Like the subject line says.
What would it take to get one of the Class I freight companies to get back into passenger rail?
If GM "killed the electric car", what am I doing standing next to an EV-1, a half a block from the WSOR tracks?
zkr123 Like the subject line says. What would it take to get one of the Class I freight companies to get back into passenger rail?
The prospect of making a decent profit on the operation. Highly improbable.
C&NW, CA&E, MILW, CGW and IC fan
Short answer: a great deal of money. Having gotten out of the business, it would take a tremendous expediture to get back into the business. Not just cars and locomotives but crews, supervisors, administrators; platforms, stations, yards, shops; signalling and track upgrades, and dispatching. Unless the potential return is greater than what the company is already making on freight, they will be better off just sticking to their existing investments in freight handling. Any market that big would probably attract an outside operator whose specialty is passenger traffic and to whom the RR is one of the contractors.
You have to have at least a 20%+ return on investment for them to consider, IMO.
Canadian Pacific is already in the luxury train business and they are a Class I. However they have to be making a decent profit on that service to remain in it and justify it to their stockholders. I think at some point CP will tire of the operation and either sell it or stop it entirely.
A long time ago Kimberly-Clark a large paper products company saw that it had a small fleet of company planes and was shuttling a lot of employees back and forth between the paper mills in Wisconsin and Corporate HQ in Dallas. Someone got the idea to start an airline based on that base traffic and they named it Midwest Express airlines. Eventually, Kimberly-Clark tired of the operation and sold it off.....later it went bankrupt or merged away (not sure which). Hence I think CP will do the same thing. I would be really surprised if they bought more equipment and expanded.
The opportunity to use the passenger service to make a huge amount of mney on something else.
Lke All Aboard Florida is expecting to do with real estate.
An Act of Congress deeding the keys to the fully filled Fort Knox gold depository vault.
Never too old to have a happy childhood!
I have heard over the years that the freight railroads hadn't covered solely-related passenger costs collectively since 1953, which goes a long way in explaining why Amtrak was established. It also explains why they are in no hurry to get back into the passenger business.
Paul MilenkovicAn Act of Congress.
It would have to be part of a government funded hi-speed rail network, maybe in the next century.
Rich
Alton Junction
daveklepper The opportunity to use the passenger service to make a huge amount of mney on something else. Lke All Aboard Florida is expecting to do with real estate.
Amtrak, according to Federal law, holds a monopoly "concession" on intercity passenger trains. For a Class I railroad to reenter the passenger business, dunno, because Mr. Buffet is feeling "lucky", would require passing a new law.
CMStPnP daveklepper The opportunity to use the passenger service to make a huge amount of mney on something else. Lke All Aboard Florida is expecting to do with real estate. That ship is starting to sink, if you Google the subject matter recently. A number of highly critical and doubtful articles about it's future success have been published in the last 10-15 days in prominent Florida publications. Psst: Don't tell schilmm, he will say he told us so.
Well, I believe I pointed that out to Dave long ago, as did others. And as to the title question, looks like you and four others agree, that for 2 reasons, it will not happen.
Paul Milenkovic Amtrak, according to Federal law, holds a monopoly "concession" on intercity passenger trains. For a Class I railroad to reenter the passenger business, dunno, because Mr. Buffet is feeling "lucky", would require passing a new law.
Paul, are you sure about the "monopoly 'concession'" part? I always understood that Amtrak was an "opt-in", allowing (but not forcing) railroads to escape the passenger portion of their common-carrier obligations by joining. That is why Southern, Rio Grande, and Rock Island could choose to not join initially, and why some smaller roads can now offer scheduled passenger service (such as Saratoga and North Creek, or FEC's proposed All Aboard Florida).
On the other hand, I have not gone over Amtrak's enabling legislation anytime recently, so I could be wrong.
In today news section it was pointed out that privatized Japanese rail companies earn a significant portion of thier earnings from non rail segment's of thier business including hotels, restaurants and real estate. Hard to make a profit even with high speed rail in Japan.
ROBERT WILLISON In today news section it was pointed out that privatized Japanese rail companies earn a significant portion of thier earnings from non rail segment's of thier business including hotels, restaurants and real estate. Hard to make a profit even with high speed rail in Japan.
This is true of the rail cruise operators in Canada. They make some offsetting money with the add-on packages and the upscale accomodations. Hotel bookings, bus tours, gifts sold, etc.
