Freight Recession??

[andersone]

I live in a world that has sadly watched coal disappear. There are some serious power plants on the Ohio River not thirty miles from here that actually had a seventeen mile conveyer system deliver the coal directly to the plant from the mine. The coal was dirty so they shut the system down,,, no more coal mining jobs,

Mother said the only consistency in life is change. Just as we have lost our black funded world, military bases have shut down, Portsmouth no longer has a single shoe factory when at one time more shoes than anywhere else on earth,,, Darwin proved it a long time ago,, adapt or die

doesn't mean its not sad, doesn't meant its isn't good, just means it is different

 

[JoeBas]

Pursuant to this point, after leaving Denver on 5 last week we did not pass another freight train on the line until after Grand Junction. There was one small yard train in the yard in Granby, and the only other train he saw that entire distance was 6 heading east near Dotsero. We did not have to go in the hole at all until we were just east of Reno!

 

[neroden]

I really really hope that the states realize that this is an opportunity to own their own lines. Cheaply. Unfortunately we've had a lot of penny-wise pound-foolish governments which avoid "spending" and sacrifice highly profitable opportunities as a result.

 

[Asher]

Port of Los Angeles had its busiest Jan. In 109 years. Those containers are still clogging the harbor.

 

[CCC1007]

The talk here is mostly about the coal lines used in other parts of the country that are hurting for traffic at the moment, as coal is on its way out in many areas.

 

[Eric S]

I really really hope that the states realize that this is an opportunity to own their own lines. Cheaply. Unfortunately we've had a lot of penny-wise pound-foolish governments which avoid "spending" and sacrifice highly profitable opportunities as a result.

Like IL not purchasing CHI-STL (or at least most of it) in the 1990s, among others of course.

 

[Bob Dylan]

While the Coal Trains and Freight in the NE is down, UP is still running numerous long Freights and Rock Trains 24/7 here in the SW.

Lots of stuff still coming out of Mexico much to the Donald's dismay!

 

[OlympianHiawatha]

BNSF just parked about 100 Engines (they look like mostly long-in-the-tooth dogs) in OKC claiming they were not needed because of the so-called freight slowdown. Yet more and longer trains than ever pass through Norman every day and night on the Red Rock Sub.

 

[MikefromCrete]

I really really hope that the states realize that this is an opportunity to own their own lines. Cheaply. Unfortunately we've had a lot of penny-wise pound-foolish governments which avoid "spending" and sacrifice highly profitable opportunities as a result.

Like IL not purchasing CHI-STL (or at least most of it) in the 1990s, among others of course.

Right, Illinois should have purchased CHI-STL when it was owned by a struggling short line. Good luck trying to get out of UP's cold hands now. As to purchasing other routes, the big "freight recession" is on coal-hauling lines in Kentucky, Virginia and West Virginia, most of which have limited use for passenger service.

 

[Metra Electric Rider]

I just read an article about major financial institutions no longer funding coal investment, I would assume due to research and such information as they have.

The CN tracks near me seem to have slightly lighter freight traffic, less coal traffic and fewer long, long trains, but there are still numerous night freights (CONO and Illinois Service have the tracks when I'm in a position to see for the most part) which rumble through the night.

 

[afigg]

The decline in freight traffic continues with even a dropoff in intermodal traffic in recent weeks.

Railway Age (April 13): Freight traffic continues on downward slope. Excerpts:

Freight traffic in the month of April, at least so far, isn’t showing signs of improvement. For the week ending April 9, 2016, carloads and intermodal units were down 20% and nearly 8%, respectively, the Association of American Railroads (AAR) reported on April 13.

For this week, total U.S. weekly rail traffic was 479,059 carloads and intermodal units, down 14.1% compared with the same week last year.

,,,,

Two of the 10 carload commodity groups posted an increase compared with the same week in 2015. They were miscellaneous carloads, up 20.7% to 9,274 carloads; and motor vehicles and parts, up 0.9% to 17,986 carloads. Commodity groups that posted decreases compared with the same week in 2015 included coal, down 44.9% to 58,166 carloads; petroleum and petroleum products, down 22.3% to 11,910 carloads; and grain, down 20.5% to 18,871 carloads.

