Rail boom article

The following Washington Post article from today about the huge expansion of freight railroads has implications for Amtrak:

Read it here

It does, in both a positive and negative manner. In the positive sense, it means that the freight railroads will now upgrade tracks and signaling, making Amtrak trains run faster and more reliably. In the negative sense, it means that there will also be more freights on the tracks,
meaning more delays due to more freight trains on the tracks. Which trend will prevail, I couldn't say. My bet is, however, in the short term things will get worse as the freights try to shove more trains on the tracks; once capacity is reached, then they'll try to upgrade and things will improve. Note, however, that track upgrades will make some new Amtrak routes available that weren't earlier.

Overall, however, I think this will be best for Amtrak, as more and more interest goes back over to rail, and lines improve. This can't help but improve the general Amtrak
environment.

This article is a keeper if you want to argue the environmental advantages of freight rail over trucks.

For example: "A train can haul a ton of freight 423 miles on one gallon of diesel fuel, about a 3-to-1 fuel efficiency advantage over 18-wheelers, and the railroad industry is increasingly touting itself as an eco-friendly alternative."


The article also describes how decades of tearing up tracks, mergers and acquisitions and shrinking the size of our nation's rail infrastructure has severely limited the shipping choices for some producers:
"The railroads charge four times as much to ship a carload of grain from Bismarck, N.D., to Minneapolis as they do to ship it from Minneapolis to Chicago, although the distances are about equal. The reason: Shippers have only one choice of railroad out of Bismarck."

Before this interesting material gets shipped off to another Forum, allow me to note that the best performing security I presently hold in a well-diversified portfolio is BNI up 10.8% YTD Mar 31. In second place is NSC up 7.7%.

By contrast, the S&P 500 is down 9.9% YTD Mar 31.

As I've shared, I've placed my bets on the industry's continued Golden Age and at this time 'we're on a roll'.

For those of us who were in the industry during the '70's, and who lived through the funeral wake that ostensibly was an an Xmas office party immediately after one's employer petitioned for Bankruptcy protection, it is indeed gratifying to see the industry revived. No one today is talking of "bail out the railroads'; "uh not quite' when I joined the industry upon graduation. While such never happened to me, I learned that over at the Rock Island, they detailed a crop of Management Trainees to write, albeit on company time, letters to 'assorted Critters' to support legislative relief for the desperately financially strapped industry.

While I realize passenger train advocates, particularly Long distance advocates as well as comparatively small shippers such as the (mythical) Farmers' Co-Op in Postville IA, tend to see it differently as their personal interests have been adversely affected, the industry has entered its second Golden Age. My hat is off to those actively employed who have made it such.

Amtrak ForumModerator's Note:

This is of broad interest to the railroad community. It has a better fit to Mr Robert Paniagua's General Operations Forum.

Gilbert B Norman wrote:Before this interesting material gets shipped off to another Forum, allow me to note that the best performing security I presently hold in a well-diversified portfolio is BNI up 10.8% YTD Mar 31. In second place is NSC up 7.7%.

By contrast, the S&P 500 is down 9.9% YTD Mar 31.

To stay partly on topic, I put my money where my mouth was a number of years ago on BNI. Partly because I liked what they were doing on the TRANSCON and other work and because they seemed Amtrak friendly.

CSX I've avoided partly because of my feeling that they are far from Amtrak friendly. I've probably lost some money there, but so be it. When they can start to expedite Amtrak trains in a consistent and friendly matter (and they do appear to have improved) I will consider investing in them.

Here is achart I have periodically shared here at the Forum.

Regarding Mr. Moore's "Amtrak Friendly Index", I doubt if any of the CNBC "talking heads" and other assorted soothsayers have heard of thsat one before.

Jersey Jeff wrote: "The railroads charge four times as much to ship a carload of grain from Bismarck, N.D., to Minneapolis as they do to ship it from Minneapolis to Chicago, although the distances are about equal. The reason: Shippers have only one choice of railroad out of Bismarck."

Sen. Byron L. Dorgan (D-N.D.), a co-sponsor of both bills, cites an example: The railroads charge four times as much to ship a carload of grain from Bismarck, N.D., to Minneapolis as they do to ship it from Minneapolis to Chicago, although the distances are about equal. The reason: Shippers have only one choice of railroad out of Bismarck.

