One wouldn’t generally think of the regional operations as anything more than…well…regional. Yet some of the large regional conglomerates (like Rail America) have operations all over the world…Rail America has operations in Canada, South America and in Australia as well as the US. Why haven’t the class 1s gone after more of these opportunities? They appear to be fixated on taking marketshare from trucks while the regionals appear to be more progressive in expanding their operations in other parts of the world. A class 1 would have the resources to purchase a shipping line or even port facilities in another country…not to mention another railroad…and the resources to bring it all together as one cohesive global transportation entity.
I think for the class ones they have developed there railroads into streamlined multi-billion dollar industries. They see no need to get involved with foreign affairs.
Maybe a more advanced member of the forums can elaborate more, and maybe correct me.
Justin
Then why the need to get trucking marketshare?..which is certainly less lucrative than international traffic over longer distances. For some reason there’s been alot of discussion on how to make trains competitive in the cheap shorthaul trucking lanes, yet almost nothing on gaining more marketshare through global expansion. A class 1 could, for example, focus on becoming better at loads from the ports in Asia to North America… which would (to me) make more sense than trying to figure out how to capture truck traffic that moves between Detroit and Chicago… (which btw is dirt cheap).
I think I am taking issue with both your premises and your arguments. Not because I like to argue. I get paid for that in the real job and it’s not fun.
- Your premise that U.S. Class 1s have not tried overseas. Well, actually, they have. CSX had a major initiative in the 1990s in freight railroading in Europe. There are others that are confidential.
- Your premise that RailAmerica has substantial overseas operations and an implication that they have succeeded. I think you mean Genesee & Wyoming. RA’s only non-U.S. operations are in Canada. G&Ws overseas operations have been a mixed bag so I am not sure what you would define as success. If the experience overseas has been negative, I’m pretty sure you would not be holding that up as something for anyone else to emulate
- Your premise that railroads appear fixated on taking market share from truck. Says who
Thanks for taking the time to provide such a detailed response…what kind of work did you do overseas? Point 4 above is most interesting to me…I was under the impression that the railways are very profitable…i.e. that they would at least have sufficient money to invest in current US operations. You say this is not the case. Your point about railways being intertwined with local economies is also interesting.
The railroads’ fixation on taking marketshare from trucks…nobody says that…its just my impression given the amount of discussion on the topic and from gleaning the headlines. Yes, I get the retail/wholesale thang…I’m involved in that as well.
Maybe expansion in other ways is the way to go…CN has a sales office in China for example…maybe that type of a presence is preferrable to one involving heavy longterm investment in foreign markets.
Ulrich, that’s a very careful response you wrote. I’m impressed.
I would rather not discuss what I did overseas both past and at present, if you don’t mind. It would rather give away too much about me and that could affect my ability to earn a living or continue to advance my career.
U.S. and Canadian railways throw off a lot of free cash, but they don’t generate the returns on investment that justify heavy quantity of new investment. They re-invest heavily to maintain existing capability to generate revenue and profit, but investment in new capability is quite thin because the returns on the new investment are too thin or too speculative. Yes, a lot of people talk a lot about railways taking market share from trucks. Talk is cheap but track is expensive.
The U.S. is just about unique in the world in the way it disperses and localizes authority for economic decisions and planning as opposed to centralizing it into an elite composed of a handful of government officers, a few extremely rich individuals, and the very large corporations, who do what benefits them. In the modern countries, e.g. Western Europe and Japan, the public at large gets a very secure public welfare system and a comfortable life at the price of rather limited social and economic mobility. In some of the not-so-modern countries the public at large gets subsidized fuel, food, and housing, and they pretend to work while the corporations and the government pretend to pay them (the Middle East, for example). In others of the developing countries the public at large gets very few subsidies but has quite significant economic mobiity opportunity (China, for example). And in most of Africa, the public at large gets nothing. But in almost no other country in the world does the average member of the public have so much influence and control over the government as in the U.S.
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I may be out in left field, but I tend to think of many of the short-line outfits as holding companies that specialize in small railroads. GVT, G&W, RA, etc are really just providing central management for some widely flung operations. That some may be overseas is coincidental.
This is not much different than what happens with fast food chains, where one owner may operate a number of stores in a region.
Kansas City Southern has a significant “overseas” operation in the Panama Canal Railway…both KCS and UP are big players in Mexico…
Neither of your examples fall under RWM’s definitions of “overseas”.
Maybe I missed it, but where does RWM’s writing define overseas in such a way as to preclude operations in Panama or Mexico?
Oh, I think they do count as “overseas” to me. It’s the gaps in culture, politics, power structures, methods of doing business, that matter to me. Mexico is a really different place than the U.S., but there is such a long history of the two countries doing business together and people crossing back and forth to work in the other country that there are methods and means to bridge some of those gaps. Panama has even a closer tie due to the Canal Zone administration by the U.S.
I didn’t exclude either on purpose, I just never got around to talking about them.
Nothing is every black and white in these sorts of characterizations. The best I can do is sort of collect a definition of the two ends of the spectrum, but if you want to look in the region at the middle of the spectrum there’s all sorts of examples that don’t fit any pattern.
RWM
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Mexican rail operations are, generally, similar to the US and Canada.
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If you’ll recall, Panama and the Canal Zone were under significant US influence and control until just a few years ago; and, likewise tended to follow existing US patterns.
My post was in response to Ulrich’s initial question…
While the Panama Canal Railway was intitially built by U.S interests (BEFORE the Canal zone was established) for most of it’s existence it was a broad gauge line and did not operate like a U.S railroad. It was in fact abandoned when KCS acquired it. That it is now a standard gauge line operated with U.S built equipment and operating practices is a result of KCS’s efforts, so it clearly is relevant to the discussion…
How did the English, Welsh and Scottish Railway in Great Britian work out? It was owned by Wisconsin Central. It operated freight trains but did not own the track. It was owned by Wisconsin Central. It is now owned by Deutsche Bahn, so that may be at least part of the answer to my question.
English, Welsh & Scottish Railways, now DB Schenker Great Britain is working out, and in fact now that it is a part of the DB empire it is in a stronger position. For Ed Burkhardt and WCL, it was a matter of understanding European rules and conditions, they made a very big investment based on a flawed understand of what conditions would be like. Yet their efforts contributed to the renaissance in railfreight in Great Britain. In Europe independent Railway Undertakings operate more like trucking companies, albeit with greater capital requirements. In Great Britain with no legacy national operator the competition is a free-for-all with no moat protecting your business from competitors, only the fact that there may be lead times involved in them getting equipment gives any advantage. By buying up 4 of the 5 portions of British Railways EW&S had a big jump on the competion. Gradually though new companies entered the business and Freightliner (owners of the 5th portion of BR) began to offer serious competition to EW&S. Returns didn’t meet the expectations of EW&S’s investors, and Ed Burkhardt had become more interested in Estonia (Estee Raudtee). WCL looked to sell EW&S, but found it difficult to find a buyer at the price it wanted. With the purchase of WCL by CN, ownership of EW&S passed to CN. With CN’s Canadian management a little more attuned to European thinking, CN sent a promising Vice President Mr. Keith Heller to see what could be done to make EW&S more profitable in the face of serious competition. Eventually when the EU dragged France, kicking and screaming, into the era of Open Access, EW&S got