NYC_George
Well-Known Member
As I watched all the losing stocks roll by on TV last night. I noticed the four big Railroad stocks were up.
NYC_George
NYC_George
Railroad stocks
- Thread starter NYC_George
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Sorry. Maybe Texas just seemed bigger given the number of times I've had to drive across it.
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I am kinda predicting that rail traffic is going to increase.
With advances in hybrid engines, it would seem that trains would be getting cheaper to run. Plus with things like shipping containers over long distance with a crew of 3-4 people compared to the hundreds of trucks it would take.
I also think that passenger rail will come back into more of a mainstream with things such as high speed lines between major citys, new york and chicago, chicago and minneapolis, new york to LA.
If trains have stuck around this long and are still profitable, I don't see them going anywhere any time see other then forward, and in some cases like stock, up.
With advances in hybrid engines, it would seem that trains would be getting cheaper to run. Plus with things like shipping containers over long distance with a crew of 3-4 people compared to the hundreds of trucks it would take.
I also think that passenger rail will come back into more of a mainstream with things such as high speed lines between major citys, new york and chicago, chicago and minneapolis, new york to LA.
If trains have stuck around this long and are still profitable, I don't see them going anywhere any time see other then forward, and in some cases like stock, up.
IronBeltKen
Lazy Daydreamer
The main problem for railroads today isn't a lack of business, but rather a lack of infrastructure. Shippers are complaining of long delays as trains have to go thru some tight bottlenecks, causing a major PR headache for the rail companies. All those rights-of-way that were abandoned in the 1980's and replaced with bike trails, would come in mighty handy right about now. But don't even dream about trying to recover those - the NIMBYs will prevent that from ever happening! 
Be careful with railroad stocks. I'm an owner of both UP and Norfolk Southern stock. Both have been doing very well this year, mainly because they offered a cost effective means of shipping compared to trucks due to the cost of diesel fuel. With price of oil plunging, that advantage is being rapidly wiped out. As Ken pointed out, trucks have a major advantage of not having to navigate the maze of railroad infrastructure issues. If diesel starts getting down into the $2.50 range, trucks will have a definite advantage.
Dan, I'd like to believe you're right but we are at the beginning of a long and deep recession. Railroads are best at hauling bulk commodities like shipping containers, coal, and grain. As consumer demand tails off, all of this traffic will decrease and the railroads will have to lower rates and cut service. In terms of rail traffic, it's dead outside the Northeast Corridor. High speed trains are horrendously expensive to build and run and can't be done without a government subsidy. I'm pretty sure the government's cash is going to have a lot higher priority uses over the next year, like preventing the sinking of the Titanic.
If you're at least 5 years away from retirement and tolerate risk, I think well-run railroad stocks are still a good purchase. If you're within 5 years of retirement or already retired, I would approach railroad stocks with great caution.
Dan, I'd like to believe you're right but we are at the beginning of a long and deep recession. Railroads are best at hauling bulk commodities like shipping containers, coal, and grain. As consumer demand tails off, all of this traffic will decrease and the railroads will have to lower rates and cut service. In terms of rail traffic, it's dead outside the Northeast Corridor. High speed trains are horrendously expensive to build and run and can't be done without a government subsidy. I'm pretty sure the government's cash is going to have a lot higher priority uses over the next year, like preventing the sinking of the Titanic.
If you're at least 5 years away from retirement and tolerate risk, I think well-run railroad stocks are still a good purchase. If you're within 5 years of retirement or already retired, I would approach railroad stocks with great caution.
NYC_George
Well-Known Member
460 miles a gallon
CSX has been running a lot of radio ads lately. They claim they can ship 2,000 lbs of goods 460 miles on one gallon of diesel fuel.
NYC_George
CSX has been running a lot of radio ads lately. They claim they can ship 2,000 lbs of goods 460 miles on one gallon of diesel fuel.
NYC_George
the Twin Cities took out all the old trolley lines after the buses took over. 10 years ago or whatever it was, when they started putting in the light rail, we spent millions putting rail in, some of it right where the old track was.
