What happen to Milwaukee Road?

[nanaimo73]

Michael-
Why didn't SORE try to acquire the Milwaukee Road from Seattle and Portland to Minneapolis, instead of all of the way to Louisville.

Greyhounds-
Do you hate the Milwaukee Road, or just Michael ?

[kenneo]

QUOTE: Originally posted by 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

Simple answer is politics. Also, the management of the MILW was trying to keep the stock price up and merge with the CNW, so kept siphoning off money from the PCE.

The politics included "my opinion is correct, and I will have it my way - the truth doesn't count" that the PCE was a money loser. Add that to the agenda of the BN to be rid of an effective competitor and the Federal Government DOT to "rid the US rail industry of excess capacity" and you have the majority of the reasons.

[rrandb]

Thank you. It is kind hard to go out of business when you are profitable. It can be done but requires a lot of effort. As always ENJOY

[greyhounds]

QUOTE: Originally posted by nanaimo73

Michael-
Why didn't SORE try to acquire the Milwaukee Road from Seattle and Portland to Minneapolis, instead of all of the way to Louisville.

Greyhounds-
Do you hate the Milwaukee Road, or just Michael ?

Hate is not a logical emotion.

The US railroad network was overbuilt. The Milwaukee Road Pacific Coast Extension was part of the overbuilding. It's totally understandable. Nobody knew how large of a rail network the US would need, and nobody could possibly foresee the Interestate System, 80,000 pound trucks, or 737's.

In addition, the government mandated economic structure of the rail industry, a government approved and regulated cartel, encouraged overbuilding. It was reasonable for the MILW honchos to assume that all they had to do was build the PCE and they would be "awarded" "their share" of the buisiness priced at a level where everyone involved could make money. Didn't happen. The world had begun to change drastically by the time the PCE was built. Henry Ford and the Wright Brothers had already figured things out.

The very short era when railroad cartels controled all freight and passenger traffic was basically over when the PCE was built. It became just so much excess capacity and drug the railroad network down as its owners desperately sought to recoup part of their investment by grabbing any freight they could at any price they could.

As of 2006, parts (easten parts) of the Milwaukee remain viable. The CP depends on the Chicago-Twin Cities line, the IC&E operates midwest lines, and the BNSFoperates a chunk of ex-MILW trackage in South Dakota. But nobody was able to "save" the PCE because it had no economic viability.

I don't "hate" the Milwaukee. I just understand what it was.

Sol (and FM Dave) let their emotional ties to the Milwaukee get in the way of reason. Both of these guys have basically repeatedly said that BNSF is acting in a malicious way that harms Montana wheat farmers. That couldn't have happened if the MILW was still around to provide competition, or so those two say.

Well, it turns out that the BNSF wheat rates have been reduced in constant dollar terms (and that's the only way to realistically compare 1974 dollars with 2006 dollars, you have to adjust for inflation). Those rates are now, according to Sol's own numbers, about half of what they were in 1974 when the Milwaukee was still around.

Any rational person would expect that the state legislature of Montana would be passing resolutions praising BNSF for developing efficiencies that help the Montana farmers. But oh no! Sol and FM Dave (along with the Montana State Government) sieze on the issue that you can no longer make a decent living growing wheat in Montana to attack the BNSF - which has cut its rates in half (constant dollar terms) on grain shipments from Montana to export terminals.

What I hate (OK, I know. I'm not ALWAYS logical.) is the irrational behavior and thought on Sol's and FM's part. I don't hate the person.

I like railroads and trains. Always have, always will. But transportation is an economic activity. If a line can't support itself, I'll content myself to looking at pictures. Shoot, I think the Colorado narrow guage lines were wonderful. I'm fascinated by them. But I don't argue that those lines should still be around and operating today. Those lines are obsolete, just like the Milwaukee Road and those Montana wheat farmers. (Harsh!? OK, I can be harsh.)

And that sure was a fine picture of those two Little Joes in the snow. I can appreciate the past without devloping a baseless "conspiracy" theory to falsely explain the passing.

Ken Strawbridge

[nanaimo73]

QUOTE: Originally posted by greyhounds

As of 2006, parts (easten parts) of the Milwaukee remain viable. The CP depends on the Chicago-Twin Cities line, the IC&E operates midwest lines, and the BNSFoperates a chunk of ex-MILW trackage in South Dakota. But nobody was able to "save" the PCE because it had no economic viability.

