Shipper's Hop Aboard Rail

[Anonymous]

Shippers Hop Aboard Rail
(The following story by Peter Krouse appeared on the Plain Dealer website on June 25.)

CLEVELAND — Have you noticed a greater number of freight trains rumbling through Cleveland in recent years?

Chances are you have. Perhaps on the Norfolk South ern line as it crosses Chester Avenue in Midtown, or maybe along the CSX track as it runs parallel to the Norfolk Southern near University Circle.

Shippers across the country have been putting more and more freight on trains as the economics of hauling by rail have become more favorable.

The increased traffic has meant strong profits for the railroads. But for many who rely on trains to ship their goods it has been -- at times -- a hassle.

Congestion on the tracks and a shortage of rail cars, not to mention rising prices, have all contributed to headaches for shippers and their customers. It has also brought to a head the need for improved rail infrastructure in the United States and perhaps a public-private partnership when it comes to paying for it.

Rail's good fortune extends across the spectrum, from the major carriers such as Norfolk Southern and CSX in the East, to the many regionals and short lines.

The Wheeling & Lake Erie Railway, which serves northern Ohio and parts of Pennsylvania, West Virginia and Maryland, has seen steady growth turn explosive in the last two years, said Bill Callison, the railroad's chief operating officer. It handled about 115,000 carloads in 2004, while this year it expects to increase volume by about 30 percent to 150,000 carloads.

Over that time, employment at the W&LE has jumped more than 10 percent to around 400.

The high price of oil and diesel fuel has been a major factor in making railroads more competitive, Callison said, because trains are typically about three times more fuel-efficient than trucks. But the overall strength of the economy, including the demand for bulk commodities such as coal, stone and scrap metal, has contributed, too.

Callison estimates that more than 30 customers seeking rail transport have located along W&LE track in Ohio over the last 15 years. Most recently Aurora Plastics put a plant in Streetsboro that's scheduled to open this summer, as is a Polymer Packaging plant in Massillon.

The good fortune has filtered all the way down to the tiny Ashtabula, Carson & Jefferson, a 6.3-mile spur off the Norfolk Southern in Ashtabula County. Operator Bob Callahan has fielded half a dozen new business inquiries since February. He hauls a lot of paper to corrugated-box maker Smurfit-Stone Container Corp. and plastic pellets that are transferred to trucks and delivered to nearby plants.

Business has been excellent at railroads across Ohio, said Lou Jannazo, chief of project development at the Ohio Rail Development Commission. "It's a great time to be in railroading, and they are at capacity."

Full trains create tensions

With more freight moving through a rail system that has not been able to grow with demand, there has been occasional tension between railroads and their customers.

At Mittal Steel USA in Cleveland, shipments of coke and scrap metal still arrive pretty much on schedule, but the rail car shortage and general rail congestion requires a lot more hustle and coordination to keep on time.

Mittal owns a short-line track called the Cleveland Works Railway, that serves the mill and three other companies in the Flats.

The CROW, as the short line is known, takes possession of the freight after it's deposited in adjacent railyards by either the Norfolk Southern, CSX or the W&LE. The short line then positions the empties or any outgoing loads for the long-haul railroads to pick up.

With certain kinds of rail cars in short supply, the railroads now closely monitor turnaround times. That requires Mittal and the CROW to unload cars as quickly as they can to get them back to the railroads without costly delays.

"We are out to make them our friends so they will give us better service," said Dan Hereda, who heads up logistics and Mittal Steel-Cleveland. "And it's working."

With greater profits, the railroads have been able to pump a lot more money into infrastructure.

$8.3 billion on improvements

The seven largest railroads that operate in the United States expect to spend $8.3 billion this year on such improvements as additional track, better switching yards and more locomotives.

CSX, for example, is putting in new siding along its main line from Chicago to Florida.

Smaller railroads are putting up dough, too. The Wheeling & Lake Erie recently borrowed $25 million to make improvements to its infrastructure that will increase the speed and efficiency of its trains. It also has ordered 150 open-top hopper cars.

But not everybody can wait for the railroads to come to their rescue.

Scrap dealer PSC Metals Inc. of Mayfield Heights has taken matters into its own hands. It recently acquired 27 cars, leasing 17 and buying 10.

The overall shortage has rail car manufacturers working double time. At American Railcar Industries Inc. near St. Louis, the backlog for its tank and hopper cars exceeds 14,000, enough work to last into 2008.

The Andersons Inc. near Toledo has tripled its fleet of rental rail cars in the last three years and still has none to spare, said Gary Smith, the company's chief financial officer. The diversified company's rail operations had operating income of only $4 million in 2003, but last year it reached $23 million.

But will all the investment and coordination be enough?

