A business, such as a manufacturing plant, a farm products company or a distribution center, considers building their facility near an operational railroad track. Management desires to ship their products by rail, but there is no siding. What justifies the construction of a siding? If justified, who pays for the construction of the siding, the company or the railroad?
the industries usually pay for trackage on or in their plant/property…mainline switch and lead is usually RR cost…of course most RR’s (CSX in MI is an exception[censored]) would be more then willing to pay to have a new customer on their line…local example…THEROFIL inc in MI moved their plant from from MP 45 to MP 60 on CSX Detroit to Grand Rapids main…old plant had 1 spur down a nasty hill…3 accidents that im aware in 10 years of including 1 time hoodlums tamerpered with the mainline switch and sent an eastbound CP runthru into the plant…new plant has 4 tracks (on level ground [:D]) 2 for storage and 2 for unloading…THERMOFIL paid a private contractor to install the trackage then CSX trackgangs cut in the new mainline switch and installed the derail…the catch was that CSX wanted half the cost of the new switch…so it was delayed about 3 weeks while negotiations went on…i never got the low down on the final cost but we spend 2 hours a day switching the new plant
Thank you J. Edgar
Nick
The Union Pacific website has detailed guidelines on how to request new railroad service at
http://www.uprr.com/customers/attachments/industry_guidelines.pdf
John Timm
Industry generally pays for labor and material costs for signal modifications and trackwork on railroad owned property as well. They might get some of those costs back in the form of rebates based on the number of cars shipped, etc. Signal labor and equipment is not cheap and company labor is expen$sive as well when using Class 1’s as opposed to contract labor. The days of just having a track as leverage against trucking costs are all but gone. (IF you do not use the switch in a main line for long periods of time, don’t be surprised if the switch and frog get removed and set aside. Use it or lose it. (and industry still fails to maintain their trackage and expects the railroad to inspect and maintain it - Most industries on-site folks are not even aware there is a contract that spells out who is responsible for what.)
UP may not build that track or switch it if it resides out of terminal or yard limits - read carefully.
See Mudchicken’s comments.
A siding is a place to meet and pass trains. I think you’re referring to an industrial spur.
The industry pays 100% of the cost of the spur, turnout, and any changes to signaling, drainage, access roads, grade-crossing signaling, and anything else that is affected. In addition the industry may be required to pay 100% of the cost of network improvements required to serve the industry. For example, a power plant proposing to receive one train per day will likely be asked to pay for siding extensions, new sidings, signaling upgrades, power crossovers, fueling tracks, staging tracks, inspection tracks and other network facilities between the power plant and the mine, if there is not spare capacity in place already. These costs can easily add up to $50-100 million. A carload shipper of moderate size – say, 30 carloads per day – may be asked to pay for 100% of the cost of new classification tracks in a yard, new storage tracks, and anything else that may be required to serve the shipper. These costs can easily add up to $10-20 million.
The shipper may or may not receive a rebate or reduction in the cost of shipping for the value of their improvements to the network. In most cases the answer today is no. However, the railroad recognizes that it the transportation cost and capital costs are too high the shipper will look to a different location, a different railroad, truck or barge, or simply not build anything at all. The railroad will work with the shipper to achieve the best possible outcome for the
RWM,
Are there many such projects underway? I would imagine that such an investment would require a thriving industry and that the lead time requirements would require a fairly stable one as well.
Are Ethanol plants big builders in such projects right now?
Q 1. Business is booming. People can figure out a lot of what might happen by paying attention to the boring minutia of numerous public sources such as air emissions and water discharge permit applications, BLM land-use applications, rezoning requests, etc., and have a good idea what’s coming 1-5 years in advance. Also, by just thinking through how things are going to get places to build big projects or supply fuel/raw material to big plants, you can figure out a good picture of what will happen to railroad traffic and lines years in advance, too. There are few secrets but neither will anyone tell you anything if they don’t have to, either.
Q 2. I thought the ethanol biz had about built-out last year but then Bush and Congress came up with a giant subsidy bill last fall.