Would you say if the PCE was in place from Seattle and Portland to the Twin Cities under an independant owner today, that it would now be viable ?

[kenneo]

QUOTE: Originally posted by nanaimo73

QUOTE: Originally posted by greyhounds

As of 2006, parts (easten parts) of the Milwaukee remain viable. The CP depends on the Chicago-Twin Cities line, the IC&E operates midwest lines, and the BNSFoperates a chunk of ex-MILW trackage in South Dakota. But nobody was able to "save" the PCE because it had no economic viability.

Would you say if the PCE was in place from Seattle and Portland to the Twin Cities under an independant owner today, that it would now be viable ?

My take is that the PCE was the economicly most viable of the four Northern Trans-continental roads. Should the MILW have shed its Granger branches into short lines and/or regionals, kept its Monon purchase and merged or bought the E-L and shedding much of its Eastern End (mostly parts of the DLW), it would have been in a position to be an absolute economic powerhouse. It would be around today, perhaps merged with the SP and with parts of the CRIP.

The UP had the LASL and the Bay area as well as the OSL/OWRN and had sufficient traffic without any PNW traffic. The NP ended at Pasco until the UP gained control of the OWRN (which ran, originally, from Pasco to Portland with a branch to Huntington).

The GN, which wanted a Portland route joined with the NP to build the SPS so that they would have an independent access to Portland.

The NP, also at the time the UP took control of the OWRN, built its "Tacoma Branch" from Pasco over Stampede Pass. The GN terminated in Everett and built branches to Vancouver and Seattle.

The MILW was the only road that had as its original terminals Tacoma and Seattle, and they had the infrastructure at both ports to support a transcontinental main line. The NP and GN, although they were physically in both towns ahead of the MILW, did not build an infrastructure, and so played second fiddle to the MILW. This provided the MILW with its incrediblly remunerative long haul PCE traffic and the ability to turn a proffit while having almost no local originating or terminating traffic which was required to be turned over to the GN and NP at the Twin Cities.

The GN and NP permitted the MILW to build the PCE provided that the MILW turned over all traffic destined West of the Twin Cities to them that was not totally captive to the MILW.

This situation changed only as a result of the BN merger and the attitudes of the MILW employees and the physical economics of the MILW's line location resulted in that main line being the economicly most viable route. And the MILW made the most of it that they could despite a corporate management that tried to drain the company in a failed merger attempt with the CNW.

The MILW was the only Western Road that had a traffic balance that even approached equal East and West. They ended up short hauling the other three transcontinental roads in adition to the SP.

[ValorStorm]

And there was the issue of Milwaukee Road's near-complete monopoly of northwest new car traffic. Tunnel clearances were the primary reason.

I will say that Montana wheat growers are their own worst enemies. Lack of rail competition is a legitimate concern here. But wheat would be more expensive to ship from Montana even with better competition. Distances are just greater here. Kansas, Nebraska, and Oklahoma wheat is much closer to its terminals and its market. (Texas and Alaska could be as big as all Canada, and Montanans would STILL have a longer school-bus ride.) And our grain storage options - compared to the prairie states - are few, small, and far between. I think Glendive has the only "shuttle" elevator in the state.

Simply put, ours is more expensive wheat. Montana farmers fight other states in an uphill battle against opportunity-cost. Big Sky Country is a good place to run "shooters." That's what BNSF wants to do here. If there were more rail options, BNSF might just let them haul the wheat.

[kenneo]

ValorStorm --- The real culprit here is the price that the farmer gets for his wheat. It hasn't increased since the MILW was torn up, but the cost of moving it has -- a lot.

My dad's family owned three large properties in Montana starting in 1915 through 1930 (I still have the Patents for the properties) and Dad and GrandDad said that the land there would grow the best grains and seed crops in the uplands between the Yellowstone and Powder Rivers. But the cost of transportation just ate them alive. And until the MILW came along in 1909, it cost about twice as much more.

