The dark cloud on the horizon

Actually, many of the railroads are actively involved in building business parks. They provide the land, the initial development, and rail service to the customers there, and encourage them to build their warehouses on the site. In return, they promise and provide single car service, interlining, and other rail services.

Right now, BNSF has a large piece of property in the area south of Chicago (Logistics Park Chicago) they use this way. They also have a large facility in Alliance Tx, and Fontana Ca. Another is planned for Gardner Kansas, near KC, and one is planned for Memphis.

CSX is building one at Winter Haven Fl with 3 million ft of indoor warehouse space, and 1.5 million ft of industrial space. UP is building East Kelly Railport near San Antonio. NS is building one near Columbus. And both NS and CSX are looking for land south of Chicago for their own developments.

We often enter in agreements with the various Class 1 railroads to operate transload facilities. We have cars brought in to our tracks, where we can often hold as many as 300 railcars. We provide the inventory management for the cars, inbound checks, weight and shipping management, outbound checks, maintenance calls, and use our own company locomotives to do the switching to set up the trains on the tracks, where a mainline engine can pick them up. We also provide warehousing, storage, and repackaging for the products as the customer requires. Some customers come to us to have a 200,000 pound railcar of bulk product broken down into 2000 pound boxes or bags, which we do, then store the product until they are shipped in a van trailer to them.

But, the main thing to understand is that the railroads are very close to their maximum capacity on long haul freight, and have very little room for growth in that area. And over the years, a great many industrial parks and facilities have been built without rail access. They have to be serviced by truck.

the critical item for the truckser is not to wory about how many miles they grab each week, but how much money they make in relation to the effort they put in. I often haul short loads and make good money doing so. The key is not having a strict mileage mindset. many drivers turn their noses up at shorter hauls, and want nothing to do with loads of less than 500-800 miles. You just need to make sure that the income is commeasurate with the effort, regardless of the distance hauled.

 

By the way, to point out the infrastructure costs the railroads have to deal with, the regional Railroad Dakota, Minnesota, and Eastern is trying to become a Class 1 railroad with the construction of 260 miles of new track, and the refurbishment of 600 miles of current track. The price tag for this, which will allow them to move coal trains out of the Wyoming Powder River Basin by 2011, is priced at 6 billion dollars. Railroading ain't cheap by any means.

 

Another by the way. Buffett has not invested in railroads in general, but has taken a stock position in one specific railroad, BNSF. This seems to indicate that he has found one company that may be undervalued or have financial potential, not an entire industry to invest in.

 

Tip,

You are paranoid, always looking for what is wrong.

It's always good to plan ahead, preparing yourself for what might go wrong, but you seem to worry a little too much.

"Prepare for the worst; hope for the best," as the cliche goes....

You prepare for the worst, but you never hope for anything good.

 

Have to respectfully disagree, Buffett now has stakes in two other R/R and Bill Gates investment company cascade holdings has also invested in rail. Several other of the $$$ talking heads are also touting rail stocks. Guess they see that rail is a place to move your money up. Just my .02