Hopper Car Fleet

[bgmb]

Anyone know what is happening to the government owned hopper cars? I heard at one point farmers were supposed to get them, haven not heard much about it in the media at all lately.

[bucket]

Farmers should own them but won't.

We will argue about it until the aluminium rusts thru.

[bgmb]

Anyone have any real info on whats going on ?

[Hopalong]

Believe they are leased to railways, don't know for how long.
CP's Robert Taylor warns that they are wearing out and there is no plan in place to replace them.
Uses that to reinforce concern that revenue entitlement is less than enough to provide incentive for investment in grain shipping.

[bucket]

A group should buy them and set up a Corp to bid them out as required maybe to short lines. The revenue could be put to good use.

As revenue comes in the company could buy a few more cars and retire the poor ones.

Soon farmers could own a fleet like Canpotex.

Just to put reflective tape on those cars was going to cost 10 million rumour had it.

They still have some value.

But the cars need an independent look.

I am sure there are facilities that could inspect and repair them for a reasonable cost as fill in work with oil in the shitter.

[bgmb]

would be nice is farmers could form a coop to buy the cars and then have some control of how they are utilized.

[wmoebis]

History repeating again. Search: "Farmer Rail Corporation"

[bgmb]

coops are doing very very well here on the input side of things.

[Wheatking]

This is my prediction on how this will play out.

We will see lots of rumblings from various industry and govt officials on how these cars are wore out and worthless.

We will have a tender process that the farmer groups will have no way of bidding on. The railways will buy the fleet for scrap price, and one a few things will happen.
A)They will scrap the entire fleet and our logistical problems will become worse, or
B) They will force farmers to buy a whole new fleet, or perhaps they will buy new ones with the gov't paying a significant portion of the bill
C) The cars that were earlier assessed as scrap will suddenly become viable for another 30 years.


I have no idea what shape these cars are in, but if they are in rough shape is it because of a deliberate lack of maintenance, or just normal wear and tear.

[hobbyfrmr]

New air lines/brakes ,Bearings, chutes and fibreglass doors on top. Most repairs could be made by oilfield construction welders if and when they could use some work. I know a couple of late thirties guys that grew up with zero and they understand how to work for money. They are doing better than me. I admire them.
A rail car is basically 2 btrains on steel wheels.

[bucket]

Hobby

We are on the same page here.

1993 I was in calgary. A machine shop we were using there had the contract to re machine the wheels. It kept his shop busy and him wealthy. Nice guy.

Those rail cars are not worthless. And BTO said he could finance them himself.

[TOM4CWB]

Bucket,

The Federal Gov kept the Hopper Cars... and they are being maintained by the railways... at a reasonable rate... with a small attrition rate as they are written off in accidents.

The least cost solution in action.

[farmaholic]

(WINNIPEG) – The big railway companies are making over $100 million a year in unreasonably excessive returns at the expense of Canadian farmers. That is one of the key findings of an independent study commissioned by the Canadian Wheat Board, released today by Canadian farm organizations at a grain elevator near Winnipeg. Farmers are asking that the federal government now conduct a full rail costing review – something that has not been done since 1992.“We’re not against the railways making a profit. Everyone – farmers and rail businesses – needs to make profits to be sustainable. But one’s profit should not come at the other’s very large expense,” said Bob Friesen, President of the Canadian Federation of Agriculture. “At a time when the soaring cost of production is still interfering with the ability of farmers to profit from high commodity prices, $100 million in revenue lost on a runaway train is a big problem.”The Canadian Federation of Agriculture (CFA), the National Farmers Union (NFU), Keystone Agricultural Producers (KAP), the Agricultural Producers Association of Saskatchewan (APAS), Wild Rose Agricultural Producers (WRAP) and the Canadian Wheat Board (CWB) today held a joint press conference to call for a review and release the results of the report conducted by respected rail analyst John Edsforth.The study estimates that the railways in 2006-07 made $175 million (or $6.25 a tonne) more than what was considered fair and reasonable compensation for moving grain under the previous Western Grain Transportation Act, also know as the “Crow Rate” (repealed in 1996). This year, the Canadian Transportation Agency (CTA) found the railways had been allowed to earn revenue that was triple their actual costs for rail car maintenance and reduced the revenue cap for grain by about $72 million per year. A gap of at least $100 million remains, while the railways appeal aspects of the CTA ruling.“This study is setting off all the alarm bells for farmers. These results clearly show that something is not right with the revenue cap and the freight rates farmers are paying,” said Ian Wishart, KAP President. “Mechanisms like the revenue cap were meant to protect farmers. We need the government to step in, run the numbers and see if those mechanisms are serving farmers or if they need fixing.”CWB elected director Ian McCreary called the study results “shocking”.'It shows the railways earn far above what they would in a competitive rail market. As shippers, we need timely rail service, but we also require that the cost for that service is reasonable since we face greater distances to port than all the other grain exporters in the world.' To ship their grain, most western Canadian farmers are forced to use either a CN or CP rail line, creating a virtual monopoly over western rail transportation. Since 1992, the federal government has not conducted a full review of what it actually costs those railway companies to transport grains. As a result, railway costs used to calculate the revenue caps for grain freight are significantly out of date, failing to account for major reductions in grain elevators, rail track mileage, rail service and car supply over the past 17 years. Canadian farmers are calling on the government to conduct a full cost review in conjunction with an upcoming railway service review, in order to get an accurate and up-to-date picture of the true cost of shipping grains to determine freight rates for farmers more fairly.“The railways continue to charge farmers based on a cost picture that was taken 17 years ago,” said Glen Blakley, APAS President. “Railway profits have gone up while the level of service to farmers has gone down. It’s time to bring railway costs back to reality and rebalance the equation for farmers.”'It seems clear that railway earnings from grain transport are excessive particularly when farmers have been burdened with additional storage and trucking costs in effect paying twice for the railways efficiency gains. The railways have externalized costs to farmers and reaped the profits,' said Terry Boehm, NFU Vice President.Over the past year, the federal government has taken a couple of steps to address the transportation issue facing farmers. The freight revenue cap was adjusted to take into account actual maintenance costs for the hopper car fleet. The government also passed Bill C-8, addressing service issues in rail transportation.“I want to thank the government for the steps it has taken so far to help restore fairness to western grain transportation, and particularly Agriculture and Agri-Food Minister Gerry Ritz who met with national and western farm leaders earlier this year and offered his support for conducting a cost review,” said Lynn Jacobson, 1st Vice President of WRAP. “Farmers now need this government to take the next step and implement a full review of railway grain transportation costs.” - 30 -Download the backgrounder

