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Understanding Railroad Car Ownership and Distribution: Key Concepts and Strategies

This overview explores the intricacies of railroad car ownership and distribution, highlighting the balance between too few and too many cars, and the associated costs. Originating carriers tend to require more cars than they have, while terminating carriers often have excess empty cars. We also discuss the benefits of private car ownership, leasing practices, and the importance of efficient service and distribution rules for minimizing empty car mileage. Insights on rates and the role of industry leaders like GE and TTX provide a comprehensive understanding of this essential logistics aspect.

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Understanding Railroad Car Ownership and Distribution: Key Concepts and Strategies

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  1. CE 515 Railroad Engineering Car Ownership and Distribution Source: Armstrong, Ch 10 “Transportation exists to conquer space and time -”

  2. Railroad Car Ownership? • Balance • Too few = potential loss of business • Too many = more expenses • Car ownership/upkeep is 15% of expenses

  3. Originating & Terminating Carriers • Originating carrier • Produce more products than consume • Usually short of cars • Causes need to lease them • Terminating Carriers • Consume more than produce • Have many “emptys” http://redlightnaps.files.wordpress.com/2007/08/thomas.jpg

  4. Private Car Ownership • Railroads encourage utilities to own their own cars • In exchange, get reduced freight rates • Example: power plant having their own coal cars • Reduces railroads’ new car investments and maintenance costs • Initials end in “X”

  5. Car Rental Systems • Bilateral Agreements • Use of another railroad’s cars • Terms and rate are private • Rail Inc (subsidy of AAR) keeps track of all “interchanges” and tracks balances • Per Diem • Actually per hour • How bilateral agreements are charged https://www.railinc.com/rportal/web/guest/home

  6. Rates • Need to be high enough to have return to owner • Low enough to encourage the railroad to keep it long enough to find a return load • Will improve overall car use • Used to be regulated by ICC http://www.nuwireinvestor.com/blogs/investorcentric/uploaded_images/dollar-bill-question-mark-734386.jpg

  7. Rates • Equipment Assets Management Working Committee • Recommend rates • Members represent all rail carriers • Rates established using formula involving original cost and age of car • Examples: • Elderly 50’ plain boxcar: $0.18/hr + $0.054/mile • Newer multilevel 89’ flatcar: $1.75/hr + $0.12/mile

  8. Service and Distribution Rules • Objectives • Ensure well-timed movement of empties • Reduce empty car mileage • Example: • Empties can now take detours to be loaded instead of being always being sent directly back “home”

  9. Assigned Service Cars • Cover specific products between specific shippers & consignees • Car ownership is often shared by different RR’s • Cars almost always return empty http://i.ytimg.com/vi/qH8XMxwphWA/0.jpg

  10. Leasing Industry Leaders • For the most part is comprises of small/medium sized firms • Specialize in one or two types of cars • Also large companies • General Electric Railcar Services Corp. • Largest fleet in the industry • TTX • GATX Financial Corp http://rscat.com/index.php?gr_1_id=19&gr_2_id=7&gr_3_id=0&doc_id=4&start=all&all_news_In_Chanell=1&details=1 http://tankcarhomepage.railfan.net/photos2/gatx6105.jpg

  11. Railbox & Railgon • TTX Corp. • Owned by major railroads • Own standardized plain cars for use by railroads • lower rates • Railbox (RBOX) : plain box cars • Railgon (GONX) : plain gondolas http://en.wikipedia.org/wiki/File:Boxcar_railbox.jpg

  12. Railgon picture http://1stclass.mylargescale.com/NTCGRR/railgon8.JPG

  13. https://www.railinc.com/rportal/web/guest/umleremis • Universal Machine Language Equipment Register • Date file updated daily • Shows availability for all cars • Maintained by Rail Inc

  14. TRAIN II • Telerail Automated Information Network • Keeps location of every freight car • Covers all railroad interchanges in the US and Canada • SAM • Shipper Assist Message • Lets shippers receive data from cars carrying their shipments

  15. Car Route Optimization • AAR continuously does studies to improve car use strategies • Database the waybills of 1% of all trains • Over 200,00 per year • Generate computer programs to evaluate the effect of car service http://4rail.net/4rmedia/nam/usa_gatx_ca_bakersfield_tankcarLPG_gatx57162__2008_XL.jpg

  16. Sources • http://www.highbeam.com/doc/1G1-113855705.html • Armstrong, The Railroad: What It IS, What It Does • http://www.answers.com/topic/rental-of-railroad-cars

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