Eastern Railroad Discussion > Trade group calls for CSX investigation

https://finance.yahoo.com/news/trade-groups-call-u-investigate-170020663.html

"allow other operators to use CSX's railroad"

In other words, the nuclear option for railroad companies

Lackawanna484 Wrote:
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> "allow other operators to use CSX's railroad"
>
> In other words, the nuclear option for railroad
> companies

Words from politicians that are not going to work, as you still have to crew and dispatch those trains from the foreign roads, at least not how the railroads are set up in today's world.

Viva Harrison!!! Great going. Wonderful "leadership".

SantaFeRuss

Interesting, 14 days ago I said that there will be push back. It is now coming true.

https://www.trainorders.com/discussion/read.php?2,4349245,4349947#msg-4349947

As Gareth Mallory said in the James Bond film "Skyfall," "Hmm, this is going well."

The longer Reuters article linked to on the Western Board (http://www.reuters.com/article/us-csx-trade-cuts-idUSKCN1AV1ZY) contains the decisive quote on the matter from Wall Street:

"Jason Seidl, an analyst at Cowen & Co, said the problems at CSX were bound to improve with time.

'We have seen railroads be in far worse position and recover,' Seidl said."

And that's exactly right: The disruptions will end, service will improve, the customers will eventually come back and CSX will be more profitable. End of story (I feel for the employees, customers and communities going through the "chaos period", though, and the permanent damage some will suffer - worse yet, the three or four remaining "non-precision" railroads may be forced by their shareholders to do the same thing).

EHH likes the chaos, uproar, disruptive stage. Create high levels of uncertainty, lay off a lot of people.

Focus on creating a new more efficient and maybe smaller company.

Posted from Android

illini73 Wrote:
-------------------------------------------------------
> The longer Reuters article linked to on the
> Western Board
> (http://www.reuters.com/article/us-csx-trade-cuts-
> idUSKCN1AV1ZY) contains the decisive quote on the
> matter from Wall Street:
>
> "Jason Seidl, an analyst at Cowen & Co, said the
> problems at CSX were bound to improve with time.
>
> 'We have seen railroads be in far worse
> position and recover,' Seidl said."
>
> And that's exactly right: The disruptions will
> end, service will improve, the customers will
> eventually come back and CSX will be more
> profitable. End of story (I feel for the
> employees, customers and communities going through
> the "chaos period", though, and the permanent
> damage some will suffer - worse yet, the three or
> four remaining "non-precision" railroads may be
> forced by their shareholders to do the same
> thing).

Or not.  Sometimes these things are just the beginning of the end of an era.  Hard to tell.

illini73 Wrote:
-------------------------------------------------------
> The longer Reuters article linked to on the
> Western Board
> (http://www.reuters.com/article/us-csx-trade-cuts-
> idUSKCN1AV1ZY) contains the decisive quote on the
> matter from Wall Street:
>
> "Jason Seidl, an analyst at Cowen & Co, said the
> problems at CSX were bound to improve with time.
>
> 'We have seen railroads be in far worse
> position and recover,' Seidl said."
>
> And that's exactly right: The disruptions will
> end, service will improve, the customers will
> eventually come back and CSX will be more
> profitable. End of story (I feel for the
> employees, customers and communities going through
> the "chaos period", though, and the permanent
> damage some will suffer - worse yet, the three or
> four remaining "non-precision" railroads may be
> forced by their shareholders to do the same
> thing).


Yup, Staggers rescued railroad corporations, not rail transportation.

TAW

rantoul Wrote:
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> Long time ago shippers could direct the traffic
> route, which carrier to use. Could/does this
> business practice exist today?

Nope. When bridge line rail companies competed for business, service was a lot better. Precision railroading in the 1940s and 1950s was often a lot better than precision railroading in 2017.

And that's been a persistent complaint of the chemical companies trade group, among others. Very few shippers have meaningful rail alternatives. Trackage rights mean little if another rail company won't utilize them. That said, many major shippers have a morning conference with their rail carrier(s) and look at the status of their unit trains, scheduled deliveries, critical shipments, etc.

In a celebrated case, the Omaha Public Power District had to begin planning its own railroad connection before the shipper finally brought prices into line.

NSTopHat Wrote:
-------------------------------------------------------
> Lackawanna484 Wrote:
> --------------------------------------------------
> -----
> > "allow other operators to use CSX's railroad"
> >
> > In other words, the nuclear option for railroad
> > companies
>
> Words from politicians that are not going to work,
> as you still have to crew and dispatch those
> trains from the foreign roads, at least not how
> the railroads are set up in today's world.

The EU solution was to separate operation and infrastructure, effectively making railroads toll roads. In that model, the infrastructure company establishes a uniform pricing schedule for use of the infrastructure, including scheduling services and traffic control. Train Operating Companies pay for the use of the line by the train/schedule. Each customer must have equal access, but with access determined by price (their Red Hot Smokin' Awesome Z Train equivalent pays more for a trip than a bulk train and less than an ICE, for example).

