Railway Age, September 1994

Fingering the Culprits on Car Supply

With too few cars being chased by too much freight, and short lines coming up short, it's tempting to point an accusatory finger when we can't get our shippers the cars they need. We can point that finger in one of several directions, because there's plenty of blame to go around.

We shortliners rarely own our own fleets, so we depend on the kindness of strangers -- the Class Is and the leasing companies. While the leasing companies, by and large, treat us like customers (which we are), it often seems that our Class I partners think of us as poor relations.

Car supply issues continue to sour many otherwise smooth running Class I/short line relationships. And, while the Class Is aren't the only source of our car supply problems, they do their share, so let's point the finger at them first.

You ask for a car and get it a week early. You don't want to pay per diem on the car, so you call your connection to see what can be done. Be grateful you got any car at any time, car supply being what it is, your connection says, so say thank you and pay the extra car hire.

Or how about this one: you get the cars you want (on paper), but the cars themselves show up with doors that don't close. Or so contaminated that your customer can't use them. In one case in my experience, seventy percent of the cars offered by the Class I were rejected by the short line's shipper for these reasons. (Don't blame the car supply manager, though -- blame the people in the field who fed him bad information about his cars.)

Of course, complaining about the problem is a poor substitute for finding constructive solutions. But even when we try, we run into a whole new set of Class I related problems. You could buy or lease enough cars yourself. Trouble is, the Class I may not want to pay you car hire, so they press you to put them out "zero-rated." Now you have to build the cost of the cars into your revenue requirement.

Let's say you're paying $400 a month for a hundred-ton car. At two turns a month you'll need $2/ton to cover the lease cost. But what if there's no guarantee of cycle time and you get only one turn a month? The deal doesn't work. In that case, you'll have to structure the move so that the Class I will pay per diem and mileage. This means finding out what their objections are and meeting them.

Or perhaps the car types you want simply aren't available. Take long-wood cars for tree-length pulpwood. CSX doesn't have any and NS has a limited number of converted bulkhead flats. Some users of tree-length wood, such as International Paper or Union Camp, have their own fleets. But the paper company wanting to switch away from the labor-intensive short wood is left with a lot of logs and no place to put them.

Can the short line help its paper company shipper out of this predicament? The South Central Florida Railroad tried and failed. They worked with Ed Magee of GE Railcar to lease cars made-to-order for the customer. CSX wanted the cars zero-rated; SCFE needed the car hire to make the deal work. The alternative was to build the lease cost into their MIFFR, assuming two turns a month. Since neither CSX nor the customer could guarantee cycle time, the cars went unbuilt.

So, how does the short line manager get the empties he needs and how does he keep foreign car hire under control?

Shipper-supplied cars are one answer. Unfortunately, the finger now points at us: short lines have a poor track record in handling shipper-supplied cars. International Paper and Rohm & Haas will tell you a private car being interchanged to a short line is like having it disapper into a black hole. Federal Paperboard makes no bones about moving its private fleet of chip cars around to find the best utilization. If railroad "A" can't turn them fast enough, off they go to railroad "B." The lesson is clear: make sure your EDI with the Class I works so that private owners tracing cars can trace through to you. And make absolutely sure the private equipment gets on and off your line like the time-sensitive commodity it is.

What about your shipper? Maybe he's unpredictable or slow (the pointing finger shifts again), but maybe there's a way you can work around that. Is there dead time at night or on weekends which you can fill? Can the customer's plant crew do some of the work ordinarily performed by the switching crew? Can you avoid weighing each car in the queue? One line started unloading unit grain trains in one 20-hour period. The time saved in daily switching and car hire has offset additional crew costs. The mill is happy because the unit train that used to take five days interchange-to-interchange is now off the property in less than three days -- almost doubling the productivity of their unit train asset.

Sure, it's satisfying to finger the culprit in car supply. But it turns out that the real culprit is inefficiency -- and this culprit can be rehabilitated.

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Created July 31, 1995. Send comments to lblanchard@aol.com