Posts Tagged ‘grain by train’

CSX Will, First and Foremost, Protect Its Own Financial Interests in Line Sales or Leases

January 23, 2018

Many years ago when I was a college student intern at the Illinois Department of Transportation, one of my co-workers in the Bureau of Planning schooled me on what CSX is seeking to do today.

The Illinois Central Gulf Railroad was slimming down its route network much as CSX is doing today.

ICG was seeking to abandon a web of former Illinois Central Railroad branch lines in Illinois whose primary commodity handled was grain.

My fellow planner quoted officials of the ICG as saying “we’re going to get that grain one way or another.”

Even if the grain was taken away from those scores of small town grain elevators that dotted the Illinois prairie like rural skyscrapers by truck rather than in covered hopper rail cars, it had a long way to go to reach its final destination.

Those trucks leaving the elevators were not bound for a port on the Gulf of Mexico or the Mississippi or Ohio rivers.

The grain traveled by truck a relatively short distance to a regional grain facility such as the one operated by Cargil in Tuscola, Illinois, where unit trains were made up to move the grain onward toward its final destination, whether for export or domestic use.

ICG would continue to make good money hauling grain while getting rid of the expense of maintaining hundreds of miles of branch lines and paying union scales wages and benefits to the railroaders whose trains ran once a day or less on those branches.

The routes that CSX is seeking to lease or sell are not necessarily 25-mph or 10-mph branch lines in need of millions of dollars of rebuilding as was the case with many of the lines the ICG abandoned in the 1970s. Some of them, like the New Castle Sub, are significant mainlines handling much overhead traffic.

But they do cost a sizable amount of money to maintain and the CSX employees who operate the trains on those routes make Class 1 union scale wages and benefits. CSX would rather see that money wind up in the pockets of its shareholders or used for other purposes, such as buying back its stock.

Like the ICG in the 1970s, CSX will do all that it can to keep most of the business generated by its “surplus” routes while not having to pay to maintain or operate them.

CSX doesn’t do much business in Akron. What business there is could be handled by the Wheeling & Lake Erie, which already has a considerable presence in town.

But the Wheeling won’t be hauling most of that freight to its final destination. How that freight reaches its destination will come down to how those sale or lease contracts are written.

The ICG also spun off most of the former Gulf, Mobile & Ohio mainline between Chicago and St. Louis to an upstart known as the Chicago, Missouri & Western.

ICG was careful to keep for itself the more financially attractive elements of the route, including ownership and operation of the track between Chicago and Joliet, Illinois.

CM&W quickly found the traffic it received from the ICG was not what it thought it had been promised.

CM&W had overpaid for the ex-GM&O and couldn’t earn enough to pay its debts and get back its investment.

There are, of course, numerous success stories in which a short line or regional leased or purchased a route from a Class 1 and was able to make a go of it due to lower labor costs and more attentive customer relations policies.

Such was the case when the late Jerry Jacobson leased some track from CSX for his Ohio Central System.

It remains to be seen how much, if any, of the New Castle Sub that CSX will be willing to part with.

Aside from whatever business there is to be had in Akron, there is considerable auto rack business at Lordstown and some business in the Youngstown area.

CSX is not going to put itself in a position where it is likely to lose most of that business to Norfolk Southern for the long haul.

We’ve seen this game played before. Route rationalization has been the modus operandi of Class 1 railroads for years. That is how the modern W&LE got started. We’re about to see it play out again.

Larger Grain Harvest Seen in U.S. This year

September 2, 2016

A Detroit-based logistic company said it expects a larger than normal harvest this fall.

train image2Rail Freight Solutions said it has expanded its export container loading capabilities at its Detroit facilities to handle the grain traffic, which it expects to be 15 percent higher in the United States. A larger than normal harvests is also expected in Canada

RFS said it has the capability of loading 40 containers per shift inside of its 90,000-square-foot building.

The company said it is communicating with rail shippers and agricultural leaders on the new grain loading capabilities that provide transportation to and from Detroit’s intermodal facilities, including those operated by Canadian National, CSX and Norfolk Southern.