The magnitude of the Railconnect project

lego trains

From Trinity Journal: RAILCONNECT SUCCESS FACTORS – Patrick Meagher

In my last commentary I reviewed the Humboldt Bay Alternative Rail Corridor Concept Level Construction Cost and Revenue Analysis Final Report.  I wrote that op-ed to ensure (Trinity) Journal readers understand the magnitude of the Railconnect project that is advocated by its promoters.  It is important now to dig deeper into the report in order to examine the complexity of that project, and so I quote from page 32 as follows, “The financial feasibility of the proposed rail routes to Humboldt County is only one of several factors in determining whether the project is viable.  Other key factors include: rail distance to competing ports, railroad market considerations, vessel characteristics of potential fleet, marine terminal requirements, and navigation channel needs.  Without addressing each of these factors, the rail line in and of itself  will not generate the traffic needed to justify the construction cost.”  So, let’s examine one of the key factors mentioned above; what about that fleet of dry-bulk ships that will be required to service the rail cargo arriving at the Humboldt Bay seaport?  Shashi Kumar author of the 2016 U. S. Merchant Marine and World Maritime Review tells us that maritime shipping companies scrapped 359 dry-bulk ships in 2015 due to low demand.  He states, “these were not enough to offset the leftward shift of the demand curve caused by the decline in Chinese imports, slower growth in iron ore and steel trades, the fall in Chinese and Indian demand for thermal coal imports, and their increasing reliance on clean-energy sources.”  The impact of this decline in commodity exports has resulted in the bankruptcy and loss of assets for twelve dry-bulk shipping lines, sale of ships to rid operators of the cost of maintaining them in lay-up, and lost access to lines-of-credit for violating loan covenants.  Given the dramatic change in world markets for commodities, operators are discarding ships and costs to meet the changes in both current and expected future bulk shipping demand.  In order to remain profitable the bulk shipping fleet will stabilize at “just-enough” for operators to service current demand at established west coast commodity shipping ports.  So where does this leave the proposed $200 million plus Humboldt Bay seaport and the connecting billion dollar plus rail line?  Railconnect promoters need to be reminded that maritime intermodal shipping is first and foremost a for-profit business.  Maritime bulk shipping operators will go where bulk cargo is ready to move with the ships they have on-hand, and that is not to the proposed Humboldt Bay seaport.  Both the 2003 and 2013 studies assert that these projects are high cost and high risk.  The 2003 study recommends against a publicly funded cargo seaport in Humboldt Bay for those reasons and is still valid.  I argue that support for the construction of Railconnect is not warranted because it will never be able to meet all the 2013 success factors identified above.

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30 thoughts on “The magnitude of the Railconnect project

  1. Boy, this breakdown is an eye opener. From sitting in on all sorts of bay discussions over the years a snapshot of what the bay could and could not be started to form in my mind. This breakdown is the best I’ve heard. Just this last week the largest bulk and container shipping co. in South Korea has declared bankruptcy. Sure fits right in to the story line for rail/sea in Humboldt.

    Liked by 2 people

  2. Cherry picking data is the precise reason we need the feasibility study. This study will look at it from a neutral stand point. The out come will not be influenced by those either for or against.
    In a conversation with Jack Crider’s friend Bill Burgel, the author of the Harbor District’s back of napkin study, he admitted his study was under funded, and a more in depth study was needed. He referred to it as a pre-study. When asked if the proposed east west rail had any fatal flaws, he said no.
    If you subtract the 5 to 7 thousand dollars spent to fly over the proposed routes in the middle of winter, the study cost about $14,000. Just enough to pay the staff and print out the pretty copies.
    If you read the study closely you will notice the study only considers fully loaded trains going one way. Even so the study admits that it could be marginally successful.
    Considering the anti rail stance the District displayed at the time, many people believe that the Harbor District’s study was politically motivated.

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    • Monte:

      Next you will be citing the second cousin of the neighbor of the maid who does Jack Crider’s housekeeping.

      You continue to ignore the fact that the railroad and harbor went to rot to begin with due to rather simple economics (the demand and therefore revenues no longer paid for their maintenance). Making both all shiny again does not change that basic economic equation.

