Just out of curiousity , if a large “mini-mill” type steel producer was to acquire one of it’s larger ‘scrapper’ suppliers. And that the locations were 100 miles apart, both rail served. Let’s assume that the 100 miles between them is broken up 60/40 between a class one and a regional. And that the mill can provide the equivalent of 5 one hundred car unit trains per week of scrap moving between the scrap yard and the mill.
Which would be the cheapest way for the steel producer to move it’s incoming supply?:
By rail.
By contract motor carrier.
By in-house trucking fleet.
Given the short haul, would the railroads even be interested in this business?
Figure on just over 500 Dump Trucks each hauling 2 loads a shift on a 12 hour basis. I priced it out at roughly a CPM at 1.25 a mile for trucks. However you would have a Constant Stream of trucks hauling and would not have to worry about switching delays. Shift was a 12 hour with a 50 MPH AVG 2 hours there and back with 30 mins to load and unload and also time to refuel at the end of the shift. Maintance would be done on the weekends. Total trucks needed were just over 530 giving you a 10 truck spare fleet to cover any breakdowns. Now with that distance I doubt especially with a Regional involved a Class One would touch it. They hate to short haul anymore and we all know it. Regional if it could get Trackage rights would do it in a second.
My experience in marketing short haul unit trains is from decades ago, but I would venture that competitivly price rail service could be profitable for both carriers. One caveat. The service would probably have to be provided with one car set and certainly no more than two. If the train could run at an average speed of 25mph, you would need 8 hours for the loaded and empty move. With one car set, only 16 hours a day would remain for loading and unloading. Given that scrap won’t load or unload as easily as coal, grain or other bulk products, that could be a daunting task.
So, which would be more expensive to buy, 100 rail cars or 530 large dump trucks? (This assumes that the customer owns the equipment.)
Then there’s the little detail that a couple of thousand truck movements a day would probably have to be coordinated with the local authorities (and draw flak from the local NIMBYs.) Also, how long would the local pavement hold up?
On the unloading end, if the train was equipped with rotary couplers, why would it take longer to unload scrap than to unload coal? By the nature of the material, scrap steel isn’t likely to freeze like coal.
If this was to become a regular, long term operation I’m sure that some kind of flood loading arrangement would be both possible and economically feasable. However, noise pollution might become an issue, especially if there’s one local householder with sensitive ears…
a pick up at Point A and then delivery at Point B. Utilization of a dedicated train ( determind by number of cars + power needed+ cycle times to fulfill customer needs.
BNSF has any number of ‘dedicated grain moves’ in this area Wichita vicinity each week. These trains keep power and cars assembled through the pick up and through the delivery. ( Utilizing probably a baloon track-type sysetm at each end for the load/unload process). DP power is used to make the move to allow a push-pull running arrangement.
I would guess they could make scrap steel handling within a similar plan?
Yeah that figure would be about right. However what would be the Revene of the Steel Produced and the cost for the Railroad useage see I listed the costs for the Trucks. BTW my cost included Fuel and Maintance and cost of EQUIPMENT LABOR IN THAT BID. That 1.25 Per Mile is the Round Trip price. See I was smart and Bid this as a Round trip price not a One Way Trip since I knew what it was going to be a dedicated operation. This way you know what your TOTAL COSTS ARE. My Fuel Costs are based on 3.50 Per Gallon also and 6 MPG avg and they could be way less since your going back EMPTY. Also what would the RR’s charge on a per car basis to move this 100-200 bucks so your looking at roughly the same prices. If your a mini mill set up your Roads are set up for Heavy traffic already at least they better be. Also Most Mills and Scrapyards are in Rural areas anymore with close access to the Highway since Trucks carry alot of the Product in or Out. Lastly getting that number of Trucks and trailer not a problem. Your going to want a 40 ft Dump or walking floor trailer and a Daycab truck with a PTO setup with around 330 HP MY truck of choice would be a Freightliner Daycab with a Detroit engine 10 speed trans fixed fith whell steel wheels 3.55 rears and call it good. Would only need one Tank of 100 Gallons fuel and wet tank Heck might even get the Tare down to under 30K with trailer do it right.
