Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

Weak Economy Slows Cargo, Idles Railcars

with 7 comments

Associated Press

Those of you who subscribe to the lrc-general mailing list will have seen this already: thank you Richard Campbell for posting it.

As some of you may know I have a harmless obsession – I like to watch trains, and take their pictures. And one of the places I go to do that around here is Deltaport. And I have been noticing recently that it has been very quiet. I usually like to take pictures of trains as I think shots of empty railroad tracks are less interesting. Though there are people who do that too.

But you cannot extrapolate a trend from a few anecdotes. But this is actual data

Texas-based BNSF Railway, a division of Burlington Northern Santa Fe Corp., has parked upward of 1,000 cars in Montana alone, spokesman Gus Melonas said. More are parked in other parts of the company’s 32,000-mile system, which operates in 28 states and two Canadian provinces.

They decline to provide a figure for the whole system citing reasons of confidentiality. But the truckers are not so reticent.

One of the nation’s leading trucking companies, Schneider National in Green Bay, Wis., says it believes a freight recession began about 20 months ago, well before signs of a downturn closed in on consumers.

“We have been in a freight recession longer than people have been expressing deep concern about the economy,” said Bill Matheson, Schneider’s president for intermodal transportation.

or the ports

In January, Long Beach posted a decrease of about 12 percent in overall volume compared to January 2007

The trajectory of ever increasing imports into North America was never going to be sustainable, but the extent and speed with which things have turned around seems to have taken the province of BC by surprise. The Gateway program is still steaming along with no slackening of its pace. Despite increasing concerns about the impacts on the environment and local communities Gordon and Kevin are determined to press on regardless.  But as we also know the justification for both port expansion and the associated road program was never really very well thought through. It was simple opportunism, not long range planning at all. And the road expansion appealed to other groups. I think that for a while there a lot of people thought that the apparent economic case – more trade means growth and jobs – was good cover for what they really wanted. Freeways and suburban development. Business as usual. And I think that cover has been blown.

And I have no doubt at all that when confronted with this story their reaction will be that it is a cyclical effect. The recession, they will say, will be temporary, and when things turn around we will be in a stronger position to compete. Except that this is no ordinary recession, and more than one commentator is drawing comparisons with 1931. And I suspect that as usual the US response to difficult times will be to retreat back into protectionism.

There is also another effect of the credit crunch that is more direct in its impact. It is becoming increasingly difficult to finance P3s. Because the organisations that were really keen on such things were once awash with funds. They had these wonderful new financial instruments, which looked a bit complicated, but people thought were backed by real estate. Securitised mortgages – and lots of them, thanks to the removal of federal oversight of the financial community and exactly the same type of instrument by the way that caused the 1931 collapse. That is when the recession started. Not the 1929 Wall Street crash. The banking crisis which looks the same as the one the US has now. When people could not make their mortgage payments and the banks foreclosed and then found the properties they had repossessed were unsaleable. Which meant the value of the paper they had been flogging was now impossible to determine.

So how long before the penny drops in Victoria?

Written by Stephen Rees

March 29, 2008 at 5:32 pm

Posted in Economics, Gateway

7 Responses

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  1. Just a note. Coming home from a family vacation to Disneyland, we toured Nevada and helped the local economy in Vegas and Reno. Upon driving North along HWY 395, the rail line adjacent to the highway was being used for storage for bulkhead lumber cars & flatcars. I estimated at least 8 km. of stored cars!

    Malcolm J.

    March 29, 2008 at 10:07 pm

  2. Regarding port facilities, one does not need to invoke the Great Depression or even the US, to see the potential folly of Gateway. Ridley Island in Prince Rupert was the coal terminal developed in the early 1980s to supply the Japanese coal market with northeastern British Columbia coal. The steel market did not develop anywhere near the projections, and the Japanese, federal government and provincial government wasted a lot of money. The Japanese had locked themselves into long term contracts, the prices of which turned out to be much higher than spot prices in the late 1980s and 1990s. The Japanese were belatedly able to renegotiate the contracts, several years after which the mines closed. The federal government overbuilt the coal terminal and spent a lot of money maintaining it when no coal was being shipped. The provincial government built a rail spur (electric at that) which had two very long tunnels, two paved and one gravel highway, and a town site where homes were almost given away just before the mines closed.

