5.10.04

THOSE CROWDED RAILS. The Noble Pundit has discovered Photon Courier's coverage of the meltdown on the freight railroads, and he offers a few comments of his own.
Basically, the gist of the articles(here and here and here and here) is that the freight railroads in the United States are facing capacity constraints caused by a lack of locomotive power and from actual phyical plant constraints caused by the elimination of double tracking in many parts of the country.

Much of this is related to the relentless drive towards efficiency that the railroads have been engaged in over the last 40 years. We can take it all the back to the MUing (or multiple unit) of diesel engines when they first came out. Prior to the ability to MU locomotives, every engine had to have its own crew. When the MU capable diesels came along, suddenly one crew could singlehandedly control the power that in years past would have required four steam locomotives and their corresponding four crews. So with this new labor efficiency, the railroads began shedding manpower at a fairly high rate.
That approach has perils of its own. The Deramus family attempted, both at Chicago Great Western and at Kansas City Southern, to exploit the low-speed capabilities of the diesel to handle all of their traffic in one huge train a day each way. The consequences include additional breakage of equipment, as couplers and brake hoses do not always stand the strain, and slow handling of goods, as the one train a day has to do all the local work that the peddler freights used to do. The ton-miles per man hour looks impressive, but shipper satisfaction falls off.
The second big efficiency that was implemented was CTC or Centralized Traffic Control. Basically this moved the control over a section of track from being the responsiblility of a local located trackside tower to a centralized control center in a major city (Union Pacific runs from, I believe, Omaha. CSX is run out of Jacksonville). This allowed the railroads to shed more manpower by concentrating their dispatchers in one location and so long as that location stays up and running, everything is good. CTC is far more labor efficient.
It also permits the railroads to make more effective use of their tracks, as faster trains are no longer restricted to following slower trains on the same track, and as the dispatcher has an easier time of overriding the timetable when services get disrupted. But it calls for a certain amount of discipline to not send slower trains ahead of faster ones in the first place, or to delay the passenger trains ... Union Pacific had no end of trouble when it took over the Chicago area commuter service.
Being able to MU locomotives and the implementation were really the low hanging fruit of the efficiency movement in the rail industry. Both actions made sense and really didn’t effect the capacity or operation of the railroad in any significant way – in fact, they often made the road more profitable and increased the capacity through better utilization.

But after the debacle of the Penn Central and as the malaise of the late 70s set in, the rail industry began to experience a condition of over capacity. The government, through the ICC was more apt to let lines get abandoned to prevent more massive bankruptcies. Passenger service went from abysmal to effectively non-existent for large swaths of the country – even after the advent of Amtrak. Railroads started looking to shed physical plant, and the government was in a mood to let it happen.

And so pressure relieving branch lines were let go to the weeds. In many places, between CTC and lower traffic, it was possible to rip up double tracking and to save on the maintenance costs. As more and more traffic transferred to the interstates (partially because of the reduced coverage of rail service) the rail industry seemed to be caught in a vicious downward spiral of falling traffic. Given the gloomy outlook, the industry can hardly be faulted for cutting the physical plant capacity.
Let's not confuse the pressure-relieving secondary lines (such as Penn Central's old Pennsylvania lines from Indianapolis to St. Louis and Crestline to Chicago, Conrail's Lackawanna Cutoff and the Erie west of the Pennsylvania-Ohio line) with the truly excess main lines (Milwaukee's Pacific Coast extension, much of the Rock Island) or the branch lines that generate a few cars per month for the through trains to cope with. The single-tracking with controlled sidings might have gone too far. Union Pacific spent a lot to restore the second main track in western Iowa, Burlington Northern Santa Fe is doubling the entire Kansas City-Belen-Southern California line, and the Michigan and St. Louis passenger corridors out of Chicago aren't going to be serious without a second main track.
Later, as the 80s came on and traffic seemed to level off some, the cuts to the physical plant slowed down (but didn’t stop), but the railroads started looking for ways to get rid of their older diesel engines, but to do so in a way that didn’t require them to go out and buy one for one replacements. So they started looking around and they realized that at certain times of the year, motive power was in higher demand in one location and at other times, in other locations. Problem was, those locations weren’t always on the same railroad. So they got together and worked out motor pooling arrangements. Basically these arrangements allowed for run-throughs of motive power on long distance, multi-line trains, and allowed for the use of say, a UP locomotive in Miami by CSX, or a CSX locomotives in Los Angeles. Kind of like a giant rent by the hour scheme in which more often than not, the roads were just trading hours, not cash.

And so with all this, especially the pooling of motive power and physical plant cutbacks led to the rail industry being able to compete with truckers again. The rail chieftians had their industry running at peak efficiency.
The point of hiving off the branch lines is to be able to run long trains with little paperwork from one shipper to one consignee. Coal trains from mine to generating plant are good, as are container trains from coastal dock to inland city (or coast-to-coast) and grain trains from a large elevator to a dock. Automobile shipments require relatively little switching under current arrangements. Motive power sharing is not something new: the Bangor and Aroostook was able to buy some additional diesels for the potato harvest season because the Pennsylvania was willing to hire them for the iron ore shipping season, which is constrained by ice conditions at the Soo Locks. Noble Pundit has neglected an important institutional change in his story, which is the effect of deregulation of railroad rates with the 1980 Staggers Act.
But that, in and of itself, has become the biggest impediment to the rail industry. They are now too efficient.

What has ended up happening is that with the increased efficiency has come increased traffic. More and more traffic coming in to our ports is coming in on containers that immediately go onto trains to be transported to within a short distance of their final destination. Other shippers of grain, of rock, of manufacturing parts are all now more willing to use rail to move their product as it is moving finally. It isn’t always necessarily true any more that a product could be driven faster than it could be shipped by rail. And the cost per lb is extremely competitive due to the reduced expenses of the railroads.

But what the railroads are facing now is the problem of a capacity constaint. They focused so hard on making sure that everything was being utilized as efficiently as possible that they wrung out all of their excess capacity – including their surge capacity. As soon as traffic started to rise above the planned levels, there was no reserve to reach into to move the freight. There are only so many locomotives. There are only so many routes between points A & B. Right now, the railroads simply can’t move anything more than they already are.
The problem that arises is a bit more challenging. Under deregulation, railroads have freedom to adjust their rates. Many have gone after traffic by offering rates that cover the avoidable cost of the service (crews and rolling stock) but do not yield sufficient return to replace, let alone add additional, capacity. Whether there is a price that balances traffic with capacity while allowing for the replacement or addition of permanent way remains to be seen. (That's stuff for another post, this one is getting long.)

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