What is the actual business purpose of having a trans-continental railroad. Yes it has been a dream ever since the Golden Spike in 1869, but what REAL business advantages does it present in the 21st Century?
While I am not a traffic expert, I doubt there is really that much traffic that is actually moving Coast to Coast. Moving from one coast or the other to inland destinations or from inland originations to coastal destinations or export ports.
Silly me. I don’t see a real advantage to having a coast to coast carrier - with all the interline agreements that exist among todays Class 1’s.
The only benefit I see in the UP-NS deal is the elimination of duplicate ‘back office’ personnel, personnel that for the most part is non-contract and easy to sweep off the property.
Time sensitive containers from China/Japan to the East Coast? I do not know what transit times are for containers going through the Panama Canal, but it might be shorter going west coast to east coast. Such cargo may already be going by train, just eliminates a switching move / associated paper work along the way? Just a guess.
All the carriers have ‘run-through’ agreements that cover the movement of priority trains over multiple properties. Trains operating under these agreements can and do operate as ‘fast’ as any single carrier can operate between Origin and Destination.
A corporate merger or acquisition would eliminate duplicate boards and executive committees, i.e. CEO, CFO, COO, etc. It would also eliminate most of the duplicate staff functions, i.e. accounting, IT, finance, marketing, HR, audit, legal, engineering, etc. Doing so could result in savings of hundreds of millions of dollars over time.
Been there done that! The Fortune 200 corporation that I worked for acquired three large corporations in my time and eliminated thousands of high paying overlapping jobs. The savings are probably minimal compared to potential operating savings, but they can be significant. And the name of the game in business today is every dollar counts.
Savings depend on the size of the Golden Parachutes that the senior official extract. With UP + NS being mostly a end to end ultimate property the savings from eliminating duplicate routes will be very limited.
Ya, but think of all the cars and electronics and…well, most everything we buy that comes from China and other parts of Asia. People in Maine and New York and Miami buy them too. Yes a ship from China could go through the Panama Canal and dock in New York in a few weeks, but quicker to offload in a west coast port and move the containers with the goods by rail to the east.
UP-NS argues that it would make the trains quicker if they were all on one railroad - create a train of 100 doublestacks with 3-4 engines in Los Angeles, and run it as a unit train all the way to say Philadelphia only changing crews as necessary. No switching from one railroad to another.
Pro:
A shipment from the middle of the western half of the country to the eastern side would involve two different companies and each half of the trip would be too short for either company to consider but combine the two parts into one company’s territory and it might be worthwhile.
I don’t know, I but can’t imagine that there would be a lot of traffic involved.
Con:
Presently, if UP has a shipment destined for the eastern side, they can deal with either NS or CSX to deliver it by the more efficient route. If married to NS, it would take that route, even if it is more circuitous and inefficient.
Again, I can’t imagine that this would be a significant consideration.
Conclusion:
I think maybe Zug might be on to something: Ego.
The shareholders need more dividends of course and they can no longer grow the company outside of mergers. Eventually they’ll get to a point where we will have to start colonizing deep space and take over other planets to satisfy those greedy money-grubbing orcs.
I think the load must be extremely time sensitive to pay up to $12,000 for a 40 ft container from Long Beach to New York to safe 8 to 10 days.
Regards, Volker
Railroads like being paid. If a railroad can ship something from Point A to Point B entirely on their railroad, they will do it, even if it would be quicker for the shipper to send it via a second railroad. That way they get paid for the entire trip.
Well, it’s already packed in the container in China, so it doesn’t have to be redone in LA, just moved from ship to rail. Not sure how much it costs to go by ship from LA to NYC via the Panama Canal, but I doubt it’s cheaper than rail - or quicker?
The difference in shipping cost purely port to port for a 40 ft container going to either Los Angeles or New York is currenty less than $1,500 vs. up to $12,000 by rail. No port fees included.
To LA by ship and than by rail to NYC is 8 to 10 days faster.
Regards, Volker