No more charters & special moves: 3/28/18 Memo fr Anderson

[Seaboard92]

And the Bennet Levin Farewell to the E Units trip also bit the dust. No offense I'm pretty sure the sky could be falling.

 

[crescent-zephyr]

Why?

Seems like a great opportunity for someone such as yourself to start a company whose sole mission is to make moves like this happen without Amtrak.

 

[Seaboard92]

Why?

Seems like a great opportunity for someone such as yourself to start a company whose sole mission is to make moves like this happen without Amtrak.

The amount of insurance you need to run on freight railroads makes it cost prohibitive to do so. As much as I would love to do it and be the knight in shining armor riding in to save the day. That one is a bit over what I'm capable of.

Honestly if you ask me the economic impact of excursions is high enough that I think the federal government should underwrite the insurance cost. Which would lower the barriers in place that prevent excursions from occurring. Thus making it possible for brand new start ups to run a non Amtrak mainline excursion.

Thus giving us a complete free market in the excursion market by allowing for more competition. Amtrak's decision is actually hurting operators like the Virginia Museum of Transportation and the New Mexico Steam Locomotive Foundation (not sure in the official name) who have never ran a trip with Amtrak.

So under the new policy they are no unable to run a trip. And they've put millions into their engines, and marketing and now that's gone to waste. The government really needs to come in and help us.

 

[jis]

Why?

Seems like a great opportunity for someone such as yourself to start a company whose sole mission is to make moves like this happen without Amtrak.

I thought the issue was insurance. Small companies would find it quite impossible to get the necessary insurance. One of the primary functions of Amtrak has been to provide insurance cover.

For specific cases where a state institution is being harmed, shouldn't or coulrn't the state pick up the insurance, pending the various bodies involved in a federal cat being brought into alignment? Admittedly, it is hard for the feds or the states to do so suddenly in the middle of a fiscal year in which such has not been budgeted or appropriated.

 

[crescent-zephyr]

They are both able to run trips... They are not able to run Amtrak trips.

Why do you feel it is beyond you? You're quite passionate about it, as are others. (And let's be clear, I've been on these trips. I get it. 261 to Duluth, 765 around horseshoe curve, 611 around the Asheville loops, 844 denver to Cheyenne... I've invested thousands just in tickets to these locomotives in recent years).

What would it take to start such a company? What companies provide the type of insurance that is required?

I've seen ️very little concrete information, and a whole lot of "it can't be done" and "it's too expensive." That's a lie. I was told I would never see #4501 run again on the mainline. I was told I would never see the #611 run again period. (Yes im aware NS, Wick Moorman, things chaged, doors closed again..)

 

[crescent-zephyr]

And to be clear, im proposing a company that would be the middle man. #261 wants to run to Duluth? They contact "xyz rail logistics" and they provide the necessary insurance and coordination between BNSF and the 261.

The idea being... Such insurance is too expensive to purchase for 1 trip. Well if this xyz company is the middle man for 20 trips per year through various groups (new River, aaprco, etc.) that costs go down. Maybe it's more $$$ than what amtrak charged, but maybe it's still affordable?

I'm not sure what this company would need to provide... Amtrak inspected the equipment, provided inssurance, lovomotive, and operating crews. That's a big task.... but doesn't seem impossible.

Also... Seaboard I don't mean this as a challenge to you.. I hate the "well if you want to see that locomotive run why don't you volunteer and donate" crowd you see on train sites so much. I'm more asking a hypothetical question that maybe you have or others have the answers to.

 

[jis]

I have a related question. The current accident damage limit is $295 million per occurrence. Does this mean that a charter train has to carry insurance for $295 million or some very significant proportion of it? What is the amount of insurance that they have to carry to satisfy the host railroad? Clearly they would want the operation to be adequately covered to meet the no fault nature of the operating contract should something untoward happen. Anyone know what that number typically is?

 

[Seaboard92]

I get what you are proposing and I think something like that is truly needed. But unfortunately the coverage Union Pacific, CSX, and the others are asking for is so high that even with twenty or so operators signing onto it. It would not be a profitable business as the middleman.

That's why I think it should honestly be coming from the government because with them it doesn't matter nearly as much if it loses money. And also because at the beginning I doubt one could get all of the operators needed to lower the cost enough. While the government could handle the loss more then I could.