The joke now, is, that coal littered the ground just like stones do in New England, and it was just as troublesome. You couldn't even just heap it up and burn it because you would just set the ground on fire!!!!! So in 1931 they sold the properties -- along with the mineral rights. That proved to be several billion $$'s of [banghead][oops]

[Murphy Siding]

QUOTE: Originally posted by kenneo
The GN and NP permitted the MILW to build the PCE provided that the MILW turned over all traffic destined West of the Twin Cities to them that was not totally captive to the MILW.

Can you explain "permitted" in the context of this subject? I don't quite understand.

[n012944]

After reading all 17 pages of this topic, I must say that it is a very interesting topic. I would like to add a few of my opinons to this,[:I]

1. If the PCE did make a profit, someone would have bought it and operatied it. You can go on all day about political theroys, but in the end someone would be operating it today. Look at the eastern end of the MILW, for the most part it is still in operation, making money for the CP.

2. As for the little joes being the greatest locomotive on the face ot the earth, the CSS&SB got rid of there 3 little joes a less then 10 years after the MILW did. They replaced them with a couple of brand new GP38's and several GP7/9's. Now the CSS&SB little joes had less miles on them, and were in better shape than the MILW joes. If they were such a great engine they would be hauling coal in northern Indinana right now. In the end, and this is one reason why Conrail got rid of the electric freight engines, is that it does not pay to have road locomtives that are captive to one area. It is better to have a SD40 that can operate anywere on the system as opposed to a joe that is held captive to 1000 mile line.[:0]

[Anonymous]

QUOTE: Originally posted by ValorStorm
I will say that Montana wheat growers are their own worst enemies. Lack of rail competition is a legitimate concern here. But wheat would be more expensive to ship from Montana even with better competition. Distances are just greater here. Kansas, Nebraska, and Oklahoma wheat is much closer to its terminals and its market. (Texas and Alaska could be as big as all Canada, and Montanans would STILL have a longer school-bus ride.) And our grain storage options - compared to the prairie states - are few, small, and far between.

I take it geography is not your strong suit! Montana is closer to Portland (THE major Pacific Rim export area) than Kansas, Nebraska, and Oklahoma, and most US hard red wheat is bound for export. What those latter three states have that Montana doesn't is a semblance of intramodal rail competition. And don't think for a moment that being a captive shipper state is irrelevent to the price grain farmers receive for their crop. Montana farmers have at least 1/3 of their profits eaten up in transportation costs.

QUOTE: I think Glendive has the only "shuttle" elevator in the state.

I think there's more. Someone mentioned Mocassin a while back, there's a shuttle facility near Billings, and I assume there are a few others. But you are right, there's not that many compared to carload elevators.

The problem with shuttle facilities is that they replace the carload facilities which were numerous and spread out accross the State. Thus the average truck haul from farm to railhead (including farm to local elevator to shuttle facility moves) has increased dramatically from about 15 miles to about 100 miles today. Thus whatever is "saved" by shuttle efficiencies is lost by having to longhaul (relatively speaking) by truck.

Now, the logical solution to this is to keep the carload elevators active, whether on a mainline or a branchline, and allow a shortline operator to distribute/collect the cars at the local elevator and deliver them to the shuttle facility. There, the cars can either be added to the shuttle consist, or (if they are 264k or below) emptied at the shuttle elevator. A 264k car is still more efficient than a 105k truck.

QUOTE: Simply put, ours is more expensive wheat. Montana farmers fight other states in an uphill battle against opportunity-cost. Big Sky Country is a good place to run "shooters." That's what BNSF wants to do here. If there were more rail options, BNSF might just let them haul the wheat.

Well, there were more rail options, and BN went to great lengths to make sure those other rail options were extinguished, and BNSF continues today to protect it's monopoly in Montana, even to the point of *purchasing* the Montana Western at an exorbinant price to prevent free interchange between UP and MRL. Frankly, if it weren't for the elimination of the PCE, BN may not have had the necessary income to stave off a bankruptcy of it's own.

[greyhounds]

QUOTE: Originally posted by nanaimo73

QUOTE: Originally posted by greyhounds

As of 2006, parts (easten parts) of the Milwaukee remain viable. The CP depends on the Chicago-Twin Cities line, the IC&E operates midwest lines, and the BNSFoperates a chunk of ex-MILW trackage in South Dakota. But nobody was able to "save" the PCE because it had no economic viability.

Would you say if the PCE was in place from Seattle and Portland to the Twin Cities under an independant owner today, that it would now be viable ?

