I am new to this forum. I am curious if any one knows which issue of Trains Mag. had an article about A&K Materials trying to run business off a railroad in Illinois a few years back. The article stated they were attempting this in order to scrap the line. They were stopped when the local communities found out what they were really up to and made a big fuss. I had the impression that they picked a railroad with too much traffic to try that stunt with.
In north Mississippi an 80 mile remnant of an old GM&O main was recently turned into a 20 mile remnant. The “operator” is a scrap metal dealer who ran most of the business off after purchasing the line in 2004. I am hoping to get a bill in our state’s legislature one day that will stop things like this from happening. The article in Trains about A&K Materials was great. I just don’t remember which issue it was.
Well, if the railroad track is more valuable as scrap than it is as an operating railroad, then it should become scrap. That would turn it into something more useful, now wouldn’t it.
If you want to keep it around as a railroad, then you can buy it for scrap value.
And the loss can come out of your own pocket, not the taxpayers.
With a hand on the throtle and a hand on the brake,
North Mississippi was wide awake
I used to try to put freight on those ex GM&O lines. It wasn’t there to put.
(1) The return of the west end of the TP&W was not a function of local community outcry as much as it was the intercession of another railroad operator & shippers. (the strange birds at Pioneer being the KJRY railroad here)
(2) the STB is charged with preserving rail service where possible. (If the line cannot generate the traffic it’s gone…STB will not save a line just because there “might” be future traffic. )
(4) A&K Materials has been yanked onto the STB carpet more than once and has a reputation in the industry that is not kind. (A&K is hardly alone, witness the former Youngstown & Southern RR real estate scandal … STB is now investigating ways to stop abuse of the existing regulations by scrappers, waste haulers and real estate interests.) To quote the STB regarding A&K in the TP&W case:
"After weighing the evidence, we conclude that Respondents wrongly purchased the La Harpe Line for the purpose of abandoning and salvaging it. Our exemption process is designed to facilitate continued service to shippers and continued maintenance of the transportation network. The integrity of that process is undermined by, and must be protected from, tactics such as those employed
Second, There are many miles of track in North Miss that could be considered on the verge, if not already gone…The tracks south of Grand Junction, Tn. to Holly Springs, and possibly to Water Valley??? Middleton, Tn to Ripley, Ms ??? [ Have not been in the area in some time so not completely sure if they are still in place at this date.]
Do you know if the Missippian from Fulton South is still in operation? Got some of my first steam rides on it… And several of the “Sentimental Journeys” riding behind Southern Rwy 4501 from Memphis to Corinth and return.
As a former North Mississipi resident, and Memphis native…Welcome! I know you will enjoy this forum!
This post seems as good as any to post my 2000 message on the forum (time well spent? The jury is out):
Greyhounds:
I certainly value your insight–especially as it relates to your experience with the IC–with your posts on here, but I think I am going to have to disagree with you on this one.
Although, I can’t argue with your premise that, if the line is worth more as scrap, it should be sold as such, I think that fact that someone wants to prey on the line as scrap does not necessarily mean that the line does not have more value in service as compared to scrap.
The problem, as I see it, is soft money. The line in question may–or may not, I am sure you know more about the details–be worth 1000 times the current value of scrap in 10 years. The problem is, it would take ten-years to realize this profit whereas the scrap represents an immediate and sure profit.
Although this might defy common sense, most business men–who are only concerned with profi
Basically, it boils down to the fact that no one knows the future. So, since we have to make decisions based on the future, we’re into uncertainty. So we do analysis and some projections.
We can do the analysis several ways. There’s discounted cash flow, there’s net present value…several ways to do it.
But it all comes down to the fact that if the projected future value of the line, discounted for the risks of uncertainty and the cost of money, as an operating railroad exceeds the current scrap value, the line will be kept. If the present owners don’t have the capital to keep it around they can sell it to someone who does for more than they would get scrapping it.
Now the projections and the analysis might be wrong. “There is no certainty, only reason and experience to guide us.” But we can’t just hang on to 80 miles of railroad based on the thought that it “might” be useful ten years hence.
Unless there’s a good analysis (and aparently there isn’t) that the railroad line is more valueable in place than scrapped, then it should be torn up and melted down into something more useful.
Basically, it boils down to the fact that no one knows the future. So, since we have to make decisions based on the future, we’re into uncertainty. So we do analysis and some projections.
We can do the analysis several ways. There’s discounted cash flow, there’s net present value…several ways to do it.
But it all comes down to the fact that if the projected future value of the line, discounted for the risks of uncertainty and the cost of money, as an operating railroad exceeds the current scrap value, the line will be kept. If the present owners don’t have the capital to keep it around they can sell it to someone who does for more than they would get scrapping it.
