Let's quit complaining and fix Chicago

Posted by Fred Frailey
on Wednesday, November 5, 2014

Untangling the mess in the Railroad Capital of the World is not that difficult. It does not necessarily require a lot of money—you don’t need CREATE’s billions, for instance, although if governments showered the money down (don’t count on it) the railroads would gladly catch it in their caps. What it does require is the attention of railroad CEOs and a willingness to make deals with their counterparts, who they generally detest.

So here are four ideas to start the ball rolling. One or two may be new to you.

1. Schedule unit train handoffs. At the root of the problem are unit trains, dozens and dozens a day. They come at every hour of the day and night, and I’m not talking just oil trains (did you know that 70 percent of Canadian Pacific’s grain originations in the U.S. are routed by shippers through Chicago?). There are few places to hold them (see below) and the receiving railroad in a handoff is now not under any obligation to take them when offered.

All of this being so, schedule the handoffs. BNSF Railway and CSX Transportation, for instance, know they interchange, say, eight unit trains a day each way. So schedule those transfers, at (for example) 1, 4, 7, 10 a.m. and 1, 4, 7, 19 p.m. BNSF and Norfolk Southern could do the same, at different hours, and so on between the other railroads. The delivering railroad knows that if it misses its slot, the receiving railroad is under no obligation to take a train until the next slot. But the receiving railroad is obligated to take a train if offered in a slot time. The advantages are that the delivering road can plan ahead and perhaps not turn its double track line into Chicago into a single track railroad with unit trains parked for miles on the second track. And the receiving railroad knows its responsibility to have rested crews and delivery tracks ready and waiting at those hours.

Worth a try?

2. Set up a unit train holding yard. I’d love to take credit for this idea, but credit belongs to Rod Case of the consulting company Oliver Wyman. Indiana Harbor Belt has an underutilized hump yard in Blue Island, Ill. Flatten the hump and make it a gigantic holding tank for unit trains. The trains could be inspected, locomotives fueled and serviced and so on. The cost of track occupancy is by the hour, and I suppose the receiving railroad pays. This gets the pesky unit trains out of the way.

Or IHB could move its automobile sorting from Gibson Yard in Indiana to Blue Island, and make Gibson the holding yard. Either way, it clears up the main lines and puts money in IHB’s pocket.

And by the way, speaking of Indiana Harbor Belt . . . .

3. Merge the Chicago switching railroads. Consolidating the IHB, Belt Railway of Chicago and B&O Chicago Terminal would achieve several objectives. First, it would achieve economies and open up capacity, thereby achieving greater savings as more traffic flows through their arteries. Second, a merged terminal railroad would attract talent, which I don’t think is present today.

I would model this railroad after Conrail Shared Assets, which is the terminal railroad for CSX and NS in New Jersey and Detroit. Conrail has no revenues, only expenses—total costs divided by units handled equals each owner’s bill. This model has worked fabulously for CSX and NS. Let’s give it a try in Chicago.

4. To quote Cole Porter: Get out of town. Rerouting business around instead of through Chicago is the usual remedy, but there are problems. First, options are limited. The Kankakee Belt that connects NS with BNSF at Streator, Ill., until recently hosted one interchanged train a day each way. I’ve heard it’s now two. But beyond that would require the big bucks by owner NS to add sidings and so forth. The Toledo, Peoria & Western has atrophied; it, too, would require a lot of capital to become useful. A Chicago businessman envisions an outer belt railroad beside the proposed Illiana Expressway between Indiana and Illinois, but that is years and years in the future, if ever.

So that leaves the St. Louis and Kansas City gateways as alternative interchange points, but here, too, you have problems. The biggest is agreeing on new divisions of revenue. Maybe BNSF and UP don’t want to accept a smaller piece of the pie for taking freight a shorter distance. Then there is capacity. UP is heavily used between Kansas City and St. Louis, and NS between KC and Decatur, Ill. How much more business can CSX handle on its former Conrail St. Louis Line before it, too, becomes a parking lot? Finally, you don’t just snap your fingers and have the necessary crews. Enlarging a crew base takes months, and unless the rerouting is permanent, keeping those crews employed 12 months a year is a problem.

BNSF and CSX in December will open an interchange in Smithboro, Ill., on the Beardstown branch of BNSF and the St. Louis Line of CSX, starting with one oil train a day. As crews and experience accumulate, that pace will probably pick up. It’s a start, and a good one. Do this four or five or six more times through other gateways and you will chip away at the glacier we call Chicago.

That’s it for me, folks. I’m off for the fleshpots of Italy: Rome, Tuscany, Florence, staying only at the nicest places, eating only at the best restaurants and tasting only the best wines. I’ll be back in the second half of the month. In the meantime, give us your ideas for fixing Chicago.—Fred W. Frailey

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