Eastern Railroad Discussion > Is NS really short on power?

The reason I ask is, here we have 67d sitting on the Conemaugh Line at Millvale, Pa. right where it has been sitting for 3 days now. If they really need power, here are 4 inactive units that could have been cut off and put on another train. Yes, that is the CR Heritage unit 3rd back in the consist. This is a Gypsum train for Shelocta, Pa.



Edited 1 time(s). Last edit at 10/23/14 16:00 by EH49.

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Yes we are very short on power, if they left it on its on for a reason, I'd venture to guess so they don't have to rework the cars all over again

Posted from Android

The NS 8098 Conrail spent a whole week sitting at the power plant at Strawberry Ridge, PA. It left Strawberry Ridge on 10/18.

SlipperyWhenWet Wrote:
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> Yes we are very short on power, if they left it on
> its on for a reason, I'd venture to guess so they
> don't have to rework the cars all over again
>
> Posted from Android

Exactly

Posted from Mobile Safari

Stationary trains like this one are part of the REASON NS is short on power.

And if you are short on crews, you can't move the trains or the power.

Nice picture!

I assume that Strawberry Ridge....if that is the destination for this train....is not ready to accept it. Dave W

Here in NJ, power rarely sits for as long as 24 hours. More often, it's in in the morning, and out in the early evening. That's pretty good turn around by railroad standards.

I've been noticing a lot of empty 53 foot well cars heading east into the North Jersey Terminal area. Probably saw 30 wells on the rear of 20R today, and a similar number on the prior train.

NS just cant get trains over the road anymore

This train came from Strawberry Ridge and is destined for Shelocta, Pa.



Edited 1 time(s). Last edit at 10/23/14 17:34 by EH49.

trains are sitting all over eastern pa. could be new ds system or shortage of crews.

This afternoon I was at the downtown post office in Fort Wayne, Indiana. I noticed a westbound NS train on the elevation with about ten locomotives. There was a little bit of everything including three different BNSF paint schemes: red/silver, pumpkin and executive.

Entirely management's fault for not looking ahead. Yet they make big $$$.

Railroads can be their own worst enemy.

Yes, but Wall Street is often only interested in short-term profits and meeting projections to the detriment of the stock price.

coach Wrote:
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> Entirely management's fault for not looking ahead.
> Yet they make big $$$.
>
> Railroads can be their own worst enemy.

And this is the key. If you take the power off of a train like this then another A6 Class 1 brake test has to be done if the train is off air more than 4 hours - something I wish the FRA would give a little more leniency on. Also, assuming this train is waiting for yard space somewhere, if you take the power off you might play hell getting another set of power to put back on it. Granted, only 1 unit is needed to keep the air up on the train, but it's sometimes hard to gather up enough power to replace the set.
It's not just NS - I believe every class 1 railroad is having this problem right now. Having enough crews is a very tricky thing. Hire too many and the first minor downturn you are looking at furloughs. People cut off have to seek other employment and some don't come back when business returns. Not enough crews and you see what that does.


NYC6001 Wrote:
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> And if you are short on crews, you can't move the
> trains or the power.

rantoul Wrote:
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> wabash2800 Wrote:
> --------------------------------------------------
> -----
> > Yes, but Wall Street is often only interested
> in
> > short-term profits and meeting projections to
> the
> > detriment of the stock price.
> >
> > coach Wrote:
> >
> --------------------------------------------------
>
> > -----
> > > Entirely management's fault for not looking
> > ahead.
> > > Yet they make big $$$.
> > >
> > > Railroads can be their own worst enemy.
>
>
> In past 3 months UP bought back $850 million in
> shares. The industry share buy back for the past
> 2 years:
>
> NSC 2013 $496 million 2012 $1.2 billion
> CSX 2013 $344 million 2012 $720 million
> UP 2013 $2.2 billion 2012 $1.5 billion
> CN 2013 $791 million 2012 $1.4 billion
> CP 2013 $78 million 2012 $199 million
> KCS 2013 $1.5 million 2012 $1.9 million
>
> Vision?


