Re: Railroads under pressure...maybe that's a good thing?
Author: BOB2
Date: 02-21-2016 - 09:28
I can tell by the detailed nature of this well documented comment that you must have extensive experience with various RR commodity cost structures, right?
Yes, coal trains were profitable, just not as much as many, even in the industry and folks like you, thought they were, due to the high maintenance costs, equipment costs, and operating costs, and the loss of other time sensitive traffic slow moving coal trains also imposed on the RR's.
Coal is dead. Natural gas is way cheaper, way cleaner, and way more flexible to use when making electricity. This nearly 30 year trend has only gotten much worse for coal and the utility industry has spoken through the free market (more so than any of the effects of the regulations).
RR's have for years neglected large traffic segments, and failed to offer competitive service, in pursuit of this supposedly "easy" money, and now, they can't afford to do that any more.
Adapt and evolve, or go extinct....that applies to RR's too.....
And finally, actual financial evidence from quarterly reports seem to suggest that RR profitability has fallen significantly less than the loss of coal traffic volumes, which makes the thesis you postulate about the supposedly highly "profitable" nature of that coal traffic, somewhat questionable........