The next big step in leasing is where the railroads companys sell there track to the banks and lease time slots from them to run there trains. They wont hire there own employees but use “Leased Employees” From Addeco or Manpower.
The will sell off there engine terminals and lease time and repair work not unlike when we go to joes garage. yards will be sold to regional railroad terminal authoritys who will bill the railroad for sorting there trains.
The railroads main focus will be selling and aranging transportation and custumer service.
I heard leased employees are stored in freezers[bday][bday][bday][bday][bday][D)][oX)][#ditto][#dots][#offtopic][#oops][#welcome][#welcome][#welcome]
And you can all lease me as your rent-a-railfan, and I’ll take pictures of the leased trains on leased railroads run by leased employees with leased camera equipment transported in a leased vehicle. [(-D][(-D][(-D]
railroad has always been a capital intensive business and leasing has always been a big part of the finance picture - however, leasing used to be transparent to railfans because the leasing method was the long-term equipment trust. I’m sure many of you have seen trust plate on cars and locomotives. Now with shorter term leases and power sharing - we can see anything anywhere.
But I don’t see any future for leasing of track - unless the track is owned by a government agency of some kind. Any leasor whats to lease things that can be reused when the lease expires - or conditions change. And its hard to move track from one location to another.
You may see leasing of right of way - particularly if the ROW can also be used for other applications such as power or communication lines. But it is really hard to make the numbers work for a track lease.
dd
Then mabee you could lease a train for your amish moving co.
[(-D][(-D][(-D][(-D]
ROFL! [(-D][(-D][(-D][(-D]
Hmm. Quite an interesting thought.[:D]
Why not just lease out the whole thing to some open acccess advocate,and just collect the rent?[:)]
the class 1s lease lines to get out of having to pay crews any New York Dock aggreement money to crews that will lose their jobs or have to relocate to other terminals to keep working for that company…
csx engineer
Unfortunately for you, I doubt they will start leasing lunatics.
csxengineer98: what is New York Dock Agreement money?
Peterson6868 must have caught something from Futuremodal.
Dave H.
Economic theory dictates that . . .
Oh, bloody 'ell with it. I’ve read more about economic theory this past week than at any time since college.
But unlike now, college Microeconomics and Macroeconomics made sense to me.
Leasing virtually everything is possible if you operate an airline. You would probably still directly employ most of your own personnel and some subtantial hardware may need to be purchased. All that this proves is that you can establish a substantial business with a relatively small amount of upfront money, most of the rest being borrowed. Such undercaptialization is almost a guarantee of failure, though.
Not a few companies have fired all their employees - then leased them back from an employee leasing firm. All they have to do is write a regular check to the leasing company - no taxes to figure or anything like that.
Considering the need to know the track and territory, leasing employees in train service seems unlikely, except in the type of situation I just described.
As for leasing track/ROW, why not? If the owner is getting appropriate return on his investment and has no interest in actually operating a railroad, sure!
A railroad could be built by a bank or a group of investors and leased to a railroad to operate its trains over
and the investors just sit back and collect the rent and do some track mainatnce every now and then
that presumes that the railroad earns sufficient to pay back the cost of capital sometime in the investor’s liftime – something that is not happening in most class 1’s today. the industry that I am in pays back it’s capital investment in 3 to 5 years and we still have a hard time finding investors.
dd
If I’m not mistaken, CEFX railcars and locomotives are owned by CIti Bank. What is their reasoning for the interest in the railroad business?
Generally capital leases, such as CEFX, provide a good, steady return over a number of years. They are not flashy investments - but the stability of the returns is the important factor.
The venture capitalists are always bragging about the fact that they made 20% on a deal - but they may have invested that money in a venture for 5 years before they get the 20% return. On the other hand, a capital lease returning 4% per year actually returns nearly 22% over 5 years due to compounding.
So the CEFX folks would be 2% ahead of the flashy venture capitalists. That’s money they can take to the bank – and they do.
dd
Andrew,
To add to the above, CEFX leases the locomotive on a long term lease, so the return is guaranteed.
Take the MK2000s(the new GP20) they lease to UP.
A fleet of them, on a ten or fifteen year lease.
UP doesn’t want to buy or build switchers, the cost isn’t worth it to them, but they do need small, dual use locomotives.
So they lease them from CEFX, who had Boise Locomotive build them to UP specs.
CEFX owns the locos, and UP pays to lease them.
Maintenance, beyond the normal things, brake shoes, oil changes, stuff like that, is CEFXs responsibility.
So UP gets a fleet of switchers, without the cost of buying or building them outright, (research the SW10 program UP created)or the cost of heavy maintenance, and CEFX, (Citibank) gets a guaranteed long term return on their investment, which, after the lease is over, and if UP doesn’t want to lease them again, they can sell on the second hand market to short lines.
Keep in mind, the current nationwide fleet of small, dual use switchers, the GP35 and 38, the GP15, and the SWs, are getting older, really older, and no one is building any new ones, neither EMD nor GE.
So, a market for these exists, and after the lease is up, they can be sold off.
A win-win for both parties.
Ed