BacktotheFuture

Inside the 4Q numbers at BNSF

2009-11-04T16:50:00Z

I assume from the financial perspective in regards to stock price that Buffet's New Santa Fe is going to be pretty decent.

Just In Case

2009-09-29T20:08:00Z

RWY-ist thinks all us rail transportation people are too narrow minded read below about how great HSR is to some...

Show-Me Institute study slams high-speed rail proposal

Missourinet

By Steve Walsh

September 28, 2009

A new study takes a close look at high-speed rail in Missouri and concludes Missourians would not get much of a return on their investment. The study was conducted for the Show-Me Institute, a St. Louis-based free-market think tank, in response to federal economic stimulus proposals to expand high-speed rail services throughout the United States.

Randal O'Toole, a Senior Fellow at the Cato Institute, authored the study for the Show-Me Institute. O'Toole says Congress has called for $8 billion to be set aside for high-speed rail, and Missouri would only be eligible for a slice of that - hardly enough to cover the costs of constructing or upgrading. O'Toole says upgrading 250 miles of track between Kansas City and St. Louis would cost about $875 million.

"That is just an awful lot of money and it is just to upgrade tracks so that passenger trains can run at 90-110 miles an hour on the same tracks as freight trains," said O'Toole in an interview with the Missourinet. "If you wanted to build brand new track and have true high-speed trains, trains going 150-200 miles an hour, it would cost you a lot more - billions or tens of billions of dollars in Missouri."

The suggestion is that any additional costs would have to be absorbed by Missouri and other state governments.

"We can be sure they're going to be coming back to local, federal, and state taxpayers and saying, 'Give us more money,'" said O'Toole.

As far as O'Toole is concerned, it doesn't really make a lot of sense.

"Here you've got a proposal, essentially, to spend about a billion dollars," said O'Toole. "And all you're going to get is trains that are now going 79 miles an hour and they might go 90 miles an hour, instead, or a little bit faster."

Why would the trains be limited to speeds only reaching 90 miles an hour?

"Burlington Northern Santa Fe, which runs a lot of the tracks west of Chicago and St. Louis, says they don't want trains running faster than 90 miles an hour on their tracks," said O'Toole. "Any trains faster than that will be incompatible with their freight trains and they don't want it. So, here you have the federal government saying they will only fund things that run faster than 110 miles an hour and the largest railroad in the country is saying we're not going to accept anything faster than 90 miles an hour."

The study shows that ridership on the Amtrak line between Kansas City and St. Louis at just 29 percent capacity, leading O'Toole to say the demand does not exist in Missouri. But would ridership exist if high-speed rail were to become a reality in Missouri? O'Toole says figures for the Northeast Corridor, in which high-speed rail does exist, would indicate ridership would not rise all that much.'

"Some of the projections put together by advocates of high-speed rail assume that they will fill 70 percent of the seats," said O'Toole. "Amtrak doesn't come close to filling 70 percent of the seats - even on its high-speed trains between Boston and Washington. It fills only about 55 to 58 percent of those seats."

O'Toole suggests if the federal government wants to provide Missouri and other states with money to upgrade passenger train service, it should allow the states to use the money to improve safety and for purposes other than expanding high-speed rail.

Property Taxes - Progressive Railroading History

2009-09-02T17:55:00Z

Larry Kaufman I am inclined to twist your ear for some more background on property taxes the railroads pay for their right of way. ( you monetioned in a another thread)

What can you tie into this with land grants that created many of the railroads and the transition or facts behind those grants. Were the original grants set up with a specific tax rate based on when the lines were in service, amount of ton miles. etc?

Side note I always found the MRL situation interesting. MRL takes over BN lines in 1989 but can't buy them because of the Mortgage Note Payables go through 2049 (60 years from take over). Or is that misperception? It would make sense that there was 150 yr mortgage to the NP...2049 - 150 = 1899. The land grant is dated 7/2/1864 though.

NP land grant gave them 200 feet on either side of the roadbed. Were railroads allowed to sell that for profit?

Containerisation International - August 2009 p. 56-57

2009-08-14T16:21:00Z

Interesting read, most is re-hash of what is/has been going on, but some interesting tidbits. Also short haul intermodal lane note as well on the eastern side (I wondered aloud in a post last week or so about short haul opportunities.) LK I did a poor job editing properly in regards to paragraphs, etc. Please look past that if it's a pet peave of yours. :)

Back on track

North America’s intermodal rail industry has suffered along with the decline in the container shipping business, but thanks to ongoing investment and service improvements its prospects are looking up, as

Martin Dixon reports.

