Western Railroad Discussion > UP Sues CML Metals For $2.3 Million

Read the article here:

http://www.thespectrum.com/story/news/local/cedar-city/2014/12/18/union-pacific-files-million-lawsuit-cml-metals/20620567/



Edited 1 time(s). Last edit at 12/21/14 09:39 by BurtNorton.

That's an easy one, company not making the money they were so didn't pay. Let lawsuit be filed, wait, go into negotiations about the amount and get it lowered its a win for the company as they didn't put out the money for months and then end up paying a much lower amount. Also possibly getting lower freight rates too boot. Not much new about that deal in the corporate world.

BAB Wrote:
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> That's an easy one, company not making the money
> they were so didn't pay. Let lawsuit be filed,
> wait, go into negotiations about the amount and
> get it lowered its a win for the company as they
> didn't put out the money for months and then end
> up paying a much lower amount. Also possibly
> getting lower freight rates too boot. Not much new
> about that deal in the corporate world.


Unfortunate, but stuff happens.

There's always a tug of war between the sales guy who's absolutely sure this customer is 100% legit, and the accounts guy who wants to see a completion bond etc before the company provides the service, etc. Some business will walk to another vendor, other customers can't find anybody willing to bond them at a reasonable price.

In know in many businesses, they make the customer prepay at least a good portion for their service if there's question of their abilities to pay. CML Metals probably "charged back" to the UP a bunch of items, maybe like late arrival times, non-complying rail cars, maybe dirty locomotives?!?! Those chargebacks can get pretty creative.

Wonder if they still have "Order Notify" cars out there. Say its grain, corn, etc. from back east. The shipper fills the car and starts it towards its destination where he knows he can sell it and they don't really need a car for awhile. While its in transit, orders come in and if they can get the price higher, they will sell the load to the highest bidder They call the railroad and have the car rerouted to the new buyer.

Now when that car reached its destination, it can not be spotted until it is paid for. Through a special bonding company the shipping monies are deposited in the carrier's account at that moment and the shipper also gets his money for the contents. When the agent gets conformation the shipping costs are in their account, he will release it for spot. This was a regular move on the East Coast Peddler out of Wat. Jct. We would have an order notify car for the grain outfit at Tempelton, Paso Robles or Atascadero all the time.

That's the way it was explained to me back in the early 70s. There would be hell to pay if the car was spotted and no money was collected.



Nudge

spnudge Wrote:
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> Wonder if they still have "Order Notify" cars out
> there. Say its grain, corn, etc. from back east.
> The shipper fills the car and starts it towards
> its destination where he knows he can sell it and
> they don't really need a car for awhile. While its
> in transit, orders come in and if they can get the
> price higher, they will sell the load to the
> highest bidder They call the railroad and have the
> car rerouted to the new buyer.
>
> Now when that car reached its destination, it can
> not be spotted until it is paid for. Through a
> special bonding company the shipping monies are
> deposited in the carrier's account at that moment
> and the shipper also gets his money for the
> contents. When the agent gets conformation the
> shipping costs are in their account, he will
> release it for spot. This was a regular move on
> the East Coast Peddler out of Wat. Jct. We would
> have an order notify car for the grain outfit at
> Tempelton, Paso Robles or Atascadero all the
> time.
>
> That's the way it was explained to me back in the
> early 70s. There would be hell to pay if the car
> was spotted and no money was collected.
>
>
>
> Nudge


Very similar to the old US Post Office's "Cash on Delivery" package. No cash? No delivery!

It does put a lot of cash in the system, and bonding adds a cost.

UP wanted to get at the head of the creditors line.

Dropping from $112 to $82 is not a disaster unless your margins are on the vacuum side of business. A $30 drop should mean you need to be 'careful' - not shut down.

A little bit of something is better than nothing at all!

dcfbalcoS1 Wrote:
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> Dropping from $112 to $82 is not a disaster
> unless your margins are on the vacuum side of
> business. A $30 drop should mean you need to be
> 'careful' - not shut down.

Well if you had super slim margins at $112 it would figure that as soon as the price went below $100 they were done.

I don't think the Gilberts will suffer.

Mike Root
Madras, OR

Part of the problem is CMLM hasn't been able to find a buyer for the ore on this side of the Pacific. They have to rely on one country, China, to buy the ore and the competition in the China market is fierce...


Allen

BAB Wrote:
-------------------------------------------------------
> That's an easy one, company not making the money
> they were so didn't pay. Let lawsuit be filed,
> wait, go into negotiations about the amount and
> get it lowered its a win for the company as they
> didn't put out the money for months and then end
> up paying a much lower amount. Also possibly
> getting lower freight rates too boot. Not much new
> about that deal in the corporate world.

How comforting to see that cash-strapped corporations can be just as flaky and manipulative as dead beat renters and other low-lifes!

I've forgotten what the hold code was for shipments that hadn't been paid for on Union Pacific, but I'd see it every so often while classifying cars. Since our hold track was often pretty full, I had to work pretty hard to convince some people that these cars were being held for a reason. So yes, this practice continued through 2010 at least.

Carl Shaver
Lombard, IL

shortlineboss Wrote:
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> I don't think the Gilberts will suffer.


UP joins the list of railroads who have had contract "disputes" with CML.

And other issues with the Gilberts as well.

Out

CC = Cash Customer