Topic: Booming growth on freight railroads

[gildone]

The current issue of Trains has an article about how CSX has begun and infrastructure project to compete with NS' "Heartland Corridor.  The project is tied in with CSX's new intermodal yard by Rickenbacker airport in Columbus, eliminating the bottleneck through Greenwich, Ohio as well as other projects in Ohio.  Each new terminal will create approximately 2,000 jobs "by luring reailer to locate distribution centers nearby"

So far, Ohio is the only state that has committed to assist with the project.  CSX president Michael Ward says:  "Ohio is a key area for logistics development..."

Good news for Ohio's economy. 

[GCrites80s]

KJP, it's kind of a bum out to learn that railways can barely recover their cost of capital from expansions of the rail system.

[dmerkow]

Unfortunately, there are reasons why states had to give RR massive amounts of subsidies in terms of land and tax breaks to get the system built out.

[BuckeyeB]

This land grant issue is a non-starter in my opinion. Only 5-10% of the 240,000 mile US rail network was built by this means. All the rest was done through private financing and once these lines were built, railroads had to pay taxes on them.

In addition to that, the railroads were obligated to carry mail and troops either for free or at a very low rate. I seem to recall that by the time the railroads were allowed to charge what it cost to move the mail they had lost about $132 million (in 1944 dollars). On top of that, railroads had an army of workers and facilities dedicated to the movement of mail. Uncle Sugar didn't pay a nickel for that.

What IS true is that the government had to issue land grants to settle the west. It would not have happened otherwise.

Fast forward to 1967. The railroads' passenger service, while fraying at the edges, was still a going concern until the US postal service, now being run by a former airline exec, took the mail off the trains. Because of this, what was a slow decay became a rout as hard-pressed railroads dropped train after train in order get out of the passenger business as fast as possible.

The mail was the railroads' hidden subsidy. Once that was gone it was "game over."

[KJP]

Note that I identified the second two maps on the previous page. Sorry, I'd forgotten to do that when I posted them.

[BuckeyeB]

Those maps are really a tribute to the rail industry, which has dramatically increased tonnage while reducing physical plant. They have carried this about as far as they can and are now having to invest in new tracks and signaling. Note the BNSF between Chicago and LA. They've almost closed the last gap and made the railroad double track all the way. Likewise, UP is slowly adding second track on its LA-El Paso route. Still, the investment is not keeping up with demand. A solution has to be found, most likely some sort of public-pribvate partnership.

[noozer]

J.B. Hunt shifts more truckloads to rail
RailwayAge.com

With the price of a gallon of diesel fuel ranging between $4.75 and $5.00, truckers are shifting more of their loads to rail for the long haul. This is reflected in the second-quarter earnings statement of J. B. Hunt Transport Services, Inc. (JBHT), which said that a 28% increase in intermodal revenue, to $496 million, was a major factor in a 17% increase in total revenue to $977 million, compared to the same quarter last year.

Full story at:

http://www.railwayage.com/breaking_news.shtml

[noozer]

http://www.npr.org/templates/story/story.php?storyId=92633264

Plan To Unsnarl Chicago Rail Hits Snags In Suburbs
by David Schaper
 Morning Edition, July 28, 2008 · A "calamity," a "rail meltdown" and "chaos in the supply chain" — those are all ways transportation experts and executives describe the state of railroad congestion in Chicago. "And it's only going to get worse," adds another.

Railroad companies say it takes a freight train about two days to travel from the West Coast to Chicago — but the same train sometimes needs another two days just to get through the city.

Full story at the URL above:

[dmerkow]

It was this kind of congestion in Cincinnati in the 1870s that cost the city leadership in the post-war fight for urban supremacy (among a number of issues).

[noozer]

It is also this kind of congestion that stands in the way of projects like the Chicago-hubbed Midwest Regional Rail System and those portions of the Ohio Hub Plan that connect to Chicago.

[tt342998]

Ohio Central Railroad sold
http://www.coshoctontribune.com/apps/pbcs.dll/article?AID=/20080804/NEWS01/80804019&referrer=FRONTPAGECAROUSEL

A Connecticut-based railroad said today it has acquired the Coshocton-based Ohio Central Railroad System for $219 million in cash.

Full story at link above:

[Robert Pence]

I didn't see that coming.