We are trying to find green shoots but see only 'mould,’ lamented an industry analyst speaking at the North American Rail Shippers Association (NARS) annual meeting held in Chicago in May. His comment summed up sentiment among most railroad and intermodal operators on the continent. Figures for intermodal traffic make for grim reading. According to data published by the Association of American Railroads (AAR), North America’s intermodal rail volumes for the first 24 weeks of 2009 were down 17% on the corresponding period last year. The biggest drain on intermodal traffic has been the depressed international liner business. Indeed, domestic movements have remained relatively buoyant. According to the Intermodal Association of North America (IANA), combined US and Canadian domestic container traffic was stable (up 1%) in Q1 09 (see table). In contrast, international container traffic declined by 23%. This was on the back of a fallow 2008 when intermodal traffic fell by 3%, led by a 7% drop in international cargo. Domestic containers again showed some traction, rising by 7%. This was at the expense of trailers, which were down 4% to 2.1 million units (see table). Trailer volumes have been in decline for several years as the container has become the preferred modal choice. Partly, this is because of its stacking capabilities which provide obvious cost advantages, ie, its use on doublestack trains. Where speed off the rails is important, trailers have the advantage. This is why express carriers, such as UPS, keep the trailer as their choice of intermodal equipment. The slump in trailer traffic meant that total intermodal domestic traffic fell by more than 7% in Q1 09. It was the largest drop since IANA started reporting on quarterly data in 1998. Meanwhile, the collapse in world trade has resulted in a rapid deterioration in international traffic. After a challenging 2008, the rate of decline doubled in Q1 09 compared with Q4 08. Joni Casey, president and ceo of IANA, told CI that international movements of containers on rails was down 25% in May compared to a year earlier. It was the 27th consecutive month of decline. According to the executive, the slump in auto trade had impacted both international and domestic business while the US’ housing crash had severely affected domestic volumes. At the AAR, John Grey, its senior vice president for policy and economics, said that the domestic intermodal product had become very competitive with trucks. ‘Following the impact of higher fuel prices from last year, a large number of shippers have sustained the switch to intermodal.’ Nonetheless, profits have nosedived across the continent’s rail and intermodal sectors. Norfolk Southern (NS) and Burlington Northern Santa Fe (BNSF) posted profit falls of 39% and 35% respectively for Q1 09, with each blaming tumbling cargo volumes, particularly in their international intermodal business divisions. BNSF’s international sales were down 25% and NS’s total intermodal traffic was 25% lower than in the same period of 2008. ‘Freight demand is as low as I have ever seen it,’ commented Steve Branscum, group vice president of consumer products for BNSF. ‘The economic downturn is more pronounced and lasting longer than anyone expected.’ Elsewhere, intermodal marketing companies (IMCs) saw their Q1 09 volumes fall 11%, this following a 10% drop in Q4 08. The Pacer group, for instance, notched up a net loss of USD177 million in the first quarter of this year. Given their limited exposure to international traffic, volumes have been less impacted by the collapse in shipping volumes. Despite falling cargo volumes, railroad companies have been continuing with their ambitious capital investment programmes to improve network coverage and service quality. Doug Rubin, senior economist with the marine consultancy company Moffatt & Nichol, said that the major railroads are each investing in excess of USD1 billion a year in creating new capacity. BNSF, the largest US intermodal operator, has undertaken a number of capacity upgrades since 1997, including building additional track on its Southern Transcon route from Los Angeles to Chicago; expanding sidings on the Northern Transcon Line between the Pacific northwest and Chicago; and modernising/increasing intermodal facilities in the Chicago, Los Angeles and Memphis areas. ‘We have continued to invest in our long term infrastructure improvement projects through the recession,’ said Branscum. ‘However drawing board projects have been pushed back given that volumes have fallen back to 2003/04 levels. Meanwhile, NS is spending USD150 million on upgrading its Heartland Corridor between Norfolk and Chicago, which it claims will reduce travel time by one day when completed next year. It is also close to completing improvements to the Meridian Speedway with Kansas City Southern (KCS) between Dallas and Louisiana. In addition, the railroad is spending USD100 million to boost capacity on the Patriot Corridor, which connects Boston with Birmingham, New York, with short-line operator Pan Am. Finally, NS is seeking federal funding to support its ambitious USD3 billion Crescent Corridor upgrade, connecting New Orleans with the north east of the US. This track runs parallel to the congested I81 and I75 highways. ‘There’s dirt turning on all these projects,’ said Jeff Heller, assistant vice president international marketing at NS. ‘Whilst we await federal funding to support the vast bulk of the Crescent Corridor upgrades, we are already going ahead with terminal upgrades and small bits of double-tracking.’ Last year CSX Transportation launched a public/private initiative to create a more efficient rail route linking the mid-Atlantic region of the US and the Mid-West. The USD700 million project will upgrade tracks, equipment and facilities and provide clearance for double-stack trains. Some bottlenecks are outside the control of railroad companies, the most significant being around Chicago where rail freight, passenger rail and highways converge. Train speeds are reduced to such a crawl that operators are forced to dray containers between US east coast (USEC) and US west coast (USWC) networks. The USD2.56 billion Chicago Region Environmental and Transport Efficiency programme (CREATE) is a multi-agency initiative to plan and construct critical projects to deal with this situation. Started in 2007 with federal funding support, five projects have been completed, four are under construction and a further 22 have preliminary engineering work completed. The work includes new roadway overpasses/underpasses at locations where auto and pedestrian traffic currently cross railroad tracks at grade level; new rail overpasses/underpasses to separate passenger (commuter) and freight train tracks; viaduct improvements; grade crossing safety enhancements; and extensive upgrades to tracks, switches and signalling systems. ‘The benefit to intermodal users is that reduced congestion may negate the need to dray containers across Chicago from western railroads (BNSF and Union Pacific Railroad) to eastern carriers (CSX and NS),’ said Mike Payette, assistant vice president of government affairs at Union Pacific Railroad. He has responsibility for the advocacy aspect of the CREATE programme. CREATE seeks to focus rail traffic on five rail corridors and improve train speeds and reduce delays. Currently train speeds range from 5mph to 12mph and delays can be as long as 122 hours, depending on the line. Payette says that once the programme is completed in 2015, average speeds will have been raised to between 13mph and 22mph while line delays will have been reduced to between five and 23 hours, depending on the corridor. Despite these benefits, obtaining funding has been challenging. Payette explained: ‘The programme needs USD1.3 billion from 2010 to 2015 and to date has received just USD216 million. CREATE is waiting for the Illinois State governor to sign off USD320 million and is seeking USD500 million from the Obama Stimulus Bill. It also plans to ask for USD700 million from the next Federal Transportation Bill.’ High levels of investment right across the North American network appear to have paid off, as railroads boast ever-improving service quality and expanded network coverage. BNSF claims that it has managed to cut average train moves by 12 hours in Q1 09, compared with the previous year. ‘We are using the current environment [slower trading volumes] as an opportunity to enhance our services and move into new geographies,’ commented Branscum. ‘We have shortened core transit times and launched 16 new services. Transit times have become very truck-equivalent.’ Despite these improvements, the Hub Group – a leading US-based IMC – recently confirmed that it was shifting most of its traffic to rival Union Pacific Railroad. ‘They have made some tremendous investments in physical plant and their service levels are extraordinary now,’ commented Dave Yeager, chairman and ceo of the company. ‘Their transit times are very competitive with BNSF. For example, from southern California to the south east they are a day faster and they are equal to their rival on routes from California into Chicago and the USEC. A lot of their investment has really paid off.’ Statistics provide some support to the industry’s service improvement claims, with IANA noting that the weighted average intermodal train speed improved 11% to 33.3mph in Q1 09, compared ith a year earlier. However some of this progress may not be down to railroadinvestment alone. Tony Hatch of ABH Consulting speaking at the NARS conference in May, suggested that lower volumes had been a major contributor to the improvements. Either way, the impact has been to make intermodal rail services more competitive and increasingly attractive over shorter distances. The railroads are seizing the initiative. NS, for instance, is developing a number of USEC shorter haul services to compete with trucks. These include:

