Why do railroads pull cars not from their own company?

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punchy71

New Member
Greetings,
I am new to the world of railroading. I read recently that any given railroad's trains will usually or most likely be pulling a majority of their own cars, labeled and scripted with their own name. Example: a BNSF train of mixed freight with a train made up of mixed car types the majority of the cars will be painted with the BNSF logo. A minority of the cars will be non-BNSF cars. This made sense to me. What doesn't make sense to me (and what the article didn't say) is why would any given railroad be pulling a minority of some other railroad's cars in their train in the first place? Why not just have each railroad pulling trains consisting of ONLY cars from their own railroad company? This is something I've often wondered about and just simply don't know the answer to.
Thank you
 

cprted

Rodeo Clown
Because not every railroad goes to every destination. A carload of widgets might move over 2-3 different railroads before it gets to where it needs to go.
 

Crow

Member
Greetings,
I am new to the world of railroading. I read recently that any given railroad's trains will usually or most likely be pulling a majority of their own cars, labeled and scripted with their own name. Example: a BNSF train of mixed freight with a train made up of mixed car types the majority of the cars will be painted with the BNSF logo. A minority of the cars will be non-BNSF cars.
I wonder what article that was. Besides unit trains like a full train of grain cars, typically most of the cars are not owned by the railroads, and certainly not the host railroad. One any given BNSF or UP train, a very small percentage will be BNSF owned or UP owed cars. Most cars are either owned by a leasing company (the reporting mark will end in X) or a different railroad.

Railroads don't want to be in the business of owning cars, they want to be in the business of moving freight.
 

punchy71

New Member
This sounds, at first blush, like a railroad is nothing more than a locomotive engineer, a locomotive, a brakeman, a conductor and, in olden days, a caboose. And all the cars are just quasi-public property...
 

cprted

Rodeo Clown
This sounds, at first blush, like a railroad is nothing more than a locomotive engineer, a locomotive, a brakeman, a conductor and, in olden days, a caboose. And all the cars are just quasi-public property...
Don't forget the massive physical infrastructure.
 
Free interchange of cars across railroads and international (Canada and Mexico) boundaries is absolutely essential. Before standard gauge back in the 1800's, the lack of it was a serious impediment to efficient commerce.
 

punchy71

New Member
Why is it absolutely essential to have "free interchange" with Canada and Mexico?
 
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I don't understand the question. How could it not be? Are you suggesting all cargo be transloaded between incompatible railroad systems? Horribly inefficient. Or are you opposed to international free trade?
 

Bill Anderson

Well-Known Member
If there is someone out there who knows about how railroads bill for freight, please speak up. I do know that the billing of freight is quite complex and there are fees railroads pay for hauling other roads' cars. That is why one sees primarily home road cars on a train

Again, I would appreciate it if someone who truly knows the system would speak up, otherwise the rest of us are just offering up our opinions.
 

cprted

Rodeo Clown
Why is absolutely essential to have "free interchange" with Canada and Mexico?
Canada and the US are each other's #1 trading partners. You know all that foreign oil politicians love to blather on about? Canada's is the US's #1 supplier of oil ;) I would suspect that the US is also Mexico's #1 trading partner as well. Think of what would happen if train cargo couldn't freely cross the border ...
 

Ed Sand

General Idiot
If there is someone out there who knows about how railroads bill for freight, please speak up. I do know that the billing of freight is quite complex and there are fees railroads pay for hauling other roads' cars. That is why one sees primarily home road cars on a train

Again, I would appreciate it if someone who truly knows the system would speak up, otherwise the rest of us are just offering up our opinions.
How much time ya got?

But, seriously, it is a very complex subject. A long time ago I posted some summary information about railroad revenue processes. I don't have the originals any more, but if you're very curious I can try and dig them up here. I assume they're archived.

Basically, there are five key processes that make interline (interchange movement between railroads) possible. As others have pointed out, because different railroads serve different industries, you have to either interchange cars or transload them (unload the first railroad's car into the second railroad's car - that's what used to happen before interchange)

There are a hundreds of exceptions and twists on the below, but as a gross generalization there are:
1) Freight rates/billing - this is what the waybilling carrier charges the customer for movement of the freight from origin to destination.
2) Divisions/interline - this is where the railroads divide up the total freight rate and settle it among themselves.
3) Car Hire - this is the rate (hourly plus mileage) a railroads pays to use another railroad's cars.
4) Demurrage - this is the charge customers pay if they take too long to unload or load the cars.
5) Car Repair - there's an industry wide settlement process for inspecting, repairing, and invoicing another owner's cars.

For each of these, the industry rule books run to hundreds of pages.

Also, the term 'free interchange' doesn't mean there's no charge, it means you don't need the prior permission of car owner or railroad to interchange a shipment. You just need to have your cars registered (if you're a car owner) or subscribe to the interchange rules if you're a railroad. Most of the basics of these are in the Official Railroad Equipment Register.
 

Bill Anderson

Well-Known Member
Ed: Thanks for your summary. It is exactly what I was looking for.

What is the term or rule where one railroad has to return another road's freight cars as soon as possible? I remember this was a problem back in the 60's, when the freight cars of most western railroads were fairly new and the cars of the bankrupt, pre Penn-Central (and subsequently pre Conrail) eastern roads were worn out and in bad shape.

The eastern roads began pirating the better cars of the western roads, using them to haul freight on their lines rather than returning them in a timely fashion to the western roads. This resulted in a shortage of freight cars in the western US. I was fairly young at the time and cannot remember whether or not the old ICC had to get involved in order for the cars to be returned to their rightful owners.
 
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Ed Sand

General Idiot
Bill,
I think you're thinking of incentive per diem. Car hire used to be known as per diem (they tried to change the name when it went from a daily charge to hourly charge, but many older folks still call it per diem) and the rates were prescribed (set) by the ICC. During the service issues of the late 60s and early 70s, there was a boxcar shortage in part because the rates were set too low. As an attempt to overcome that the industry created an 'incentive' rate for high demand cars. This is what led to the groups of investors buying boxcars and using various short line marks for them. It's also the root of the RailBox program at Trailer Train (TTX now). FEC actually sued to stop it, and won, but the recession of the early 80s ended the shortage anyway.

Eventually, the car hire rates were deprescibed and went to a market bid/offer process.

But, other than car hire, there's no actual rule that says you have to return a car ASAP. Cars in an assigned pool are an exception, of course
 

Bill Anderson

Well-Known Member
Thanks Ed. We have a new member from Chicagoland who is a retired accountant and worked in Milwaukee Road management. I hope he can contribute to these discussions.
 




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