The superiority of a route can’t be looked at end to end as what matters more where traffic originates and terminates. A superior route “A” between endpoints 2000 miles apart is of little utility if the traffic originates at midpoints on inferior route “B” that route “A” can’t economically access. For example, box traffic originating at LA/Long Beach travels in heavy volumes to the gateways of Kansas City, Memphis, and Dallas/Fort Worth, as well as Chicago.
Current train density on the Golden State is on the order of 24-30 trains per day, but the traffic mix and origins are quite different than on the Transcon. The Golden State is really a Kansas City/St. Louis to Los Angeles railroad.
[quote]
The growth is in intermodal, particularly in import. It is a very low margin business, but shows signs of improvement as contracts are churning. Those port which are capable of handling the ships and those lines which are most efficient at transporting the boxes east will be the winners. With higher efficiencies and thus lower costs, it appears BN
I was under the assumption that margins on intermodal import boxes were very low. By margins, I mean either gross margins or profit margins. If the profit margins are indeed high…BNSF has a real winner at this time.
Ed, as you know railroads are a volume business, and when the volume rises above certain thresholds the margins become highly attractive.
Your impression points to a basic fallacy we’re all subject to, that of relying on conventional wisdoms rather than objective fact. The obvious fact that there is substantial investment being made to add capacity for steamship intermodal, and that the investors approve that investment, should have been all the evidence necessary to demonstrate that the margins were now very attractive, elsewise we could only conclude that the investors were to the last man and woman a collection of chowderheads. “Conventional wisdom” is a generalization about what worked yesterday and is a poor plank on which to bridge to the future.
ALL, not just one, of the Class Is have a real winner on their hands with steamship intermodal as demonstrated in their annual reports.
I recall a very good article several years ago in Trains which discussed the lower margins, yet growth of intermodal vs the high margins of the "boxcar’ business.
I wonder how much of the objective fact is based on other factors, such as high energy costs/efficient method of transportation for the rails.
There certainly are macro economic factors at hand here which are leading to increased investment in the rails. The flood of imports from Asia is certainly one of those factors. It will be interesting to see how railroad pricing holds up during the next recession.
While BNSF’s ST, is a nice piece of iron. It actually has more mileage LA-KCMO vs The Sunset-GSR. BNSF only has the advantage KCMO-CHI. The UP also has lower grades than the BNSF, crosses the continental divide at a lower elevation, closer to Phoenix, hits Tucson, El Paso. BNSF reaches PHX via the slow and curvy peavine. El Paso is also off the beaten path. UP as well has the better route into the LA Basin, which gives it the best route between California, Texas, including the Southeast to points such as Atlanta, and Charlotte.
Looking at old Official Guides passenger TTs: RI-SP GoldenState Route KC to LA is 1829 miles; ATSF KC to LA via Newton and Amarillo is 1788 miles. I would guess that BNSF’s newly double tracked line thru El Dorado would take off a few more miles vs Newton.
The reason why the Santa Fe transcon rules the Chicago to California intermodal traffic cones down to one thing. Speed and never being afraid of using it. In the early 90s under the Santa Fe trains like the 199 and 198 and their eastbound counterparts as long as they were on all articulated cars meaning 3 5 and 10 pack cars were allowed by timetable and FRA to run passenger train speeds. The other intermodals had to get by with just 70mph these ran at 79 mph.
I did a lot of rail fanning out in Ancona in my childhood about that time. One day stands out to this day. Train 991 was coming in on the normally westbound main passing a manifest interchange bound for the old NYC at the south end of Streator. It came screaming by with 4 GP60s 2Ms and 2Bs on it and on the radio the dispatcher was asking if he was going to be past the manifest train in the next 5 mins as his westbound counterparts were at Mazon rolling at 79 hwading towards him and he didn’t want to slow them down at all. Engineer said on the radio 5 mins hell I’m already past him at Reading now slowing for the crossover. Dispatcher said 10-4 your clear to Joilet.
Passenger trains called on Phoenix, so that would indicate more mileage. Bypassing via Maricopa has less mileage. I wouldn’t necessarily use old passenger guides for freight movements. Not to mention line improvements over the years.