NS shifts automotive equipment gears to match car-buying pattern shifts

Posted by: Jeff Stagl | Date posted: 8/8/2008

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Posted by Adron on 8/11/2008 3:37:10 PM

About time we wised up, funny how it usually takes a market adjustment to bring logic back into certain buying patterns. The twisted irony is I'm sure particular political alignments will still say that big trucks should go the way of the dinosaur and demand legislation. The market is a much better regulator of demand than any silly legislative action.

Posted by David Smith on 8/12/2008 11:14:17 AM

This anamoly of rising demand for smaller cars will be short-lived just like it was in the 70's, the last time we had an artifical oil "shortage" created by government incompetence. Once we win the drilling battle in Congress we'll see oil prices (and subsequent gas prices) decline to more normalized levels. Then sales of larger vehicles will again become dominant because they are a better fit for the American lifestyle. I just hope NS and the other railroads can just as easily convert the autocarrier fleets back to normalicy.

Posted by Larry Kaufman on 8/12/2008 11:49:49 AM

Dave Smith continues to believe that the earth is flat. The 1974 energy crisis occurred because our good friends in OPEC put an embargo on shipments to the U.S. following U.S. support for Israel during its Yom Kippur War that was started by the Arab OPEC nations. There was no shortage of oil then, just an artificial disruption of the market. There were no developing India or China to affect the market as it existed then. Today, the problem is that world-wide demand for oil is greater than ever before and production has not increased to keep pace with demand. Golly, supply and demand again -- it always works, doesn't it? So the harking back to past oil disruptions may make some people feel better, but it just isn't accurate. If anything it gives some people a false sense of security and a rationale for doing nothing. Perhaps Mr. Smith should run for Congress. He'd feel right at home with the others who prefer to do nothing. More seriously, Americans seem to have set $4/gal. as the break-point for gasoline. At and above $4, they reduce their driving, and you cannot give away a large SUV, much less a Hummer. And, as this is a rail-oriented blog, it figures that Norfolk Southern and other railroads that participate in the multi-level pool will have to reconfigure the fleet to reflect the change in mix of what is selling and what is not selling. To make good news out of bad, at least with the carmakers in deep recession, they at least have time in which to do the requisite reconfiguring.

Posted by Dave Smith on 8/13/2008 7:52:04 PM

Flat Earthers like Larry Kaufman continue to align themselves with Nancy Pelosi, Harry Reid, and the rest of the 25% of un-Americans who don't want us to drill for our own oil. Indeed, they continue to ignore the fact that the US could easily be energy independent if we only opened up the OCF and ANWR, as well as refocussing on CTL and oil shale/oil sands production. Oh yes, Larry, this is indeed an artificial shortage akin to the artificial shortage of the 1970's. It is all due to government fiat, enabled by psuedo-communists like Larry who yearn for a socialist nirvana. Regardless, buying patterns of US consumers will soon return to the types of vehicles that fit the American psyche, namely SUV's. I think NS has jumped the gun in spending so much money to convert auto carriers to small car dimensions, because in a short while they'll have to convert them right back to larger vehicle dimensions. By the way Larry, what do you drive? Or do you just live off the backs of taxpayers via public transit?

