What kind of savings, overall, does a shipper enjoy, shipping in a rail car that they own, versus one owned by the railroad? Is the savings available presented in a flat fee, or is it an incremental savings (per mile or per day, etc) The Staley “High fructose corn syrup” tank cars and the bulk soybean covered hoppers come to mind in this regard. It would seem that having a railroad just drag a car owned by the shipper from point a to point b, would be a lot cheaper than having to furnish the car as well.
In that spirit, back in Detroit’s golden age, I’m really kind of surprised that Ford, GM, Chrysler, AMC, (and even some of the older brands such as Packard, and the sort) did not own (and advertise upon the side of) their own fleet of autoracks.
It just seems like new car promotions painted on the side of autoracks speeding past cars stopped at grade crossings, would lend itself well to the advertising experience. Say a guy is sitting there looking out over the faded paint on his hood, or past the scratches and scuffs on his dashboard, and sees a sparkling picture of the new “Varoomobile” rolling past, seems like an ideal opportunity to make a subliminal pitch.
Granted, with the way Detroit is faltering today they do not have the money to even think of such a venture. But back in the day when Detroit WAS the kingdom, I’m surprised they never gave this a try
A shipper does get a better rate for providing his own car, exactly how it works would be better answered by other members of this forum.
As far as autoracks are concerned, they did not come into existence until the early 1960’s. TTX provided the flatcar and the railroads provided the racks because railroads were going after business that they really didn’t have.
The answer to your first question is several reasons…
A.) You don’t pay car hire charges if you own the car. That means you can keep the car at your location as long as you want. Car hire for railroad owned equipment is typically charged after two days.
B.) Railroads charge more for specialty cars. Most tank cars and covered hoppers are limited to one commodity to prevent cross contamination. As a result railroads are reluctant to invest is such equipment.
C.) Ensure a steady supply of cars. When you own the car, you control it’s travel. No one is going to appropriate it for another customer.
To answer the second question. The ICC outlawed the practice during the early part of the 20th Century. As far as I know, that ban is still in effect.
As a corollary, autoracks are free running. When they arrive at a mixing station, the racks can be loaded with any makers vehicle. Would Ford really want “their” autorack carrying Hondas?
Who operates the mixing stations, typically? The car companies, or the railroads?
I guess that having to pay to have the empty racks backhauled (if owned by the auto mfg company) would get to be a big cost, whereas if the RR owns them, you just order the number of cars you need, when (and where) you need them?
There is some company with “Jones” in the name that seems to be advertising on the side of it’s cars (can’t remember the full name)
But it’s more of a plug for the company than the products themselves, so maybe that is a loophole?
Not sure I get your intended meaning here. Automobiles were shipped to market by rail inside box cars for several years, going back to the 1930’s, weren’t they? So the RR’s clearly had some car haulage business.
They did, prior to WWII, but following WWII, the auto makers had fleets of trucks hauling autos direct from the assembly plant to their dealers. GM and Ford had regional assembly facilities and that was how they were able to ship their cars by truck, at an acceptable cost. Other makers didn’t have that luxury, and still shipped by rail in boxcars. They did not have the $ at the end of WWII to buy war plants from the Defense Plant Corporation like Ford or GM. As the number of “lines” increased at GM (much more so than Ford) pressure to build like cars at one facility for each “line” grew. GM was most receptive when the railroads came to them, with the right rates for large shipments of new cars–especially buyers of all those E, F, SD ,SW and GP units. Ford was tempted too, by having to hold costs down to stay with GM. The auto racks were eagerly accepted when the shipping and manufacturing dynamics changed in the early '60s.
As I understand it, the customer is initially charged full tariff for whatever commodity is being shipped; but, if it’s moving in a private-line car (one whose initials end with the letter X), the railroad then offers a mileage-based discount because it did not have to provide the car.
Here’s some ballpark figures: a 100-ton capacity, private-line covered hopper leases for about $600/month. On a 2,000 mile haul a railroad might offer what? - maybe a 10-cents/mile rebate because the customer provided the car; but if the nature of the commodity being moved - at either the shipper’s end or at the consignee’s end - normally results in big demurrage charges at around $75/day for railroad owned equipment, eight days of demurrage saved each month “pays” for the lease.
Twenty-to-thirty years ago it seemed as if every little country elevator that could hold 25-cars or more had its own fleet of cars with their respective names stencilled on the car sides.
The mixing stations (at least ours) are operated by the railroad’s transloading subsidiary. Because the cars are free running, it’s more profitable for the RR to reload the racks for the backhaul, rather then moving them empty.
The other company your thinking of the probably, the David J. Joseph company…which is a car leasing (among other things) firm.
Minor caveat, the mixing centers are operated by Logistics companies rather than affilliates of the railroad. UPS is big in Auto Logistics in the US, this is a separate subsidiary from the package delivery subsidiary. Many large companies are outsourcing all their transportation and warehousing functions to Logistics Companies.
All of the above companies operate worldwide, recently Schenker AG gobbled up BAX Global, the US Logistics company that arose from the former Burlington Air Freight, which was long ago spun off by the Burlington Northern.
I guess that having to pay to have the empty racks backhauled (if owned by the auto mfg company) would get to be a big cost, whereas if the RR owns them, you just order the number of cars you need, when (and where) you need them?
On a similar thought, how much time could be cut off the rail time from the mid-west to the west coast mixing yards if say BNSF were to use their Kansas City yard to assemble a complete train of nothing but loaded autoracks that they had collected from all over the midwest. Then it could be turned into a Z-train and given highest priority to its end destination.
That is just a thought. In 1973 the trucking company that I worked for took the Chrysler business away from the railroad between Detroit and Chicago. The trucks had, in a month’s time, handled more cars between factories in Detroit and the Chicago dealers than was handled by the railroad. Of course, at that time it took six days to get the train from Detroit to Chicago.