Disappearing local freight

Note that shareholders for most larger corporations are pension plans, both union and management, individual 401(k) plans, mutual funds and individual direct investment. In other words, the working middle class

While it is our money, the portfolio managers have one concern, the size of their bonus this year. They don't care if the company survives as long as they make as much money as possible.

That should be good for the shareholders right? Well the demand from the portfolio managers for outrageous returns leads to increased risk taking by management of the companies. Anybody remember 2008?

Things were better when there was more family ownership of companies. There was a need for prudent decision making to maintain the family legacy. Things are too big for that now so we're stuck with the big risks and their downsides.

And no, I'm not a communist. I do cash and investments for a living. I know these guys.

Money management is never perfect. Which is worse, the activist looking for short term gain, or the indexer who lets management pay themselves however they want? Capitalism is the worst system, the only thing worse is every other system [stolen indirectly from Churchill].

But more pertinent to the topic, it is interesting to see these high-intensity transload facilities popping up in NJ and Long Island. Railroads are getting more like airlines--flying point to point with fewer and fewer nodes [a.k.a. sidings]. I prefer the older way.

kilroy wrote:

Note that shareholders for most larger corporations are pension plans, both union and management, individual 401(k) plans, mutual funds and individual direct investment. In other words, the working middle class

While it is our money, the portfolio managers have one concern, the size of their bonus this year. They don't care if the company survives as long as they make as much money as possible.

That should be good for the shareholders right? Well the demand from the portfolio managers for outrageous returns leads to increased risk taking by management of the companies. Anybody remember 2008?

Things were better when there was more family ownership of companies. There was a need for prudent decision making to maintain the family legacy. Things are too big for that now so we're stuck with the big risks and their downsides.

And no, I'm not a communist. I do cash and investments for a living. I know these guys.

Kilroy- I agree. It's the demand for outrageous returns with all companies that are publically traded is my big beef. I don't have much of a business background but I wonder how much the railroads have to not spend on the right areas because of this.

Well I for one will say that our way of life is WAAAAY to dependent on the dow jones industrial average. That having been said, have you ever seen the show undercover boss? Most CEO's have absolutely NO idea at all what goes on at the ground floor of their company. And with that, a ceo of a railroad might be a good business manager, but does he understand the RAILROAD business?

Airman, I think the railroads are a bit different than some businesses that are being run by the lawyers and finance/accounting guys. I think you'll find most of them have worked their way up in sales or started out as summer/part time crew members and have an entire career with railroads. That may change in the future but for now, most/all of them are run by railroaders.

It's just a very capital intense industry that they are dependent on stock holders and bond holders. Very different business model than Google.

We may shortly be seeing the demise of the Woodbury-Salem line as well. The largest of the three regular customers (Ardagh [formerly Anchor Glass], the others are Koppers Poles and Mannington Mills) ceased operations and closed their plant mid-October of 2014. The last empties were pulled out of the glass plant by SRNJ about a week after that, and I haven't seen any traffic on the line since. Though two customers in Salem remain, along with an occasional carload or two being delivered to Woodstown, it's unlikely that it will be cost effective for that line to continue operating, either south or north of where the ownership changes in Swedesboro. Mannington is a recent convert to rail service, having trucked in their supplies until 2005-- and I'm sure could just as easily switch back to trucks if the rail freight rates rise now that the major Salem shipper is gone. Koppers would almost definitely do the same- as of now, they're transloading the poles from railcar to truck at the old Salem Yard, and trucking them over to the treatment facility near the port.

The county owns the tracks south of Swedesboro, and will probably not formally abandon them in hopes that either business at the Port of Salem takes off, or somebody else buys and reopens the glass plant, but I just don't see it happening in this economically depressed part of the state. Conrail, on the other hand, will probably want to get rid of it, as there are no more customers in Swedesboro, and the only former one north of there, Garmar Industries, hasn't shipped or received by rail in some time. I guess we'll see what SRNJ decides to do with the #100 GP9-- when we see it on the interchange track at Swedesboro waiting to get picked up and sent back to Winslow, we can assume the Salem Line is done, at least for now.

The bottom line is Class 1s aren't interested in rural, carload-at-a-time freight service, it just isn't economically viable. Here in Woodbury we still see, weekly, one or two produce reefers get dropped on the team track and unloaded by the business down the street- but that's along a busy rail junction, not 30 miles out of the way like Salem.

Correction- Mannington got rail service for quite some time - even before 2005. I can attest to that. I also believe it was when US Rail leased the line did Mannington stop rail service. But yeah the line is in grave danger..

A couple of other things to consider. Many manufacturers who have not left the state have downsized their operations for better efficiency which means less materials needed thus ending the need for rail service. Also the constant encroachment of R.O.W.s by home builders which increases the NiMBY effect. You also have to consider the number of transload facilities that have been opening up.
Also look at all of the huge distribution warehouses that have been built near rail yards like Port Reading, Linden, and Port Newark. None of these warehouses have rail spurs built to serve them.
That had to be a telling sign right there.

Regarding the Salem branch, the glass facility wasn't its only customer. There's also an animal feed plant in Woodstown that ships by rail (or at least they used to). But that alone may not be enough to keep the track from going inactive. With that said, this branch will be seen as a tool for helping to revitalize Salem County so one way or another this route will be maintained.

While it's disheartening to see the decline of local freight throughout the Garden State, there is one line that seems to be doing fairy well: The River Line. Almost all the sidings that were in use when it opened a decade ago are still in business today. I was worried that relegating freight service to overnight hours would cost them some customers but that doesn't appear to be the case.

The "2014" NJ grants for RR work were announced a week or so ago: http://www.nj.gov/transportation/about/ ... grants.pdf" onclick="window.open(this.href);return false;
The Salem branch (and most of South Jersey, for that matter) came out of it pretty good.
JS