Actually, the company my family owns is selling like 300-600 gallons of product to a hump yard in California. The whole yard will be closed for like a day while it goes under massive repair with the stuff. I will try to get more info before then, and there will be a ton of photos after it is done.
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Jim you are right on that point. I can see demand drop if the price of fuel goes down, but I think that truck companies still would save money shipping by rail, although the headache does go up.
I think I may start investing in rail, maybe sell off in a few years. The way I look at it is, the market is going to get better sooner or later. Hopefully it doesn't crash. And as you say, it seems pretty safe right now.
Actually, the company my family owns is selling like 300-600 gallons of product to a hump yard in California. The whole yard will be closed for like a day while it goes under massive repair with the stuff. I will try to get more info before then, and there will be a ton of photos after it is done.
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Jim you are right on that point. I can see demand drop if the price of fuel goes down, but I think that truck companies still would save money shipping by rail, although the headache does go up.
I think I may start investing in rail, maybe sell off in a few years. The way I look at it is, the market is going to get better sooner or later. Hopefully it doesn't crash. And as you say, it seems pretty safe right now.
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George, UP says they are even cheaper, if we are to believe Zoe Richmond, spokeswoman for Union Pacific, who says there is potential to add produce-carrying cars, which would reach New York in five to seven days. While the train may take a day or two longer than trucks, Richmond notes the environmental benefits. “We can ship one ton of freight 780 miles on one gallon of diesel,” Richmond says. Now, go to http://www.montereycountyweekly.com...ering-salinas-valley-crops-by-train/1/@@index and see why the fuel cost of simply shipping the products is only a small part of the overall cost. It's the infrastructure that's killing the railroads, as well as the fact that trucks can get it there faster. Add that to the fuel surcharges that have been added by the railroads over the past year, the additional surcharges for "captive" shippers, the logistical challenges of shipping anything but bulk cargo from terminal to terminal, and the railroad loses it's supposed fuel advantage very quickly
mike8693
Member
I crush dreams =)
My uncle and great uncle have many CSX shares and lets just say they are doing very well. I can see like New York to Chicago where you might save half the cost of a plane ticket and it takes an extra hour, but I don't think New York to LA would ever happen even if high speed trains were put in. Lets say the cross country train traveled around 250 miles an hour. A cruiseing speed of a 747 is 565 mph. So a flight on a 747 is around 5 1/2 hours so it would be like a 12 hour ride plus an time for delays. Also take into consideration except for avoiding weather it a straight shot but with a train they may have to divert around cities and such. A coach ticket LAX to JFK with taxes is around 400. Even if a train ticket was 300 it would still be cheaper say just to work the 5 hours at 20 bucks an hour. The only posibility would be maglevs (highest speed 361 mph) but they think they could get to 600 mph. But it would be imposible at current prices to make a profit considering one mile of maglev track is a million and there is around 2600 miles between jfk and lax. It would be cool to take a cross country train.
My uncle and great uncle have many CSX shares and lets just say they are doing very well. I can see like New York to Chicago where you might save half the cost of a plane ticket and it takes an extra hour, but I don't think New York to LA would ever happen even if high speed trains were put in. Lets say the cross country train traveled around 250 miles an hour. A cruiseing speed of a 747 is 565 mph. So a flight on a 747 is around 5 1/2 hours so it would be like a 12 hour ride plus an time for delays. Also take into consideration except for avoiding weather it a straight shot but with a train they may have to divert around cities and such. A coach ticket LAX to JFK with taxes is around 400. Even if a train ticket was 300 it would still be cheaper say just to work the 5 hours at 20 bucks an hour. The only posibility would be maglevs (highest speed 361 mph) but they think they could get to 600 mph. But it would be imposible at current prices to make a profit considering one mile of maglev track is a million and there is around 2600 miles between jfk and lax.
It would be cool to take a cross country train.