Murphy it was 250 Dallars Per Round Trip. Also there are flood loaders out there for scrap metals called Convyer belts. Basically your going to 250 trucks at the Scrapyard 250 at the Mill at the Start of the Shift 125 leave in the 1st hour 125 in the second hour. See it is all Scheduling. Look at it this way your a RR Dispatcher knowing you have 50 trains a day on your line you do not try and put them all in at ONE TIME can not be done. What you do is break them UP. I figure on using maybe 10 stations to load up in the yard and 10 dump points at the mill. Go to a DC and see how many doors they have. Can you imagine Wal-Mart shipping 1000 trucks all out of ONE DOOR. Not GOING TO HAPPEN. See I am thinking IN OTR terms were we use more than one spot to LOAD OR UNLOAD. With 10 spots to load or unload your at roughly 5 mins on each end. Bump that to 15 spots and you get 7.5 mins to load or unload. Using Dump Trailers all you need is End Loaders to shove it into the pile for movement by the magnet. Heck you could even use End loaders at the Scrap yard if you wanted and still make it. In order to load 10000 tons of Scrap a day you have one hell of a rush with getting it loaded in Gons with out having power to Move the cars if needed. See that is were OTR trucks are more efficent we can move the loading site if needed not bring the loading site to a fixed point.
The hypothetical example that I used (albeit perhaps flawed) was put together with the intent of fishing out the cost comparison for truck vs rail WHERE THE DISTANCE IS NOT LONG yet the VOLUME IS LARGE ENOUGH to attract rail’s interest.
To put it another way, would it be worth the steel mills time to try and put together a rail package, or would it simply be cheaper to go truck and not bother with the rail’s disdain for short haul.
there is no hard set rule that there be only one loading line at the scrap yard, maybe they can load five trucks at a time?
the $1.25/mile figure you gave earlier, is that a charge per trip while hauling (one way) or a charge that anticipates the 200 mile round trip (charging the customer for the empty return trip to the scrap yard)
in other words, is that charged as $125 per delivery, or $250 per delivery?
It would seem to me that rail should be able to KILL on this arrangement, since the truck comparison is so heavily loaded with labor vs the trains.
Now, to make this work, perhaps you might have to insist upon the scrap yard building the train themselves to make this feasible, where the railroad(s) just come along and drag the train from point A to point B
And you MIGHT have to consider the possible variable that the Mill’s finished product ships by rail and the volume is sufficiently large that the railroad dare not risk offending their customer by refusing to hall their incoming scrap supply, but that is a variable I was saving until all the naysayers had their chance to insist “NEVER HAPPEN” etc etc .
Most Loads in loads out are Bid on a Round trip or Tonnage basis now if we went on a tonnage basis it would be 10-12 a ton for the trucks to haul it loaded. I have no Idea what the RR’s would charge.
Railroads are not adverse to short haul movements if the numbers are right. A unit train movement with fast loading and unloading obviously does not have expensive terminal work. In the scenerio you set, revenue could be up close to the truck cost of $250,000 per trip which at 200 miles produces $1250 per train mile.
I was going to look at the Surface Transportation Board’s web site to get the factors for the Class I’s revenue per train mile, but the site is busy or down. If your unit train equals or beats the average for any of the class 1 systems, my guess is it would have an attractive profit. I suspect that there may be any number of existing unit train operations with hauls as short as the 100 miles in your example. Information on the same wouldn’t be readily available outside the companies involved, but perhaps forum members might know of a few.
There are actually so many variables and unasked and unanswered questions to give an honest and complete answer… who owns the carriages (rail or otherwise) for the loads?..what is the given value of the loads at any given time?..what can be negotiated with a trucker? a railroad? owning trucks and drivers? And that’s just a start.
Actually, who owns the “carriages” (we call 'em freight cars here in the US) is not very relavent to overall cost. The cost of ownership should be about the same no matter who owns the cars. They’ll probably be leased anyway and it won’t make that much no never mind if the railroad leases the cars or the shipper leases the cars. The shipper is going to pay for it either way, either by a higher rail rate or a direct lease payment.
In any event, this hypothetical (and highly unlikely) movement of scrap is a hanging curve ball right in the railroads’ wheel house. If a railroad marketing person could not get this freight and revenue on his/her railroad then he/she should seek a different line of work.