I wonder what effect it will have on future use of OCR's excursion rolling stock, especially steam.

[Firenze98]

With all the gridlock going on in cities, how are they supposed to expand service if all the land is developed around them?  Will we see a trend like the interstate system in the 50s where new tracks will have to run through existing communities, uprooting businesses and residents for new routes?  I don't know the solution but this could get ugly unless other ideas come about.

[Sherman Cahal]

Eminent domain.

But railroad ROWs take up far less space. One track and ROW is the equivalent of two lanes of roadway and some shoulder (35').

[KJP]

Consider the new single-track tunnel in Switzerland will handle more than 100 freight and passenger trains per day. Consider that one freight train hauls the same amount of cargo as 150-250 trucks, and one double-deck passenger train like a TGV Duplex hauls 1,000 people, removing more than 800 cars from the road.

Let's assume that the rail traffic is 50/50 freight/passenger... Over a 24-hour period, that single railroad track could take 7,500 to 12,500 trucks and more than 40,000 cars off the road. If you double-tracked the railroad, you'd more than double the capacity.

[noozer]

Big news on the O-C being sold.  Knew something was up, but didn't know the buyer until now. 

[noozer]

Coshocton newspaper seems to be a little off on the sale price of the Ohio Central...the Columbus Dispatch reports it as much higher.

Coshocton-based railroads sell for $219 million[/u]
Tuesday,  August 5, 2008 3:01 AM

COSHOCTON, Ohio -- Freight railroad operator Genesee & Wyoming Inc. has agreed to buy the Ohio Central Railroad System, based in Coshocton, for $219 million in cash, the companies said yesterday.

Full story at:

http://www.newarkadvocate.com/apps/pbcs.dll/article?AID=/20080805/NEWS01/808050312/1002

[noozer]

Another consequence of growing freight rail traffic...note the numbers for increased trains to be generated by the new Rickenbacker Internodal Yard.

Crossing violators tracked
Train ride catches 3 drivers flouting rail alerts
Thursday,  August 7, 2008 3:25 AM
By Tim Doulin

THE COLUMBUS DISPATCH

The gates to halt traffic came down as the train rolled down the track toward the crossing on Fairwood Avenue at Refugee Road.

That didn't stop a black Jaguar from whipping around the gates to beat the train to the crossing.

More at:


http://dispatch.com/live/content/local_news/stories/2008/08/07/RAILCORRIDOR.ART_ART_08-07-08_B1_D0AV7GV.html?print=yes&sid=101

[noozer]

August 8, 2008
Domestic intermodal grows at highest rate in four years
Railway Age Magazine

The Intermodal Association of North America reports that during the second quarter of 2008, domestic intermodal volume grew at its highest rate since the second quarter of 2004. During the 2008 quarter, volume was 5.4% higher than in the comparable 2007 quarter, said IANA in its Intermodal Market Trends & Statistics report. IANA said it was the 11th straight quarter that domestic container volume posted year-over-year increases. Container volume grew 8.1% during the quarter, while trailer volume increased 1%.

Full story at:

http://www.railwayage.com/breaking_news.shtml

[KJP]

This is tremendous news. I remember in the 1980s when their ROI was about 4 percent....

http://www.railwayage.com/breaking_news.shtml#Feature4-8-12

August 11, 2008
Class I return on investment rises to 10.53%

Class I railroads earned a 10.53% return on investment (ROI) in the 12 months ended June 30, up from 8.56% a year ago. Railway operating revenue totaled $58.1 billion vs. $50.7 billion in the 12 months ended June 30 2007, net railway operating income was $8.1 billion vs. $7.0 billion, and net income totaled $7.1 billion vs. $6.0 billion.

Full story at URL above:

[noozer]

ROANOKE REGION INTERMODAL FACILITY PROJECT ADVANCES:

The Virginia Department of Rail and Public Transportation (DRPT) today issued a Notice to Proceed to Norfolk Southern Railway, authorizing the railroad to initiate construction of the Roanoke Region Intermodal Facility at the Elliston site in Montgomery County, Va.