No, I'm convinced it would still be just execess capacity.

I'll cite two factors that conclusively indicate that there is adequate capacity today and into the near future:

1) The grain rates are lower, much lower, today than they were 30 years ago with the Milwuakee in place. If there was a true capacity problem that wouldn't be the case. If the demand approached available supply you'd see those prices go up, now down.

2) Seattle and Tacoma are fast growing container ports. This growth is being handled by the current rail network. It will always be less expensive to add capacity to the BNSF lines than to operate an entire new route. (and hopefully, someday, the UP will get its act together.)

Throw in the domestic business (UPS, LTL, other intermodal, chemicals, etc.) and basically, that's the market between the Twin Cities and Puget sound. It's being handled just fine now. And it's growth is being handled just fine now.

Again, it will always be cheaper to add capacity to the BNSF (and UP) than to operate an entirely different route.

And don't forget the CN and CP. The Canadian and US rail networks are totally integrated. Vancouver can take more containers and those railroads can deliver those boxes to Chicago.

The current capacity is doing the job just fine - another route would be excess. I don't conceed that the PCE was ever viable. I don't see how it would be viable today.

Ken Strawbridge

[greyhounds]

QUOTE: Originally posted by futuremodal
[br Frankly, if it weren't for the elimination of the PCE, BN may not have had the necessary income to stave off a bankruptcy of it's own.

I agree that's a possibility. Which makes a good arguement as to why the PCE had to die.

With it, you might have had two banckrupt railroads. Two broken down streaks of rust instead of one good, efficient system.

That's FM's irrationality. That's what he seems to want.

Ken Strawbridge

[n012944]

QUOTE: Originally posted by greyhounds

QUOTE: Originally posted by futuremodal
[br Frankly, if it weren't for the elimination of the PCE, BN may not have had the necessary income to stave off a bankruptcy of it's own.

I agree that's a possibility. Which makes a good arguement as to why the PCE had to die.

With it, you might have had two banckrupt railroads. Two broken down streaks of rust instead of one good, efficient system.

That's FM's irrationality. That's what he seems to want.

Ken Strawbridge

I think you are wrong on that one. It was not the PCE elimation that saved the BN. It was Powder River coal and the passage of the clean air act, which made burning western coal nessesary if you did not want to install expensive scrubbers. Sure the extra revenue from the PCE was nice, but it was not the diffenece maker.


Bert

[Anonymous]

QUOTE: Originally posted by greyhounds

As of 2006, parts (easten parts) of the Milwaukee remain viable. The CP depends on the Chicago-Twin Cities line, the IC&E operates midwest lines, and the BNSFoperates a chunk of ex-MILW trackage in South Dakota. But nobody was able to "save" the PCE because it had no economic viability.

Well, the "ex-MILW trackage in South Dakota" you mention IS a part of the PCE, and was only saved because the State of South Dakota was smart enough to purchase it, otherwise it would have ended up a victim as well. And the Chicago-Twin Cities line is also a part of the PCE in that it was part of that trancon route. Yes, the PCE survives intact east of Miles City!

And the only reason the IC&E routes were saved is that they were the part of the Milwaukee kept after the PCE retrenchment, thus they lasted until after Staggers allowed the pawning off of unwanted trackage by the Class I's to shortline and regional opertators. The owners and operators of the MRL today would have gladly bought the entire PCE west of the Twin Cities had that opportunity availed itself, but the regulatory structure pre-Staggers did not favor that.

If the PCE could have survived past Staggers in an ongoing operational capacity (basically a few years more), it would still be in operation today. The existance of the MRL and the ambitions of the Washington Group would have guaranteed that.

QUOTE: Originally posted by nanaimo73
Would you say if the PCE was in place from Seattle and Portland to the Twin Cities under an independant owner today, that it would now be viable ?

Yes, under the umbrella of the Washington Group. The irony of that is, if the MRL people had instead bought the PCE, the ex-NP lines might be rail trails today! Of course, those NP bonds from yore might have forced the BN to keep those lines, thus contributing to an eventual BN bankruptcy! The point is, I'm not sure the MRL folks would have also bought the NP lines had they been offered up by BN, if indeed they had gotten control of the PCE. Mr. Sol might have some insight into that speculation.

QUOTE: Originally posted by greyhounds
No, I'm convinced it would still be just execess capacity.

