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Rail Industry Question
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RookieRailer
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Rail Industry Question
 
« on: Oct 26th, 2005, 8:34pm »
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Here is the question, I understand there are many levels to this question, so please keep in mind my handle.
 
As an alternative to Long Haul Trucking, can anyone buy a locomotive(s), freight boxes, negotiate trackage rights and start their own rail service?  
 
Any suggestions for additional information would be greatly appreciated.  
 
Rook


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toddsyr

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Re: Rail Industry Question
 
« Reply #1 on: Oct 26th, 2005, 8:44pm »
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I'm sure there are many here who would know more about this than I, but I'd imagine the trackage rights are the toughest part, providing you have alot of cash for the needed equipment.

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RookieRailer
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Re: Rail Industry Question
 
« Reply #2 on: Oct 26th, 2005, 9:23pm »
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Thanks for the response, toddsyr.
 
 Pertaining to trackage rights, how would they rate that?  By the mile? Time?  Should I just look up BNSF in the phone book and ask "How much for time on your tracks from Houston to Fort Worth?"  
 
Rook


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George_Harris
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Re: Rail Industry Question
 
« Reply #3 on: Oct 26th, 2005, 9:31pm »
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You are right.  There are many levels to the question.  
 
Permission to do this sort of thing is being proposed in several parts of Europe.  It has been given the name "open access"  At this point it appears to be running into many difficuoties.
 
Since the railroads in the US own their own tracks, you would have to convince them that you are not part of their competition.  Otherwise, you will not be running on their tracks.  Since a lot of main lines are near capacity, you migh find yourself having to spend major bucks on track that would not be yours so you would have no asset to reclaim if your operation ceased or moved.  
 
Generally there are two forms of agreements:  Haulage rights and trackage rights.  
 
In a haulage rights agreement, and I believe this is the for of agreement that KCS has for operation over the IC tracks between Hattiesburg MS and Jackson MS, the owning company operates the trains of the tenant company, usually with their own power, but it could be with tenant power.  It may even be that your cars would just be put in a train operated by the owner.  There are many forms of these agreements.
 
In a trackage rights agreement, you have the right to run your own trains with your own crews on somebody else's track.  This is done according to their rules and with them doing the dispatching.  When the two lines are competitors this can lead to some real fun and games.  How much clout you have to get your trains priority can really affect how well these things operate.  
 
Historically thaere have been and still are multiple forms of trackage rights agreements.  These things were usually negotiated with various costs included and then went to the Interstate Commerce commission in the past, now the Surface Transportation Board for approval.  Normally they consist of:
 
A percentage of the value of the facilities being used, usually based on the assets' book value, with the your cost usually based on the ratio of your traffic to total traffic on the line.
A proportion of the maintenance costs and taxes based on the same ratio.
Full cost to you for providing any unique facility that would not exist but for your traffic.  
 
Incidentially, for a crossing of the tracks of two railroads, the one that got there second, the "junior" road pays all costs of maintaining the crossing to a condition satisfactory to the railroad that got there first, the "senior" road.  
 
George


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toddsyr

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Re: Rail Industry Question
 
« Reply #4 on: Oct 26th, 2005, 9:43pm »
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on Oct 26th, 2005, 9:23pm, RookieRailer wrote:       (Click here for original message)
Thanks for the response, toddsyr.
 
 Pertaining to trackage rights, how would they rate that?  By the mile? Time?  Should I just look up BNSF in the phone book and ask "How much for time on your tracks from Houston to Fort Worth?"  
 
Rook

 
You're welcome, and welcome to Railfan Net. Mr. Harris's reply covers it better than I would've. It can get very complicated as he pointed out. Is this just a dream of yours, or something that may actually come to fruition?


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RookieRailer
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Re: Rail Industry Question
 
« Reply #5 on: Oct 26th, 2005, 10:34pm »
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toddsyr,
 
Part dream, but wanted to take a look at the situation before the family business dives back into Long Haul Trucking.   At $3/gallon over the road is it more safe/&economical to haul 6 trucks a week or run 1 train every week or two weeks.
 
Our operation, years ago, recieved rail loads from Class 1 service, but as I remember it was not very reliable due to the fact that our products are perishable.  Hence the desire to "own" the supply system.  
 
Our company has some experience in Long Haul Trucking as support for our local distribution business.  As we operated, we did a little better than break even, capital expenditures were needed to keep efficiency, instead the capital was spent on the core business.  But... as we see freight costs (outsourced) we feel from a service and cost perspective that we can do better in house.
 
George:  wow, that is quite a bit for me to chew on.  I am presently trying to pull the Astros through Game 4.


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RookieRailer
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Re: Rail Industry Question
 
« Reply #6 on: Oct 26th, 2005, 10:35pm »
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By the way... was this the right forum to post this in?

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electro soundwave
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Re: Rail Industry Question
 
« Reply #7 on: Oct 26th, 2005, 10:47pm »
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It wasn't but don't worry. It'll be moved to the correct forums eventually. Oh and Don't worry about the Astros. I think that the White Sox will take good care of them.  