      How about taking on the author point by point? If he’s so full of it then it should be easy. But I notice you never do…

      Liked by 1 person

    • What information do you think is missing? Show us. You want to talk about “cherry picking”? The application to fund the current study did not even mention the existence of the 2013 study. Not mentioning the most current information in the application is beyond “cherry picking”. Some might call that fraud.

      Liked by 2 people

  3. “In a conversation with Jack Crider’s friend Bill Burgel, the author of the Harbor District’s back of napkin study, he admitted his study was under funded, and a more in depth study was needed. He referred to it as a pre-study. When asked if the proposed east west rail had any fatal flaws, he said no.”

    Wait, who had this “conversation”? If a pre-study says “high cost, high risk” then why spend over ten times more to do more study? What high cost, high risk factors do you think will change? How do you define a “fatal flaw”?

    Liked by 2 people

  4. “Considering the anti rail stance the District displayed at the time, many people believe that the Harbor District’s study was politically motivated.”

    What stance? How was the study politically motivated? Are you saying the district skewed the data and information? How did they do that?

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  5. “If you read the study closely you will notice the study only considers fully loaded trains going one way. Even so the study admits that it could be marginally successful.”

    Could be marginally successful? Where did you get that? How is that a good thing? Bulk trains only going one way was looked at because there is no such thing as bulk trains going two ways loaded. Containers were not looked at because a previous study show that they were not a likely to be a successful market.

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  6. “This study will look at it from a neutral stand point. The out come will not be influenced by those either for or against.”

    According to the “plan” the study will have direct input from the upstate railconnect committee. If these aren’t the “for” people then please tell us who is.

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  7. I always say it’s better to forgive than to receive.

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  8. The macro view of world shipping is showing a slowing in amount of world wide trade currently. One of the largest shipping companies showing the results is Hajin in S. Korea. They have just filed for bankruptcy, stranding their ships in ports around the world. It looks like products bound for Xmas buying will not make it to retailers. All their bulk carriers are on port as well. Shipping is a fragile market, Volume is everything because of its very small profit margin. They are not paying docking fees and US ports are worried. Just keep this in mind when planning grandiose rail/port projects for Humboldt.

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  9. I like the idea of the choo-choo people spinning their wheels on this total waste of time. I actually think those of us with a (much, much, much) firmer grasp of reality should occasionally let these folks think that they are getting a little taste of success just to keep them drooling over their fantasy. The result will be that this total economic dawg keeps sinking under the weight of its’ own economic impossibility and the advocates are kept busy such that they have fewer resources and time to screw up the world in other ways they might be more successful at. Just sayin’.

    Liked by 1 person

  10. Here is more 2016 shipping bankruptcies to show how serious world markets are. We are at the beginning of a worldwide slowdown which could last for many years. Not a good time to be thinking about rail/sea to help Humboldt’s economy. Hanjin, Duebo International, Winland Ocean shipping, and Copenship, have all closed in the last 10 months. These are four of the biggest shippers in the world. If we don’t pay attention to these signs we will make a big mistake to move ahead with local rail/sea infrastructure. Do the study but postpone construction until it make sense economically. Look up any of these shippers and learn what is going on.

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    • I admire the passion you have in your opposition to the east west rail. It would be easy for me to counter your research with my own, but that would only lead to an escalation in the conversion. I realize it is unreasonable to think that a mind so made up could be changed.
      Being an amateur historian, I became interested in the east west rail route from a purely historical and geographic standpoint.
      Historically, I learned the motivation for the original proposed rail. I also discovered the reasons for it not being built.
      Geographically, I learned that there were indeed ways to traverse the coastal range easily. The main parameters I used were, a grade from 1 to 1.5%, and a route that does not follow rivers where the blue clay soils are common.
      The feasibility study will add to my research, and the Harbor Districts study, and all the other studies that relate to this project. I believe that having more information is a positive thing, and will allow us to make an informed decision when the time comes.

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      • Monte:

        “It would be easy for me to counter your research with my own, but that would only lead to an escalation in the conversion.”

        You mean as in: You say your piece, been there done that says his and you start a dialog? No, it would be a shame to escalate to that sorry state of affairs.

        But I can at least applaud your “escalation” in the very next paragraph by bringing up the point that with care it might be possible to find an East/West route that won’t constantly slide out like runny jello.