B&OCT worked somewhat like that when I was there. Foreign lines used the line to get between two places not related to B&OCT delivery, such as WAB, NKP, C&O, B&O, Soo Line, CGW, PRR on B&OCT. At times, Erie, Rock Island, and others showed up to use B&OCT because we were not a parking lot like the alternatives. I asked the accountant handling billing about that. He came in every day to take the previous day's trainsheets to his office, work them, and bring them back for storage. He told me that anything that didn't already have a trackage rights agreement would just be covered as a detour. If there was empty railroad and a train to run, just do it. He would pick up the move on the trainsheet and send a bill.

In Chicago back then, there were so many boomers (often canned for Rule G and back at work somewhere else the next day or so) that virtually any crew had somebody who was qualified on B&OCT. In almost EU fashion, yes, C&O and B&O owned B&OCT, but as a separate Chicago Switching District railroad, it was required to be a separate company with separate books. Everyone on B&OCT understood that the foreign trains were our customers as much as the folks whose cars were between a B&OCT engine and caboose.

The US has the emptiest railroads in the western world as a result of the way the system is set up now (and many appear to pursue even emptier yet). We do less with more than anywhere else by several metrics. The manager of the DB Berlin control center told me that his job was to run as many trains as possible, limiting empty railroad to the degree possible. You'll never hear that in the US.

The EU solution, like the B&OCT example, does not require separate ownership of trains and tracks, just separate companies. Deutsche Bahn is wholly owned by the German Government, gust as the Federal Railroad was. However it is now an infrastructure company, 14 passenger companies, and a freight company. Well over 100 Train Operating Companies, including the ones the government owns, use the network.

It can be done. However, for that model to work, operation cannot be chaotic as US railroads insist on pursuing. That takes a lot of knowledge that is not currently available in the industry and a lot of work, which is a four letter word (I heard all about that part when I was part of the team trying to lose the chaos at BN in the 90s).

TAW

Lackawanna484 Wrote:
-------------------------------------------------------
> rantoul Wrote:
> --------------------------------------------------
> -----
> > Long time ago shippers could direct the traffic
> > route, which carrier to use. Could/does this
> > business practice exist today?
>
> Nope. When bridge line rail companies competed
> for business, service was a lot better. Precision
> railroading in the 1940s and 1950s was often a lot
> better than precision railroading in 2017.

There is no precision in today's Precision Railroading. That term is merely used to deceive and promote; a marketing gimmick.

TAW



Edited 1 time(s). Last edit at 08/16/17 07:56 by TAW.

I'm starting to wonder if EHH's legacy at CSXT will be Open Access? With the trouble he is creating for business all around the eastern half of the nation, not to mention disruptions for the economy at large, and congress's penchant form knee-jerk legislation these days, I would not rule it out! I think the CEO's of the other railroads had better be scared what kind of political ramifications EHH's mayhem might bring.

Ted Curphey
Ontario, OR

EHH's precision railroading CSX style:

1) Close most of the hump yards.
2) Lay off an X amount of workers.
3) Make senseless reroutes.
4) Dispose of thousands of company freight cars and locomotives.
5) Blame traffic disruptions on rogue employees.
6) Quietly reopen a few critical hump yards.
7) Quietly pull some locomotives and cars out of storage.
8) Reroute the reroutes back to their old routes.
9) Illusion of change act is over, ride off into the sunset.

Not his usual playbook, it feels like this is where it heads eventually. Just a big illusion, except for the employees who get caught in the mess.

Posted from iPhone

WONK ALERT

The chemical industry won a ruling last year which could make Open Access for rails possible.

Some time in the future it may be possible to drop rights of way, signals, yards, etc into the equivalent of a limited partnership trust.

Huge tax benefits to the rail companies,share owners, execs,etc. And it would open the door to multiple companies operating on a piece of track. With their own or hired crews.

Walmart rail, Schneider rail, Covenant rail, etc.

I expect that will be here sooner than many of us expect.

Posted from Android

But, even with open access, the owner road dispatches it and that can be the dead mouse in the closet.

tomstp Wrote:
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> But, even with open access, the owner road
> dispatches it and that can be the dead mouse in
> the closet.

The experience with pipelines suggests the impetus becomes the sale of space on the pipeline. As TAW mentions above, there's a huge amount of surplus capacity on US rail lines.

To be clear, BNSF would no longer own or dispatch the lines. That would be done at the LP level where the incentive is to maximise revenue.

Posted from Android

As long as there are crews required I don't see the savings. JB Hunt or UPS isn't going to hire a bunch of people to sit in far away cities waiting to run their own equipment a limited number of miles to the next crew change. May as well just have BNSF hire and keep crews qualified. However once crews are not required and a train can be dispatched to run LA to Chicago over any railroad without worrying about changing crews then I see open access this as working.

Posted from iPhone

The savings can be extensive for an asset intensive industry like a railroad. You eliminate double taxation of earnings on use of tracks, for example. Big saving right there.

I'd be very surprised if the class 1 lines aren't playing with the numbers and the risks.

Posted from Android