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macjet
Member
I was listening to Senator Coburn from Oklahoma on the Senate floor last week. He said Amtrak can't even sell food without a subsidy. If I remember the numbers correctly it takes $60 million taxpayer dollars to make up for their losses on food alone. That is unacceptable. I can't remember how much Texas and Oklahoma have to subsidize the Heartland Flyer just so those two can have the novelty of passenger rail service. If it isn't profitable then shut it down. Not to mention that it takes 3 times as long on the train as it does to drive OKC to DFW.
Jim is right. Except for certain city pairs in the NE passenger rail is dead. There are a few fans who dream of a European style system but the US is just too big. I think Texas itself is bigger then the EU.
Jim is right. Except for certain city pairs in the NE passenger rail is dead. There are a few fans who dream of a European style system but the US is just too big. I think Texas itself is bigger then the EU.
AndrewC
Mostly Harmless
The EU is actually about 6 times the size of Texas and about half the size of the US. (TX= 691,030 km² V EU= 4,000,000 km² ) The big difference is there are nearly 500million people here, and they are concentrated in densely populated pockets. Short hops between major Western European cities within the same country is much better by train than plane but its still not feasible to go say from London to Warsaw by train even at 300kph. As said before it simply can't work in the US except for the NE and to a lesser extent the west coast because the US has too few people living in smaller centres that are too far apart. Don't forget too the European passenger services are very heavily subsidised to an extent that would make a US taxpayer faint.
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macjet
Member
The EU is actually about 6 times the size of Texas and about half the size of the US. (TX= 691,030 km² V EU= 4,000,000 km² ) The big difference is there are nearly 500million people here, and they are concentrated in densely populated pockets. Short hops between major Western European cities within the same country is much better by train than plane but its still not feasible to go say from London to Warsaw by train even at 300kph. As said before it simply can't work in the US except for the NE and to a lesser extent the west coast because the US has too few people living in smaller centres that are too far apart. Don't forget too the European passenger services are very heavily subsidised to an extent that would make a US taxpayer faint.
Sorry. Maybe Texas just seemed bigger given the number of times I've had to drive across it.
I owned Norfolk Southern stock for about 5 years (I think) I bought it for $21 dollars a share and I never loss money with it and continued a steady rise too about $78 a share 3 weeks ago but since the economy sucks now it dropped too $52 dollars in 3 weeks... Seeing it drop now on a daily basis is making me kinda sick... but thats the story of all stock nowadays... I don't have a whole lot invested in NS so I'm keeping my in and waiting it out and crossing fingers for a rebound...
If you already own railroad stock, it's being caught in the downdraft that is dragging down the rest of the market so don't panic. My NS stock has also gone from up 22% for the year to down 18%. Remember that railroads are not what we like to model, they are really integrated financial companies with interests in real estate, minerals and mining, and manufacturing. All of these require short term capital to be available at reasonable costs to finance day to day operations. This hasn't been happening because no one wants to lend money to anyone else. All we can hope is that the G7 meeting this weekend produces some results in terms of backstopping bank to bank lending. If we can reduce the interest spreads in these kinds of fundamental loans, we can see a fairly good increase, if not long lasting, in equities. Until then, just sit tight on any railroad stock you've owned for a year or more. If the G7 doesn't produce any results and we see the same kind of panic break out next week, then it's time to consider reducing your exposure to equities in general, including railroads. You can't time markets but, if we don't see a pretty good bump next week, I think it's highly unlikely we'll see anything but sucker rallies in the next year. That's a good time to be out of the market but still stay liquid so you can get back in when you are confident the normal fundamentals of the market are once again working.
Cost of transportation is a very complex thing to calculate. What is to be included?
I think that rail roads are one of the transportations that have very little subsidiaries.
When comparing to air freights (goods and passenger) the cost of airports and air traffic control should be included. Do the airlines really pay all cost for airports and traffic control?
Comparing trucks and buses with their competitors I think that the trucks and buses are subsidised a lot. That differs of course from country to country. Do the trucks and buses really pay for the cost of building roads and maintain them in proportion to their demands of construction cost and wear? In Sweden where I live there would be no buses or trucks if it wasn't for the fees and taxes that the cars are paying. How is roads financed in US?