Norfolk Southern spent about 4x their 2013 buyback amount in capital expenditures. Roadbed, locomotives, IT, signals, etc. A little over two billion dollars. That suggests to me that they have their priorities in order. Wouldn't surprise me if the other lines have similar outlays on new infrastructure.


WONK ALERT about stock buybacks

Stock buybacks are a basic tool of capital management.

Basically, if a company turns a profit, it has three choices, which can be combined.
--It can pay a dividend to shareholders, which will be taxed twice (at the corporate level and again at the shareholder level).
--Or it can increase investment in plant and equipment, as NS is doing in its reviled Indiana Gateway expansion project to increase capital expenditures.
--It can retain earnings for working capital, which isn't taxed, but is closely watched by the tax man.

Stock buybacks are expenses, which lower taxable earnings and shrink the number of shares outstanding. For example, you have a hundred shares outstanding, and earn $100 and pay a 5 cents dividend. You're earning $1 per share, and you're paying out 5 cents of the dollar. (To get the five cents, you have to earn about 7 cents, pay the tax, and then hand over the nickel to the shareholders.)

If you decide to use some of the $100 in earnings to buy back 5 shares, or you borrow money to buy back 5 shares, you have only 95 shares outstanding. So instead of earning a dollar per share based on a hundred shares, you're now earning a dollar and a few cents per share on 95 cents. And, you save the cost of dividends and taxes on the five shares you killed off. But you have interest costs, which are very low right now.

It's a lot more complicated than this in reality (cost of the deductible interest versus the double taxation, net present value of the future cash flows, etc). If you want to keep the number of shares relatively flat over time, you may need to do buybacks to offset options granted when the stock price was lower.

Rathole Wrote:
-------------------------------------------------------
> (snip)
> It's not just NS - I believe every class 1
> railroad is having this problem right now. Having
> enough crews is a very tricky thing. Hire too
> many and the first minor downturn you are looking
> at furloughs. People cut off have to seek other
> employment and some don't come back when business
> returns. Not enough crews and you see what that
> does.
>
> (snip)

We had that issue with a recent furlough of police officers from a local county agency.

A hundred people were laid off, about 40 of them immediately found jobs with other agencies. When a grant came through to rehire, they chose not to return. So the county has to select, hire, train, monitor etc rookies in place of the experienced people they lost.

rantoul Wrote:
-------------------------------------------------------
> ...If you decide to use some of the $100 in
> earnings to buy back 5 shares, or you borrow money
> to buy back 5 shares, you have only 95 shares
> outstanding. So instead of earning a dollar per
> share based on a hundred shares, you're now
> earning a dollar and a few cents per share on 95
> cents. And, you save the cost of dividends and
> taxes on the five shares you killed off. But you
> have interest costs, which are very low right
> now.
>
> It's a lot more complicated than this in reality
> (cost of the deductible interest versus the double
> taxation, net present value of the future cash
> flows, etc). If you want to keep the number of
> shares relatively flat over time, you may need to
> do buybacks to offset options granted when the
> stock price was lower....
>
> To me, this is not investing in the business, just
> moving nuts around under the accounting cups...I
> get that it works for the stock holders. Why not
> target extra cash for capital improvements that
> fix or expand assets known to be operational pinch
> points? Not in the plan. Extra money could not
> be spent on more capital projects because capital
> spending is already as fast as can be managed.
> Today's shareholders and managers are not
> railroaders. Vision?

It's in the plan. That's why I led off by saying that they're spending four times as much on capital expenditures as they're spending on buybacks.

Any capital management plan will include funding for the areas which management sees as most important. (It's also one reason why investors often look at the amount of capital expenditures, research & development, etc to assure that management is not short terming the business. Goosing the results to look good this year, with pain in the out years.

Something Congress has perfected...)