The October 2007 issue of Railway Age has a feature article regarding the need for capital expenditures by railroads to handle “the tsunami of freight that’s coming their way.”
I will be brief in summarizing, suggesting those interested read the article:
RR’s currently spend $9 billion annually on capital improvements, of which $2 billion is used for expansion. The Association of American Railroads plan proposes that they add $1.5 billion a year for expansion. The plan looks forward for the next 28 years in assessing needs and is, in my judgement, a gigantic committment to providing for the nations transportation needs.
Much more detail in the article, accompanied with map illustrations.
Interesting piece. The question, though, is can railroads fund the extra $1.5 billion in expansion on their own? I have heard, particularly after reading Don Phillips’ pieces in Trains, that the government should chip in and help the industry keep up with demand (since, obviously, the expense will be so enormous).
Good question. One thing is for certain, if they’re going to be able to keep up with the predicted demand, they’re definitely going to have to make some major capital improvements, particularly in the East and Midwest where so many bridges are in such bad shape.
I think the Western railroads are a good example of what the Eastern railroads need to do in terms of major improvements. Triple tracking, higher speed crossovers and such are a sign of what’s to come, a lot more trains.
With due respect for Mr. Phillips, he does appear to favor government solutions from the start.
We should fully understand that the Railway Age article presents what the RR’s themselves are proposing through their own organization, the AAR. The AAR would not be putting out such a proposal if its members did not feel comfortable with it. Certainly there are situations where government needs to be part of the solution. The Alemeda Corridor in LA is a classic example; and the need to solve the Chicago problems will need more than the RR’s to solve.
We out west have a lot of room for improvement. The construction of an additional line thru Cajon Canyon is a good example but the Alameda Corridor East Project hasnt moved an inch and the improvements to that particular line (trenching and dbl tracking from Los Angeles to El Monte) are crucial. Plus add in a few dozon grade seperations that need to be done, but yes, there is a lot to be done to meet the expected tonnage coming down the line.
GREAT!! Let’s let the AAR put its money where its mouth is. Let’s let them take all the dues and fees the railroads have been paying them over the years (instead of advertising or holding safety campaigns) and put them to driving up the price of common stock, snapping up bond issues or making outright loans.
It’s always easier to “let George do it,” isn’t it? [:P]
I have always enjoyed reading Don Phillips columns, but he is (or was) inside the beltway. Even as a reporter, it is easy to look for solutions based on that great American taxpayer source of income and taxation.
Well, I am pretty much to the point where enough is enough. I am tired of entire tax situation and the mentatlity. Think about it. The government is soon to be requesting, not asking, but requesting that we send more of our income to Washington. Ok. That means that we will have less to live on. In effect our income is being reduced. Why? So government expenditures can INCREASE. “We want more of yours so we can be bigger (not better)”. You, the American taxpayer will simply have to get by because we want more!
If there is going to be investment in our railroads, let the investment come from the companies or from new capital raised.
Take a look at most (perhaps all) of the major railroads that are publically traded. How many have share buyback provisions? I havent done a survey, but my guess would be they all do. Big bucks.
Perhaps someone out there today can take a look at the Class 1’s and determine how many have share buybacks programs and how much each year is funded to those programs. If no one does, I will try to later today.
That figure would go a long way in funding capex requirements.
So there is a tsunami of freight coming. From where? and to where? If it is all containers of Chinese imports and good paying jobs decline doesn’t that sort of balance spending and restrict traffic?
…I don’t know why it isn’t restricting good paying jobs…but our administration continues to imply all the free trade is good for our country and economy. {Even though the “good paying jobs” seem to be leaving}…
While I don’t like to see politics inserted into discussing the many topics at this site I wish to remind Modelcar that it was the previous President who was the major instigator of free trade.
About “good paying jobs”, too many of us think that the world is standing still and we may do what has always been done. Do not inovate, do not make something better and let all workers continue doing that with which they are comfortable. So where are the harness makers and the blacksmiths which were so important 100 years ago? Let’s keep the crank telephone, or better still the pony express. If this country fails to lead, or even keep up, with the innovational world of today then those with “good paying jobs” will not have a buyer for whatever they create.
By the way, I have never seen “good paying jobs” specifically defined. But I do know that our economy is very sound and that unemployment numbers have been consistently low for several years. The only constant is change and we should embrace it