http://railpictures.net/viewphoto.php?id=329747
Do they scrap them? Do they put them back in service after minor patching? Do they undergo major and expensive repairs?
Odds are they won’t be scrapped. They will be gotten into running condition before they are moved to the nearest rip track. From there (after they are repaired enough to meet safety standards for movement) they’ll be sent to their home shop for whatever is necessary to restore them to good vehicle-transporting status. Or to have the shackles adjusted, depending on whom you want to believe.
It depends on the AAR depreciated value. The AAR has a mandatory formula to be used when handling damaged equipment. This is mandatory when railroads damage equipment.
The damaging railroad requests a AAR depreciated value statement from the car owner. The car owner has seven days to provide one. The railroad has seven days to tell the car owner if the car is repairable or destroyed upon their estimated costs.
If the car’s estimated cost far exceeds the AAR depreciated value, the railroad will send a letter authorizing the car owner to invoice them for AAR depreciated value. If the estimated cost is not much more than the depreciated value the car owner would elect to have the car sent to a home shop. The car owner would have to pay for all costs associated to have the car sent home. Once the car is repaired, the car owner can only invoice the damaging railroad for the AAR depreciated value.
This is basic, it goes much deeper.
Interesting, thanks!
So which railroad is responsible paying the damages for the cars? The railroad that owns the track where such derailment happened or the railroad that employs the engineer that was running the train?
What if those cars had automobiles in them? Who would pay the damages to the cargo? The same railroad?
Many times the cargo contained in the wrecked cars is disposed of at the location of the wreck ( taken out of the car and then destroyed and burried). AT several wrecks involving auto racks with cars, I witnessed, the Hulcher guys pulled the cars out of the overturned rail transport, and windrowed the cars, recorded the serial nos-VINs- and then proceeded to walk the sideboom cats up and down the pile, and then burried the whole mess in a deep trench along the ROW.
Really?! Why not sell them to local auto scap yard?
thats what they use to do due to EPA rules most stuff is hauled off. and the last new auto racks that a SO-CALLED engineer derailed was scraped
In the early 70s, SCL lost 56 cars at Effingham, SC, many of them loaded auto racks. While the cleanup was in process, I spoke with “someone” who was part of the cleanup. He told me that the autos would be loaded onto new racks and shipped to the final destination, where they would either be accepted or rejected. It was obvious that they were all junk. Once rejected, a final disposition would be determined by the insurance co (or SCL if they were self insured. I don’t remember exactly which). Has it changed that much in the past 40 years?
In a related business - A few years ago there was a ship hauling Mazdas Volkswagens - as best as I can recall - that rolled partway over and almost sank. A tremendous effort and seamanship by the salvage crews got it to port, with like 4,700 1,800 cars on board with various degrees of damage - some including salt water intrusion into the engines and various fluid systems ! [:O] For a while anyway, the disposition was simply to scrap them all - VW Mazda wanted nothing to compromise the quality of the ‘brand’, and / or no competition to selling new cars through the dealers. After a while, though, the less-damaged ones were salvaged and resold - the costs of properly disposing of all the fluids in each one and the engine blocks, etc. was getting too high. I’ll see if I can find a link . . . wanswheel / Mike, any help you can provide here would be appreciated, buddy.
- Paul North.
EDITED - My memory ain’t worth a ‘beaver’s [as in castor canadensis, to keep this OK for family reading] principal structural work product’ any more, to evade this site’s censoring software. I’ve edited my post above, and here’s a link to an article:
"Mazda scrapping all
The railroad hauling the automobiles would be responsible for all clean up charges including envirnomental.
Example of which railroad is responsible. Let’s say UP authorizes BNSF trackage rights on their track. If derailment is caused by mechanical, BNSF pays whether or not there are UP or BNSF crews. More than likely there will be BNSF crews qualified for that territory. I would assume if a train hits a car at a grade crossing, the two railroads would have a agreement in place in case of a derailment.
If the auto racks were loaded, the cars will be hauled away and shredded. GM, Ford or whoever would file a claim againist the responsible railroad for everthing associated with the loss of property.
On another note, years ago when I was a kid in Atlanta, I went to a derailment on the belt line that Southern, Georgia RR, West Point Route and Seaboard Coast Line used with my dad since he was a Georgia RR car foreman. The trainmaster told all of us to move away from the derailment and get on top of a hill near by since a train was going to pass the derailment. We all hear about four loud pops. When the train passed by, four Cadillacs on the top deck were missing their roofs. This was before racks had side screens, doors and roofs.
So when it comes time to pay the damages for derailed cargo and/or equipment do railroads have some kind of insurance that they claim against or do they pay out of their pocket?
Probably small railroads all have insurance but maybe Class I railroads don’t because they have the cash anyway?
Small and large railroads have insurance to cover it. Large and regional railroads will go ahead and pay and file an insurance claim. Short lines file a claim and pay when they get the money.
The Class I railroads are self-insured for the first $50 million, they pool for the insurance on the next $ 50 million, then they typically have a $1 billion dollar umbrella policy with a $100 million dollar deductible. That’s the way it was a few years ago, the break points may have increased to adjust for inflation.
