I know you better than that Jay. You know perfectly well the meaning of the hotel analogy. No hotel ever has 100% average occupancy, and yes those empty rooms do have a cost. But if you don’t build for the max occupancy, you’ll end up losing business in the long run.
Say you want to build a 200 room hotel. Then you find out your average occupancy will only be 50% anually, or 200 x 50% x 365 = 36,500 nightly stays at say $100 a night = $3,650,000 net revenues.
So you say “well, we’ll just build a 100 unit hotel.” What happens? Do you now get 100% occupancy? NO. You still get only 50% occupancy, and the potential clients who happen to get turned away on those nights you are maxed tend not to return to your hotel when occupancy is lower, so now you have 100 x 50% x 365 = 18,250 nightly stays x $100 per night = $1,825,000 net revenues.
So now your net revenues are half what they would have been, while your fixed costs only dropped marginally (e.g. a hotel of 200 units does not cost twice as much to build as a hotel of 100 units).
The cost of keeping rails in place is a fraction of what it costs to rebuild an abandoned line or build a whole new line. Keeping a line mothballed for 20 or 30 years is much less costly than having to rebuild that line after abandonment.
Real financial types from Wall Street and many other places are throwing cash at railroads right now, or haven’t you noticed the steep rise in share prices among those publicly traded??? Further, even short lines enjoy a rich investment environment these days. In the railroad financial meetings I attend each year I hear more enthusiasm than fear of lawsuits. Litigation is a risk of doing business like anything else. Investors are far more afraid of the government than of the courts…
But again, you’re talking about a cost to a railroad that doesn’t have enough money to pay the bills for the part that is operating. And the idea that you’ll need a given line in 20 or 30 years is pure speculation. When your company is teetering on bankruptcy, you can’t afford to speculate.
No, but they were all lacking that crystal ball that told them which lines to keep, and which one to pitch. So, they did the only thing that anyone (you included) would have done. They analized current traffic, and predictable future business. They did what they felt was correct at the time, based on what they knew at the time-the same as you, or any other person would have had to do. To suggest otherwise, isn’t quite realistic.
Is that abandonment of tracks or something else Dave???
If you are speaking of abandonment and removal of main lines, much more of that was accomplished by the bankrupt lines such as Conrail, the MIlwaulkee Road, and the Rock Island than was done at virtually any other time and those roads were bankrupt or in Conrails case a government corporation created from seven bankrupt railroads…
But, this “retrenchment” you speak of must be ione o’ thme new fangled Eck-O-Nom-IC words, ‘cause it is notr a term of art in railroadin’…
Well then why has DME been forced to seek Fed financing for a obviousely needed expansion into PRB. NYC only makes loans to RR that have verifiable needs and a guarenteed returns on investment. There is little market for RR speculation as in the
“Will be” or “could be”? The latter is the salient way to present the question, since the former is a pure guessing game.
Here’s the proper way to ask that question: Which lines either abandoned or possibly slated for abandonment could concievably become heavy duty mainlines in the future if preserved/rebuilt?
So how is it the railroads all got it so wrong, while every other freight transportation mode got it right and continued to expand and accumulate assets?
Because, they had something the other modes didn’t have-miles and miles of excess trackage, in the wrong place, costing money; which the ICC would not let them get rid of fast enough.
Would you be referring to the air freight industry that teeters along from one handout to the next and requires government paid FAA ATC? Or perhaps the trucking industry that couldn’t turn a wheel competitively without the Interstates and with a few exceptions loses more companies each year than it gains? Perhaps you’re speaking of the barg
Futuremodal is right. I don’t recall seeing any trucklines pulling up highways or bargelines filling in waterways or airlines converting airports into shopping centers. Folks running those kinds of transportation businesses must have really been forward looking.
The suggestion that the forecasts of overall economic and population growth should have told railroad management to keep the track is about as simple minded as anything I have ever heard. The argument assumes that traffic on every trunk line would grow at or close to the same rate as the economy. Interesting that the lines on the “I would have saved them” list might have provided some relief for handling the huge shift in the movement of consumer goods from domestic manufacturing origins to west coast ports. I would like to see the 1980 prediction of that shift. Maybe coal is different? As late as 1989, no one anywhere in the coal business was forecasting the growth of Powder River Basin coal production to any where near to today’s levels.
If we follow the argument, we should be able to find buggy whip plants all over the place.
OK, so you’reapproaching blah, blah, blah warp speed, but you’re not actually saying anything.[(-D][(-D][(-D] The city I live in, in 1950 was served by: GN,MILW,IC,CNW, and RI. Now, it’s served by BNSF. No coal from the PRB rolls on these lines. According to your theory, the railroads should have kept those lines open, and just waited until the traffic came back. If they had…Rock Island would have…oh, wait a minute, they went broke. Milwaukee Road would have…whoops, they went broke too. Ok, Illnois Central would have…gotten rid of all these branches, to keep from going broke, then merged into CN anyway. Chicago Northwestern would have…gotten rid of all these branches, to keep from going broke, and then had to sell out to UP anyway. Great Northern, on the other hand,merged into BN/BNSF. It got rid of these unprofitable branch lines here locally. It now runs on a profitble core line made up of remnents of GN,MILW,IC,CNW and RI trackage. I think I’m seeing some sort of pattern here. [;)]
Anyway, carry on. There must be some windmills somewhere still needing to be tilted.
Trucking companies don’t own the highways (although the way some of them drive, they obviously don’t know this) so to “abandon” them, they just have to take a different route. Their “growth” is buying more tractors and trailers, hiring more drivers, and maybe building a terminal or two. PS: I’ve got one truck t
I have here the Port of Seattle studies from 1975-1980 that predicted just about exactly the growth of intermodal import export that actually occured over the 30 year projections involved.
When Odyssey Partners bought into Milwaukee Road, they relied on US Department of Energy projections that showed that Powder River coal use was going to explode, and was in fact already exploding between 1974 and 1980.
The problem with your arguments here is that you would have to argue that the people and agencies that did, in fact, accurately predict the growth, were somehow wrong, even though their projections were right on the mark.