Read more at:
http://railpace.com/hotnews/

[noozer]

RAND Corp. study says railroad capacity is public concern

The volume of freight transported in the United States is expected to double over the next 30 years. Greater use of rail freight could allow the supply chain to accommodate this increase while minimizing highway congestion and reducing fuel consumption. A new study by the RAND Corporation, a nonprofit research organization, provides insight into railroad capacity and performance measures. It finds that while U.S. railroads have notably improved their productivity during the past three decades, continued incremental improvements may be insufficient to handle a large increase in freight volume.

Full story at:

http://www.rtands.com/breaking_news.shtml#Feature4-8-20

[KJP]

Interesting that the UPS foundation helped fund it....

[redbrick]

Figured UOers would appreciate this Norfolk Southern commercial. I guess it's a year old and maybe many of you have already seen it but I just saw it for the first time today.


http://www.nscorp.com/nscorphtml/video/lonelygallon.wmv

[Sherman Cahal]

NS' commercials were great when they ran with frequency. GE's commercials were really nice as well.

If you get a chance, take the time to view the making of that commercial. It was more complicated than I thought!

[KJP]

For the first 35 years of my life, I NEVER saw a TV commercial for a freight railroad. Very rarely would I see one for Amtrak. Now I see both pretty frequently. Of course growing up with just six TV channels and now having more than 200 has a little something to do with that.

[KJP]

http://www.rtands.com/breaking_news.shtml#Feature2-9-08

September 5, 2008

Study: EJ&E sale would hurt mostly upscale towns

Some affluent white folks in the suburbs are the only ones who stand to lose if the EJ&E Railroad is sold to the Canadian National Railway, local newspapers report. That's the contention of two University of Chicago professors in their study of the proposed $300-million sale of the EJ&E line that encircles the Chicago area from northwest Indiana to Waukegan.

Read more at the link above

[KJP]

One of my college roommates works for Norfolk Southern as a locomotive engineer. Bastard makes $80,000 per year. I know, I could apply there, too...


http://www.railwayage.com/breaking_news.shtml#Feature2-9-18

September 17, 2008
Norfolk Southern, BLET sign six-year agreement

Norfolk Southern and the Brotherhood of Locomotive Engineers and Trainmen Tuesday signed a labor agreement offering the railroad's 5,000 engineers a pay increase of 19% during a six-year period.

Read more at the link above:

[Robert Pence]

One of my college roommates works for Norfolk Southern as a locomotive engineer. Bastard makes $80,000 per year. I know, I could apply there, too...

Pretty good money. From what I've heard, it comes with something of a price, especially until you've been around long enough to get off the extra board.

One of my near-neighbors is a locomotive engineer on NS, but I haven't talked with him much about his work. He's something of a renaissance man, as are a few other locomotive engineers I've met over the years. He's well-read, an avid cyclist, and creates beautiful summer gardens in his back yard.

[noozer]

An excellent story from CNN about why railroad business is booming:

<iframe src="http://www.cnn.com/video/savp/evp/?loc=dom&vid=/video/living/2008/09/17/lemon.railroads.back.on.track.cnn" height="393" width="406" allowtransparency="true" frameborder="0" scrolling="no"></iframe>

[KJP]

http://www.railwayage.com/breaking_news.shtml#Feature4-9-29

September 26, 2008
UP sees continued high capital outlays

Union Pacific is on target to spend $3.1 billion on capital improvements in 2008 "and although we are still evaluating the demand environment, we currently expect to invests something close to that amount again in 2009," Union Pacific Chairman Jim Young told the Surface Transportation Board last month, in a letter responding to the board’s request for information about service plans for the rest of this year and capacity needs.

Full story at link above:

[noozer]

http://columbus.bizjournals.com/columbus/stories/2008/09/29/daily27.html

Thursday, October 2, 2008 - 9:24 AM EDT
Genesee & Wyoming closes deal for Ohio railroad system
Business First of Columbus

Connecticut railroad operator Genesee & Wyoming Inc. has closed a deal to buy the 445-mile Ohio Central Railroad System for $234.3 million.

Full story at link above:

[noozer]

Letter to Washington Enquirer: U.S. Needs More Trains
24 Oct 2008
AAR President and CEO Ed Hamberger wrote in a letter to the editor of the Washington Enquirer:


WASHINGTON EXAMINER October 23, 2008


Does the United States Need More Trains?
Yes: Rail reduces congestion, pollution

By Edward R. Hamberger

The U.S. needs more transportation, and it needs it now. Highways, railways, ports and airports are all straining to keep up with demand. Bad as conditions are now, they will only get worse without prompt, forward looking action. At the same time, we need to find solutions to a number of environmental issues that are tied to transportation.