Posted by Larry Kaufman on 8/14/2008 10:13:07 AM

Having been challenged on the basis of ideas and fact, Mr. Smith, having neither on his side, resorts to personal invective. So be it. I''ve been attacked by better than he. As the editors of PR have allowed a particularly vicious and nasty personal attack, I am assuming that I will be allowed the opportunity to offer a response in kind. Flat earth, Mr. Smith, refers to people like you who reject all ideas that man can progress. It is you who posit the same old arguments despite plentiful evidence that you are wrong, thus earning you the flat earth sobriquet. You have no idea what my personal political views are - nor should you - but I will tell you and any other readers who have not already been bored to death by this increasingly puerile exchange that I was a Schedule C special assistant in the Office of the Secretary of Transportation more than 35 years ago during a Republican Administration. Your juvenile effort to insult and offend me by tying my views to those of Ms. Pelosi and Sen. Reid are just that - juvenile. You see, Mr. Smith, I don''t need to impugn other people''s motives or patriotism. I do challenge incorrect interpretations of history and ill-founded ideas. That''s what blogs are for, whether you choose to admit it or not. You are plain wrong about being energy independednt by opening the OCF and ANWR, although I grant you that Dick Cheney no doubt considers you a "good, loyal American" for mouthing such inanities. The U.S. has 3% of the world''s population and consumes 25% of its energy. We cannot drill our way out of this problem, and the more realistic of us understand that and seek a variety of alternatives. When you get to language like "pseudo-communists," you only make yourself look stupid. That''s the kind of idiotic epithet that used to vbe used by the McCarthyites. I don''t need to defend myself to the likes of you, a pseudo-socialist living off the U.S. Treasury in his electric co-op world, and paying no federal taxes on his artifical profits. Your visceral anger is amusing,if unconstructive. As for some substance in this silly rant of yours, I''ll take NS''s word for it that it knows what its markets are likely to be and that its management is properly spending resources so that it will be able to serve the markets that exist, not the fictional ones that "David" hallucinates over. Finally, David, I drive a hard-top luxury convertible and my wife drives a luxury SUV, both manufactured in Japan, not that it''s any of your business. Having worked hard for a long time, we consider it our right to own and drive any kind of vehicle that suits our fancy. We pay for our gasoline and we don''t condemn ExxonMobile for the price. When I worked in NY, I happily rode public transit and thanked my fellow taxpayers for the subsidy. Funny thing, though, my fellow taxpayers all seemed to understand that getting workers to and from a central city efficiently was a better use of public resources than building multiple additional lanes of freeways just so auto traffic could pile up in the city. Fortunately, your Libertarian screed has no more adherents today than it ever has. You must enjoy standing in front of a mirror and raging at yourself. Perhaps in future blogs you will try to exchange ideas rather than invective. I somehow have my doubts that you are capable of conducting a rational exchange of ideas, as I''ve seen no evidence of rationality on your part yet.

Posted by brian on 8/14/2008 3:19:03 PM

Tell me...are Dave and Larry really the same person who skipped medication time?

Posted by David Smith on 8/15/2008 8:45:50 PM

Whether NS has contemplated future market conditions or not is irrelevant, since they are part of the oligarchy that can simply pass on costs to consumers, regardless of whether those costs were due to the normal cost of doing business or due to poor managerial decisions. That's the beauty of belonging to the fraternity of natural monopolies. However, it does occur to most folks that NS would be better suited if they just hauled the minicars in the SUV-dimensioned auto carriers rather than spending so much money converting them for what is clearly a temporary situation. As for the current energy situation, the EIA conservatively estimates that there are 115 billon barrels of recoverable oil and 570 trillion cubic feet of natural gas in the Outer Continental Shelf alone. Clearly, we can and should drill our way out of this unnecessary energy problem. We have a 300 years supply of coal that can be converted to synthetic fuels via CTL technology. We have untold billions of barrels of oil available via the oil shales of the Intermountain West. Yes, we are easily capable of becoming energy independent within a few short years. However, there are some on this forum that would have us believe it is better for the railroad industry if Americans stay enslaved to increasing dependency on foreign oil and environmental fascism.

Posted by Larry Kaufman on 8/18/2008 11:39:11 AM

Here we go again; another political screed from Dave Smith. Anyone note that he increasingly is off on political rants and has less to say about transportation? And, sorry, Brian, but at my age I faithfully take my meds. You may also want to consider that I don't originate exchanges at this blog, but do respond to the lunacy expressed from time to time. No names, of course, because I don't wish to be accused of attacking anyone. Oligarchy? Heck, why not go all the way and call it a monopoly. Others do. They are, of course, wrong. Railroads face more competition than do Dave Smith's beloved co-op electric generators, and where they have market dominance - a term with legal significance - their rates may be challenged with reparations and interest due to those who can persuade the STB that they are being forced to pay unreasonably high rates. After 28 years, that seems to be obvious to all but a few in the utility and chemical industries. Simply pass on costs? Only someone who never has had to buy transportation service or provide it would make such a statement. No evidence, but rhetoric seems to be the order of the day from Mr. Smith. I'm sure NS, considered by most to be one of if not the best managed railroad, appreciates Mr. Smith telling it how to conduct its automotive business. Considering that 11 out of 12 new trans-plants were built on NS tracks, I'll take NS's reputation over the maundering of Mr. Smith, who demonstrates no real understanding of railroads or economics, although that never keeps him from having an opinion, invalid though it usually is. Sorry, Mr. Smith, oil drilling policy just is not a subject of this particular blog or site. You're on your own with that loony blather. You really ought to watch the name calling though. Last week it was pseudo-communish. Now it is environmental fascism. And Brian had the temerity to include me in his query whether we were one and the same person but off our meds. Happily, I am not Dave Smith, have never been Dave Smith, and never will be Dave Smith. His problem, which he states over and over, is one that cannot be fixed simply by meds.

