I was just curious about what it takes to buy a railcar or railcars and lease them out to railways.
Do you purchse the railcars brand new from a railcar manufacturer then lease them out?
What kinds of prices do you pay for new railcars?
Do people buy used cars and lease them out?
Do a lot of people do this?
How do you get paid for the use of your car?
Is this a fairly common thing that’s done by individual people who just own one or two cars?
Any info or webpage links would be helpful, I was just reading about this somewhere and it peaked my curiosity.
I’m not sure of the numbers, but owning railroad equipment takes big bucks. A single car has to be over 100K, so if you had a few million, you could own a small fleet. I would imagine that it is something like the apartment rental business, and vacancies kill. Time is money. If you win the lottery, buy railroad stock, it’s easier. [swg]
Do you think you are ready to compete with the likes of GATX, and others?
Don’ t forget that that the railroads own a fair amount of equipment too, and sometimes that sits idle waiting for loads.
If you really wanted to break into the business, maybe the way to go would be to find a regular shipper, and contract with them to use your cars. The problem might be that your economy of scale may result in the railroad being able to provide that same service for less, and there goes your business.
Sorry if I was a little down on your business concept there. I have had my own “model railroad” business which failed in the past. I lost about a half million dollars in the process. I have also owned apartment buildings in real life, and understand the problems there. Combine a general knowledge of railroads with that business experience, and you get, THE DEVIL’S ADVOCATE, me.
If I had said these things to George M. Pullman, I would have been dead wrong. But that was a different time. I still say if you want to own railroads, BUY STOCK, not rolling stock, shares of the company itself. Rolling stock comes with them.
I too would would like to hear from some other members on this, so I’ll shut up for now.[swg]
I wi***hat I could remember the months, but you need to look over the Trains magazines for the past month. I remember two months that have articles that may interest you. One of them mentioned the numbers of cars and the general shift to leasing rather than owning buy many of the class ones. The second brought up the point of cars above the old 100 ton standard. Many cars have become obsolete over night.
Also the freight car industry is VERY cyclical. Their are always ups and downs. For example after record breaking years most of the major car producers have had to idle some of their plants. Now business is starting to pick up again.
Personally I wouldn’t come near the railcar business. Their is way to many swings to the extremes.[;)]
No offence taken, this isn’t a business concept of mine, I have no money to invest in stocks or rolling stock for that matter, and have no intentions of doing so.
I am just curious as to how the business works, I know there are people out there doing it and I was wondering how they did it.
Just doing a little research purely out of personal interest.
From the posts above I can see it’s not an ideal money maker business to be in, but I am not so much interested in the IFs as much as the HOWs.
I am much relieved to hear that.[;)] Research for modeling perhaps?
I wish I knew all of the details myself. I kind of have a basic grasp, and I know that at one time in the past cars needed to be returned to their home road, but I’m not sure when that practice ended.
Grain hoppers have a seasonal flow, and I believe that the BNSF and CP round them up and store and dispatch them from a couple of central locations.
Lumber cars have to be returned empty to the mills, because there is no load for them in “Chicago” for example.
Coal trains, same thing, loads one way, empties back for refills.
I did manage to find one of the articles that Dough was referring to, Trains Jan 2004 page 58. This article will answer many of your questions.
Seems to me, one of the better bets would be to go with boxcars.
Most other specially designed cars seem to be limited in where they can go and obviously what they can carry.
Assuming that your boxcar could go anywhere in the North American Boxcar pool, I suppose it would be more likely to be in revenue service more often, no dead-heading to it’s destinations.
I’m gonna have to take a look at that article you mentioned big boy - I just gotta find the issue [:)]
Investing in free-running boxcar fleets was quite the rage in the mid to late 1970’s, with per diem payments being the major source of income. Unequipped boxcars carried the reporting marks of various short lines and were free runners under the car service rules in effect. I’m not sure of all the particulars but the whole concept went bust after a couple of years.
I would have to agree that box cars would be one of the better bets. However, according to the article, entitled Risky Business, box cars and reefers are mostly owned by the railroads.
I took the time to crunch the numbers from the article. There they had listed by car type the ownership numbers for all the the major North American railroads, and then the numbers for private ownership. The percentage I have listed is the privately owned percentage of the total in service in 2003.
Would an open hopper be the same thing as a coal car?
That’s really interesting about the Tank Cars.
I suppose they are a real specialty item, after all they can only haul certain commodities that most of the time aren’t interchangeable (sugar products to propane kind of thing).
I would tend to agree with the guys who think you’d have to be nuts to do this. I too have owned rental property and seeing it unoccupoed is an aging experience. My fantasy is to own my own business car or other splendid accommodation-on-wheels and attach it to trains (for a fee, I suppose) and ride around the country in the grandest of style. Anybody have any idea how this works?
I can’t promise anything here, but if you go to the Tennesee Central RR museum site, there is a list of private passenger equipment. There is also a list of privately owned locomotives (mostly E8s, and private owner cabooses)
These cars are used by the owners - mostly for business, once in a while on vacation trips.
I suggest contacting the museum and see if they will put you in contact with the owners.
Again, I am only offering a suggestion, nothing more, on a possible source of info. JOHN.
One big company in this business is Chicago Freight Car Leasing, who have an Australian subsidiary which is the big player in this country anyway. They have a website that might be worth checking (for both the US and Australian operations).
In Australia they also lease locomotives, and the details and pictures were on their Australian website last time I checked. Just put their name in a browser!
A number of small operators failed due to high insurance costs, and suddenly, we realised that CFCL had always owned their locomotives and cars. But you need large amounts of money to do this!
I read in a magazine that VIA Rail will allow private rail-car owners to attach their car to the end of their trains; for a fee of course. Unfortunately I can’t remember which magazine it was in. I believe it cost $8000 to have your car on the train from Vancouver to Montreal. That included power connection and any necessary switching. If anyone is interested, I can try to find the article.