How does a RR handle storage of empty cars be they gondolas,tank,box,flat, cubes, etc.,etc…Especially when a customer goes out of business (a mine or mill or high volume commodity, ie. corn/ethanol) or if there’s a dip in the economy and business goes slack (ie. autos, chinese goods).
Where does the RR “store” these cars if the leasee can’t? Do they create a rail traffic congestion problem?
Can they be dedicated to another use or customer?
If they are just sitting they aren’t making any money, how does the RR deal with that?
How does that factor in with the ordering of new cars?
Mostly the cars of any given major railroad are leased and not railroad owned. So in a severe downturn I would expect them to be returned to the lessor with a thank you very much. In a slight decline they may be stored in yards that have been closed or remote locations on branch lines or where ever the railroad can find a place for them
A segment of the RR business is seasonal, such as crops, etc. Business down/up turns are another reason too. At the UP (former MP) yard here in Spring Texas, a ton of covered hoppers are stored here and used as needed. I also know that railroads use “no longer needed” passing sidings and unused freight sidings for the same purpose, particularly in the west and midwest.
Without naming names, I personally know of a northeast refinery that years ago had problems storing “in process” product that resulted due to operational problems. Many times I witnessed calls to the RR to “get all the tank cars (in x service) you can”, and they would be filled and used as rolling storage tanks, and kept on RR property until needed. But other times, there would be no need for these cars at all!
As a retired business analyst, I can only imagine the work/planning/speculation that goes behind the decision to buy and/or lease freight cars by either railroads or industries. While all the good judgement “in the world” is probably brought into play, the end decision as to how many to buy or lease, is often not much more than a "crap shoot.
The lessee of the cars is responsible, whether it is a railroad or a shipper, for storage of the cars until the lease expires, unless the lessee wants to buy out of the lease. The buyout terms may be onerous (take or pay) if there is surplus of that car type, or very attractive (money for nothing) if there is a shortage. In the former case the lessor has to keep making the payments on the cars to his bank and will not willingly take a loss, in the latter case the lessor can constructively place the cars with another lessee at a higher rate. Lessors can place the car with whomever they wish, short-term or long, railroad or shipper, wherease lessees may not be permitted to sublease the car – it depends upon the terms of the lease.
Car lessees and lessors store cars wherever they can find room at a reasonable price. A common rate is $1-3 per day depending upon location. Many short lines and industries with surplus track generate income in this way. Class Is place their own cars into unneeded sidings, yards, or shove them down branchline main tracks that are not in service or embargoed. Stored cars can indeed create a congestion problem, particularly if they are in main line sidings that could otherwise be used to meet trains, or sucking up capacity in yards that is needed to classify cars.
Forecasting car needs is an art as much as it is a science. The car has a 40-50 year lifetime and making bets that far into the future, and being right, is difficult. Being wrong means a tremendous amount of money being spent to pay the capital and interest on an asset that is costing money (for storage) instead of earning money.
I think the first part of your question assumed the railroad is responsible for the cars if a shipper ceases his use of them. That might be true (but is not always true) if the cars are “system”, i.e., railroad-provided, but if the cars are shipper provided then the shipper must deal with it. Class I
CSX stores cars where ever they can…i remember the downturn of the 70’s.( recession depression whatever)the then chessie had stored autoracks in Fowlerville siding Williamston siding and Ensel yd in MI…in 2000 i pulled 35 stored hi-cube boxes from the old branch to Ionia they had been stored since the Conrail merger…currently with the “downturn” and the closing of Ford’s Wixom plant autoracks are stored in the old plant yard off off Wixom yd…for about 2 months …Jan and Feb this year…all 3 yd tracks had empty doublestacks stored the Great Lakes Central (former TSBY) stores empty grain hoppers at Chilson pass Cohactah pass and Byron pass…as well as others im sure …until needed in the fall
As previously stated shortlines with extra track or unused mainline make money from storage fees. I know of one in particular that has somewhere in the neighborhood of six miles worth of cars in storage. Spine cars, flat cars, boxes, a variety of cars most of which are bad ordered. Some have been in storage for a few years. All are non railroad owned.
Those days have been here since last year. Last July UP already had 4 miles of Centerbeams in storage with more coming. An article this week in the New York Times mentions at many times that number in intermodal equipment stored by BNSF. See link below.
There is an art to handling car storage properly if one hopes to make money at it. The best short line operators know that most of the money in storage is in the movements generated rather than the fairly low per diem rates Railway Man correctly mentions.
Somewhere in my collection of photographs is a shot of a string of stored Railbox boxcars. Don’t remember exactly when it was taken, but it would have dated to the early 80’s.
The CSX W&A sub has a yard adjacent to Dobbins AFB just south of Marietta, GA. There are five tracks about 3/4 mile long, they are usually full of intermodal empties (the kind used for trailers, not containers). In fact I just checked Google Earth and you can clearly see three tracks full of them (along with a C-130 Hercules that is on display sitting in the grass).
the cars i mentioned on the GLC are RR owned cars…guess its better to store em in huose then somewhere else…no matter how ya slice it tho its a money pit…think of the inspection/repair these cars need after sitting dormit for 8 or 9 months…not to mention the bees…
before 2002, cars were stored on the former MoPac riverfront trackage in Little Rock. The track ran from the NLR yard over the Junction Bridge, where a wye was and the track ran east, which connected to the UP main to pine bluff at the airport. to the west, it ran to the UP main to Biddle Yard.
Down in Shreveport at KCS’s Deramus Yard, a bunch of Midsouth engines were stored a few years ago, where they were all scraped.
On my trip to Dorango Co. last summer I passed a line of flat cars the kind with the semi trailer fifth wheel on them that stetched for approximately 20 miles. They were on an unused rail line and the farther I drove the more rusty they became. Like they had been there a long time. I don’t remember what RR name was on them.