how are the rrs handling the added increase in pig and containers? as gas prices climb will rrs be able to handle it? was in galesburg,il., 5 days and saw soo many trailers on wheels on the flat beds, from trucking co.'s never heard of before!! high oil prices hurt rrs but they are getting more new buisness. and more mass transit will be rode.[:)]
The railroads manage their plant based on carloadings and the resulting ups and downs in revenue. More carloadings translates into more $$$ to be poured into the plant. You won’t see the Class 1’s going to the bank and asking for a loan, the carloadings pay the bills. (Kind of a 'duh[#wstupid] comment, but folks lose sight of the obvious)
Mud,
If this oil price run up is not a flash in the pan, I think you will see the railroads going to the capital markets AND gettig the money!
How long it will take I do not know. Five years maybe??
Mac
According to the October Trains NS’ return is getting up to a point where they can go to the capital markets and get decent financing.
The railroads will miss any such “boom” because they simply do not have the necessary capacity, and the incremental increases in capacity planned for the near future is woefully inadaquate according to transportation professionals.
FM
Which transportation professionals?
Mac
Mac, U R wasting your time. FM will pick the “transportation professionals” that agree with him - and rest easy that they won’t be the ones actually doing the work - and quote them. Journalists do this all the time. They find a “source” that agrees with them and then quote that “source”. FM can find a quote that agrees with his half baked opinion on anyting.
The railroads are doing just fine adding capacity as is warented. Mistakes are going to be made, the UP is behind the power curve, but overall things are going along well.
What FM will do, if he holds to form, is point out imperfections. Well, imperfection is inevitable. He can’t understand this. Since he can’t understand the inevitable, you’re wasting your time with him.
Perhaps FM is jealous that he is not a transportation professional (aka railroader).
Those outside the rail industry:
Bob - The only way I’d ever work for the rail industry again in any capacity is if I am granted the power to get rid of the closed access anachronism. There’s a huge difference between “rail professionals” and “transportation professionals”. The former see the world through the eyes of monopolists, the latter see things from the national good perspective.
Mac and greyhounds - Yes, you are wasting your time as am I, because I already know that neither of you cares to explore these issues. Any evidence to counter your misperceptions of the state of railroading are simply dismissed as “selective”, so it becomes a non sequitor. However, for the sake of others who read these posts, may I remind you that the railroad industry makes up roughly 20% at best of the entire transportation industry, so “railroad professionals” are outnumbered by “transportation professionals” 5 to 1, making the POV of railroad professionals the “selective” choice. Those transportation professionals tend to have more comprehensive knowledge, and they look at things from the perspective of what’s good for the nation, so when they say that rail infrastructure investment is woefully inadaquate to handle the needs of the nation, they are simply stating the obvious.
Rail professionals are only charged with analyzing what’s good for the stockholders in the short term, so when capacity is constrained it allows higher rate charges, thus more potential return for the stockholders. Of course, it becomes a huge suicide pill, because constrained capacity also limits the ability to grow the customer base, while those being jacked by higher rates will complain to the regulators, bringing on the possibility of federal action against current rail practices, which means the Nirvana of revenue adaquacy will never be reached.
Hmmm. When Milwaukee Road had difficulty meeting demands on its system, it was because it was pricing too low, and therefore deserved to die.
When Union Pacific has difficulty meeting demands on its system, it is “behind the power curve” but doing just fine.
I guess the hand must be on the other foot now.
Best regards, Michael Sol
Hand of the foot??
The MILW is gone with the wind, thank God.
The UP has raised its prices to ration its capcity. That’s the way things work, but you don’t understand that - so you make up conspiracy thoughts. You know not of what you speak.
As in “the hand must be on the other foot now.”
Bank on it.
LC
FM
This guy is not a transportation professional. He is a bureaucrat. If what he says is true, it sounds like a good arguement for public investment in rail infrastructure even without open access.
Doubtless his source is a study that is unreferenced in the piece. About 95% of the time when the govt hires a consultant to do a study they tell the consultant what counclusion they want.
As usual you offer no relevant evidence.
Mac
Kind of like you mixing up “cash flow” and “free cash flow,” huh?
Railroad rates have declined from 14 cents per ton mile for selected industrial items in 1990 to about nine cents per ton mile in year 2000, and have declined further since then. [Railroad Regulation, General Accounting Office, June, 2002].
At what point in that period of time did they “raise prices” to stave off the enormous capital needs because of demand? It’s not there. You can’t find it in the record of the past thirty years. If that’s the “way it works” then apparently you forgot to tell the railroads.
The record of selected commodities is exactly the opposite. Where there is high demand, the prices have been lowest and frequently go lower, where demand is stable or even declining, the price has then been raised. [Montana Wheat Study, 2005].
What you are describing is an “Equilibrium Pricing Model.” It is described in “Nonlinear Tariffs and Freight Network Equilibrium,” Transportation Science 28:3, August, 1994, 236-245, with an acknowledgement that it remains theoretical although sporadically applied.
Railroads haven’t used it.
What railroads have used is a "market
I got your UP price increase right here:
http://dx01.my.uprr.com/pubdir/inetbull.nsf/0/e290bdfe810abe6f86256ec5005052f4?OpenDocument
You are missing the point. Trying to fix an 85% Operating Ratio is different than utilizing price to control demand.
You cannot look at the incredible drop in transportation prices charged to shippers by railroads over the past thirty years and reasonably say that these massive, sustained price drops were efforts to intentionally increase demand on saturated systems. Although that is exactly what your premise infers.
Nor can you argue, reasonably, the corollary, that every price rise represents an effort to control demand.
As opposed to the other reason: to make more money.
I’ll bet you forgot that that’s what businesses, even railroads, ultimately try to do.
UP has an Operating Ratio they need to fix. I suppose there is no irony in your proposition, by observing that this horrible operating ratio would not be there, if the UP had, in fact, been using Equilibrium Pricing.
That is, if what you say is true, then the problem wouldn’t exist and they wouldn’t need to raise prices now, they would have raised them when they reached capacity. No meltdowns. No congestion. No long cycle times.
But, that’s not what actually happened, is it?
Less demand is not what they are after. More money is what they are after.
Well, that, and escalating operating costs which have bumped up pretty quickly in the past three months.
Of course they wouldn’t raise prices because that that would they?
Indeed, UP says not one word about the increase being designed to dampen demand:
"Escalating fuel costs and the impact of congestion are creating economic challenges for all of us. Unfortunately, Union Pacific can not escape these economic pressures and mus
Hi, I didn’t want to start a new thread and my question stays in the spirit of the original. You guys seem pretty knowledgable.
Will this current “Golden Age of Railroading” last? New locos, car shortages, everybody needs employees, it looks great.
Is it sustainable?
Thanks for your time.
Donald…
So much here that is laughable and indicitive of a retro-pathology. “This guy is not a transportation professional. He is a bureaucrat.” So now persons employed by or contracted to the government are, by your definition, not professionals? And I guess if we follow your line of (cough, cough) “reason”, only railroaders are “transportation professionals”?
Of course, you still give the underinvestment argument credibility with your call for public investment in infrastructure, something I assume you wouldn’t do if you really had discounted the rantings of a government bureaucrat.
Then of course his source is unreferenced in the article, so he must just be making it all up. The fact that he presented this topic at a public speach must mean he’s gotta lotta hutzpa to just make stuff up.
BTW, there is ample reference for the shortfall in spending on rail infrastructure. Let’s see if you can make an honest attempt to find those numbers.
In the meantime, show me the reference for your claim that 95% of the time the content of government studies is pre-determined.