There is no single solution. Futuristic technology like Maglev may have a role to play, but the cost would be immense and would largely come from public sources. The technology itself is unsuited for the mix of heavy bulk commodity trains, swift merchandise freight trains and fast passenger trains that ply the nation's rails. So if we are to keep today's transportation problems from becoming tomorrow's transportation crisis, rail must be part of the solution.

Railroads help reduce fuel consumption. Last year, trains moved a ton of freight an average of 436 miles per gallon of diesel fuel - the equivalent of moving it from Baltimore to Boston on just one gallon. On average, freight trains are three to four times as fuel-efficient as trucks.

According to the U.S. Environmental Protection Agency, freight trains are also cleaner than trucks, emitting only a third as many greenhouse gases to move the same volume equivalent distances. Freight trains also help beat congestion. A single intermodal train can take 280 trucks off the highways.

Freight trains save money for taxpayers and consumers. The American Association of State Highway and Transportation Officials says that if all rail freight traffic were shifted to trucks tomorrow, current rail shippers would pay an additional $69 billion per year and an extra $128 billion would have to be spent on highway improvements.

Demand for rail service is growing. The two busiest years in history for freight railroads were 2006 and 2007, and Amtrak recently announced that its 2008 fiscal year was the busiest in its history. Commuter railroads across the country are also reporting large passenger increases.

Yet one major stumbling block lies in the path of growth for both freight and passenger rail: capacity, or more accurately, lack of it. Portions of the rail network are already approaching capacity. With the demand for rail transportation expected to almost double by 2035, conditions will worsen unless capacity is increased.

Railroads already invest heavily to renew the system and increase capacity. Over the past 10 years, almost 18 percent of their revenues have gone into improvements, compared with less than 4 percent on average in manufacturing.

Yet by itself, even that amount isn't enough. A Cambridge Systematics study last year found that $148 billion needs to be invested to expand capacity in the freight rail network by 2035 to keep up with demand. The good news is that freight railroads can raise at least 70 percent of that amount by themselves, according to the study. The bad news is that a gap of $1.4 billion a year between what can be invested and what should be invested remains.

One way to help bridge the gap is through a modest program of tax incentives. Bi-partisan legislation proposed in this Congress would extend a 25 percent incentive to anyone who invests in projects that add capacity to the nation's rail network.

Another way is through public-private partnerships in which the public pays for public benefits and the private sector pays for its benefits. A number of public-private partnerships to expand both freight and passenger rail capacity have already been successfully developed in California, the Pacific Northwest, Chicago, North Carolina and between the East Coast and the Midwest.

America's future prosperity depends heavily on transportation. Expanding rail capacity will help insure that prosperity while providing environmental benefits. The time to expand rail capacity is now.

Edward R. Hamberger, a former assistant secretary of transportation, has been president and CEO of the Association of American Railroads since 1998.

http://www.aar.org/Pressroom/News/2008/10/102308_washenq_LTE_ERH_Morerail.aspx

[KJP]

We'll probably see more of this for a while.....

http://www.railwayage.com/breaking_news.shtml#Feature1-10-31

October 30, 2008
U.S. freight traffic and volume declines

Freight traffic on U.S. railroads declined 4.7% during the week ended October 25 in comparison with the same week last year, the Association of American Railroads (AAR) reported. Volume of 34.5 billion ton-miles fell 3.9% from the comparable period a year ago. Volume in the East declined by 4.5%, while the decline in the West was even larger at 4.8%. Intermodal volume fell 4.1% from the comparable period a year ago.

Read more at the link above:

[noozer]

Value of U.S. goods ground transported in North America climbs in August, USDOT says
Progressive Railroading

In August, the value of trade moved via surface transportation modes between the United States and Canada and Mexico totaled $72.3 billion, up 4.5 percent compared with August 2007’s total, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics.

The value of U.S. trade also rose 0.9 percent vs. July’s total. About 88 percent of U.S. trade by value with Canada and Mexico moves via rail, truck and pipeline.

Full story at:

http://www.progressiverailroading.com/news/article.asp?id=18476