For the calendar year to date, however, intermodal traffic is still up a little.

For the first 14 weeks of 2016, U.S. railroads reported cumulative volume of 3,372,955 carloads, down 14.2% from the same point last year; and 3,589,027 intermodal units, up 0.8% from last year. Total combined U.S. traffic for the first 14 weeks of 2016 was 6,961,982 carloads and intermodal units, a decrease of 7.1% compared to last year.

The decline in coal traffic is getting worse if it is down 44% for the week. In the "missed it by that much" category, the biggest coal mining company in the US is filling for bankruptcy. Bloomberg news: The Coal Market Bets Everybody Got Wrong. (umm, no, I'm sure one can find those who predicted a rough road ahead for coal with the accelerating shift to natural gas power plants and wind turbine farms).

A year and a half ago, the chief executive officer of America’s biggest coal miner predicted a bottom to the commodities rout that had dragged prices to their lowest level in a decade.

Peabody Energy Corp.’s Greg Boyce said in an interview at the time that the fundamentals for coal were better than some feared, that supplies would soon shrink and the industry would head into an “inevitable” rebound. Prices instead continued to slide, production remained high, and on Wednesday, Peabody said it had joined rivals including Arch Coal Inc. and Alpha Natural Resources Inc. in filing for bankruptcy.

Meanwhile. Amtrak's On-Time Performance numbers for March which have been posted to the Route Performance stats on the website are by and large pretty good. The long term challenge is the inevitable cutting of capital spending by the freight railroads overall and downgrading of some lesser used freight routes.

 

[afigg]

An update on the latest freight traffic numbers. Still down from 2015 as expected but intermodal traffic is down as well. So good news for Amtrak On-Time Performance, not so good for sustaining freight railroad capital plans for track improvements and capacity upgrades.

Railway Age: Rail freight traffic: Same stuff, different week

North American rail freight traffic remains in the doldrums, the Association of American Railroads reported for the week ending May 21, 2016.

Total U.S. weekly rail traffic was 506,983 carloads and intermodal units, down 8.5% compared with the same week last year. Total carloads for the week ending May 21 were 244,290 carloads, down 10.6% compared with the same week in 2015, while U.S. weekly intermodal volume was 262,693 containers and trailers, down 6.5% compared to 2015.

Four of the 10 carload commodity groups posted an increase compared with the same week in 2015. They included miscellaneous carloads, up 20.7% to 10,071 carloads; nonmetallic minerals, up 4.7% to 37,326 carloads; and motor vehicles and parts, up 2.1% to 19,067 carloads. Commodity groups that posted decreases compared with the same week in 2015 included coal, down 28.8% to 66,709 carloads; petroleum and petroleum products, down 21.5% to 11,593 carloads; and forest products, down 8.3% to 10,341 carloads.

 

[dlagrua]

In general the USA is in a recession and we are importing less good from China. Additionally the recent decline in the price of oil has cut back some US production but as the price escalates over $50 a barrel this may change. Add in the EPA closing of many coal mines and that equals reduced freight traffic and revenue. It is a cycle that like many other things will change with the eventual resurgence of American manufacturing. As for the effect of reduced freight; except for lines in WV, some of which have already been mothballed, the effect on passenger rail may not be negative. Amtrak pays for track use and that is a revenue constant that the private railroads can count on.

 

[jis]

Perhaps you use a different definition of recession from the professionals in the field?

One problem with resurgence of manufacturing theory is that a lot of it will be done by robots, not by humans even if it comes to pass.

In business parlance Amtrak's trackage charge would be characterized as "bad revenue" by itself, since absent other reason to maintain the facility it would not pay for doing so. It is an incremental cost based number allegedly, but is contested by the host railroads. It basically has to do with host railroads fulfilling an obligation and does not really pay for much on an ongoing basis.

