I’m curious as to how Montana Rail Link continues to exist and make money as a railroad. They connect with BNSF on both ends, and it seems that BNSF runs a large amount of trains over their rails even though they have their own line (ex-GN) through northern Montana. Unless I’m mistaken, didn’t BN LEASE the rail-lines to MRL instead of selling them? Why hasn’t BNSF just bought back this line if they rely on it so heavily for handling excess/unit traffic? If BNSF didn’t route the trains that they do over MRL, would MRL be able to survive on its own? This operation just seems a bit strange to me, as there aren’t any others like it around. Most regionals act as terminating roads instead of through-routes nowadays, and only FEC hauls the tonnage MRL does (minus maybe DME/ICE due to their huge size).
In our area there is a similar operation. The Buckingham Branch leases the former CSXT(C&O) line from Doswell (Richmond), VA to near Clifton Forge, VA. Virtually all of their traffic through our town are westbound overhead empty coal trains going back to WV, a fair number of empty grainers going back to the Midwest, an occasional ballast train for the CSXT and the tri-weekly Cardinal for Amtrak between Washington and Chicago. The originate or terminate a very small portion of their car handlings.
Short line carriers, such as MRL and BBR, despite leasing trackage of Class 1 carriers, do not inherit the workforce or work rules that were in effect when the lines were operated by the Class 1 carriers. The Short lines implement their own work rules and pay schedules, which are signifigantly different than those the previously existed.
The MRL exists and is profitable account the BN thought it was a good idea at the time. It is still the shortest route between TX, OK, CO, KS, WY and NE than any other BNSF route. BN leased the mainline ROW to Washington Corporations account there was a lien in Gold Bonds on these lines. All of the branchlines were sold to the MRL. Rob Krebs tried his darnedest to purchase the lines back but they are so profitable to WashCorp the asking price to buy out the last 50 years of the 60 year lease was just prohibitive. The contract has a traffic guarantee of the 1987 levels which was a slow year in the industry and MRL tries to set a budget at that level which means it is a pretty lean operation.
The BN had a number of reasons for leasing the line. They have been covered in this forum a few times before. So just sit back and wonder what the BN had in mind and know the MRL is doing a nice job for Mr. Washington and it’s employees. The also do a very nice job for the BNSF every day.
There are people in the industry who continue to view grades as paramount determinants of “inferiority”. MRL represented their view of this particular, ex-NP, line with its severe grades, abundant curvature, and a toxic tunnel. They misunderstood, by their self-imposed limitations, every business opportunity represented by this transaction, which created a rail system that is more profitable (%), on BN’s “worst” line, than the rest of the system.
What about Wisconsin Central ltd. and Kansas City Southern Lines, do they fall in the same equation?
I wouldn’t say KCS falls into this category, as it is a Class 1 and owns its lines. WC on the other hand is similar, but then again it’s not. WC owned its lines, MRL leases theirs. WC had a scattered web of lines, MRL is pretty much only a through-route. WC has lots of online customers, MRL doesn’t have as many (at least what they do have is all located in a few areas). But for similarities - WC was created bc SOO didn’t think those lines were profitable (and they were wrong). MRL was created bc BN didn’t think those lines were profitable (and they were wrong). WC was eventually bought back up by a Class 1 due to it’s growing importance, and so will the MRL when it’s 60 year lease is up (which isn’t for another 35 years or so).
CN is gradually scaling back and probably will dump many lines of the WC other than the mainline from Superior to Chicago. There will be no winter Taconite Pellet trains from Virginia, MN to Escanaba, MI this year. CN would like to dump the line east of Ladysmith, WI. The Empire Mine in the UP will be closing, which is the only mine that CN serves directly. Just this past Friday it was announced that the Domtar paper mill at Port Edwards, WI will close in the Spring of 2008. The mill will be dismantled and the property sold.
CN is better situated to make money from shipments originating in Wisconsin than the Soo Line was, as it owns the GTW and IC which means that it can move shipments a greater distance and get a better revenue split. CN is continuing to downsize its Wisconsin operations and I can see the day when all they will keep is the mainline, plus the former MILW Valley line.
beaulieu: By “dump” the Wisconsin lines, do you mean CN would try try to sell them to short lines, or are they doomed, because they wouldn’t fit in with CN traffic patterns?
