Yep yep, very interesting thread, I know for this lifelong shortline rail to read. I used to do cost sheets like this. I’d get all the est. expenses wrapped together for operating costs, and then double it. Yep, thats right, DOUBLE IT! That would then be the est. operating cost. YES INDEED, due to taxes taxes taxes( diesel fuel and payroll just to name a few! ), pesky variable costs / and unforeseen expenditure changes from the original spread sheets, blah blah blah the works. Shortline railroading can be done. And I’m psyched about the new Evansville Western. So phsyched, I already put together a EW yahoogroup. Although, the EW has the P & L backing it, so it’s kind of out of league for this thread. Heres the link if anyone wants to join.: http://finance.groups.yahoo.com/group/EvansvilleWesternRailway/
then there is the issue of escrow for those rainy days of future maintenance projects like track /bridge structure upgrades( those dangblasted axle loadings ), engine overhauls, wheels, tractions motors, more blah blah blah
I don’t want to get into about locos, because some people like Fords and Chevys, well I’m into SD38/39s, SD40-2s, 6-axle Alcos, and anything with a 12 cyl 645 in it( turbo’d or othewise). And I can babble on for hours and hours of fun bs about locos. But I’ve always wished there would have been a market for an SD59 model. Thing could have looked like a SD40-2 too. Same concept as with the SD38/39/40/SD45 scenario. Big porches for the 12 & 16 cyls, big hood for the 20 cyl obviously. Same with a SD59/60 combo: big hood for the SD60, big porches for the SD59. And all vanity aside, a SD59 could have been a modern age/ fuel mizing/cost concious mean & lean freight lugging / hauling machine. A third gen SD39 on steroids of 710 pills. Plop some HTCRs under it, and it’s even more on the side of saving dollars. Alright, enough of my loco bs. Back to the regular program…
Take a look at my revenue numbers above. Its all there. Same post as the expenses and EBITDA projection (cashflow) as well.
LC
WHOA there junior…
Why do we need higher speeds???
We don’t. This is a common misconception outside the short line world. 10mph is just fine. I’d like to have better track but have you ever seen the difference between a 10 mph derailment and a 25 mph derailment?! The cost is at least triple to go along with the ugliness. Keep in mind that the 10 mph derailment is already gonna cost you $50,000 to $100,000 or more depending upon any number of factors. So, the 25 mph $150,000 to $300,000+ derailment expense will really put a damper on that balance sheet fast… I’d probably keep the track excepted too, even though maintained better as it tones down the FRA issues considerably.
I did not take into account business (equipment) and property taxes. No idea what they would be on railroad property in that neck of the woods.
Best regards, Michael Sol
Based upon similar properties my best guess on property taxes is $50,000 or less. That would be the number for the entire ad valorem tax including equipment.
LC
WHOA there junior…
Why do we need higher speeds???
We don’t. This is a common misconception outside the short line world. 10mph is just fine. I’d like to have better track but have you ever seen the difference between a 10 mph derailment and a 25 mph derailment?! The cost is at least triple to go along with the ugliness. Keep in mind that the 10 mph derailment is already gonna cost you $50,000 to $100,000 or more depending upon any number of factors. So, the 25 mph $150,000 to $300,000+ derailment expense will really put a damper on that balance sheet fast… I’d probably keep the track excepted too, even though maintained better as it tones down the FRA issues considerably.
LC
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Oh man, yes siree, speed is not a major factor at all when your a shortline under 150 miles, for sure at that. If you have the track, then fine. But if not, the derailment factor is HUGE. It can be make it or break it. Keep the operations and speed gracefull, and you’ll build capitol and physical plant gracefully. Speed it up, and you’ll die quickly. AMEN? I worked for one MN shortline, and those goofballs were just plain running dangerously. Scarry stuff, not kidding. I’m still amazed that this particular outfit is still around. Honestly, it’s really amazing. It’s purely because of the dumb luck factor, coupled with the fact that they actually have lots of bulk freight customer base, to cover their rears.
Tormadel: I kinda dropped a hint (LC caught it)…The operating types that go fast just because they can are a threat to the future viability of the line. What I asked LC about was what speed was going to do to the biggest asset you have here (track structure).
That shiny locomotive is worthless junk if the track is not there to generate income. Paperpushers and pure operating types get themselves in a hole quick on new startups frequently by ignoring the track structure and NOT having a good trained trackman around. The question was posed to see how much we could maximize the utility with.
LC: Would concur on the use of air tools like MT-4s, a pavement breaker and one inch Impact Wrenches along with a gas saw and gas bolthole machine. Local mechanics can usually fix them easier. (although air impacts usually fail early due to JoeBob not understanding how to take care of it…the joys of Marvel Mystery Oil!) …We have yellow stickers around here that say in one inch letters: Take care of this equipment. If it doesn’t work - neither do you!" [tup][tup][tup]
Well, that’s reasonable.
I guess if I had a concern on the revenue side of things, it would be the high reliance of the line on the cardboard and woodchip traffic.
I’ve followed the industry since 1957, when one of the largest Kraft process mills in the world was built, literally next door. I’ve known every General Manager since 1957, beginnng with Roy Countryman, and including the current manager, Bob Boschee, with whom I spend a couple or three hours a week on a regular basis discussing business issues. They have about a $30 million a year transportation budget. Big operation, originally located on the Milwaukee mainline by Milwaukee’s industrial department, served off of a short spur by NP.