I've seen a lot of things now that I've been told would never happen run however. I didn't believe a Big Boy would grace the rails in my lifetime. And UP has made that happen. But I honestly think it should be a government ran program.

 

[crescent-zephyr]

Well this company could have funding provided by states that see the value... West Virginia being a good example.

Again... What kind of money are we talking about here? Do you know which companies even provide this type of insurance?

If it's 1 million a year... That's high but doable. If it's 100 million a year.... Now maybe that's indeed crazy high. Are there any public records to see what a group like Metra, Northstar Commuter, railrunner etc. Are paying for insurance each year?

 

[jebr]

I have no idea what Northstar has for insurance, but since it's operated by BNSF it may be something that they cover as part of the contract.

I'm not sure how much of a boon it is to the local economies. There might be an argument that it helps to preserve or experience history, but my understanding is most of the direct positions for most of these (or at least 261) are volunteer, so no direct jobs are created, and if it's a non-profit there's no corporate income tax. Thinking specifically for Duluth, while a last-minute cancellation will certainly hurt occupancy at local hotels, June is prime tourist season and if there was no 261 train booking hotels they'd likely be filled by tourists to the North Shore instead, perhaps spending about the same amount of money in the local community (if not more, since they may drive to nearby destinations or spend a couple days in town instead of just an overnight.)

I'm not completely against subsidies for it, but it seems like the same argument that's made to justify a lot of corporate and sports subsidies that don't really deliver on the benefits claimed. I'd be more receptive to the "helps people to experience history" argument, but I'm not sure how much that is worth to allow trains to run on commercial tracks versus having it either sitting in a museum or having a separate stub tourist track for it to operate on. Just my personal opinion, though.

 

[Seaboard92]

Well this company could have funding provided by states that see the value... West Virginia being a good example.

Again... What kind of money are we talking about here? Do you know which companies even provide this type of insurance?

If it's 1 million a year... That's high but doable. If it's 100 million a year.... Now maybe that's indeed crazy high. Are there any public records to see what a group like Metra, Northstar Commuter, railrunner etc. Are paying for insurance each year?

Now statewide funding would work till you have states like West Virginia. Wondering why they are helping 261 in Minnesota. But I see what you are going after.

I've never worked on the insurance side so I can't give you those numbers off hat but I do know the right person to ask. So when I see him I'll ask him about it. I'm mostly in operations and not the business side of charters.

So insurance is not exactly in my job class. I generally handle planning routes, cars, servicing, boarding, food, and stuff like that. My boss however would handle insurance.

 

[seat38a]

I keep hearing insurance is prohibitively high but not ONCE have I seen numbers. So how do you know its too high???

 

[Seaboard92]

I keep hearing insurance is prohibitively high but not ONCE have I seen numbers. So how do you know its too high???

The reason I know not to sound sarcastic is because it's the one thing everybody agrees on. In this industry almost everyone disagrees on everything but insurance being too high is one thing we all agree on. I want to say the freight railroads require something close to what Amtrak carries for themselves

 

[snvboy]

But what's the number? Too high for one can be entirely reasonable for another. So, does anybody know the actual insurance requirements? Maybe have an actual quote or COI to share?

 

[cpotisch]

But what's the number? Too high for one can be entirely reasonable for another.

Charter groups tend to be pretty small. It's not difficult for premiums to be out of reach or close to it for the vast majority of charter them.

 

[seat38a]

But what's the number? Too high for one can be entirely reasonable for another.

Charter groups tend to be pretty small. It's not difficult for premiums to be out of reach or close to it for the vast majority of charter them.

If you can't afford insurance for your car, then you should not be driving. If you can't afford insurance for ...... then you should not be ..... (Fill in the blank. Works for A LOT of situations.)

 

[jis]

I believe Amtrak is mostly self-insured. They carry only an excess insurance policy (i.e. and extremely high deductible policy which tends to cost less) with some reinsurer, I forget which one off the top of my head. Of course things may have changed since I looked at it last.

Smaller outfits, even 20 charter trips pooling together, by themselves would be unable to take advantage of very high deductible policy, and costs go up dramatically as deducitbles go down. I think that may be the crux of the problem.