My conclusion is that if the different transportation methods would pay for their own costs the train would benefit of it.
Please correct me if I'm wrong.
I think that rail roads are one of the transportations that have very little subsidiaries.
When comparing to air freights (goods and passenger) the cost of airports and air traffic control should be included. Do the airlines really pay all cost for airports and traffic control?
Comparing trucks and buses with their competitors I think that the trucks and buses are subsidised a lot. That differs of course from country to country. Do the trucks and buses really pay for the cost of building roads and maintain them in proportion to their demands of construction cost and wear? In Sweden where I live there would be no buses or trucks if it wasn't for the fees and taxes that the cars are paying. How is roads financed in US?
My conclusion is that if the different transportation methods would pay for their own costs the train would benefit of it.
Please correct me if I'm wrong.
In the United States, trucking companies do not get a free ride. The road use and fuel excise taxes pay for somewhere between 80% to 110% of the cost of repair to roads and new interstate road construction, depending on who's numbers you believe. The railroads believe they are at a competitive disadvantage because they pay for almost 100% of the maintenance and construction of their infrastructure. The real disparity is the way the US tax code treats these differences. Trucking companies get to write off all their fuel and excise taxes in the year they are incurred. Railroads, since they engage in much more capital spending, have to depreciate the cost over a 10 to 15 year period. This makes trucking companies a more attractive business proposition because they are able to write of more taxes faster than railroads. OTOH, railroads have huge real estate holdings because of their infrastructure and those property taxes are written off every year. Since many of these real estate holding are fully depreciated, they are no longer a tax burden and actually start to produce revenue when they are sold off for things like industrial and commercial development. Consequently, you're able to make cogent case that either trucking or railroad companies get a better deal from the taxpayers, depending on who's ox is being gored.
Airlines, and air freight, do not pay for even 25% of the total cost of their infrastructure. This goes back to the days when airlines as a group were much too poor to pay for airports and the question of air safety was too important to be left in the hands of many different air carriers. This is starting to change as gate fees and landing fees are starting to close the gap in cost recovery. The big problem now is that airlines are in about the worst financial shape they've been in since shortly before WWII. Compare almost any airline stock to a railroad like Norfolk Southern to see what I mean. Both the federal government and the authorities that own airports are trying to get airlines to pay a bigger share of their costs. Unfortunately, you can't get blood out of a stone so that will have to wait until if (and when) the airlines reach a healthy financial state again.
Airlines, and air freight, do not pay for even 25% of the total cost of their infrastructure. This goes back to the days when airlines as a group were much too poor to pay for airports and the question of air safety was too important to be left in the hands of many different air carriers. This is starting to change as gate fees and landing fees are starting to close the gap in cost recovery. The big problem now is that airlines are in about the worst financial shape they've been in since shortly before WWII. Compare almost any airline stock to a railroad like Norfolk Southern to see what I mean. Both the federal government and the authorities that own airports are trying to get airlines to pay a bigger share of their costs. Unfortunately, you can't get blood out of a stone so that will have to wait until if (and when) the airlines reach a healthy financial state again.
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mike8693
Member
Airlines never really make money just less in debt. If they had to pay for airports and all that they wouldn't ever make it. I can't see how they ever pay for planes with a plane anywhere from 20 to 400 million will usually only make around 18,000 on one flight after gate fees, fuel, etc.
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Trussrod
Well-Known Member
I'm certainly not that knowledgeable about comparing truck to rail shipping but if what I've just read here is correct, 'they can ship 2,000 lbs of goods 460 miles on one gallon of diesel fuel, or better yet, 780 miles on one gallon of diesel,' then it would seem that there would be no way for trucks to compete with rail service from the cost of fuel to ship a product.
Also it would seem that diesel fuel would be the same cost for either turcks or rail so both would getting the same advantage in savings. Unlsess I'm wrong isn't the same Diesel fuel use for both trucks and trains?
Also it would seem that diesel fuel would be the same cost for either turcks or rail so both would getting the same advantage in savings. Unlsess I'm wrong isn't the same Diesel fuel use for both trucks and trains?
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