The industry is so competitve, that many plants have been shut down in recent years. A new plant is so cost-effective compared to an older facility, and the margins so tight, older facilities have to work hard to make a profit. At the same time, the lumber industry has been on such a rollercoaster due to the Canadian timber tariff brouhaha, sources of chips have ranged from near to very far, naturally affecting overall costs of operation quite dramatically. Makes a big difference to the cardboard plant if it can buy waste chips, or has to make or purchase “custom” chips.
The pulp industry constantly oscillates between lean and plenty, that is, shortage and overcapacity. During the overcapacity periods – which occur about every 5-7 years – the indus
Ya-with only 2 trains a day, I would also have to say that it would be better to contract our MOW work.
If there is going to be some mining haulage in the future, you might want to make sure the tracks are strong enough to take the load or you might run into what CONRAIL did with their wide-body locomotives.
Thanks for the input guys , but I don’t contract all of my MOW out. That is a quick way to par far TOO MUCH for too little. Contractors have profit margins. I can’t afford them unless there is a significant value add. That is one of the reasons we have a great management team for this project. Our track people manage projects including contractors when required. The contractors are used for specific tasks for which they are well qualified and capable of doing the job more quickly, conveniently and with less cost than our employees.
Also, you don’t need a “Certified” bridge engineer to inspect a bridge. A B&B foreman is fine. We certainly don’t need a bridge contractor to do that. That is just one way of opening your wallet. If I need more than replacement of existing compenents I of course use a state licensed Professional Engineer specializing in structures.
LC
[quote]
QUOTE: Originally posted by Limitedclear
WHOA there junior…
Why do we need higher speeds???
We don’t. This is a common misconception outside the short line world. 10mph is just fine. I’d like to have better track but have you ever seen the difference between a 10 mph derailment and a 25 mph derailment?! The cost is at least triple to go along with the ugliness. Keep in mind that the 10 mph derailment is already gonna cost you $50,000 to $100,000 or more depending upon any number of factors. So, the 25 mph $150,000 to $300,000+ derailment expense will really put a damper on that balance sheet fast… I’d probably keep the track excepted too, even though m
Opps appearently I was tired when I posted earlier. My mistake, a roots blown would be a SD58 and I would have to guess that horsepower at like 2600-2700(& 16 cylinders). The SD59 would have a turbocharger but only the 12 cylinders.
Be offline for a day or so, keep the faith…
LC
Ok LC, have a good one. Hope to hear from you again soon
Well…depending on what kind of tonnage a train from those mines are, I have to ask if it would better to use 115lb rail. I just don’t see a bunch of loaded quad or bethgon hoppers staying on track with under 115lb rail.
Andrew, note the rail numbers, 115#, 112# and 100# jointed in some sidings…
As long as you run at restricted speed, its a good track base…would have to see how it was maintained, but thats what mudchickens do!
An interesting thread.
If I were a potential investor the most important variable for me would be the ability to develop other customers along the line. The cardboard plant, as it was already pointed out, seems too “iffy” for me. The plant could close, depriving the short line of almost half its revenue. But if there was suitable land along the right of way which could be developed into an industrial park of some sort then there may be an additional source of revenue.
In my area short lines have to be creative and aggressive when it comes to potential sources of revenue. Purchasing, rebuilding and then leasing motive power is something one short line in my area does to increase its revenues. Other short lines have gotten involved in hauling construction waste from transfer stations they build and operate themselves. Team tracks are also used.
I remain puzzled over the six engine, high horsepower requirement for a $1.2 million revenue railroad.
Here’s why. Where I grew up, the Milwaukee had one switch engine, a little SW1200, # 627. It ran just about every day for the 20 years that I knew it.
Through that little switch engine’s eyes, it “operated” a railroad just about 50 miles in length. It did a Missoula patrol every weekday and a Blackfoot run on Saturdays.
Every morning, after it had breakfast it went six miles east from the Missoula depot to the Anaconda Company’s Bonner (AFP) mill. There, it dropped empties and picked up lumber and woodchips. It hauled these back to Missoula where it set off the lumber and proceeded west to the Intermountain Lumber mill where it picked up both woodchips and lumber. Sometimes there were chemical cars waiting there for Stone Container as well, from the previous evening’s freights. The sidings at the Intermountain Mill (actually part of the Missoula Yard) were also the “Traffic Gateway” to the BN resulting from the BN merger conditions, and BN cars would be spotted off the BN’s Bitterroot branch at that location, waiting for Milwaukee pickup, or delivered there by Milwaukee for BN pickup.
Chip cars spotted from the previous evening’s DFW from the Deer Lodge LP Mill would also be at this siding, ready to be taken to Stone Container.
After pickup of those carloads, #627 backed up about half a mile and put the Intermountain Lumber Co. cars with the AFP lumber cars, then proceeded west again with the AFP and Intermountain woodchip cars fifteen miles out to Schilling, the Stone Container pulp mill yard. There, it dropped off the woodchips, and went around to the other side of the mill and gathered the finished product cars. It hauled these back east to Missoula in the afternoon. The Stone Container cars would be blocked in whatever order with the lumber cars, along with chemical empties from Stone, and placed for pickup by the evening west or eastboun