Posted by michael willis on 8/19/2008 2:58:05 PM

What a great debate between Mr. Smith & Mr. Kaufman. This is the kind of debate that should air on the Larry King show! with additional members of the panel from the railroad/transit/electric utilities area with oppssing views from the oil/automotive/airline sector. The public needs to know the efficiency numbers & the incredible advantages that 21st steel wheel on iron rail century railway technology has in its favor vs fuel slurping rubber wheeled suv's & trucks over the road & thirsty wings in the air! EFFICIENCY RULES!

Posted by Richard Frick on 8/19/2008 6:30:11 PM

It is a shame that this type of forum is used to lucubrate on political issues and circumvent the issue at hand. The Automobile Industry requested a NEW conveyance from the Railroad Industry in 1991 and continues that request to deaf ears. Seventy-five percent of the current fleet of multi-levels have reached their maturity and by Railroad Regulations, should be scraped due to OLD AGE. They are the True Dinosaurs of the Railroad Automobile Transport Industry. There is a product in use by the BNSF and American Honda Motor Co., Inc. called the AutoMax. that provides the ride quality that is required with todays more sophisticated vehicles. The use of sensitive computers to control the various functions of the vehicles cannot tolerate the rough ride that is provided by the Old Technology. That is giving a lot of misplaced credit since the multi-levels were built on outdated Intermodal railcars thereby providing an extended life to this worn out equipment. The AutoMax Railcar will transport 85% of ALL vehicles that are manufactured in North America and Imported into North America. The Railroad Industry is trying to protect against the obsolescence of the multi-level fleet by ignoring the true benefits that the New Technology provides. With the rising cost of fuel, you would think that the Railroad Industry would would embrace technology that reduces fuel costs by 40% and virtually eliminates transcontinental movement of empty equipment for repositioning to loading sites. The New Technology will handle automobile and Lt. Trucks/SUV''s on the same railcar and provides the ride quality of a Double Stack railcar. Maybe the Railroads feel that containers of freight need a better ride than vibration and impact sensitive motor vehicles. As for the lack of a universal network that can accommodate the AutoMax railcar, the outdated technology can easily accommodate the routes that cannot accommodate the AutoMax and provide an efficient network for the entire Automotive Industry. that cannot.

Posted by Larry Kaufman on 8/20/2008 10:28:22 AM

The argument in favor of broader use of the AutoMax car is a welcome addition to this blog site. All equipment investment invariably is made by the acquirer on the basis of expected/anticipated return on investment. BNSF and Honda have been pioneering users of the Greenbrier AutoMax car. That no one else has committed to it suggests that the benefits may not be all that some claim. As for the auto makers calling for better cars, etc., the railroads still are common carriers and must provide service upon reasonable demand. Nothing prevents the auto makers from financing their car fleet and negotiating an allowance for provision of cars. The chemical industry always has provided its own cars. Otherwise, this is the classic approach of those shippers who feel "entitled." They expect carriers to make all the capital investment they want, whether the rate charged covers the capital investment or not.