Cruise Ships make their money on the booze sold on board, their off shore trips, the gifts they sell on board, their side trips, etc. Not unlike the rail cruise operators. Seems to be they follow similar models.
My on board ship account is always more than my ticket price.
Around Tokyo, several private electric railways were built to bring customers from the hinterland to the railway owned department store (Which was always located adjacent to a major JNR station.) The commuter traffic was just gravy.
Actually, the railway/department store was a chicken/egg question for Seibu and Tobu. The same holding company owned both the store (with restaurants and other amenities) and the rails.
Chuck (former Tokyo resident)
Even if you could wave a magic wand and make passengers marginally profitable, their trains would be disruptive of the slow-but-steady freight that is the bread and butter.
Rail plant, traffic and operations have so changed that the 1950s some of us remember so fondly -- when half the miles run off were passenger miles -- ain't coming back. Ever. We'll be doing well to hold onto the Amtrak that we have.
For a passenger-only, high-speed operation run by the government or governments, the 22nd century suggested by another poster sounds about right.
So a little off topic here BUT.....
I am curious that if railroads go to electronic braking how much that might improve the safety margin of both higher speed frieght trains and higher speed passenger trains expecially on lines that have PTC installed.
Also, curious if higher speed freight will ever kick off the ground in this country. See freight trains in Texas in largely unpopulated areas already pushing close to 80 mph. I wonder what additional technological improvements would be enough for the railroads to increase the speed to 90-100 mph?
1. Maybe not true HSR, but 100+mph.
2. One train daily causes problems if the rest are only 30-50mph. Most need to be fast, with maybe a range +/- 10-15 mph. Look at freight in other countries. Juniatha could explain. 100+ mph freight and passenger mixed on 5-7 minute headway. Two-track mainline on west bank of Rhine.
3. Shorter, faster hi-value freight rather than long, slow bulk cargo.
As Kevin hinted, the problem with significanty faster freight is that the customers are not willing to pay enough of a premium to overcome the cost of more power and the disruption that such a service causes. The ATSF Super C died for lack of revenue relative to cost, not that the Santa Fe could not get it over the road. With subsequent traffic growth the disruption cost would be much higher today.
On a true HSR 100 MPH freight will be slow, now the disruption is going to the passenger trains the route was presumably built for. Freight could run at night, but that is when MofW work is typically done on such lines. That could probably be dealt with.
The passenger carrier will certainly charge as much as it can get for the use of its facilities. Think of ATK on the NEC which is not a low cost host to the freight services that NS can not get off the line.
The freight service will have significant terminal costs, plus local dray costs to and from the terminals. These costs are both time and money. A 60 MPH truck will set time and rate standards to at least 500 miles.
I do not see a profitable market niche for HSR freight between trucks and airplanes until or unless one could get to 1,000 miles or more, and even then I am skeptical that enough customers would be willing to pay enough of a premium over truck rates to support the investment in terminal facilities that would be required.
Mac
A train is far more efficient than a truck above 500 miles and should take far fewer employees and labor costs to drive even 50-100 containers or trailers per train, if work rules were changed to pay by time worked, the way most folks are paid. It is simply a business that requires a schedule and reliabilty that the rails cannot or choose not to deliver. When the oil, coal, and ethanol loads dry up, they may wish they were not so complacent.
BaltACD An Act of Congress deeding the keys to the fully filled Fort Knox gold depository vault.
trackrat888Its empty and what gold may be or not be their is owned by foriegn banks. Germany tried getting their gold back and the US has yet to deliver
<sigh> This should be common knowledge as this is part of our monetary system.
Thats actually incorrect, I had an IT project on Ft. Knox itself. The gold held at Ft Knox is entirely owned by the U.S. Government. The gold held at the Federal Reserve vault in Manhattan is where the foreign government gold is kept because that is where the financial itermediation takes place (in NYC). Ft Knox is owned and run by the U.S. Mint directly under the Treasury Department not the Federal Reserve as conspiracy theorists might assert. The source of most of the Gold at Ft. Knox and the reason for it's construction is because we had a wartime President that outlawed the public holding of Gold Coins, Gold Bars, etc. So when the public sold them back to the Feds a place was needed to store the Gold and Ft. Knox was built for that purpose. The amount of Gold in Ft. Knox is audited at least once a year and reported to Congress via the Treasury Department. The amount in troy ounces is reported on the U.S Mint website. The audit of the Gold follows FASB Accounting standards and a small amount of gold is removed from the depository to test for purity during each audit. Last I checked it was 147 trillion ounces of gold stored there. No idea what the current figure is. Here is the real kicker........the gold is carried at a value a of $22 an ounce on the U.S. Treasury books, so it is significantly undervalued. Opening the depository to the public presents a fairly serious security risk so the Mint is strict about who is allowed in and who is not. The last time members of Congress were let in to inspect the gold supplies was 1974 when rumors were spread then that Ft. Knox was empty.
