An article in the Wall Street Journal today indicates there is a shortage of box cars developing as the fifty year rule is eliminating them. Paper and lumber industries being hit the hardest.
The obvious answer is new boxcars, but one might wonder whether containers might be used as a replacement. Major shippers/receivers being set up to handle well cars, etc?
Or not.
The Wall Street Journal article stated that current rates do not justify railroads or pool operators expanding investment. The article also mentioned that this offers truckers an opportunity.
This shortage has been good for our business we are rebuilding old cars that would normally get scrapped and they keep pulling them out of storage
Where sidings already exist boxcars are alot more efficient. I can understand why the paper industry would prefer boxcars over truck or container. Both alternatives are alot more expensive.
Boxcars still have plenty of customers, judging by the trains that come thru here. If rates were raised to make owning them profitable, some customers may go away, but the free market will find an equilibrium as it always does. Or, a satisfactory alternative will be found. My guess is that boxcar customers use facilities and equipment which is a sunk cost; their willingness to make the investments necessary to use an alternative will depend on many factors, and some will be unable or unwilling to do so. It will be interesting to see what shakes out.
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This is yet another example of what John G. Kneiling - Trains’ “Professional Iconoclast” columnist and author in the 1960’s-1970’s - said many times: The shipper ought to own the cars he needs to prevent these kind of problems - an alleged shortage, complaints about the cost, and the whining about same (those are kind of interactive, too). Also, the paper companies depending on the railroad or a leasing company to supply the cars is another way of using OPM (“Other People’s Money”) to provide part of the capital to finance their business.
There are some inconsistencies here (the article has some very interesting rates/ figures, too). For example, “. . . paper company executives say they will have to rely more on trucks, which by some estimates cost 20% more per ton than shipping by rail.”
But: “New boxcars cost around $135,000. The rates that paper companies and other shippers pay for boxcar service typically include monthly equipment charges ranging between $450 and $700. That is decent revenue on a 30-year-old boxcar that has long since paid for itself, but well below the $940 to $1,100 in monthly car-hire fees needed to profitably deploy a new boxcar, said Richard Kloster, senior vice president of AllTranstek.”
So the new cars cost roughly $400 to $500 per month more than the old ones.
Now, figure 100 tons net load, 1-1/2 trips per month = 150 tons per month. That’s about $2.70 to $3.70 per ton additional.
Figure an average move of 500 miles (many will be longer) = 0.54 cents to 0.74 cents per ton-mile.
For a comparable 22-ton truck load, that would add $0.119 to $0.163 per mile to the matching rate. As compared to $1.50 per mile truck rate, that looks like a mere 8 to 11% increase to me, not the 20% mentioned in the article. An improvement
We were expecting a boxcar of oriented strand board from western Canada. To our surprise, today, instead we got a center beam car of oriented strand board with each unit individually wrapped. No complaints on our end.
Murph, the wrapped product on centerbeam cars are frequent eastbound loads through Tehachapi, and a lot show up through Rochelle. It seems that dimension stock is more likely to be unwrapped on centerbeams
Paul, John Kneiling made those comments in another era. The railroads need to evaluate how important the paper business is to their own bottom line. with coal going down the tubes and oil traffic light, they might conclude that paper is worth saving. They must therefore do what it takes to allocate the equipment… it isn’t the customers’ responsibility to supply the equipment. The provision of equipment is part of the service… otherwise what comes next… should they also provide the locomotives and crew?
Center door containers?
Unfortunately the article is blocked as “subscribers only” when I tried to access it…
My colleague friend says the problem is ONLY one, that the railroads don’t admire clocks. If they did, he says, there would be a whole bunch of boxes running around … especially old ones.
Please explain this a bit more - sometimes analogies just aren’t so clear.
Carload shipping is increasingly a niche market thing. There’s still a market for general service box cars, but they’re looking like 60’, hi-cubes (110 ton?) that can handle stuff like lumber, beer and breakfast cereal…
…the market is shrinking all the time.
chutton01 (6-26):
The colleague says if railroads admired the clock they would reduce the use of or get rid of classification yards because classification yards are time wasters. Boxcars need to be kept moving, at least more than they are now. If they were kept moving, they could make two or three or maybe four trips instead of one. Presto! No more car shortage!
Furthermore, the more trips a car makes in a given timeframe the more it enhances the railroad’s bottom line. Makes sense to me!
A real life example of wasted time is one I am personally familiar with. A boxcar load overshoots its destination by nearly a hundred miles. Then, it is classified at a classification yard. It returns to the area of destination, but overshoots it by 25 miles. It is then switched, and finally backtracks again 25 miles and delivered to the receiving customer. Float around a-go-go! No wonder there is a boxcar shortage.
The colleague says he is so over the hill now that he has absolutely no interest in being a part of a success story. My interpretation of that is that he realizes because of his age he will now never benefit from the railroad’s speeding things up in a common sense way, so he is not willing to share his thinking with them. What if he was right? And, because no one listened, the b
The railroads do admire the clock and would dearly love to consign hump yards to the scrap heap, their marketing aims these days are trainload movements, not single car movements. Single car railroading demands the switching capacity of hump and all the other yards. Trainload movements can be hauled directly from the shipper to the consignee and require no switching in route and no car shortages.
So long as you are dealing with single car customers, that don’t own their own cars, car shortages can occur.
It is difficult to know if this isn’t an elaborate leg-pull on your ‘colleague’s’ part.
Hey! I’ve got an even brighter idea than that one! Since all switches are instrumented under PTC, why don’t we retrofit all couplers with proven Lionel technology, control them with a superset of DPU commands, and use the equally time-honored Great Western slip-coach technique to drop off all the intermediate boxcars at just the right time (factoring in wind, rain, and other resistance via up-to-data from the cloud) to arrive at each consignee’s loading dock? Not only does this keep trains moving, it reduces both the length of the train that arrives at a class yard, and the number of moves that need to be made in that yard for the next grand round of slipping.
Of course, as with all silver linings, there are a few clouds, and one of these is that many thoughtless consignees do not have sidings that conveniently face into the direction of travel. So you would have to take the train to the next class yard and hump cars into a ‘return’ rapid movement to slip them appropriately into the sidings facing the other way. But hey! that will only take what? a couple of hours at track speed, and then just a quick couple up to the cars already waiting to go that way, and run the power around the train…
There are a few other minor details, like tying down the cars once they arrive on the siding, but i’m sure your buddy that knows so much about how to keep cars moving will certainly have ideas on how to stop them, to