Transcript Measurements and Analysis - FreightCar Rail Services

Railcar 101
The Basics of Railcars: Car Types,
Components and Rules
Acquisition and Maintenance
Options
Carol Scarborough
So you need some Railcars…

What are my options?




Order railcars from the railroad
Buy railcars
Trip lease (or borrow) some railcars from others
on a temporary basis
Lease railcars


May 21, 2008
Full service lease
Net lease
DTE Rail Services, Inc
Maintenance Management Seminar
2
Railcars
Who Provides the Assets
Shipping By Rail Increasingly Means Owning/Leasing Your Own Cars
Freight Cars in Service
1/1/07
Other RRs
8%
PCO's
51%
Class I RRs
41%
Source AAR Policy and
Economics Department
May 21, 2008
DTE Rail Services, Inc
Maintenance Management Seminar
3
Acquisition of Railcars by
Railroads and Private Car Owners
80,000
2006 total new cars =
74,729. The most
cars acquired since
1998 (75,685)
70,000
No. of Cars
60,000
50,000
40,000
30,000
20,000
10,000
0
1998
Source AAR Policy and
Economics Department
May 21, 2008
1999
2000
2001
2002
Class I RRs
2003
2004
2005
2006
Private
DTE Rail Services, Inc
Maintenance Management Seminar
4
How the U. S. Freight Car Fleet Changed
500,000
450,000
400,000
Boxcars
350,000
Gons
300,000
Hopper
Cov Hop
250,000
Flat
200,000
Tank
150,000
100,000
50,000
1980
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Source AAR Policy and
Economics Department
May 21, 2008
DTE Rail Services, Inc
Maintenance Management Seminar
5
Railcars
Ownership/Maintenance



Railroads are pushing capital investment in cars to their
customers
AAR will increasingly implement stricter standards on
railcar maintenance with higher penalties
 Wheel impact load detectors
 Acoustic bearing detectors
 Truck hunting detectors
Revised Car Repair Billing Rules allow for specific
pricing of repairs based on responsibility and why made
codes
May 21, 2008
DTE Rail Services, Inc
Maintenance Management Seminar
6
Railcars
Ownership/Maintenance

Railcars represent a new set of factors for the shipper
 Acquiring/subleasing/disposing of railcars
 Lease/ownership strategies
 Maintenance
 Administration
 Fleet planning, distribution and management
Analyzing and controlling these costs is a key
factor in rail economics
May 21, 2008
DTE Rail Services, Inc
Maintenance Management Seminar
7
Components for Furnishing Railcars
Leasing Railcars
Full Service Lease
Everything is included
Lessee pays premium price
Net Lease or Purchase
Responsible for everything
Maintenance
Usually annual mileage capped
Excess mileage charges will apply
if exceeded
Responsible for loading/unloading
damage
Hatches, gates, linings
May 21, 2008
UMLER Registration
Taxes/Insurance
Remarking
DTE Rail Services, Inc
Maintenance Management Seminar
8
What does my railcar really cost?
Leasing Railcars
May 21, 2008
Monthly Rental Fee
Mileage
Transportation Charges
Maintenance
DTE Rail Services, Inc
Maintenance Management Seminar
9
Auditing Rental

Lease Invoices




Monthly Rental Charges
Delivery (on rent) dates
Termination (off rent) dates
Shop Credits (rental abatement)
May 21, 2008
DTE Rail Services, Inc
Maintenance Management Seminar
10
Auditing Mileage

Mileage Credits



For loaded miles paid by railroads
Apply as offset against rental
Excess Mileage Charges



Vary according to lease
Limit of miles for calendar year
Offset increased maintenance expense
May 21, 2008
DTE Rail Services, Inc
Maintenance Management Seminar
11
Auditing Mileage (continued)

Mileage Equalization




Apply to tank cars only
Cars usually return in reverse of loaded
movement
Charges apply if empty miles exceed loaded miles
by 106% on annual basis
Verify that railroads are not running up excess
empty miles
May 21, 2008
DTE Rail Services, Inc
Maintenance Management Seminar
12
Auditing Transportation

Transportation Charges

Delivery into service


Use prior lessee’s last free empty move
Lease Termination


May 21, 2008
Be sure to follow loaded movement for free empty return
Negotiate termination location at the beginning of the
lease
DTE Rail Services, Inc
Maintenance Management Seminar
13
Auditing Transportation (continued)

Transportation Charges

Costs to / from shops



May 21, 2008
If net lease use shops on loaded route
If full service lease work with lessor to use shops on
loaded route
Use empty move after loaded move when possible
DTE Rail Services, Inc
Maintenance Management Seminar
14
Auditing Transportation (continued)

Transportation Charges

Out of route charges



May 21, 2008
Use free empty repositioning movements when possible
Verify that the route charges is for the route that was
issued to the railroad
Try to negotiate contract rates with railroads
DTE Rail Services, Inc
Maintenance Management Seminar
15
Maintenance Responsibilities

Net Leases


Lessee responsible for all maintenance
Full Service Leases


Not always “full”
Usually AAR running repairs and FRA
requirements
May 21, 2008
DTE Rail Services, Inc
Maintenance Management Seminar
16
Maintenance Responsibilities (continued)

Lessee’s responsible repairs:



Linings
Cleaning
Removable car parts

May 21, 2008
outlet caps, valves, dome covering, fittings, gates and
hatches
DTE Rail Services, Inc
Maintenance Management Seminar
17
Other Administrative Tasks

Possible Lessee’s responsibilities:

Net lease




May 21, 2008
UMLER registration
Remarking of equipment
Ad Valorum tax reporting
Insurance
DTE Rail Services, Inc
Maintenance Management Seminar
18
Conclusion



Railcar fleets are expensive
There are several options for obtaining railcars
Be sure to compare all options and responsibilities:




Does your company want to invest in assets long term or
have a short term need?
Do you have the manpower and expertise to manage the
assets?
Do you want to outsource some or all of the management?
Do you have a strategy for disposing of assets at end of
term?
May 21, 2008
DTE Rail Services, Inc
Maintenance Management Seminar
19