One more thing, Ft Knox has railroad tracks all over it and some approach the Gold Depository. I read that some of the gold there was shipped in by rail but when I was working there I could never find the specific rail lead to the Depository. So either it is ripped up or underground.
The varied replies in this thread that fall into the categoriess "a boatload of money" or "the possibility of earning a profit", highlight a fundamental concept of any capitalist endeavor. A for-profit enterprise (that is, a non-gov't one) will normally only engage in a business opportunity if the company expects to earn a reasonable profit on the investment. That's the entire purpose for running a company.
So many people operate under the misconception, or outright delusion, that for-profit companies, for reasons I can't fathom, should be run for the good of all, and ought not ever charge anything more for a product or service than the costs of production. Profit is evil, apparently. But without it all of us will soon be out of a job.
So it is with passenger rail service in the U.S. (and apparently in Japan and other supposedly "they do passenger rail right" countries). Passenger rail is hopelessly unprofitable under the current operating model where it largely borrows rail capacity from freight railroads. Operating a completely dedicated right-of-way is very expensive, and really makes little sense because it would only be profitable with train frequencies and ticket prices that no market can support. If the Northeast Corridor can't run profitably, with its population density, train frequency (equals convenience), and relatlively high-speed, largely dedicated right-of-way, then where else in the country can passenger rail have a prayer of being profitable?
And no company will want to get into a business it knows will never generate a profit for the company in one way or another.
MikeinPlano:
Most of what you say is quite reasonable, but I have to take issue with your second paragraph.
Business entities are created and are permitted to operate as legally constituted Corporations because they are perceived to perform a public good. If railroads did not perform a public good, we would never tolerate the noise, inconvenience of grade crossings, etc. This and other countries would not have promoted their construction and helped through land grants, eminent domain, tax breaks, etc. But they do provide a public good, so we tolerate these and many other things. In return for these concessions, Corporations have a responsibility to perform as Common Carriers in the public interest. That includes providing some services that are not profitable, just as I, as a good citizen, must keep my lawn mowed and keep the snow shoveled off the sidewalk in front of my house, even though those things do not profit me directly.
I have never claimed that Common Carriers do not have a right to make a reasonable profit, and have never heard that argument advanced by anybody with any sense. Profit is not evil, per se. However, Corporations are chartered to conduct business in such a way as to promote the common good. That means they have responsibilities, and the government that has permitted their incorporation has the right to say what those responsibilities are.
Tom
ACY MikeinPlano: Most of what you say is quite reasonable, but I have to take issue with your second paragraph. Business entities are created and are permitted to operate as legally constituted Corporations because they are perceived to perform a public good. If railroads did not perform a public good, we would never tolerate the noise, inconvenience of grade crossings, etc. This and other countries would not have promoted their construction and helped through land grants, eminent domain, tax breaks, etc. But they do provide a public good, so we tolerate these and many other things. In return for these concessions, Corporations have a responsibility to perform as Common Carriers in the public interest. That includes providing some services that are not profitable, just as I, as a good citizen, must keep my lawn mowed and keep the snow shoveled off the sidewalk in front of my house, even though those things do not profit me directly. I have never claimed that Common Carriers do not have a right to make a reasonable profit, and have never heard that argument advanced by anybody with any sense. Profit is not evil, per se. However, Corporations are chartered to conduct business in such a way as to promote the common good. That means they have responsibilities, and the government that has permitted their incorporation has the right to say what those responsibilities are. Tom
Well said! Railroads are not the same as many other businesses. Their charters require them to operate a railroad as a common carrier, which historically implies for the commonwealth. Yes, in the UK and US they were private corporations, with making a profit as a goal, but only one within the context of public service. Unlike a maker of steel, pricing was set by Parliament in the UK. Here we had less government involvement with price regulation, but as a trade off, far more government assistance in building.
I might add that the Supreme Court, in Citizens United, has said that Corporations have some of the rights of citizens. I happen to disagree with that decision; but whether you agree or disagree, doesn't it seem inconsistent that they should have rights in our society, but not have responsibilities to that society?
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