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home : people : opinions April 30, 2016

4/24/2013 8:36:00 PM
Casual, Cursory, Candid, Cobbled Comments
By Cecil Acuff

Europeans have long pitied Americans for their sorry passengers trains. But, when it comes to moving goods, the U.S. has a freight network that is the most cost-effective in the world.

It is, however, a very capital-expenditures intensive business. Since the Staggers Act of 1980, signed into law by President Jimmy Carter, rail companies have invested about 17% of their revenues in their networks. This amounts to half a trillion dollars of private money over the past three decades.

Even the American Society of Civil Engineers becomes uncivil about the sorry state of the nation's infrastructure. But, they are showing a grudging respect for America's goods; railways.

The economic downturn has actually helped propel capital spending on everything. Last year, $23 billion was spent, a record in real terms. The plan has been to modernize the network while business is relatively quiet and money is cheap.

Railroad firms hope to be in a better position to handle rising traffic in the future. In 2009, Berkshire Hathaway, Warren Buffet's investment firm, bought the Burlington Northern Santa Fe, a Texas-based firm. Buffet described the purchase, "an all-out wager on the economic future of the United States."

That bet is already paying off. In 2011, the seven largest freight railways had operating revenues of $67 billion, up from $47.8 billion in 2009. Net income was $11 billion, with returns on equity averaging 11%. By 2025, rail freight demand is expected to double. Much business is coming from shifting consumer goods. Containers are lifted off ships and trucks, loaded onto trains, and whizzed to their destination. This pays well and is growing fast.

Moving goods by rail is four times more fuel-efficient than by road, and railways can always increase their future capacity. America's trains may soon nibble at trucks' market share, particularly for road journeys longer than a day.

Truckers are battling high fuel, high labor costs, driver shortages, road congestion, tighter driver rules, and chronic road under-investment.

Today, some 43% (by weight) of stuff moved on American freight trains is coal. As power stations become subject to ever stricter environmental laws, this could dwindle. But, The Association of American Railroad experts see growing opportunities for moving crude oil. American production is rising, and is often cheaper than crude arriving on ocean tankers.

America could, and is, building more pipelines to move crude, but the rail network is already in place. In the last quarter of 2009, about 2,700 carloads of crude oil were moved by rail. This had grown to 81,000 in the last quarter of 2012.

Whatever loads America needs to move in the future, railroads are well able to do the job.

Gentle Journal readers can soon see some massive (when compared railroad to road tractror-trailers) equipment at The Perkins Territorial Plaza. A Santa Fe caboose now, and later, an 80-foot, plush, executive car. It's west of Guthrie. Someone should sell tickets to see the Oklahoma Department of Transportation get that monster past I-35. It's too high to go beneath. And, you can't let air out of steel wheels!

So, someone strike up the band. "Pardon me boy, Is that the Chattanooga Choo-Choo. Track twenty-nine. Boy, can you give me a shine. I can afford, To Board a Chattanooga Choo-Choo. I've got my fare, and just a trifle to spare, ...."

The Atchison, Topeka, and Santa Fe. "Do you hear that whistle down the line. I figure that it's engine number forty-nine. She's the only one that'll sound that way. On the Atchison, Topeka, and the Santa Fe. Here she comes, woo-oo-woo-oo-woo-oo-woo,..... here she comes. She's got a passenger list that's pretty big. They all want lifts to Brown's Hotel. 'Cause lots of them been travellin' for quite a spell. All the way from Philadelphia. On the Atchison, Topeka, and The Santa Fe."

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