 

[seat38a]

I keep hearing insurance is prohibitively high but not ONCE have I seen numbers. So how do you know its too high???

The reason I know not to sound sarcastic is because it's the one thing everybody agrees on. In this industry almost everyone disagrees on everything but insurance being too high is one thing we all agree on. I want to say the freight railroads require something close to what Amtrak carries for themselves

"I want to say" is not factual info, just conjecture on your part. Again, lots of talk about its unaffordable but no actual numbers.

 

[railiner]

Okay, I understand that the insurance costs are prohibitively high. But, I am asking why? Why can small "Ma&Pa" companies operate just a couple of buses for charter that carry upwards of 56 passenger's. What is their casualty record compared to charter train excursion's, on a per person basis? Or even private auto insurance? It mystifies me, unless it is just an easy means for freight railroads to deny their operation, as an annoyance....

 

[cirdan]

Why?

Seems like a great opportunity for someone such as yourself to start a company whose sole mission is to make moves like this happen without Amtrak.

I thought the issue was insurance. Small companies would find it quite impossible to get the necessary insurance. One of the primary functions of Amtrak has been to provide insurance cover.

For specific cases where a state institution is being harmed, shouldn't or coulrn't the state pick up the insurance, pending the various bodies involved in a federal cat being brought into alignment? Admittedly, it is hard for the feds or the states to do so suddenly in the middle of a fiscal year in which such has not been budgeted or appropriated.

What about people such as commuter rail agencies, who in some cases, not entiurely unlike Amtrak, don't actually own the tracks they run on.

Does their insurance cover operations outside of their regular routes.

Would there be an opportunity here for the more innovative among them to step up and venture into the PV market?

 

[crescent-zephyr]

The commuter lines can run private charters on their own lines. That's how the #765 trips ran last year and will run this year on the Metra line from Chicago to Joliet.

Outside of their own lines I'm not sure how that would work.

That's kind of what im saying... There is business opportunity there. You need the right people with industry knowledge and connections, but the need is there.

 

[crescent-zephyr]

But what's the number? Too high for one can be entirely reasonable for another.

Charter groups tend to be pretty small. It's not difficult for premiums to be out of reach or close to it for the vast majority of charter them.

If you can't afford insurance for your car, then you should not be driving. If you can't afford insurance for ...... then you should not be ..... (Fill in the blank. Works for A LOT of situations.)

These groups have insurance. I can't imagine the "regular" insurance for firing up a steam locomotive and pulling a passenger train is cheap. These groups also spend around 1 million dollars just to restore the locomotives. These aren't small little private clubs playing train...

There are specific insurance requirements for operating on mainline railroads. It sounds like the mainline railroads want you to have insurance to cover all costs for anything that could possibly happen. (Entire train falls off bridge and contaminates water supply? Idk how they judge the worst case scenario). That's gonna be a high price tag no doubt. But again... No one seems to actually know what those requirements are or approximately what they cost.

 

[jis]

I would not go so far as to say "no one knows". Surely the guys who actually write the check for such things know. The problem we are facing in this small discussion group here is that no one participating here is willing to share such information even if they know. They may have good reasons for such reluctance. i don't know what kind of non-disclosure agreement goes with specific contracts regarding pricing.

About steam excursion, I was sitting next to the Chairman of AAPRCO at the Gala Dinner at the Chicago Spring Meeting of RPA. He mentioned in passing that most if not all steam excursions operate under the umbrella of either host railroad provided insurance or Amtrak's Insurance. None of them according to him actually carry their own self-standing operating insurance that would independently satisfy the host railroad.

I have no idea how true or false that assertion is. Just mentioning what I heard.

 

[crescent-zephyr]

I'm pretty certain his statement is correct.

Norfolk Southern provided insurance for its "21st century steam" partnership with 765, 4501, 611, etc. When I rode the last 611 trips out of Roanoke, I heard multiple car hosts say "NS isn't going to pay for the insurance anymore" - they were just car hosts but that's something.

But a place like Strasburg, TVRM, etc. Etc. Do carry their own insurance. It's just not enough to cover mainline requirements. Again... I can't imagine such an insurance is cheap to begin with.

I actually think nobody knows because it hasn't been done.

 

[CHvision]

http://wvmetronews.com/2018/05/02/new-river-train-back-in-business/

New River train is back as the major event