        Keep up the good work. With any luck we might actually have a rational conversation on the subject (What can I say? I’m an optimist).

        Liked by 1 person

  11. Thank you for the encouragement.

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    • Monte:

      My aim has always been to get you to talk about what you are promoting. I encourage you all the time.

      Just don’t expect me to just accept everything you say at face value.

      Fair enough?

      Liked by 1 person

      • To change the subject, what are your views on the cannabis laws in Humboldt? I believe that we have had these news rules rammed down our throats, and the proper thing to do is have a moratorium until the issue can be placed on a ballot, and let the citizens of Humboldt decide.

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      • Monte 6:49:

        Why do you feel the need to change the subject? I’m quite satisfied with our continuing to talk about YOUR project. Why aren’t you?

        You have the floor sir (and the soapbox to stand on).

        Liked by 1 person

  12. Since we grow a very large premium crop of cannabis here, it would make sense to bulk ship it to other states that have legalized it. No train should returning from the coast should leave empty.

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  13. Sorry I changed the subject, I was just curious about how another human felt about an important subject. I did not realize you wanted to continue to thumb wrestle.
    Under what conditions would you support an east west rail?

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    • Monte:

      Under what conditions would I support the East/West rail?

      For starters:

      You must PROVE that the project is economically feasible (I think I have said that a few times already).

      You must PROVE that ecological and sociological concerns can be addressed and mediated properly.

      You must PROVE that this doesn’t become a publicly funded means for a few players to make obscene amounts of money at the expense of the rest of us.

      I think that will do for a beginning. All of this has already been mentioned by others and myself.

      If you want to discuss the cannabis culture issues, I suggest you look at John Hardin’s blog (Like You Got Something Better To Do [LYGSBTDO], which is frequently reprinted in the LoCO (there’s a new article today).

      Perhaps if you still feel inspired on the new subject, you can talk the Tuluwat Examiner staff into publishing another Op Ed. Perhaps another series of questions that you then fail to answer. That’s your format, isn’t it?

      Liked by 1 person

      • I realize now it was a mistake asking you your opinion on another subject. It appears that you are so invested in being an adversary that answering a simple non confrontational question from me is not possible.

        As for you ever supporting the east west rail I believe you will never be able to, since instead of waiting to let the study answer your questions you expect Me to PROVE these things to YOU.
        And that’s just the beginning.

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      • Monte 8:11:

        Hey, you asked and I answered. Which is more than I can say for you.

        And I thought I did you a favor telling you where you can go for the viewpoint you were seeking. My bad, I guess.

        Liked by 1 person

  14. If I owned a store in Old Town I would want to know if the current rail right of way on first street is going to be used. What traffic and pedestrian impact would there be? Where would a spur be put if ships were to dock on the Eureka side? Would the train have to cross the bay near Arcata or would a trestle be needed on the spit side as there used to be? What would happen to the Oyster industry and the toxics being disturbed in the north bay constuction? What about a real dialog with residents in both communities, since many don’t remember what it was like years ago with lumber and log trains. That should be done BEFORE it is locked in stone. Also the Coastal Commission will have to way in and could ax the idea after a lot of time, and money have been expended. Doing a project on this scale requires many state and federal agencies to weigh in. The route from Redding will have to pass through many potential sacred sites of a number of Tribes. You can see what problems that has caused in the Dakotas. That is why the go road was never finished from the Klamath going north. Archaeological surveys need to be done to protect tribal rights. I won’t go on because the list of concerns could take up a few pages. I hope this helps you understand my concerns and if they will be addressed.

    Liked by 2 people

  15. I figure if Jerry Brown and the state will not give any financial benefit to any Ca. port who ship coal. That makes it pretty clear it will be a hard sell for a small port to have a coal facility. What are your thoughts on my concerns?

    Liked by 1 person

    • I am by no means an expert, but I believe there are no US ports on the west coast shipping coal.
      As for yours and my concerns, the study address’s these in the part that studies the permitting process. All of these will have to be held to CEQA, and NEPA standards.

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  16. Pingback: Important chance to stop the East-West Railroad in Weaverville March 9, 10am | Tuluwat Examiner

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