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[farmaholic]

The coalition discovered that the railways were receiving far more money under the revenue cap for car maintenance than they were actually spending.The CTA confirmed the FRCC’s findings in a report showing that in 2004 the rail companies received $4,329 per car per year under the revenue cap to cover car maintenance expenses, but spent only $1,686, representing a total overpayment of $48 million.While the Conservative government rejected FRCC’s bid to buy the cars, it followed up on the maintenance costs issue.In June 2007 the federal transport minister asked the agency to adjust the volume-related composite price index to reflect actual rail car maintenance costs.In July the agency announced an interim decision that would reduce the freight rate by $2 a tonne for the 2007-08 crop year. That decision was appealed by both national railways to Federal Court of Canada and has been put on hold.In October the agency launched the review now underway.A number of industry groups filed submissions, including five producer groups, the governments of Alberta and Manitoba, the Canadian Wheat Board and the Western Grain Elevator Association.In general, those organizations rejected the arguments put forward by the rail companies and urged the agency to ensure that the railways’ compensation for maintaining rail cars be reduced to accurately reflect their actual costs.“Farmers have been overcharged for rail car maintenance and we are encouraged that this revenue cap review is an attempt to correct the situation,” said the submission by Keystone Agricultural Producers. “This is an extremely important issue for grain and oilseed producers.”A key question for the agency is the definition of maintenance and what kind of work should be included in calculating costs.Specific issues being reviewed include whether to include lubrication, inspection and air hose coupling when calculating maintenance costs, the appropriate level of contribution to railways’ constant costs, how to treat costs associated with closing hopper car gates and wheel replacement and whether to use specific railway cost data and industry standard rates to calculate actual costs.The CTA’s review has it origins in work done by the Farmers Rail Car Coalition in its unsuccessful effort to buy the government’s cars.The contentious issue of how much the railways should receive under the revenue cap to cover hopper car maintenance costs is nearing a resolution.The decision by the Canadian Transportation Agency is expected to save prairie farmers around $2 a tonne in freight costs in 2007-08 and beyond.The two national railways had untilDec. 5 to make their final arguments to the agency and both met the deadline.“It’s still our intention to issue a decision on or before Jan. 31, 2008,” said Jim Riegle, head of the CTA’s grain division.That ruling could be appealed to the Federal Court of Appeal or to the federal cabinet.The CTA’s decision is expected to cover three issues:The amount of money currently embedded in the grain revenue cap to compensate railways for car maintenance costs.The amount actually spent by the railways on car maintenance.A method for adjusting the revenue cap’s price index to reflect the difference between the embedded and actual costs, already estimated by the agency to be in the range of $65 to $70 million.The contentious issue of how much the railways should receive under the revenue cap to cover hopper car maintenance costs is nearing a resolution.The decision by the Canadian Transportation Agency is expected to save prairie farmers around $2 a tonne in freight costs in 2007-08 and beyond.The two national railways had untilDec. 5 to make their final arguments to the agency and both met the deadline.“It’s still our intention to issue a decision on or before Jan. 31, 2008,” said Jim Riegle, head of the CTA’s grain division.That ruling could be appealed to the Federal Court of Appeal or to the federal cabinet.The CTA’s decision is expected to cover three issues:The amount of money currently embedded in the grain revenue cap to compensate railways for car maintenance costs.The amount actually spent by the railways on car maintenance.A method for adjusting the revenue cap’s price index to reflect the difference between the embedded and actual costs, already estimated by the agency to be in the range of $65 to $70 million.

More history.... about 7 years ago.

[bgmb]

Tom, so the railways are basically using them and kind of keeping them able to roll.

Would be like me renting land for taxes.

What a great deal for the railways.