Posted by Bert Ruden on 9/10/2008 12:48:48 PM

While it is true that none of the other OEMs have committed to Automax cars to the extent Honda has, other manufacturers have at least dipped their toes in the water. Certainly both Nissan and Toyota have made use of these railcars. The biggest concern with the Automax cars at the moment is their height. At 20 feet 2 inches ATR there are many places they cannon go in the North American rail network. While I agree with Mr. Kaufman's argument that the OEMs need to either supply their own equipment or pay rates that will cover the capital costs for the equipment, I also believe that the "Big 3" U.S. manufacturers are not in the financial position at the moment to ante up a few billion dollars for railcars. I will take issue with the "old technology" argument. Damage-free shipments for one of the major U.S. manufacturers have been in the very high 90 percentile range for several years. When you dig deeper into the statistics you find that a good percentage of the damages that do occur have more to do with loading and unloading vehicles rather than anything inherent in the design of the railcars. What I have heard from the carriers is that converting a bilevel to a trilevel is neither cheap nor easy. That is the greatest strength of the Automax design: it can be converted from a two-deck to a three-deck railcar with only a day or two in the shopand the manpower to move the decks. The biggest question, in my mind, is whether the automotive industry is going to move away from their "build in quantity for stock" manufacturing model and go to a faster, more flexible and more customer-driven manufacturing model? If they do, multilevel railcars may indeed become dinosaurs.

Posted by David Smith on 9/10/2008 8:26:32 PM

The AutoMax is lightyears ahead of the competition in terms of optimized auto carriers, perhaps even the USRA flagship equivalent. It is unfortunate that the railroads have not adopted the AutoMax as the flagship of the auto carrying equipment fleet. Then again, if you were an automobile manufacturer and you were forced to choose between the present out-dated but cheaper rail-owned fleet, or having to purchase your own autocarriers, which way would you opt? By the way, does anyone else here think that the AutoMax would make a great template for an articulated passenger car?!

Posted by Larry Kaufman on 9/17/2008 11:32:24 AM

Ye gads! Does Dave Smith have the foggiest notion what he is saying? As usual, he makes a flat statement that the AutoMax is lightyears ahead of the competition in terms of optimized auto carriers, perhaps even the USRA flagship equivalent. He, of course, offers no support for the assertion; we're just supposed to accept it as Gospel. By the way, Davey, USRA doesn't have a flagship, never had a flagship, and doesn't even exist anymore. I realize that you don't believe anyone in the railroad knows anything, but has it ever dawned on you that those railroads that have not adopted the AutoMax (some have, you know) have not done so because the economics don't work for them. Unlike electric co-ops, railroads must secure their capital in the capital markets, not from the Treasury. Auto manufacturers, like other private sector businesses, seek the optimum in running their businesses. If the AutoMax enables them to achieve that, they will demand that railroads supply the AutoMax - or they can acquire the cars by purchase or lease and put them into service in their own self-interest. Cars represent capital investment, whether made by railroads, shippers, or leasing companies. Their cost of ownership and operation is included in the rate charged for transportation. Mr. Smith, you don't understand any more about rail cars than you do about rail economics - which is nothing. As for the cockamamie idea of using the AutoMax as a template for passenger equipment, Mr. Smith demonstrates for all to see that he gets his jollies simply by being contrary, not from any knowledge or wisdom. He, who argues against the continuation of Amtrak, would have someone do something that doesn't really make any sense at all - but what's different about that from any of his other anti-railroad screeds? No, Davey, no one else thinks that the AutoMax would make a great template for an articulated passenger car?! Perhaps that's because there is no demand for an articulated passenger car, and if there were, a better car would be designed than a two-truck freight car with freight car suspension.

Posted by David Smith on 9/17/2008 7:35:05 PM

Sooooo.....the Larry Kaufman insult parade just continues, unabated and unsubstantiated! Perhaps Larry should go back to high school and review the meaning of words such as "equivalent" and "template" before he spouts off another pointless rant against creative thought. "USRA equivalent" is not the same as "USRA", it is philosophical classification meant to imply the optimum design example for that type of freight car. And using the AutoMax as a template for an articulated passenger car design does not imply (except of course to the double-digit IQ crowd) that the an AutoMax-inspired passenger car would use freight car suspension et al, rather would incorporate the basic AutoMax frame with passenger car amenities. Most normal readers here probably got that, so it's not too suprising that such a not-so-subtle suggestion went right over Larry's head.

Posted by Larry Kaufman on 9/18/2008 1:45:20 PM

It's a funny thing, but I don't seem to have a problem of insulting other scriveners at this blogsite, although I certainly am not always in agreement with every post. It's only Dave Smith. Perhaps the problem is Mr. Smith's? Perhaps there's something in the water he drinks or the air he breathes? Or, perhaps it's that he constantly presents an anti-rail ideological bias here that calls for rebuttal lest the truly cockamamie ideas accidentally take root.