In reading the history of the BAR (Bangor & Aroostook), it mentioned that the line was impacted by the AAR ‘automated car-hire system’ implemented in 1997. Evidently BAR had enjoyed some ‘float’ before then.
What was this AAR change, and wouldn’t it have impacted all common carrier freight lines?
My knowledge of car hire accounting is very modest but I do know that before computers it calculation was labor intensive and took at least 3-4 months to settle. The user of foreign line cars had to advise the owner what the user owed. This meant that the BAR had to advise over 100 carriers, plus who knows how many private owners, what BAR owed. At the same time the other carriers had to advise BAR what they owed it. The net amounts of money then changed hands. Bills had to be presented within some time frame and time was allowed to compare debits and credits so both parties could calculate their net position.
When computers came in car hire was a natural application for them but the settlement process remained unchanged. I am 99% sure what you are refering to is when the industry, acting through the AAR, established an electronic settlement process.
If a carrier was chronically in a net debit position, that is used more car hire than it contributed to others, then speeding up car hire settlement would be a one time cash outflow. The effect on all class ones taken together was the same since due to the need to pay for private cars. Car hire expenses were unchanged.
The impact on most carriers would have been minimal. The impact on a small chronic debtor with a relatively large payment balance each month could have been noticeable. It would have been like having to make two mortgage payments in a month. How painfull it was would depend on your income, the amount of the mortgage, and your cash balance.
Mac
Thanks, Mac for the explanation.
The “float” period mentioned was also analogous to the period of time many (corporate and private individuals used with their personal checking accounts’the floating of checks,etc")
The coming of computers certainly changed the cash habit of both catagories of spenders (corporate and individual). It was within this environment that many individuals were ‘caught’, and the service fees for banks became a much larger profit center than previously.
It would certainly stand to reason that smaller rail ops with issues of cash flows could really be impacted on several levels. It immediate turnaround for cash payments could certainly change old bookkeeping habits in a hurry. [More than likely it was during this eras when large corporate entities sought out smaller banks,‘who were sort of off the grid with the Federal Reserve Banks’ to utilize those types of banks to build in a little time on the ;float’] It was sort of like the practice within the industry for brokers to load 'speculative 'loads of commodities.
Such as lumber, with an original destination of some point that might have just had a weekly service. Giving them time to sell the ‘rolling commodity’ and change the destination while enroute. My father was in the lumber business and he just loved to buy a car that was already against the bumpers at some point ( ie, Beloit,Kansas, back then) The price would get better, and better as the Demurage became a factor!
Computerization has certainly changed the complexion of the Rail,Transportation, and business worlds over the last thirty years. Steve Jobs and his partner Stev Wasniack sure turned the way the World did things upside down with their little Garage built ‘Apple’.
Wasn’t there a story in a recent TRAINS about a shortline that owned many more cars than they needed to serve their own customers, and sent the cars out across the country to live on the ‘per diem’. That seemed to be more revenue than they could generate with their own customers.
Bruce
There are many “boxcar shortlines” out there…
Arkansas Oklahoma (AOK)
Atlantic & Western (ATW)
Missabe & Bigbee (MB)
Coe Rail (CLRE)
East Erie Commercial (EEC)
Finger Lakes (FGLK)
Hartford & Slocum (HS)
Northeast Oklahoma (NOKL)
Steelton & Highspire (SH)
Sidnet & Lowe (SLGG)
St. Mary’s (SM)
And the list goes on.
Nick
A couple of corrections
Meridian & Bigbee and Sidney & Lowe.
I don’t think that I would put the Steelton & Highspire in the same category, as its primary function is to service the Arcelor-Mittal (ex-Bethlehem Steel) mill at Steelton, PA. The line was built by Bethlehem Steel to service the mill.
You may be thinking of Roscoe, Snyder & Pacific, a West Texas shortline that connected with Missouri Pacific (later UP) and, I think) Santa Fe. RS&P is mentioned by Fred Frailey, almost as an aside, in his masterful Trains magazine article on the reconstruction of UP’s T&P Line.
To amplify a bit: Before the days when computers became a real-time operating and accounting tool, the industry standard on car hire was that if a foreign car was on your railroad at midnight, you owed and paid the owner road the
Unfortunately, demurage still works on midnight, causing much gaming of the system by both RR and customer…
Thanks Billio, as soon as you mentioned it I remembered it was in a Fred Frailey article.
It is funny that you mentioned that. About five years ago I was trackside when a string of EEC gondolas went by. I don’t know what they were doing to those cars but I think you could say they were the definitive example of being in distressed condition. The paint seemed to be burnt off and blistered and each car was a variety of colours. The bodies were a whole other sad story
There must have been complaints because at some point somebody took the bull by the horns and repainted the reporting marks on some of the cars by hand, in white, using a wide paint brush! Definitely not a professional looking operation.
Thanks everybody.
Bruce