.50 a bushel, a carload would bring $15,750, with a shipping cost to Seattle of $1,550 [1974 dollars]. Just about 10% of the gross revenue went to transportation. Yes, that is $6500 in 2005 dollars, but then you have to measure the equivalent of the gross revenue in 2005 dollars as well.

This all changed under deregulation. Instead of enjoying natural market advantages, Montana farmers were penalized on one hand by rates that did not decline but actually increased relative to those offered to other wheat shippers, but more importantly, those lower rates encouraged much more wheat to ship to Seattle and Portland than under regulated rates. As a result, the market price for wheat there (and everywhere as a result of the policy) is substantially lower in constant dollar terms than it was in the 1970s. That is to say, the $4.50 ($3.50-$4.50) price received then is the same $4.50 price today, notwithstanding the depreciation of the dollar over that time period.

The carload of wheat brings just about the same price today as a result of this. Thirty years later, the farmer still receives $15,550 carload revenue of wheat at Seattle or Portland. But instead of the 1974 shipping cost of $1,550, the shipping charge is now around $3,300 per carload.

In actual, not constant, dollars, the cost of transporation has doubled to Montana wheat farmers, while the actual dollar cost for nearly every other shipper, including wheat shippers, has declined.

The $6,500 transportation cost per carload 2005 dollar equivalent would also suggest that the 1974 carload value of the wheat would be $64,443 at Seattle or Portland, measured in 2005 dollars.

In part due to railroad pricing policy post-Staggers, it isn't.

It would be interesting to know what the actual value of a carload of wheat is today, measured by the current market price. You might find that the market price of a bushel of wheat has changed VERY little in the intervening 32 years.

I don't have any knowledge of wheat prices then or now, but I do know about corn prices. In 1974 and 1975, corn brought less than $3.00 per bushel in my part of the world; all corn farmers (including me, at that time) were hoping corn would go to $3.00 per bushel. Today, 32 years later, corn farmers are STILL hoping corn prices go to $3.00 per bushel. It's interesting to know that a basic pickup truck now costs about 10 times what it did in 1974, and a basic 40-hp tractor also costs about 10 times what it did in 1974. Makes it pretty hard to make a living raising corn nowadays.

[MichaelSol]

Today, to the shipper at Great Falls, a 100 ton hopper of hard red spring wheat would bring $16,555.

[Murphy Siding]

QUOTE: Originally posted by MichaelSol

Well, if the "advantage" was fair and impartial rates, you're exactly right. They lost them.

Fair and impartial are really subjective terms, depending on whether you are the one getting the good deal or not.
I wonder if MWK,after a long period of not so profitable operation, found that they just couldn't compete in a deregulated environment?

[MP173]

I have seen some "statistics" in my life, but I found the $6500 carload rate quite challenging to understand. I understand the math, but don't see the realitivity.

The key numbers numbers in the equation are as follows:

1974 = $4.50 bushel
2006 = $4.50 bushel

That goes a long, long way to explain the frustration level of Montana. Sure, they will lash out at BNSF...they have to in order to keep from going crazy. They havent had a pay raise in 32 years! They should be doing something about the demand and supply of their wheat in order to increase the price.

ed

[Murphy Siding]

Ed-Is it possible that $4.50 was really high in 1974, and conversely $4.50 is really low in 2006? At the same time,the freight rates could have been *low* in 1974, *high*in 2006. The laws of supply and demand cause a lot of weird things to happen.(Like gas prices, for example.)

[greyhounds]

QUOTE: Originally posted by MichaelSol

There were 8000 containers arriving. It is correct that 40% of that went by truck or "local".

LIke a lot of Sol's "data", this is a moving target.

First he said that 8,000 arrived and went out by train with the MILW getting 100+ per day.

When it was pointed out that they ALL didn't leave on a train, he came up with some "additional" containers for the local freight and maintained that 8,000/month left on trains with the MILW handling 100+/day.

Now he's back to 8,000 total with 40% being "local" loads and not moving inland by train. (remember - he has steadfastly maintained that the MILW had 50% of the container business trhough the Port of Seattle)

Now he has variously said that that 50% is half of: a) 8,000 or b) 4,800.

Take your pick, but don't be hangin' your hat on the number - he'll change it again when it suits his purpose.

Ken Strawbridge

[greyhounds]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by greyhounds
Got a picture? I don't think so. You're blowing more smoke.

Counted 115 flatcars (230 containers/trailers) on this train, Milwaukee #262S (Seattle), in February, 1974. Milwaukee #262T (Tacoma, (included a Kansas City Block)) was about 45 minutes behind it. These trains had rolling crew changes -- didn't stop. Average train speed Tacoma-Chicago about 38 mph. Average westbound Milwaukee #261C (Chicago) and #261TC (Twin Cities), 42 mph. Compare to BNSF's current intermodal average train speed of 32.9 mph, or UP's 25.0 mph.



Boots on the ground.

WOW! The Milwaukee was "The Magic Road".

230 containers on a train of 115 89 foot flatcars. Good gravey, all the other railroads had to wait until double stack technology developed to get to intermodal trains that big. And it was a perfectly loaded train. There were 230 avaialble hitches on the flats, and MILW used every one of 'em. Boy let me tell you, nobody else came close to 115 car trains with a perfect trailer per car ratio of 2. And that thing would have been 10,000 feet long. It's "almost" unbelievable.

Anyway, what did they take back on the wesbound haul? A key to railroad intermodal profitability has always been to move the equipment under revenue in both directions. If 115 flatcars came east on this monster, what did they carry west.

Please don't tell me the MILW was so stupid that they moved 'em all west empty for zero revenue.

Nice picture though. Too bad we can't actually see some of the "230" containers.

I note diesels behind the "Joes". I understand that the electric system couldn't pump out enough power to allow more than two "Joes" to run at one time. Did the train have more diesels cut in as helpers?

I'll hand it to you that the MILW "tried". That 42mph scheduled time for #261 was on a par with ATSF #188 from Chicago to LA at 44mph. But the MILW couldn't maintian the schedule while Santa Fe could. They tried and failed. Why can't you just accept that?

Ken Strawbridge

[MP173]

It is a very nice photograph.

I had asked several pages ago what the typical freight rates were for intermodal and general freight back in the 70's. Any info yet?

ed

[solzrules]

I agree that was a great picture. Got any more?

I see the argument over freight from 30 years ago is still in full swing, however.

[MP173]

Yeah, I would like to see more pics. My shots of MILW are only a few at Sheldon, Indiana on the Southern Indiana line.

Michael...was MILW running much coal on the Southern Indiana line during the 70's?

I did get shots of Little Joes on the South Shore tho. If I can figure out how to scan them...well, that is asking too much.
ed

[rrandb]

After 17 pages I still do not have a clear picture of what happened to the MILW. Maybe it's all those #'s and name calling but my head is spinning. I got the losing money in the east and more than was made on the PCE part.But how do you end up selling the money making part for scrap? That takes some effort. [2c] As always ENJOY