nicknoyes wrote:
A business, such as a manufacturing plant, a farm products company or a distribution center, considers building their facility near an operational railroad track. Management desires to ship their products by rail, but there is no siding. What justifies the construction of a siding? If justified, who pays for the construction of the siding, the company or the railroad?
See Mudchicken's comments.
A siding is a place to meet and pass trains. I think you're referring to an industrial spur.
The industry pays 100% of the cost of the spur, turnout, and any changes to signaling, drainage, access roads, grade-crossing signaling, and anything else that is affected. In addition the industry may be required to pay 100% of the cost of network improvements required to serve the industry. For example, a power plant proposing to receive one train per day will likely be asked to pay for siding extensions, new sidings, signaling upgrades, power crossovers, fueling tracks, staging tracks, inspection tracks and other network facilities between the power plant and the mine, if there is not spare capacity in place already. These costs can easily add up to $50-100 million. A carload shipper of moderate size -- say, 30 carloads per day -- may be asked to pay for 100% of the cost of new classification tracks in a yard, new storage tracks, and anything else that may be required to serve the shipper. These costs can easily add up to $10-20 million.
The shipper may or may not receive a rebate or reduction in the cost of shipping for the value of their improvements to the network. In most cases the answer today is no. However, the railroad recognizes that it the transportation cost and capital costs are too high the shipper will look to a different location, a different railroad, truck or barge, or simply not build anything at all. The railroad will work with the shipper to achieve the best possible outcome for the shipper but is not in the business of investing its capital into the shipper's fixed plant.
All track and signal construction within the railroad right-of-way will usually be done by railroad forces on a force-account basis because the railroad's agreement with its locals requires such. The shipper can use its own contractor outside of the railroad right-of-way.
A shipper located on a lightly used, unsignaled main line or within yard limits might get away with a simple #11 hand-throw turnout at $50-100K up to the edge of railroad right-of-way. A shipper on a high-density congested main line might be required to install a #24 movable-point frog turnout leading to a 10,000 signaled deceleration track, with a control point on each end, costing $8-10 million. That's before the shipper has laid a foot of track on its own property.
The location as Mudchicken points out is not always feasible. I wish I had a dollar for every shipper who optioned or purchased a piece of property next to a main track and then discovered the railroad would not put in a switch at any price. In signalled track a switch cannot be put in just anywhere, and curves, bridges, clearances, grade-crossings, and other features all play a big role. Sometimes a long lead has to be constructed for 1-5 miles to get to a point where it's feasible to install a turnout. I can recall one shipper who discovered to get a spur into their property next to a main line would have required construction of a $50 million bridge -- were they ever aghast!
I do a lot of these things and it's fun but never very easy. The amount of coordination it takes is not for the faint of heart. If, for example, you wanted a spur off a signaled main line to start accepting cars on February 1, 2010, you're almost already too late to get started.
RWM