Now the projections and the analysis might be wrong. “There is no certainty, only reason and experience to guide us.” But we can’t just hang on to 80 miles of railroad based on the thought that it “might” be useful ten years hence.
Unless there’s a good analysis (and aparently there isn’t) that the railroad line is more valueable in place than scrapped, then it should be torn up and melted down into something more useful.
Ah…I dont think you can translate decissions about lawsuits into other (equity based) business decissions…for this reason:
Lawsuits generally involve juries, and juries oftentime decide by emotion more than fact. We have all seen outcomes of lawsuits that seem to defy logic.
A lot of businesses would prefer not to trust to emotion to predict the business future…especially if it also entials years of effort and continuing impact to the business.
A lot of folks, not just businesses, would calculate that
$3Million x 100% is greater than $60Million x 80% x (uncertainity of jury verdict)
[2c] (OK, I annoy everybody with another 999,999 of these…)
Ah…I dont think you can translate decissions about lawsuits into other (equity based) business decissions…for this reason:
Lawsuits generally involve juries, and juries oftentime decide by emotion more than fact. We have all seen outcomes of lawsuits that seem to defy logic.
A lot of businesses would prefer not to trust to emotion to predict the business future…especially if it also entials years of effort and continuing impact to the business.
A lot of folks, not just businesses, would calculate that
$3Million x 100% is greater than $60Million x 80% x (uncertainity of jury verdict)
[2c] (OK, I won’t annoy everybody with another 999,999 of these…)
A little bit of both. Often, if the facts are undisputed, the case will be decided on summary judgment. The cases that survive summary judgment will almost always settle before a jury ever sets eyes on the case.
In many ways, a jury is the least important part of the process–unless it is criminal law or personal injury, then, it is everything.
I’d have to side with greyhounds on this. If, it’s such a potential money maker for a future railroad operator, it seems to reason, that someone would buy it from the scrap dealer now. If the scrap dealer could sell it for more than scrap value as it sits today, he’s surely sell it in a flash. It doesn’t appear that there are any folks out there that believe it to be worth more than scrap value. If you think about it, isn’t that why Mr. Scrap dealer owns it now?
Coulda, Woulda, & Shoulda don’t pay the bills. (Enacting state laws ordering owners to lose $$$$ to keep lines open makes no logical sense. I do not see MS or local government trying to buy the line in an OFA)
If you look at STB AB- dockets 868 and 869 you see quickly what killed the line. (International Paper’s reluctance to ship anything by rail anymore.) In spite of two shortline operator’s best efforts at enticicing some of the 2000 cars a year lost (international paper now ships by truck)back to the rail side, it did not happen. Nobody else is willing to gamble.
Hust Bros. (commercial real estate) bought the line a-la “Rail Ventures”. and has pulled back to where the surviving shippers (4?) remain. The question is what is their real motive and does it harm the public?
I’ll give you a quick run down on some of these lines you mentioned. The Mississippian from Fulton to Amory is still in operation. It is doing well. It made a comeback, won in some new industry, and got a bigger locomotive. I haven’t seen their train in sometime but it is much more than what it was 10 years ago.
The line from Middleton, TN to Ripley, MS is the one that I wrote about getting scraped. It has been gone for a month or 2. It now ends a few miles north of Ripley. The part btwn Riley and New Albany, MS has 4 or 5 customers and does well as far as I know. The 40 miles below New Albany is now gone as well. Iron Horse Resources is the current owner and I believe they will sell the remaining shortline to another operator since they scraped the rest.
The track south of Grand Jct, TN is still there all the way to Oxford. It is a Pioneer railroad and it’s main customer is in Oxford, MS. No track from Oxford to Water Valley.
I will try to get back in here tomorrow and read some of the STB docs that have been posted. Thanks again for all this info guys.
From a legal standpoint, abandonment has always been a matter of Federal Law, not State Law. Abandonments and other rail service related issues are handled by the U.S. DOT Surface Transportation Board (STB)(the successor to the famous Interstate Commerce Commission), a Federal Administrative Agency charged with regulating railroad and certain trucking issues. Federal Law preempts State Laws, so that action by the Mississippi State Legislature in this area would have no binding effect.
As to the former Mississippi and Tennessee Railnet and now Mississippi and Tennessee Railway I am somewhat familiar with the line and from what I understand it had very little traffic and is largely composed of old 90# rail and old timber bridges which are maintenance hogs. What customer base existed consisted mainly of lumber, pulpwood/chips and a small amount of feed grain.When one of the larger lumber customers closed, the costs of maintenance took t