One of the biggest critics of the railroads is United Parcel Service, which complained to the Surface Transportation Board in Washington, D.C., last year that federal response is needed to address the capacity crunch. One proposal is a rail transportation fund akin to the highway transportation fund that applies gas taxes to road improvements.

UPS is the largest corporate customer of the railroads, shipping trailers and containers from U.S. ports to inland terminals where they are attached to trucks and delivered to customers around the country.

But the Association of American Railroads, which represents the major railroads, opposes such a tax. It could make the railroads uncompetitive with trucks and barges, said the association's president, Edward Hamberger. Also, bureaucrats and politicians would determine how the money is spent, not the railroads.

Hamberger said the association would like Congress to provide tax credits to the railroads when they expand.

The industry's problems stem from deregulation, which occurred in 1980. Railroads consolidated and restructured, and a lot of track that was deemed unprofitable was taken out of service.

Wall Street pressured the railroads to operate much leaner, said Carl Martland, a senior research associate in the department of civil and environmental engineering at Massachusetts Institute of Technology, and they did. Also, prices rose, but only for a few years. They then began a steady decline in the face of competition from trucking, only to start rising again in 2004.

Martland believes Congress should finance more research on rail issues and that ultimately a blueprint for a system that includes multiple tracks, efficient switching yards and both long-haul and short-line railroads should be established.

Clearly, the railroads can't be asked to do it all, Martland said. The public should help pay for the benefits of increased rail use, which include less highway congestion, less energy consumption and cleaner air.

"The railroads won't invest enough to get the full public benefits," he said.

CSX spokesman Gary Sease laid out the economic reality: While railroads may be constrained now, they won't be when the economy cycles downward, and yet the debt on any infrastructure improvements will still have to be paid.

There's a saying in the industry, he said. "You don't build the church for Easter Sunday."

From BLET Site

[samfp1943]

Sounds like things in the "Rust Belt" are gearing up.[8D]

[Anonymous]

Sounds like there are not nearly so many dissatisfied customers as some would have us believe.

[Anonymous]

QUOTE: Originally posted by Character

Sounds like there are not nearly so many dissatisfied customers as some would have us believe.

Quotes from article:

"But for many who rely on trains to ship their goods it has been -- at times -- a hassle."

"Congestion on the tracks and a shortage of rail cars, not to mention rising prices, have all contributed to headaches for shippers and their customers."

"With more freight moving through a rail system that has not been able to grow with demand, there has been occasional tension between railroads and their customers."

"One of the biggest critics of the railroads is United Parcel Service, which complained to the Surface Transportation Board in Washington, D.C., last year that federal response is needed to address the capacity crunch."

You see the glass half full, I see it half empty.

BTW - This is a great article! Thanks for posting it.

The "tell" however is in the finer print. There are several references to having the public bear the cost of new rail construction:

"It has also brought to a head the need for improved rail infrastructure in the United States and perhaps a public-private partnership when it comes to paying for it."

"Hamberger said the association would like Congress to provide tax credits to the railroads when they expand."

"Martland believes Congress".....(that's you and me folks!)...." should finance more research on rail issues"

"'Clearly, the railroads can't be asked to do it all,' Martland said. 'The public should help pay for the benefits of increased rail use, which include less highway congestion, less energy consumption and cleaner air. The railroads won't invest enough to get the full public benefits,' he said"

Hmmmm, hasn't railroad retrenchment caused more, not less highway congestion? Hasn't the average truck haul to the nearest railhead increased fourfold since the 1960's? Surely Professor Martland knows that the public IS paying for loss of rail network coverage across the USA via increased truck road usage.

But the funniest quote is the one from CSX spokesman Gary Sease in explaining why railroads won't keep up with current demand for fear of an economic downturn:

"There's a saying in the industry. You don't build the church for Easter Sunday."

Actually, you do build the church for your maximum capacity even if that capacity is only reached on special occasions. Ditto for your school gymnasium, your community theatre, your convention center...........the list is endless. And the saying, if indeed it is a current rail industry maxim, is idiotic.

Only a fool builds a facility's capacity for the bare minimum.[D)]

I will say there are a lot of ideas for improving rail capacity that I have promoted over the years. The UPS idea of a railroad trust fund paid for with fuel taxes on the railroads was seemingly lifted right from this forum and yours truly.[:p] And I am an advocate of using tax credits to fund rail infrastructure expansion, albeit only for lines which give opportunity for each rail shipper to have access to intramodal competition, aka the dreaded open access.

Look, it boils down to this: If the railroads want the public to fund the rebuilding of lost capacity (perchance to expand rail capacity to new reaches[tup]), then the public deserves some semblence of public acces to that public/private property. Open access solves that tradeoff. Not so sure reregulation will accompli***hat end.

I apologize if it seems I have hijacked another thread. I will now release the hostages.[;)]

[solzrules]

A real interesting read - thanks for the post!