 

[andersone]

I live in the former coal world,, and I would like to point out that the switch to natural gas had the greatest impact on the demand for coal, not the EPA. Sometimes it is easier to paint with a broad stroked rather than the finish brush

One not need read any further from this Forbes piece to see the fallacy of the EPA argument. Certain politicians point vividly at the CIA, but there are few of those we can take at face value. Spin is Not truth ,,,,

 

[Acela150]

Here's a story about Eddystone Rail. A terminal that had a train a day of Crude oil come in. That ended in January as well as some jobs at my terminal..

http://www.reuters.com/article/us-usa-crude-delta-idUSKCN0YI0EA

 

[dlagrua]

Perhaps you use a different definition of recession from the professionals in the field?

One problem with resurgence of manufacturing theory is that a lot of it will be done by robots, not by humans even if it comes to pass.

In business parlance Amtrak's trackage charge would be characterized as "bad revenue" by itself, since absent other reason to maintain the facility it would not pay for doing so. It is an incremental cost based number allegedly, but is contested by the host railroads. It basically has to do with host railroads fulfilling an obligation and does not really pay for much on an ongoing basis.

Less than 3% economic growth over the past 8 years certainly cannot be considered a good economy.

I theorize that manufacturing will eventually return to the USA as the 94 million Americans not participating in the work force do not have the means to fuel a strong retail segment. Even if you sell lower cost goods made in China; eventually you run out of buyers. Will automation/robotics play a big role in bringing back manufacturing? Absolutely but manufacturing will still create some jobs!

As for the revenue derived by the host railroads for allowing Amtrak trackage rights; whether they would be better off with it or without it is a difficult question to answer.

 

[jis]

OK, so you agree that there is some growth and therefore no recession. Good!

 

[cirdan]

One problem with resurgence of manufacturing theory is that a lot of it will be done by robots, not by humans even if it comes to pass.

Automation has already reduced the workforce required and hence brought down the costs of virtually everything over the past 50 years or so.

Robots are just the next step along that chain.

For many CEOs, offshoring is the lazy way to save money. Rather than going in and analyzing work patterns and flows and innovatively finding ways of becoming more efficient, they take structures as they are and transfer them to a low cost country while preserving the inefficiency - if not adding to it as if you are working on different sites and different continents you increase the communications and coordination overhead and soon end up with entire departments of people making sure things fit together that previously would have fitted together without anybody checking them out.

But when you really go in and seek to automate, you ultimately realize that a robot in China is not significantly cheaper than a robot in the US, and it may thus make sense to bring that manufacturing back closer to the market.

However, having said that, the totally automatic factory is still very much a utopia in all but maybe a handful of very special applications, and will remain so for at least another decade. Thus removing some of the costs of labor may indeed make the remaining jobs more competitive and bringing home manufacturing will indeed lead to a net increase in employment.

 

[jis]

Yup as long as the cost of Automation + cost of residual labor in the US is less than cost of automation + cost of transport + cost of residual labor say in Mexico or China remain less, those residual labor jobs will move back to the US over the next decade, and as you say in parallel the need for residual labor will keep going down. It will never become quite zero but it will keep going down faster initially and infinitesimally slower eventually.

So there will be a period when many thousands of additional jobs might materialize on shore, but probably not many hundreds of thousands, at least initially, but then they will level off and then start declining again, while a growth starts in higher skill level jobs in the area of manufacturing, maintaining and running automation systems. But this pool will not be quite as large as the pool that was needed to actually do the jobs that these automation systems will be taking over. In any case these jobs will require significant retraining to absorb people from their previous jobs into them. However, all this is happening while the potential work force is growing due to natural population growth. The question is how do we keep all of them gainfully employed. It is a serious question that is not being addressed at present.

So, even without totally automatic factories we are in for a bit of a mess I am afraid.

 

[Bob Dylan]

Yep, the days of the $40 an hour Miner,Assembly Line Worker,Middle Level Manager etc. are over, hence the Vanishing "Middle Class" that the Politicians and the Merlin's,er Economists are babbling about.