    Northeast coal and the accompanying infrastructure was a boondoggle which nobody should forget. It is amazing the press has such a short memory.

    Graeme

    March 29, 2008 at 11:28 pm

  3. Malcolm

    It is not necessary to go far to see idle forest product cars. The SRY yards at New Westminster are full of them. Most of the dimensional lumber mills in this province having closed.

    Stephen Rees

    March 30, 2008 at 10:49 am

  4. what need? this bunch of dobell.fraser,john les,virk , basi-and countless others—the game they play,and campbell the holder of the dice- what a useless batch of slugs!–not one good idea –8 years of patheticism! bc rail -made over 100million each year -we sold it for -700million!– so if we kept bc rail -we would have the money and the rail!–bc rail used to piggy-back-trucks and containers -now are roads are ruined because of the truck traffic!–name one thing these bc libs have done that was useful! CUTS TO SOCIAL HOUSING-SCHOOL CLOSING?–HOSPITAL CLOSING?-WCB CORRUPTION THAT HAS PUT THOUSANDS OF DISABLED ON THE STREETS!- and gordo and falco and shirley bond- talk about legacy—the legacy of a ski-jump–the legacy of a slowing sinking speed skating oval ( THE RICHMOND ICE CASINO ) who wants to have a legacy that saves–WILD SALMON-ANCIENT FORESTS- FARMABLE LAND- WHAT ABOUT THE LEGACY OVER CARRING LARGE DEBT -TO MAKE SURE THE BOOMERS( mr.rees- and santa clause ) have healh care -demographics,ramp up for the seniors- then pull back for new demographics! THE LEGACY -GORDO (THE GARGLER ) CAMPBELL –will have is ‘NOTHING” the goverment had full pockets for 6 years and did -NOTHING NOTHING NOTHING- I don`t know what happened to campbell ! hes done everything exactly oppisite to his campaign promisis in 2001- the only thing I can think of is ‘CAMPBELL IS A COMPULSIVE DEMENTED FIBSTER!—-OR MAYBE WHEN HE WAS DRUNK IN HAWAII .THAT SOMEONE SOME ENTITY HAS GOT MAJOR DIRT ON CAMPBELL . ps has anyone seen mrs.campbell? ………………………………signed………………………even a blind squirrel,occasionaly finds a nut!

    grant g

    March 30, 2008 at 12:03 pm

  5. grant g: you may be right, but you’re stepping dangerously close to troll territory with those comments of yours.

    Corey

    March 30, 2008 at 12:29 pm

  6. My eyes hurt. :(

    While I’m starting to get a little concerned about the economy with some of the 1931-replay posturing I’ve read about lately, I’m definitely not disappointed in seeing less imports. And of course, the best way to guard against importing shortfalls is to increase our dependence on our own resources, employees and goods instead of on other nations’.

    That makes me wonder, actually… what’s the ratio of complaints these days by Americans who lose their jobs to cheaper overseas workers, versus the number of (generally unfounded) complaints that immigrants were “stealing” their jobs? (Jobs Americans didn’t want, hence the unfounded complaint.) I wonder if we’d see a huge change in the economy and climate if those jobs were brought back to the US (and Canada).

    That MP who wrote the article on the coming collapse of real estate seemed to suggest 2 years, until that happens. I figured that by him saying the US was in our current state 2 years ago. So give or take. Hopefully we can learn from their mistakes before it’s too late… or is it just too late? (I want my little townhouse! But I want my savings account interest rate to go back up again, too.)

    Erika Rathje

    April 1, 2008 at 7:10 pm

  7. [...] may be a really stupid idea, given that the US economy has gone into a tailspin, US freight and container imports in particular having been in decline for the last two years. It has also miserably failed any [...]


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