So true of railroad management since WW I or so. The taconite trains are gone, the sky is falling, profitability is gone, the traffic will never return, scrap the line. This has happened over and over again, whenever the traffic dropped off or the economy went sour the railroads cut back on infrastructure. Now traffic is on a rebound and capacity is strangled by all the business. The guys like Ed Burkhart and Dennis Washington showed the managers who allegedly knew more about the industry than these upstarts did and were able to turn tidy profits in the face of such negativism. One has to wonder what other potential assets were retired and scrapped instead of being held for the ‘future’ which did not turn out so bleak as forcast. Who made such stupid decisions anyway? Well, you can bet they got promoted for all the scrap value they could disperse and all the fixed costs they could eliminate. Too bad their bonuses could not be rescinded later on. You know the folks at BN who cooked up and facilitated the MRL and the Soo Line honchos who made the WC a reality were looked at as heroes by the Board of Directors on eash RR. If they had been so smart they could have done what Burkhart and Washington did manage rather than sell off the assets.
Which you are basically saying the MRL doesn’t have union workers. Its the same thing that CPR did with the lines that they are “buying back” from the ICE.
I don’t know if the MRL has union workers or not . However many, if not most, shortlines set up in the last 25 years have union workers. What they don’t have are the legacy work rule restrants the Class I operate under due to craft lines and decades of an advisary relationship with their union members.
MRL does have union workers. The furry-backed engineer can vouch for it.
The MRL is a union shop. The point made earlier about the railroads divesting lines and letting someone else run them and they make a go of it is typical of most large corporations. The CEO’s and COO’s and other acronym’s at the top tend to have a very dim view of others in the corporations running their piece of the pie, they tend to use this line or place, makes x profit margin, so every other place must make the same profit margin.
I always thought that even a small margin bussiness is better than no bussiness at all. If the rails pay their way, why sell them off, typical short sided view. Make the money now, let the younger generation worry about how to keep making money.
Reminds me of the commercial where the guy buys a painting at auction and as soon as he wins the auction wants to put it right back up for auction. That doesnt make any sense and selling an even low profit line doesnt make sense for the future.
One thing that Warren McGee (retired NP conductor and Montana railroad history authority)pointed out about the MRL is that in Montana the old NP line (which they took over) had a much higher number of online businesses than the GN did, and MRL still has a surprisingly high number of online customers - I forget the number but it was over 100 in Montana alone IIRC. So it isn’t all ‘overhead’ bridge traffic.
The article in Trains a couple of months ago about the tanker trains of petroleum was a very interesting article of how the regional attitude makes it work.
ed
I sit on an advisory board of the biggest shipper on the line. Once a month we meet to talk over how things are going, including transportation service. The GM comes from a railroad family, worked for one in his early career, and knows what they can do and not do.
This is a company with a $35 million transportation budget and sophisticated enough to know what good rail service is and isn’t.
In general, the company has not been happy at all with the quality of rail service since the Milwaukee left. I am not referring to price, I am referring to service. And the problems long predate the current excuses of congestion, lack of capacity etc. Rather, the problems reflect an ongoing attitude about railroading, by railroads. However, the company gives very high marks to MRL for service and making it work, notwithstanding the obstacles placed in the path of continuing rail utilization by the connecting Class I carrier that ultimately carries most of the traffic to their ultimate destinations. Indeed, the GM phrases his observations with the preamble, “if it wasn’t for MRL …”.
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The terms of the MRL sale/lease obligate BN (and now BNSF) to move a specified number of cars on the MRL in a specific time period. When the quota is not met, BNSF pays the difference; When the quota is exceeded, BNSF pays extra for handling the additional traffic. When you say “there aren’t any others like it around,” that is appropriate, with regard to the traffic guarantee.
This is an “apples-to-oranges” comparison. Assuming the intent is to suggest MRL is more profitable than BNSF (or whatever “the rest of the system” means), it’s not valid. MRL is about 900 miles with no major terminals in a rural area. BNSF is a system of 32,000 miles with a vast variety of operating situations and conditions. All BNSF trains operate with BNSF power (or power leased by BNSF or through horsepower hours compensation); Most trains operating across MRL do NOT operate with MRL power (but are BNSF trains with BNSF power, except for helpers). BNSF operates trains as they are warranted on their system. MRL is guaranteed a quota of traffic from BNSF. In this aspect of the “comparison,” it would be most appropriate to ask what the profitability of MRL would be without a guaranteed traffic base.
Guaranteed traffic clouds the viability of the MRL routing. In other words: How much traffic (which is tied to profit) would BNSF route via the MRL if it was not obligated to do so? I’m not privy to this information, but what is known is that the MRL was once the former Northern Pacific route from the Twin Cities / Upper Midwest to the Pacific Northwest, and for traffic routed in this service lane today, just about zero traffic is scheduled by BNSF to operate on MRL, using the preferred shorter, less steep route through Havre and Whitefish in pr
Is it safe to assume it is mainly coal which travels from Laurel to Shelby on the upgraded line?
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