[greyhounds]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by Character

Sounds like there are not nearly so many dissatisfied customers as some would have us believe.

Quotes from article:

"But for many who rely on trains to ship their goods it has been -- at times -- a hassle."

"Congestion on the tracks and a shortage of rail cars, not to mention rising prices, have all contributed to headaches for shippers and their customers."

"With more freight moving through a rail system that has not been able to grow with demand, there has been occasional tension between railroads and their customers."

"One of the biggest critics of the railroads is United Parcel Service, which complained to the Surface Transportation Board in Washington, D.C., last year that federal response is needed to address the capacity crunch."

You see the glass half full, I see it half empty.

BTW - This is a great article! Thanks for posting it.

The "tell" however is in the finer print. There are several references to having the public bear the cost of new rail construction:

"It has also brought to a head the need for improved rail infrastructure in the United States and perhaps a public-private partnership when it comes to paying for it."

"Hamberger said the association would like Congress to provide tax credits to the railroads when they expand."

"Martland believes Congress".....(that's you and me folks!)...." should finance more research on rail issues"

"'Clearly, the railroads can't be asked to do it all,' Martland said. 'The public should help pay for the benefits of increased rail use, which include less highway congestion, less energy consumption and cleaner air. The railroads won't invest enough to get the full public benefits,' he said"

Hmmmm, hasn't railroad retrenchment caused more, not less highway congestion? Hasn't the average truck haul to the nearest railhead increased fourfold since the 1960's? Surely Professor Martland knows that the public IS paying for loss of rail network coverage across the USA via increased truck road usage.

But the funniest quote is the one from CSX spokesman Gary Sease in explaining why railroads won't keep up with current demand for fear of an economic downturn:

"There's a saying in the industry. You don't build the church for Easter Sunday."

Actually, you do build the church for your maximum capacity even if that capacity is only reached on special occasions. Ditto for your school gymnasium, your community theatre, your convention center...........the list is endless. And the saying, if indeed it is a current rail industry maxim, is idiotic.

Only a fool builds a facility's capacity for the bare minimum.[D)]

I will say there are a lot of ideas for improving rail capacity that I have promoted over the years. The UPS idea of a railroad trust fund paid for with fuel taxes on the railroads was seemingly lifted right from this forum and yours truly.[:p] And I am an advocate of using tax credits to fund rail infrastructure expansion, albeit only for lines which give opportunity for each rail shipper to have access to intramodal competition, aka the dreaded open access.

Look, it boils down to this: If the railroads want the public to fund the rebuilding of lost capacity (perchance to expand rail capacity to new reaches[tup]), then the public deserves some semblence of public acces to that public/private property. Open access solves that tradeoff. Not so sure reregulation will accompli***hat end.

I apologize if it seems I have hijacked another thread. I will now release the hostages.[;)]

In whatever FM attempts to read, he finds in it validation and vindication. Even if they aren't there, he finds them.

[n012944]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by Character

Sounds like there are not nearly so many dissatisfied customers as some would have us believe.

Hmmmm, hasn't railroad retrenchment caused more, not less highway congestion? Hasn't the average truck haul to the nearest railhead increased fourfold since the 1960's? Surely Professor Martland knows that the public IS paying for loss of rail network coverage across the USA via increased truck road usage.

Actually, you do build the church for your maximum capacity even if that capacity is only reached on special occasions. Ditto for your school gymnasium, your community theatre, your convention center...........the list is endless. And the saying, if indeed it is a current rail industry maxim, is idiotic.

Maybe the average truck haul going up has more to do with the Interstate highway system just getting into high gear during the 60's then the loss of railroads. And for you list of things you build for max capacity, I find it ironic that almost all the things you list are built with goverment money, so profit is not an issue. I guess Dave wants railroads to be paying for four track mains when the economy crashes and there is only enough traffic to support two. That is how companies go bankrupt.


Bert

[Anonymous]

QUOTE: Originally posted by n012944

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by Character

Sounds like there are not nearly so many dissatisfied customers as some would have us believe.

Hmmmm, hasn't railroad retrenchment caused more, not less highway congestion? Hasn't the average truck haul to the nearest railhead increased fourfold since the 1960's? Surely Professor Martland knows that the public IS paying for loss of rail network coverage across the USA via increased truck road usage.

Actually, you do build the church for your maximum capacity even if that capacity is only reached on special occasions. Ditto for your school gymnasium, your community theatre, your convention center...........the list is endless. And the saying, if indeed it is a current rail industry maxim, is idiotic.

Maybe the average truck haul going up has more to do with the Interstate highway system just getting into high gear during the 60's then the loss of railroads. And for you list of things you build for max capacity, I find it ironic that almost all the things you list are built with goverment money, so profit is not an issue. I guess Dave wants railroads to be paying for four track mains when the economy crashes and there is only enough traffic to support two. That is how companies go bankrupt.