I believe those limits/ break points are still correct - I read through the Norfolk Southern disclosure of same in either the Annual Report or the proxy statement last year. Except, that I don’t recall anything about a pool for the second $50 million - it was all a $100 million deductible to them. And, above the $1 billion dollar limit of the umbrella policy, it was back on them as a self-insured risk.
So if there was another Graniteville, S.C. disaster - that was the collision/ wreck from a mis-aligned switch in ‘dark’ territory and the resulting chlorine gas leak that killed several people and caused a lot of havoc otherwise - the railroad pays for the first comparatively small and acceptable deductible, has insurance for the next ‘lump’ of exposure that might seriously impact the business - but remains on the hook for a catastrophic loss.
Since NS as of today has a market valuation of about $20 billion and a ‘book value’ of total assets of about $27 billion - both per Yahoo! Finance, see http://finance.yahoo.com/q/ks?s=NSC+Key+Statistics (thank you very much !), this is kind of like you buying fire insuran
What Wabash1 indicated may very well be the case in this day and time of somewhat draconian environmental regulations. It makes sense that such debris and cargo remnant would be hauled to a site for complet final disposal.
It’s been some time since I was a at a derailment, but I would suspect that the rationals are still somewhat valid. As Beaulieu indicated the Rails probably have levels of self-insurance as he indicated. They would be a product of previous experiences, and individual lines protocols. I would defer to his familiarity with the specifics. Many larger truck lines, as well establish similar insurance protocols.
The risk beyond the level of self insurance are generally sold to a brokering insurers who would would handle(broker out to other insurance carriers) the balance of the risk up to a predetermined level of coverage ( established by the individual corporation seeking the coverage from insurers who trade in those risks as a course of doing business.)
The reasoning in destroying the autos damaged in a derailment was that if they got into secondary markets( used car dealers after being processed through body shops) the original manufacturer would then be faced with competing against their own products ( ie: a NEW Car-that had been repaired at a greatly reduced price vs. A New Car in a Dealers showroom asking ‘normal’ pricing).
So they (railroads or insurers) opted to take a total insurance loss at the derailment vs a nightmare of paperwork individual units(cars) that were being repaired in any number of different location then fed into a questionable marketing arangement. For the longest it was a practice to clean up the derailment and its results as quickly as possible. [Like the medical profession, bury your mistakes and move-on.] &
A few years ago, there was a derailment at Carroll, Iowa where one train derailed into the side of a passing train. One was a manifest, the other and the one I think that initially derailed was an auto rack train.
Some of the manifest’s cars contained tomato sauce. The place stunk of tomato sauce and fresh earth for a few days. The auto racks had Cadillac Escalades. There were a couple of racks that were derailed, but not turned over or torn apart like the others. One may have had a couple of side panels ripped open, the damage only affecting a couple of the Escalades.
All of the Escaledes from these cars were scrapped. The reason I was told was Cadillac was afraid that there could be damage that wasn’t evident to them and they didn’t want the associated liablility. They didn’t even want to use parts off of those vehicles from those cars for the same reason.
Jeff
Like any other operating expense, derailments and the damage they cause are taken into consideration as a cost of doing business. The last I looked, Union Pacific, for example, budgets around 2% of its annual operating cost to what they call “casualty costs.” This includes damage to equipment, cargo, roadbed and track, wayside structures, the environment and personal injury resulting from mishaps.
In the greater scheme of things, this does not seem like an outlandish amount of money, considering the volume of freight that is moved in a year and total operating revenues.
John Timm
John:
Just out of curiosity; I went to UPRR’s site,
and pulled out the OPR INCOME for 2009 =2% of $3.4 B =$68M
OPR INCOME for 2008=2% of $4.1 B= $82 M
So utilizing their OPR Income numbers, and using a reserve of 2%{ John’s #] of income; that they (UPRR) as a company can potentially have a kitty available to mitigate unplanned accidental expenditures in the above year’s budgets .
These are very rough(read very speculative, extrapolated figures) [pub in UPRR’s website].&
There was a bunch of autoracks hit the ground in northern Ontario in the very early seventies. The timing couldn’t have been worse.
The were the very first cars of that model year, back when the “big three” used to unveil them in September. They were GM cars, and GM had been planning a number of car show like events to debut the new models in all of the major western Canadian cities. I was in my late teens, in my car crazy phase, and I was following this very closely. The events were canceled, and when the replacement cars arrived they were introduced to the public in the normal way that had been used before, and after when the American manufacturers started to face difficulties from the oil embargo’s. GM’s new models were introduced in western Canada weeks after they were on sale to the rest of North America. It was decades before you saw the same kind of hoopla for new models.
Dad reported on news about the cleanup, insurance matters, and the arrival of the replacement cars, for weeks after the wreck. What was interesting decades later is that among railroaders it was an admittedly interesting event, but among those in the retail auto business the wreck had reached legendary proportions. More than one car salesmen, in the nineties or later, that I had met in social situations, told me about it when they heard I had family that had worked for the CPR.
Bruce