Freight Training For Railroads: Coping With The Boxcar Blues

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(Above) Former Pan Am Railways boxcars lettered for one of its predecessors (Boston & Maine) moves south through Scranton, Pa. on Train 458 on July 7, 2015. The cars have been re-stenciled for their new owner CAI Rail.

What A Trucker Can Teach The Railroad Industry

Probably the three most recognizable (and culturally as well as logistically significant) items in railroading are the locomotive, the boxcar and the caboose…. One has already disappeared from the railroad landscape and now another one is on the endangered list….

The story goes something like this: Boxcar availability on American railroads is at an all time low…. Shippers everywhere are upset…. Many of the boxcars that are on hand are getting close to their 50-year mandatory retirement age and new boxcars just aren’t forthcoming. The railroads say that building new boxcars isn’t cost effective and instead have chosen to focus their buying and building power on intermodal containers and tank cars for crude oil….

And that’s pretty much the dilemma that we’re dealing with….

And yes, there’s a few other details in this scenario that I’ll go over later in this article, but for now, that about sums it all up.

In analyzing all of this the first thing that comes to my mind is that it’s highly unlikely that you’d ever have this kind of problem in the trucking business…. Of course, that’s not to say that trucking is a perfect industry. Not even close to it, but the trucking industry strives for service levels of 100% and hits that mark 99.9% of the time…. That’s the first thing the railroads need to stop and think about very hard…. The name of the game is SERVICE.

At first glance at the color, this looks like just another everyday boxcar, but a closer look at the reporting mark shows that it’s been patched for its new owner…. TTX of the black & yellow “Railbox” boxcar fame.

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But getting back to the boxcars…. I’ve pointed out in the past, in several articles on this site, about all of the patched boxcars roaming the rails and it’s not just the shortlines and regionals either…. It’s all of the major Class 1s as well…. And I do mean ALL OF THEM.

There’s not a Class 1 railroad that isn’t running hundreds if not thousands of second hand freight cars, patched boxcars and other railroad equipment…. Don’t believe me, just look at any post on this site.

That’s not to say that it’s a bad thing, but it does go to show that the more things change and the more time marches on, the more some things stay the same…. In other words, “History keeps on repeating itself.”

The railroads say that the shortages are caused by operational problems at the individual railroads rather than having an overall shortage. They also claim to be eliminating traffic bottlenecks and making “other” improvements that will make for faster round-trip times for railcars to better meet the demands.

That’s half true in my opinion. The problems are caused by operational problems but the railroads need to understand that for every finger they point at someone else, there’s 4 fingers pointing back to them.

If you’re a railroader, regardless of how high up or down low you are on the totem pole you need to come to grips with the fact the YOU (meaning the railroads) are the ones the people see.

That means the shippers, the public, the government. Everybody. So you’re the ones people are going to blame and you’re the ones that are expected to handle the problems and that’s the just the way it goes. Nobody ever said that life was fair.

That being said, you’re also the one who‘ll get the credit when you handle the problem decisively and effectively….. Think real hard about that one too.

When it comes to carload service and/or car utilization the railroad’s service is extremely poor…. And has been for a long, long time. Decades, in fact. Loaded cars of all types can sometimes sit in yards and/or on sidings (sometimes for days) waiting for the next move – which all too often is just to the next yard and/or siding. And empty cars are usually even worse off. Most railcars spend more than 6 months out of the year waiting to be re-loaded. And that’s being nice in many cases.

Let’s contrast this scenario with the truckers, shall we…. Typically a truck trailer that empties out on Monday will be loaded Monday or the next day. That’s how the business works, trucks stay loaded and make money. It’s that simple.

The Southern Railway of British Columbia (SRY) heritage is evident in this now, patched for Norfolk Southern (NS) boxcar.

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But the railroads say that at $135,000 + for a new boxcar, the return on the investment is just too low…. In other words, the end doesn’t justify the means.

I say, how could boxcars not generate enough revenue when the railroads control the whole operation!? They order them, they route them, they switch them and they move them. It’s on their rails, with their own dispatchers and support crews, whoever, whatever…. And still they can’t make it work!?

Imagine what would happen if a trucking company said that its trailers weren’t generating enough revenue…. Most people would say that they should look a little harder at what their doing (or not doing)…. And then switch to a different trucking company.

God knows I want more than anything to see the railroads survive (and thrive). And as much as it breaks my heart to say this, sometimes you have to be willing to call a “spade” a spade…. Call it tough love…. That being said, the bottom line is this: The big railroads have become complacent and lazy and that’s a management issue, simple and plain. It’s also a recipe for disaster and long term takeover.

Conrail was a classic example of this. Conrail wanted little or nothing at all to do with anything that wasn’t running unit trains long distances. Here in Pennsylvania they were rumored to be intentionally giving customers on lines they didn’t want poor service so that they’d switch to trucks and Conrail could justify abandoning the line. Whether true or not, they succeeded in butchering their system so much that they put themselves in the price range of one CSX and one Norfolk Southern…. The rest as we know it is history…. I talk more about that in Sunday Train Summaries #1.

For now, I think that the railroads big, and maybe even a few small, need to learn what it means to hustle and start trying to compete with trucks and get these freight cars moving…. Ed Ellis said it in an issue of “Trains” way back in the 90s, Fred Frailey said it in several recent issues of “Trains” magazine and now I’m saying it here on “Trains21.org.”

It’s no mystery as to why the return on investment on these cars is so poor (it’s a self inflicted wound if you ask me). I was talking to the Foreman of a major customer on the (now) Norfolk Southern Sunbury Sub and he told me (without me actually asking him) that the railroad (meaning Canadian Pacific at the time) doesn’t care about service because they know that they’re going to get the business regardless.

