Freight Recession??

[cirdan]

Oh, so you think the trucking companies are operating at a *loss* in order to keep the truckers working. So the trucking companies are leaving money on the table. Doesn't sound like their style, given the reputation for cutthroat mistreatment of workers, but I suppose that's a possibility.

Not all truck companies may be aware they are making a loss. Short term thinking and cut-throat compatition means they may be happy to recoup opex but aren't recovering capex.

 

[neroden]

Intermodal shipment of containers is up, so it is not that the freight railroad are losing business to truck companies moving containers.

OK, the world makes sense again. The trucking companies are putting the freight on the rails to save money.

It is the shipment of of bulk commodities that is down, especially coal.

Yep.

 

[jis]

As the oil market crashes further with Iran cranking up production and export, it is likely that there will be a downturn in oil shipments from internal sources too. It is already reported to be a bleak scene in the oil drilling business.

 

[Railroad Bill]

As the oil market crashes further with Iran cranking up production and export, it is likely that there will be a downturn in oil shipments from internal sources too. It is already reported to be a bleak scene in the oil drilling business.

And all those drilling & production company loan payments given by the big banks are due each month and the money to pay them is drying up. A major concern for the overall economy that could lead to another scenario similar to 2008. Whether the government will bail them out again is an important political question that should be addressed by the campaigns.

 

[jis]

Fortunately the amount of money involved is much much smaller, and these loans have been handled very differently by the banks.

 

[Bob Dylan]

Fortunately the amount of money involved is much much smaller, and these loans have been handled very differently by the banks.

As fact checkers say, True, but the same gang of sharks and crooks are still running Wall Street, Corporations and the Big Banks and nobody has gone to jail yet except that old crook Bernie Madoff, and that's only because he fleeced the rich and connected, not we the taxpayers!

 

[afigg]

News updates on the drop in freight train traffic and for NS, cost cutting plans, although the buyout attempt from CP is likely a major factor. Saw a story several days ago that BNSF has reduced its capital spending amounts for 2016, so less track work - and fewer improvements - may be ahead for 2016. OTOH, 2016 may the best year for Amtrak On-Time Performance in years.

Progressive Railroading: U.S. rail traffic continues slide in Week No. 3. Excerpt:

Total carloads for the week plummeted 19.5 percent to 237,190, while intermodal volume slipped 0.1 percent to 253,134 containers and trailers. Only one of the 10 carload commodity groups — miscellaneous, up 15.3 percent — posted an increase for the week.

Coal traffic plunged 35.8 percent to 74,128 carloads; petroleum and petroleum products were down 19 percent to 12,409 carloads; and metallic ores and metals fell 16.2 percent to 19,418 carloads compared with a year ago.

Railway Gazette: Norfolk Southern announces cost-cutting plan

Excerpts:

USA: Norfolk Southern Corp announced details of a strategic plan to become a 'faster, lower cost and more profitable railroad' on January 27, saying it expects to achieve annual productivity savings of $130m in 2016 and more than $650m by 2020.
....

• Disposal or downgrading of 2 400 km of secondary lines, with traffic diverted onto higher-density routes. Some parts of the system may be 'more economically operated in collaboration with short line rail carriers'.

Are there any secondary NS lines that Amtrak operates on that might get "downgraded"?

 

[neroden]

Amtrak operations on NS:

Chicago-Cleveland Water Level Route

Cleveland-Pittsburgh

Pittsburgh-Harrisburg

Alexandria-Charlottesville-Greensboro, and Charlotte-Atlanta-New Orleans (Greensboro-Charlotte is NCRR)

I don't think any of these are "secondary" in NS parlance. I suppose they might sell the final segment of track in New Orleans to the Public Belt but I doubt it.

There's also the second track Alton-St. Louis, which Amtrak sometimes operates on. I suppose NS might sell that to UP who owns the other track.

Oh yes -- and there's Petersburg, VA - Norfolk, VA. That *is* secondary and might be a target for selling to a shortline. If NS offers it for sale I would hope the state of Virginia would buy it.

----

I think the most likely target for NS to sell is the mess of lines in West Virginia (and also eastern Kentucky and far western Virginia) which are primarily coal lines. There are lots of these. A couple coming south from Pittsburgh, and far far more on a network extending northwest of Roanoke. There are probably 2400 km of lines just there.

 

[Acela150]

NS screwed the pooch big time. They "projected" big time work and that work went down the toilet. Hundreds if not thousands of guys are getting furloughed. Whoever is in charge of things like this should be in line for unemployment.. I swear it's being run by a bunch of dummies..

 

[neroden]

NS top management thought coal was going to make a big comeback.

Seriously. That's what they said a year or two ago.

 

[Just-Thinking-51]

NS top management thought coal was going to make a big comeback.

Seriously. That's what they said a year or two ago.

The coal mines are running flat out to get the last of the coal out of area, and NS see this as growth?

Back in May 2015 this question was brought up here.

http://discuss.amtraktrains.com/index.php?/topic/64054-questions-for-the-ns-annual-meeting/?fromsearch=1

I wonder if Anderson did ask?

 

[CoachSlumber]

Yes. There is a recession in freight. My terminal has furloughed about 15 guys with the start being 10. 3 Trainees were basically fired. More furloughs are coming too. I'm going to be one of them..

I think Norfolk Southern is cutting 4,000 jobs. In a word: Coal.

 

[neroden]

NS apparently did recognize that many of the Appalachian coal mines were running out, but they thought they'd be carrying coal from further away (transfers from the western lines, ports, etc.). What they hadn't figured out (although it's obvious if you run the numbers carefully) is that the coal power plants are closing: it's not economical for them to source coal from far far away.