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SCL/L&N Family Lines
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toddsyr

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Re: Rail Industry Question
 
« Reply #8 on: Oct 26th, 2005, 10:51pm »
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on Oct 26th, 2005, 10:34pm, RookieRailer wrote:       (Click here for original message)
toddsyr,
 
Part dream, but wanted to take a look at the situation before the family business dives back into Long Haul Trucking.   At $3/gallon over the road is it more safe/&economical to haul 6 trucks a week or run 1 train every week or two weeks.
 
Our operation, years ago, recieved rail loads from Class 1 service, but as I remember it was not very reliable due to the fact that our products are perishable.  Hence the desire to "own" the supply system.  
 
Our company has some experience in Long Haul Trucking as support for our local distribution business.  As we operated, we did a little better than break even, capital expenditures were needed to keep efficiency, instead the capital was spent on the core business.  But... as we see freight costs (outsourced) we feel from a service and cost perspective that we can do better in house.
 
George:  wow, that is quite a bit for me to chew on.  I am presently trying to pull the Astros through Game 4.  

 
There are many variables at work here. Exact points of origin and destination are vital factors. Is there rail line between these two points? Is it unused and available? If not, who uses/owns it and are they willing to set up a track agreement? This barely scratches the surface. There is at least one gentleman on here who has expertise in trucking and rail. I'll try and bring this to his attention. If he decides to delve into this, be prepared for alot of information exchange. Without knowing all the particulars, I'd say utilizing existing Trailer On Flat Car service or containers would be your best bet.


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toddsyr

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Re: Rail Industry Question
 
« Reply #9 on: Oct 26th, 2005, 11:02pm »
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Electro_Soundwave, I was under the impression any topic was allowed in the Concourse. Sorry if I'm wrong. What would've been the best forum for starting a new rail line? Thanks for filling me in, Todd.

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electro soundwave
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Re: Rail Industry Question
 
« Reply #10 on: Oct 27th, 2005, 12:30am »
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I would have thought that this would go under Railroading. But then again, I may(probably am) be wrong.  
 
P.S. GO WHITE SOX!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


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SCL/L&N Family Lines
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Re: Rail Industry Question
 
« Reply #11 on: Oct 27th, 2005, 1:28am »
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I agree now that you mention it. Railroading would be an excellent forum for this discussion. Right on topic. I just figured The Concourse was for any topic of any kind. If I'm wrong, please tell me. I would never be offended by someone steering me in the right direction.

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CandOFan4Ever
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Re: Rail Industry Question
 
« Reply #12 on: Oct 27th, 2005, 9:19am »
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Rookie, since your business deals with perishable items, food I presume. You guys should invest in some MRBCs. In other words, a few mechanically refridgerated boxcars would be suitable maybe. I would suggest anyone from Pullman Standard to American Car Foundaries if you guys can afford one, two, or three cars.

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Re: Rail Industry Question
 
« Reply #13 on: Oct 28th, 2005, 2:12pm »
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on Oct 26th, 2005, 10:34pm, RookieRailer wrote:       (Click here for original message)
....Part dream, but wanted to take a look at the situation before the family business dives back into Long Haul Trucking.   At $3/gallon over the road is it more safe/&economical to haul 6 trucks a week or run 1 train every week or two weeks..... 

 
R.R. First order of business: A hearty welcome! Enjoy this virtual University of Rail (and other things) Transport. Prof. Harris provided an excellent account of the realities....
 
I'm an (aging) freight hand. I've seen your circumstances before. I'd suggest: Have a few lunches, or a coffee at the least, with a rep. from, say, full service leasing provider, P----- , and dedicated/ contract motor carriers. Both can work with long haul, termperature controlled movements. (With motor carriers, it is much like finding the right specialist. Some know all there is ever to know about "reefer" moves.) The option suggests, of course, whatever to do with an enroute, 0230 HR breakdown at Kit Carson, CO. There's other options, too, including long term lease, owner operator equipment....
 
Shoot me a p/m or e-mail, if need, so we don't turn Railfan Net into chatter from a Truck Stop!
 
........................Vern..............Bel Air, MD


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Ticket Agent serving...Pacific Stage Lines...Washington State System...Mt. Hood Stages...Pickwick Stages...Transcontinental & Western Air Lines.... Admitted Gold Bug..... Observant Orthodox Mossback..... H.M.R.A.O. Curmudgeons......
1oldgoat
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Re: Rail Industry Question
 
« Reply #14 on: Apr 27th, 2008, 12:31pm »
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As far as going back into truckin' vs. rai'roadin'-  during my career (begun in '6, I've seen a lot of changes.  One of the biggest has been the rail industry's resurgence.  A big part of that has been intermodal.  Currently, the railroads' biggest customers are the trucking companies.  Take the price of fuel, shortage of truck drivers, and all, I predict the more trucks will be put on the rails.  But this is just for long-haul freight.
 
Railroads don't seem interested in short hauls (anything under 600-800 miles), and most merchandise (not bulk commodities like coal, grain, etc.) is short haul.  So something like 2/3 to 3/4 of the merchandise will continue to go by highway.  
 
There is no doubt that the railroads, with some fresh thinking, could make big in-roads (sorry for the pun) into the short haul business, but with many mainlines at or near capacity this won't happen anytime soon.  
 
However, there are always the unknown variables.  At what price is oil going to peak?  How long can the US sustail the trade imbalance before it has a serious impact on how we live and do business?
 
It comes down to the old saw, "Ya place yer bets and takes yer chances".
 
Good luck!


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