Translation: “Customers have come to expect bad service.” I thought, WOW! There seemed to be no emphasis on the part of CP to fix the problem either, since apparently it wasn’t a problem to them.

Keep in mind that this is the same railroad that supposedly, along with Canadian National, is one of the two most customer oriented and focused railroads in North America.

In fairness to new owner Norfolk Southern, he also pointed out that NS has been pretty good so far. Kudos to you NS!

Lower freight volumes during the 2008 recession coupled with high prices for scrap steel hastened the boxcar’s decline and gave incentives for railcar owners to junk older boxcars.

Translation: “The railroads are making the same mistakes all over again.”

Shortly after the beginning of the Korean War in June 1950, America faced a boxcar shortage. In September, Col. J. Monroe Johnson, head of the Interstate Commerce Commission, blamed two main factors for the boxcar crisis: the demand was high and the railroads had been junking them faster than they were buying them.

Eventually the railroads did see the dilemma and ordered more cars, but by then they ran into another dilemma, a steel shortage, brought about in part by the Korean War.

What‘s the relation? When intermodal began to show promise in the 80s few railroads were willing to invest in the growing commodity, preferring, instead to focus on “cheaper & safer“ commodities like coal. Today, the war on fossil fuels sees the light of coal flickering out and containers are all the rage as railroads are depending on them to carry them into the future….

There’s no mistaking the TTX career once held by this now, Kansas City Southern (KCS) double-door boxcar.

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“Balance” is the operative word here and all too often railroads jump when they should proceed slowly and proceed slowly when they should be jumping.

The railroads say that building new boxcars isn’t cost effective and instead have chosen to focus their buying and building power on intermodal containers and tank cars for crude oil.

Sure, crude oil looks good now but as I write this the price of crude has fallen. Will it come back up?… Probably, but that doesn’t mean that the railroads should abandon anything and everything that isn’t crude or containers. I said it earlier in this article that history repeats itself and the railroads still aren’t learning that lesson.”

The problem continues to perpetuate itself because low demand for new boxcars prevents companies (like Greenbrier and National Steel Car) from scaling up production in a way that could bring the cost of new cars down which causes yet another dilemma….

Shippers say that higher boxcar hire rates would destroy the railroads’ cost advantage over trucks and cause them to put their freight on trucks. But the railroads say that either the rates have to go up or the price of a new boxcar has to come down, so what’s the solution?…

Step 1: Although I know this is just wishful thinking, the first and most obvious solution is that the government needs to get the hell out of the way and let the railroads (and business) do their job.

In typical bureaucratic fashion the federal government creates more problems than it solves. Get rid of the 50-year mandatory retirement for boxcars…. If the car’s still in good working order (or just needs minor maintenance to make it so) then there’s no reason to take it out of service.

There’s no age restriction on trucks. He or she can drive a tractor and/or pull a trailer from 1950 if it can pass a D.O.T. inspection.

Step 2: Railroads need to look very closely at their operations and fine tune them to the sharpness of a razor’s edge so that people, locomotives, freight cars, mainline tracks, sidings, every asset the railroad has is utilized to the fullest.

A great article that talks about this can be found here…. Check it out.

Step 3: Earth to railroads, start putting the “customer” back into customer service. Put the customer’s needs first. Learn to ask the question “What do we need to do to earn your business?” Instead of, “You wanted it when?

Step 4: If you have to dig a little deeper in the piggy bank for new cars then do it. Your shareholders will just have to cope and cut back their expenses. Buy a small amount every year and keep new equipment cycling through the system…. Just like most trucking companies do. You don’t need to rival the Pennsylvania Railroad in number of boxcars owned but you do need to provide your customers with adequate equipment that’s in good working order.

Step 5: Next load, any road…. Do the letters TTX ring any bells…. Revitalize the nationwide boxcar pool and utilize it the way it was supposed to be utilized. TTX is controlled and run by 8 North American Class 1s and a Class 2. Norfolk Southern, CSX, Union Pacific, BNSF, KCS, Canadian National, Canadian Pacific, Ferromex and Pan Am Railway.

The whole purpose of the arrangement was to pool necessary equipment and establish industry wide standards and yet instead of a nationwide boxcar pool, we have a nationwide boxcar shortage. It’s seems that somewhere along the way, the mission statement went the way of the caboose.

The nationwide boxcar pool?

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It all comes down to the fact that the railroads need to do whatever’s necessary (within reason) to provide the best level of service that it can to its customers….

I realize that it’s easier said than done and turning the tide isn’t as simple as closing your eyes, clicking your heels and saying, “There’s no place like home.” But if the railroads are going to survive and be profitable (and avoid long or short term takeover) they’ve got to be willing to move on many fronts at the same time.

In other words, railroads have to start creating their circumstances instead of reacting to them.

No one suggestion is going to make all of the difference, but taking action in several areas at once will. Railroads have to pool their resources and be flexible so that they can weather the challenges that always come up.

Maybe I’ll continue this conversation….

What A Trucker Can Teach The Railroad Industry:

Coping With The Boxcar Blues

Having been in the transportation business for over 20 years I’ve learned a lot of things and spent a lot of time around the railroads…. Having been on the receiving end of the backlashing railroad fan boys and railroad people alike have for trucks I have to say that when (and if) the railroads are ever ready to get serious about competing with trucks then they may want to start studying a few pages from our playbook…. Of course that means that the railroad chieftains and company execs may have to step outside of their cozy little network of corporate sycophants and listen to what a trucker has to say….

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Author:Railfan AC

AC is a U.S. Air Force Veteran, a long haul trucker, a transportation enthusiast and a lifelong lover of trains. AC's mission is to travel America documenting American railroading in the 21st century while educating those who want to know about the importance the railroads play in our daily lives including, but not limited to, the movement of goods, services and more.

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