Bert

Churches are private. Many schools are private. Theatres are private. Most convention centers are private (usually associated with a corresponding hotel or motel). I find it ironic you think most of those things are from the government.

I think it would be in the rail industry's best interests to adopt some other maxim other than "You don't build the church for Easter Sunday". Clearly none of these guys go to church.

How about "We really f*****d up! We bad!"[}:)]

[Anonymous]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by n012944

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by Character

Sounds like there are not nearly so many dissatisfied customers as some would have us believe.

Hmmmm, hasn't railroad retrenchment caused more, not less highway congestion? Hasn't the average truck haul to the nearest railhead increased fourfold since the 1960's? Surely Professor Martland knows that the public IS paying for loss of rail network coverage across the USA via increased truck road usage.

Actually, you do build the church for your maximum capacity even if that capacity is only reached on special occasions. Ditto for your school gymnasium, your community theatre, your convention center...........the list is endless. And the saying, if indeed it is a current rail industry maxim, is idiotic.

Maybe the average truck haul going up has more to do with the Interstate highway system just getting into high gear during the 60's then the loss of railroads. And for you list of things you build for max capacity, I find it ironic that almost all the things you list are built with goverment money, so profit is not an issue. I guess Dave wants railroads to be paying for four track mains when the economy crashes and there is only enough traffic to support two. That is how companies go bankrupt.


Bert

Churches are private. Many schools are private. Theatres are private. Most convention centers are private (usually associated with a corresponding hotel or motel). I find it ironic you think most of those things are from the government.

I think it would be in the rail industry's best interests to adopt some other maxim other than "You don't build the church for Easter Sunday". Clearly none of these guys go to church.

How about "We really f*****d up! We bad!"[}:)]

How 'bout, we build the church for our reasonable expectation of what the congregation will be, and as that congregation changes in size and composition we build a new church to reflect our congregation. Our old church is sold by the Dioceses to a nice developer who makes condos out of it. That is the way it is really done.

The railroad's congregation is changing again and we are putting a new wing on the church, we don't need a whole new church, just a bit of extra space because the demand is greater. This isn't a question of making mistakes, although Dave the untutored boob without a documented college education has his tunnel vision blinders on, as usual.

Railroads need to make changes to add capacity in many places and it is happening, whether that makes the so called "Captive" shippers happy, is irrelevant. Many railroad customers will never be happy, and if all of a sudden they get happy, it is for one of two reasons, your railroad is about to be hurt severely or they have finally realized they can have a choice rail service or no rail service when the line becomes unprofitable and becomes an abandonment candidate...

[edblysard]

[Anonymous]

Question for the so-called yet undocumented attorney:

When one plans to build a hotel, does he/she build for the expected average occupancy? Or does he/she build for the maximum occupancy?

Hint: The question is rhetorical to all but those in the rail industry.

[Anonymous]

QUOTE: Originally posted by futuremodal

Question for the so-called yet undocumented attorney:

When one plans to build a hotel, does he/she build for the expected average occupancy? Or does he/she build for the maximum occupancy?

Hint: The question is rhetorical to all but those in the rail industry.

If you build everything for the maximum possible occupancy you'll go bankrupt every time. To say nothing of the fact that you'll never get the chance as your banks or other financial sources won't let you build something HUGE without justification. Why are business plans required, do you imagine, oops, forgot, you don't have an imagination. Obviously you've never actually had to run a business, a nice addition to your vacuous lack of credentials.

[Anonymous]

QUOTE: Originally posted by Character

QUOTE: Originally posted by futuremodal

Question for the so-called yet undocumented attorney:

When one plans to build a hotel, does he/she build for the expected average occupancy? Or does he/she build for the maximum occupancy?

Hint: The question is rhetorical to all but those in the rail industry.

If you build everything for the maximum possible occupancy you'll go bankrupt every time. To say nothing of the fact that you'll never get the chance as your banks or other financial sources won't let you build something HUGE without justification. Why are business plans required, do you imagine, oops, forgot, you don't have an imagination. Obviously you've never actually had to run a business, a nice addition to your vacuous lack of credentials.

So all those hotels and motels are going bankrupt every time? Those resturants that build seating capacity for the Easter Sunday crowd have all gone bankrupt? All those movie theatres built for the next big blockbuster movie have all gone bankrupt?

You build for the max, not the mean. Maybe if the railroads had adopted that maxim along with the rest of the business world, they wouldn't be lobbying the government for financial aid to rebuild their lost capacity from a few decades ago.

BTW, all the credentials in the world mean nothing without a legal name to go with 'em.[;)]

[Anonymous]

QUOTE: Originally posted by edblysard

How about "We really f*****d up! We bad!"[}:)]