How are the lease units in terms of condition (mechanical, cleanliness, reliability, etc.)? I see alot of these units on CSX, are they really that power hungry or are they run thru power from other roads? Last question, Is there one lease company that has better equipment than the other guys?
I find the condition of lease units varies widely. Some are first class (the FURX, CEFX and GCFX units). Others are piles of dog poo (many HLCX units). I’ve been on units so bad, the didn’t even have seats and had TRAIL ONLY painted all over them.
CSX is power poor, and will run anything with wheels.
Nick
Why is CSX so power hungry? Is it due to neglect in spending money on equipment or a philosophy of its cheaper to lease than buy? And is CSX the only Class 1 that is in such a situation?
So why is CSX so power hungry?
CSX is power poor for two main reasons:
- Traffic is way up.
- It is still suffering from John Snow’s failure to spend money to upgrade and maintain the locomotive fleet.
Nick
So how many units would CSX need to purchase to get them back in good shape?
I see a lot of CSX locomotives on the UP out here in SE Arizona on the Sunset Route, so maybe the fact that their engines are all over the country is part of their problem. I know that the railroads have run-through agreements, but all the way from the eastern seaborad to the west coast, and vice versa?
I saw alot of run-through and leased power on the UP when I lied in east Texas. For example, I was along the x-T&P on day and of the 15 locos on 5 trains only 2 were UP. The UP roster nt their corporate site lists the leased power on it.
Does anyone know how many units CSX would need to not be so power hungry?
I see leasers every once and awhile. Some of the renters are pretty good units, ones that are reliable like the SD45’s that FEC has on lease. The others are crap and can’t be used in the lead only B units or DIT’s.
You look at some of the stuff CSX is using and some of the leasers are ex CSX, weird eh? Other stuff I have seen are ex CR/PC, SP, UP, EMDX and BNSF.
If CSX is power hungry then I hope they get some of the retired B30-7’s and B36-7’s they got in the deadline along with other old power. Hopefully the infamous CSX 4601 gets activated from retirement. I wonder if shipping the C30,and C36-7’s to Africa was a good idea when you see them now power hungry.
kevin
Define “not be so power hungry.” Otherwise, nobody can answer that question. Not that it is likely anyone here would know.
I guess what I should ask is How many units would CSX need to purchase to put itself back in good shape like NS & BNSF (motive power wise)? It just seems that these two companies are wiiling to buy more than just 100 units per year.
Just as a rough estimate, I’d say that if CSX were to purchase as many units as they currently have leased, then they would probably be in pretty good shape - power wise. [oX)]
Canadian Pacific used to be one of the leaders in leasing from the 1980s until the large AC orders starting arriving. I believe the peak was 296 locomotives during March 1997.
Did SP have something like 400 locomotives on lease around 1995 before the AC4400CW and MK SD40M-2 locomotives arrived ?
OK, so just how many lease units does CSX currently have?
Does anyone know, as a rule of thumb, how long are leasing contracts?
I was wondering if some leasing activity might be due to seasonal traffic…for instance, Roads with lots of grain routes in the fall/winter wouldnt need as many units in the spring/summer…
What are other seasonal commodities that might affect average power requirements?
I don’t know about CSX’s situation, but in general a railroad isn’t necessarily “power hungry” if they lease engines. In some cases a railroad could find it more economical in the long run to lease engines rather than buy them and then incur all the expense of doing repair / maintenance work etc. on them. Just like there are some corporations that lease autos for their company’s use, even though they have enough money to buy cars. Could be too that some railroads only need a lot of engine at certain times of year, like a fall grain rush here in the Midwest.
I am not an accountant, but I understand that there is also a pretty good difference in tax accounting for lease vs. purchase.
If you purchase a locomotive, you have to depreciate it over the life of the unit. Even if your “payments” for it are much higher…
If you lease a locomotive, your total lease payment is an expense for the period in which you lease it. In effect, you get a larger deduction this year for a lease than you would for a purchase.
Not to mention the cash flow issue.
If I have to lay out $2.5M for a new locomotive (times 100?), I either have to borrow the money at x% or not spend that much on critically needed Maintenance. If I can lease the power, I may not have to borrow the money or defer maintenance. It may cost more total in the long run if you just consider locomotive costs, but if you consider the cost of capital (ie, interest) it just might be cheaper in the long run…
Not sure how all that plays in the scheme of things for a class I RR, but thats why the accountants get the big bucks.
Okay, This brings up another question, Of the units the class one’s get (the one painted for each road) are they all purchased out right or are they leased on long term contracts and painted for whatever road? Or does it vary by each company?
Another question, when leasing from another Class 1, can the leasing RR decide what kind of reimbursment they want (i.e. payback hours, some type of payment etc.?).