RWM
Locally a new steel truss fabrication facility is well described by RWM’s description of a minimum effort – single spur off an unsignalled branch line within yard limits. A contractor constructed the in-plant spur up to the UP property line – including installation of the derail. UP has yet to connect it to the branch line.
dd
near Owosso Mi there is a large ethanol plant being built… both the GTW and the GLC are optioning spurs to serve this plant in 2010…plans are around 50 to 60 cars a week at start up with double that in 5 years…cars of corn in and tanks out…GM and GTW pooled money to build a new 4 track holding yard…with room for over 100 racks …and 3 loading tracks for auto racks at the new Cadilac plant near Lansing MI opened early last year i believe
Addition to Q2. - RWM (probably) and I have wandered into situations where industry got in far to big a hurry, hired novices and we had to come in and sort out the mess just to keep Brand X Ethanol Plant in business. Sounds like we both are into some serious addition(s) to the initial ethanol boom. (as in, we made it - now where do we go with it?)…and as noted in other threads, Ag Business can do some horribly short sighted things (Fire Ready Aim…AgriDummies…cutting corners) that wind up in disaster.
There is no fun in telling a client or railroad that you can’t get a railcar from here to there after they built a monster project that is now doomed to be inefficient or non-functional in a rail sense. (and you have wracked your brains for days trying to undo the damage)
…If Chris were to look up in Windsor, Golden, North
[quote user=“mudchicken”]
Addition to Q2. - RWM (probably) and I have wandered into situations where industry got in far to big a hurry, hired novices and we had to come in and sort out the mess just to keep Brand X Ethanol Plant in business. Sounds like we both are into some serious addition(s) to the initial ethanol boom. (as in, we made it - now where do we go with it?)…and as noted in other threads, Ag Business can do some horribly short sighted things (Fire Ready Aim…AgriDummies…cutting corners) that wind up in disaster.
There is no fun in telling a client or railroad that you can’t get a railcar from here to there after they built a monster project that is now doomed to be inefficient or non-functional in a rail sense. (and you have wracked your brains for days trying to undo the damage)
…If Chris were to look up
Thank you to mudchicken, Railway Man and all of you for your answers. You were all very helpful.
Nick
Another great thread. The economics of railroading never fails to amaze me. So, there is a 2 year backlog on building a spur. What is the normal backlog?
What is pushing the backlog out? Lack of capacity for building such project? Materials? Other factors?
I watched such a project, very small, last fall in East Chicago off of the EJE. As it turned out it was a locomotive rebuilding company that is setting up shop. With that kind of investment, the overhead cost for running a locomotive in their shop will be pretty high.
A second Northern Indiana project should begin soon, the Sysco Food’s DC at Hamlet, In is due to come off of the CF&E. Should be good news for CF&E.
ed
That’s two years without a backlog. It takes a while to do the survey and geotech, do the design, coordinate the design with all the people who have input (engineering standards, track, signal, structures, local operating, regional operating, national operating, marketing, sales, industrial development, and the shipper), get the permits, order the materials, wire the instrument houses, schedule the construction forces, and then start moving dirt. Materials shortages, particularly rail, can drive that out farther. 115 lb. rail is always in short supply because of the demand from transit construction so often it’s faster and cheaper to buy 136 lb. Big projects that break loose can use up all the rail and signal material for months. Specialty track, particularly frogs for diamonds, take a long, long time to order and receive. Ties can be a factor too. Sometimes it’s easier to get concrete, other times easier to get wood.
RWM
I never even considered the regulatory and environmental stuff.
ed
The company I work for has a long range goal of building a new lumber (distibution) yard south of town. The new site is to have a railroad spur. I’m not involved in the process, but I know it’s moving very slowly. At one point, someone came to look at our existing siding, to see about harvesting(?) the rails. That must have been a fun visit for someone. The siding, off the Milwaukee Road, is 100+ years old, and probably hasn’t seen a car since Ike was president.
Hope they don’t leave the railroad work down on the priority list or wait till the last minute. (new facility w/o rail service is part of what I hinted about above.)…Lease & contract negotiations with the railroads can take 6+ months alone.
Salvaging rail and cascading it into a new project may not even be an option if the rail is too light, corroded, Open Hearth, oddball, torchcut, worn or a host of other things. Grading secondhand rail is something that RWM and I have probably gotten into on occasion. Not always as simple as it would appear.
Why is it easy to abandon something very fast and so hard to raise up new track?
Thinking further, Im dumbfounded to learn it takes so long to build, activate and operate on a new spur. It is easier to whistle MOW out and point to a broken section of Mainline. Faster too.
…and just how do you abandon railroad in a hurry? (usually even a more long drawn-out process in most cases)
Railroads were not born yesterday or last week. Experience and legal compliance dictate that you take a steady approach, you can’t play favorites (Elkins Act et. al) and you make sure all the bases are covered. It might go faster if you had more people to service the requests, but the beancounters and operating head bubba’s are solely into running trains - everything else is considered a nuisance expense.