• New York to Harrisburg, Pennsylvania

• Norfolk to Charlotte

• Savannah to Charlotte

‘The hardest thing for us to compete with is trucks in a short haul market,’ remarked Heller, ‘but we think that there is big demand out there. If we can keep the service predictable we can compete.’ Moffatt & Nichol’s Rubin reckons that this kind of traffic represents intermodal’s best growth opportunity. ‘Growth in intermodal will be in the medium-distance traffic lanes where trucking becomes more expensive,’ he said. USEC operators have also seen some benefits accruing from increasing all-water container imports. This may have reduced hauls out of the Mid-West from USWC ports but it has increased volumes heading the other way. The IANA believes that its statistics show this shift. Of international boxes destined to the north east, south east and/or Mid-West, IANA claims that the eastern-origin share grew to 38% by the end of Q1 09. Recent investment by USEC ports in ondock rail infrastructure has facilitated some of this growth. Looking further ahead, North America’s intermodal rail industry remains confident that it is well-positioned to take advantage of any upturn in trade. Rising fuel costs and environmental issues are driving freight off the highways onto rail. ‘Energy costs are a major factor, not just in terms of fuel costs, but also taking into account the wider impact on shippers’ supply chain networks,’ remarked Grey. ‘Ultimately this will benefit intermodal.’ As the industry waits patiently for the economy to turn around the outlook appears more promising than first impressions may suggest.

HSR Consultants Unite!

2009-07-01T15:29:00Z

Just read the Midwest HSR in IL news...Chicago to STL at 220mph.

MHSRA suggest getting in that app for ARRA $....they only need $10M to do the study.

It's just clicking now that "how much money is being sucked out of this ARRA pot to "study" all of this HSR that is not economically feasible in most cases?"

Maybe a few of us could get together and form our onwn consulting group to "study" HSR between North Platte and Sydney, NE? If you are willing, I'd offer my expertise in counting the money as it comes in and making copies of the final "study."

Good grief.