I'll cite two factors that conclusively indicate that there is adequate capacity today and into the near future:

1) The grain rates are lower, much lower, today than they were 30 years ago with the Milwuakee in place. If there was a true capacity problem that wouldn't be the case. If the demand approached available supply you'd see those prices go up, now down.

Not really. What you have to calculate is the percentage of farmers' profits being eaten up by transportation costs, which is really the only relavent measure. Under that measure, transporation costs have increased, and most of that increase is due to the captive shipper rates being forced onto Montana farmers. With another railroad competing for grain hauling in Montana, that cost as a percentage of gross income lost falls from nearly 50% to around 15%. And carload rates have gone up dramatically, so that statement if patentaly false.

QUOTE: 2) Seattle and Tacoma are fast growing container ports. This growth is being handled by the current rail network. It will always be less expensive to add capacity to the BNSF lines than to operate an entire new route. (and hopefully, someday, the UP will get its act together.)

Less expensive for who? Adding capacity is a cost borne by BNSF and/or UP. Adding a new railroad is a cost borne by whatever entity or entities engage in that prospect. And you seem to forget that railcar deliveries are not keeping up with requests. Service levels are down dramatically all over the US, not just Montana elevators.

You can argue all you want about current capacity being adaquate. That may be true for BNSF, and that is only true east of Sandpoint ID with the two lines diverging to three diverging into five. The real problem exists twofold:

1. The need for capacity from the shippers perspective is for competitive capacity. All the capacity additions by BNSF and UP will not aleviate the monopolistic rate setting that is harming US producers.

2. If your only concern is BNSF and not the needs of the rail shipper community, even then you have the problem of bottlenecks, a problem created by the abandonment of mainline trackage, further compounded by the fact that the best alignments sometimes were abandoned in favor of lesser aligments. BNSF's former railroads had two mainlines from Sandpoint to Spokane, now there is just one. It is a bottleneck, and BNSF does not have the money to fix it. Which might explain why today's railroads are begging the feds for financial aid.

QUOTE:
Throw in the domestic business (UPS, LTL, other intermodal, chemicals, etc.) and basically, that's the market between the Twin Cities and Puget sound. It's being handled just fine now. And it's growth is being handled just fine now.

NO, it isn't. This is a fantasy of yours, not in line with the reality of service complaints, lost domestic production, continued truckload growth, etc.

Tell me, why is it that shippers are complaining about railroads, but not truckers and bargelines? The answer is obvious - THERE IS A REAL ONGOING SHORTAGE OF COMPETITIVE RAILROAD CAPACITY. THERE IS NO SHORTAGE OF TRUCK AND BARGE COMPETITIVE CAPACITY!

Sorry to yell like that, but if that's what it takes to get it through your thick head.......

[Anonymous]

More proof that the statement "capacity is just fine" is just plain nonsensical:

http://www.railwayage.com/A/feature1.html

And remember, whatever grain shipping problems are felt by the US on average, are may times worse in captive country.

[n012944]

QUOTE: Originally posted by futuremodal
[

. And the Chicago-Twin Cities line is also a part of the PCE in that it was part of that trancon route. Yes, the PCE survives intact east of Miles City!

[Anonymous]

To change the subject for a second and let you guys cool down. Did the MILW ever own any FP45's?????
TIA .

[nanaimo73]

Yes They had 5 of them, without dynamic brakes (Chicago-Omaha service) that were painted in UP colors at first. All 5 were scrapped. They were numbered 1 to 5
http://www.rrpicturearchives.net/locoList.aspx?id=MILW

[Anonymous]

The original line does not extend quite to Miles City. The Milwaukee line was mostly on the north side of the Yellowstone River from Miles City to Terry while the Burlington Northern was on the south side. The portion of the line from Terry to Miles City was abandoned which eliminated two big bridges over the Yellowstone River.

Larry

[Anonymous]

QUOTE: Originally posted by n012944

QUOTE: Originally posted by futuremodal
[

. And the Chicago-Twin Cities line is also a part of the PCE in that it was part of that trancon route. Yes, the PCE survives intact east of Miles City!

No the Chicago-Twin cities in not part of the PCE. The PCE or pacific coast EXTENSION was built west of the twin cities, and therfore is not included in it.


Bert