 

[Eric S]

Fred Frailey has a post up on the TRAINS magazine website about how the drop in coal traffic may negatively affect three Amtrak LD trains (California Zephyr, Cardinal, Silver Star). I'm not sure if this is behind a paywall, so this link may not work for non-subscribers. http://cs.trains.com/trn/b/fred-frailey/archive/2016/02/02/3-amtrak-trains-in-jeopardy.aspx Essentially he feels that portions of those routes could be downgraded as coal traffic disappears - for the CZ, the Moffat Tunnel route west of DEN; for the Card, the Buckingham Branch Railroad; and for the SS, the stretch between Selma NC and Savannah (through Raleigh and Columbia).

I guess there are 2 questions that come to my mind here - first, how likely is it that these lines would be downgraded (or even abandoned)?, and second, how could/should Amtrak respond (reroute, discontinue, etc)?

I just sort of guessed this was the best existing topic - not sure if the Amtrak-specific nature means it should be a topic of its own.

 

[CCC1007]

I would guess, like Fred, that the affected trains will be rerouted.

 

[OlympianHiawatha]

There is absolutely no so-called "freight recession" in Oklahoma as at least the BNSF is shoving more trains than ever through here. As soon as one clears the signals in Norman, here comes the next.

 

[jis]

One possible consequence mentioned by Fred Frailey in his Trains column ...

http://cs.trains.com/trn/b/fred-frailey/archive/2016/02/02/3-amtrak-trains-in-jeopardy.aspx

 

[cirdan]

One possible consequence mentioned by Fred Frailey in his Trains column ...

http://cs.trains.com/trn/b/fred-frailey/archive/2016/02/02/3-amtrak-trains-in-jeopardy.aspx

I think he's taking an unncessarily dim view on this.

Freight by rail has always been a roller coaster story with booms following busts following booms.

From what I've learnt on this forum, the main problem for Amtrak as far as cooperation from the freight railroads is concerned is not one of "genuinely can't do" but more one of "don't want to". Think of the daily Sunset for example.

Generally, lull periods are good for punctuality, so from on operations point of view fewer trains means more trains on time. Frailey seems to be suggesting that the penny pinchers will be jumping in and cutting capacity very soon. I disagree.

One of the problems with railroads is that there is a huge lag between traffic and capacty. Thus clogged up and congested lines can take decades rather than years to get additional capacity. But on the other hand, excess capacity tends to survive until some costly repairs are required, which can also take quite some time. Think of the Raton route. If the accountants really trimmed capacity to actual needs this would have gone years ago. But whereas on paper you may like to allocate a fixed sum for maintenance every year, in reality you typically do next to nothing for quite a long time and then get hit by huge costs when some serious stuff needs replacing.

So a reduction in freight may mean more acpacity which won't be immediately consolidated, and maybe survive long enough to be saved by the next boom.

 

[neroden]

If Buckingham Branch decided to get rid of its part of the Cardinal route, I'm pretty sure Virginia would buy it. No risks there. Similarly, if UP did anything to dismantle the Moffat Tunnel route, I expect Colorado would buy it -- but they won't because they know they need a backup route. Dunno about the Star (South Carolina is not very rail-supportive).

 

[cirdan]

If Buckingham Branch decided to get rid of its part of the Cardinal route, I'm pretty sure Virginia would buy it. No risks there. Similarly, if UP did anything to dismantle the Moffat Tunnel route, I expect Colorado would buy it -- but they won't because they know they need a backup route. Dunno about the Star (South Carolina is not very rail-supportive).

Maybe they can worm their way through using things like TIGER grants for maintenance, as is happening on Raton Pass.

 

[WICT106]

If Buckingham Branch decided to get rid of its part of the Cardinal route, I'm pretty sure Virginia would buy it. No risks there. Similarly, if UP did anything to dismantle the Moffat Tunnel route, I expect Colorado would buy it -- but they won't because they know they need a backup route.

Agreed. Union Pacific has been keeping intact the Tennessee Pass route "just in case" there is need for an alternative route through the Rockies Front Range. I don't know how much maintenance UP has been doing on Tennessee Pass, though.

 

[PaulM]

Also, doesn't BNSF have trackage rights here?

 

[Eric S]

If Buckingham Branch decided to get rid of its part of the Cardinal route, I'm pretty sure Virginia would buy it. No risks there. Similarly, if UP did anything to dismantle the Moffat Tunnel route, I expect Colorado would buy it -- but they won't because they know they need a backup route.

Agreed. Union Pacific has been keeping intact the Tennessee Pass route "just in case" there is need for an alternative route through the Rockies Front Range. I don't know how much maintenance UP has been doing on Tennessee Pass, though.

Tennessee Pass is "out of service" but not "abandoned" - right?

Instead of doing anything to the Moffat Tunnel route, does this perhaps just push UP to abandon Tennessee Pass? Or keep Tennessee Pass but somehow downgrade the Moffat Tunnel route? (I don't know, just sort of guessing at options here.)

 

[chakk]

To reopen the Tenn Pass route would require major trackwork by UP, including reinstalling all signals, grade crossing protection, and some siding tracks

plus cutting down the many tree now growing between the rails.

 

[CHamilton]

Union Pacific cuts capital spending by 15%

UNION Pacific (UP), Unites States, plans to invest $US 3.75bn in 2016 which it says is around $US 550m less than it invested in 2015, representing a reduction of almost 15%.

UP suffered an 8% fall in net income last year to $US 4.77bn due to a 10% drop in freight revenue and a 1% reduction in other revenue. Freight wagon loadings fell by 6% in 2015 compared with a 2.5% drop in overall railfreight traffic in the US in 2015.