The biggest problem is that we are going to face is what to do for the Millions of More College Grads that are loaded down with Student Loan Debt and can't find decent paying jobs.

Look at the fierce opposition to the $15 an hour Minimum Wage that the 1% and the T-publican politicians are mounting! ( a whole $30,000 a year, such Oppulence, that won't even rent an apartment in those Sodom and Gamorrahs New York or San Francisco!)

Hence the appeal of what would in the past have been fringe candidates like Lying Donald ( Trust me, it'll be Huge!) and Crazy Bernie!( Free College,$15 bucks an hour wage, Health Care for all etc.)

 

[Eric S]

Less than 3% economic growth over the past 8 years certainly cannot be considered a good economy.

I theorize that manufacturing will eventually return to the USA as the 94 million Americans not participating in the work force do not have the means to fuel a strong retail segment. Even if you sell lower cost goods made in China; eventually you run out of buyers. Will automation/robotics play a big role in bringing back manufacturing? Absolutely but manufacturing will still create some jobs!

As for the revenue derived by the host railroads for allowing Amtrak trackage rights; whether they would be better off with it or without it is a difficult question to answer.

Less than half of the 94 million (ish) people out of the workforce are between the ages of 25 and 65. So you're really looking at 40-some million of typical working age who are out of the workforce. But that number includes the people who have disabilities that make it impossible to work, parents who choose to stay at home, and others who would not be in the workforce even in an amazing/booming economy.

So, no, not 94 million, not even close.

 

[jis]

Yes. I was going to mention that too. Now that you mention it, the actual number for April '16 can be found at: http://www.bls.gov/news.release/empsit.t01.htm

The number of people who are not participating in the labor force at present for various reasons like the ones mentioned above is a bit over 94 million, and no amount of manufacturing or any other jobs coming back is going to dent that number in a major way. It might move a few million this way or that. But no more than that. Employment population ratio typically hovers around 60% +/- 5 percentage point. As more of the baby boomers pass into retirement this ratio might actually decrease a little over the next decade or so. Part of the reason that it is not recovering as fast from the drop during the Bush recession may be because of the developing demographic situation as the baby boomers start passing into retirement age. The early boomers have already passed it and the actual big population wave of the middle boomers is approaching that age fast. OTOH, some may not be able to retire even though they wish to due to the miserable state of their retirement savings. So who knows? We'll see.

Here is an interesting article on this subject: http://www.businessinsider.com/employment-to-population-ratio-is-misleading-2014-2

BTW, it is probably time for a branch of this thread to move on to Random Discussions.

 

[cirdan]

The very fact that there is illegal immigration and that there is unskilled immigration show that the need for manual labor is far from dead.

The challenge though is how you can get long term unemployed people into those jobs. Is it a question of lacking skills, of lacking motivation, or that just living off foodstamps may be easier than working hard for a poor salary?

These are issues that need to be addressed. The situation is complex and multi faceted and the solutions being peddled by politicians do not fully address the situation. Not everybody on foodstamps is lazy or unwilling to accept new challenges. Not every rich person is lacking in empathy or interested in keeping the working classes down. Politicians who trot out such phrases are not contributing to the solution.

 

[DryCreek]

What would be great is if the slowdown in freight traffic could somehow be turned to benefit passenger rail. A recurring pipe dream of mine is that some young and enterprising billionaire with more money than common sense buys a couple of RDC's and has a regional rail service between, oh say, Fort Worth and Waco. It would have stops all along the route like Benbrook, Burleson, Joshua, Cleburne, Meridian, Clifton, Valley Mills and any other town willing to throw up a platform. Later than can expand from Dallas into deep East Texas and maybe even Shreveport. As more and more rebuilt RDC's become available they can then expand into parts of under-served West Texas. Heck, maybe even some older Brill Bullets and old petrol Buttheads and Doodlebugs can be found and restored for short collector runs between Fairfield, Teague and Mexia into Waco?

I know, I probably have a better chance of waking up pregnant tomorrow than that ever happening, but one can dream, can't they?