What greatly hinders rail competitiveness vis a vis trucking on most short haul movements (most freight shipments do not go very far) is that the terminal costs of rail make it non competitive with trucking. The railroads have to gather, aggregate into trainloads, sort and distribute. The truck just loads and goes. The railroads have lower line haul costs, but there need to be enough of those line haul miles to offset the rail disadvantage of terminal costs.
Since this is a high volume, point to point, movement there is little, if any, need for the railroad to incur much in the way of terminal costs. The minimization of those costs can readily make the railroad competitive for a 100 mile haul.
Ed has given us our price ceiling - he’s going to charge $10/ton to haul it by truck. We’ve got to get under that and make money d
Greyhound: my reference to “carriages” here was to either over the road truck, railroad car, or any other type of container or vehicle. And it certainly would weigh in on whether the steele company owned any one of them or relied on the carrier(s) to provide. Then it would end up in whoever can wangle the best deal. Remember the opening quesiton was not just about railroads but also about trucks.
You might be able to acquire some cars for such an operation at a reasonably low cost, because there are still fleets of steel coal gondolas (and perhaps hoppers) that have been rendered surplus by aluminum cars. I’ve not heard of steel mills that use that much scrap steel, though some might come close, based on daily loadings that existed at one time to these places. We used to deliver a good twenty cars per day to Northwestern Steel & Wire in Sterling, back in the days when ex-GTW 0-8-0s worked the plant. I don’t think they used anything more sophisticated than cranes to unload the cars.
The whole question is nonsense because the numbers are not realistic.Let’s see:
5 100 car trains at an average of 80 tons per car:
5 X 100 X 80 X 52 weeks in a year equals 2,080,000 tons per year. One of the largest so-called minimills, Nucor Tuscaloosa, produces 1,200,000 tons per year and that is with marine transportation, at 1200-1500 tons per barge. Therefore you are talking about probably the largest steel mill in the US if not the world.
No scrap yard can produce that much scrap. Lets take the fastest process, shredding automobiles. Assume that they will yield a ton per auto, which they won’t. That would be 40,000 per week. The average shredding operation can’t produce 100 tons per hour, including maintainance time. So there aren’t enough hours in the week to produce that much.
No you can’t unload it that fast. Various grades of scrap are mixed in the charging bucket, placed by magnet from the car. Unloading it and having to move it to the melt shop puts rail completely out of the game. It is only feasable with marine transport due to the freight being approx 50-60% of rail.
So there aren’t enough hours in the week to produce that much.
No scrap yard can produce that much scrap
The average shredding operation can’t produce 100 tons per hour
Unloading it and having to move it to the melt shop puts rail completely out of the game
Man will never get to the moon because even IF there was a roadway leading there, there is no automobile fast enough to get there in one man’s lifetime
The earth is flat and if you sail too far, you’ll fall off
Some of you guys crack me up, you’ll go to so much effort designing situational disqualifiers just to validate not having to think about the core issues, perhaps if you devoted as much effort into trying to figure out how to make things work, as you do in trying to avoid them altogether, well… lol let’s just say I anticipated as much. “It can;t be done” lmao!! [xx(]
In the hypothetical example I outlined, the new combined (mergered) entity would have ample incentive to put every effort into making each end work in concert with the other, since it would be it’s own money that is being saved. And just why wouldn’t they want to explore every and any opportunity to do just that? Maybe it would just be better to continue throwing money at the truckers and not have to worry about wandering off the edge of the earth?
Even if it might be only 3 unit trains per week instead of 5, so what? that really doesn’t void the concept of exploring rail utilization vs truck, where the opportunity presents itself, does it?
No. Who owns the “carriages” is a detail. It will not signficantly affect competitive situation of rail vs. truck.
The equipment ownership cost is there. It’s real. The shipper is going to pay the cost one way or another. It might make a few dollars difference here and there, but it’s not going to significantly alter the competitive situation.
Or can you offer some insight on how the steel company’s cost of capital will differ to a significant degree from the railroad’s or trucker’s cost of capital?
BTW, I do agree that this hypothetical example was unrealistic. The volume was much greater than anything really possible. But that’s not the point. The point is that the railroads can compete with trucks at shorter distances under the right conditions.
If I have time tomorow I’ll try to work out the competitiveness of rail at lower volumes on this same move.