FROM THE EDITOR, RAILWAY AGE OCTOBER 2024 ISSUE: This month we dive head-first again into boxcars. Financial Editor David Nahass, who (pardon the cliché) is rather adept at thinking outside the box, deftly managed to gather opinions from several industry stakeholders. At least one appears willing to drive a stake right through the heart of this “love it or loathe it” market. I’d be surprised if David’s deftness fell on deaf ears. Please pay attention!
Opinions on boxcars are deeply divided—not enough to cause an intermodal crane operator to “mistakenly” grab a boxcar off its trucks and fling it into a nearby scrap yard, thereby creating a windfall for the scrapper, based on the high price of steel, but divided nonetheless. The chasm has to do with—what else?—money!
Here are a few observations from this year’s Railroad Financial Desk Book:
“The boxcar remains a more complicated railcar market. Why? It projects the possibility of growth: Let’s face it, a boxcar looks like a modified version of a 53-foot trailer. Boxcars haul multitudinous products including some bagged commodities found in a bulk railcar. It has survived and evolved several forecasted premature deaths due to the ‘end of paper’ and the ‘end of reading.’ It is a market that can generate growth and get more loads off trucks and the roads and onto the rails … Why would something so seemingly straightforward become so controversial?”
“The boxcar offers a minimum 3-1 conversion rate for truckloads, underscoring its incredible efficiency.”
Here’s one bound to raise a few hackles:
“Railroads are artificially holding down car-hire rates provided to boxcar owners. Net result? Investment in boxcars is being dampened as investors have difficulty achieving a reasonable rate of return on an investment in new boxcar assets.”
How about this one:
“TTX’s car-hire rate is not subject to negotiation or to the code of car-hire rules. TTX is an entity owned by the Class I railroads, and it has an anti-trust exemption to set its own rates. As a result, that same boxcar whose default rate is $0.17 to a non-TTX owner will earn $1.12 per hour if that car carries a TTX reporting mark. That $300 difference in monthly market revenue balloons to about $775 using the default rate.”
More on this sticking point:
“Car-hire reform will result in a robust, competitive, multi-supplier boxcar market that will support carload growth for the future, and that secondary issues such as car type diversity can easily be solved by the market if reform is implemented.”
These opinions are only a sample. After digesting the Desk Book, you might have an upset stomach or need to take a chill pill. “Sorry if you just had your mind blown,” David Nahass says.
In 1961, U.S. astronaut Alan Shepard, patiently waiting for hours inside his Mercury capsule to be launched into space aboard Freedom 7, said to NASA flight controllers, “Why don’t you fix your little problem and light this candle?”
Let’s work on fixing our little problem, and get to work growing carloads, OK?