The railroad industry calls it "differential pricing," and "it occurs every day in the airline industry," said Edward R. Hamberger, president of the railroad trade group.

Ah, a politician said it, that makes sense. I'd think a number of factors play into it, including what the market will bear. Other factors woudl be volume and maintenance requirements. If $100 million in maintenance and capital supports 50 trains day while the same $100 million supports 10 trains a day in Bizmarck, that woudl change the cost equation. Don't know if it does, but it's certainly something missing from Dorgan's "analysis." As for ADM, how about they send us all rebate checks for the profits they receive on ethanol while driving up our food costs.

the difference with the airline analogy , any airline is free to fly to any airport . the railroads have a monopoly in many instances . i am surprised that the "free market " allows this to happen .
As for the railroads doing well , well with the amount of intermodal avaliable from China to the Usa , it would be hard not too . are there any examples of the railroads winning back traffic form road transport on a regional basis . Say Atlanta to Chicago ?.

As I write this (with an NS M/W crew replacing crossties in sight of my window, BTW) we have several active threads, all of which seem to carry essentially the same message:

The fuel crunch is finally steering the transport system, and the economy in general, toward a reorganization in whch the role of the rail industry will expand dramatically.

The problem now, as this writer sees it, is how to deliver that message to a fickle electorate, and its elected "servants" who tend to think of two-year horizons as "long-term planning".

As this trend intensifies, all of us who are familiar with the operating conditions and constraints to which both the freight and passenger rail industry are subject, should expect to be part of a vanguard dealing with a public which, due to diversity and multiculturalism, simply does not possess the innate knowledge common to the business and technological communities of three generations ago.

It's a Monday in the springtime, and the economy is, at best, only in second gear....let's put our best foot forward.

Because tomorrow is primary election day in an elderly, provincial, normally-overlooked state notorious for negative campaigning.

David Benton wrote:..are there any examples of the railroads winning back traffic form road transport on a regional basis . Say Atlanta to Chicago ?.

Mr. Benton, the remark that "the railroads are back in the game in spite of themselves" has been heard about the industry more than once. In short, I don't think there have been any successful marketing efforts to WIN shippers back from highway transport.

Every industry out there "talks the talk' about marketing, but the railroads have not done too much with the "walk the walk".

But with $5.00/ga Diesel coming soon to a truckstop near you, and the shortage of qualified drivers (some motor carriers have 100% annual employee turnover), some business will revert back to the rails - even if for no reason other than by default.

It looks like the railroad are trying to market themselves at least. I've seen 2 or 3 different CSX commercials that promote the railroad as more "green" than trucking.

Mr. Noah, have you noticed where and when the current CSX ads appear? They air on stations such as CNBC and Fox News....on radio during the 5AM hour. They are pitched to investors, and hardly the consumer public.

Gilbert B Norman wrote:Mr. Noah, have you noticed where and when the current CSX ads appear? They air on stations such as CNBC and Fox News....on radio during the 5AM hour. They are pitched to investors, and hardly the consumer public.

I don't watch either CNBC or Fox News and I've seen the CSX ads (I can't remember what station though). when was the last time you saw a trucking ad?

A train can haul a ton of freight 423 miles on one gallon of diesel fuel, about a 3-to-1 fuel efficiency advantage over 18-wheelers, and the railroad industry is increasingly touting itself as an eco-friendly alternative. Trucking firms also use the rail lines; UPS is the railroad industry’s biggest customer

http://www.temple-telegram.com/story/lo ... 4/22/48819

Suburban Station wrote:..when was the last time you saw a trucking ad?

Can't recall that one.

But back on the CSX campaign, I do think the ads are "slick" and they do educate whatever segment watches them (maybe it is more the consuming public than I sense is the case) regarding the merits of railroad transportation in today's economy.

Of importance is that maybe, just maybe, the industry will be a bit less "out of sight out of mind'.

What I do find interesting is while each of the Big Four Class I's have conducted multimedia ad campaigns, they never seem to do so at the same time. I guess such cannot be considered any kind of illegal collusion such as price fixing, but it does seem interesting to me that is the case.

Speaking of transportation ads, aren't airline ads a bit lean of late?