Wednesday, July 08, 2009

Analysis of NB Southern Announcement

So what does $18 million buy? And is this a good investment by the governments?

I should say, what does $36 million buy, because some of the more recent articles about the announcement state that J.D. Irving will match the federal and provincial funds.

Given 90 miles of mainline track (Saint John to Maine border) and 34 miles of branchline track (St. Stephen line), that is an average of $290,000/mile.
A recent Iowa Department of Transportation analysis determined that rehabilitation of lines to 286K standards generally costs about US $265,000/mile. That falls very much in line with the figures above.

The newer articles (below) talk about upgrading the line to the the 286K standard. Many of New Brunswick's railway lines can only handle cars that weigh up to 263,000 lbs. Most class 1 railways in North America, aka the larger ones, handle cars up to 286,000 lbs and more. It makes it hard for shippers to send cars across the continent when they can only use 263,000 pound cars.

This upgrade will allow easier interchange of traffic. Marwood (just north of Fredericton Junction) is quoted as saying they will use the rail line once it is upgraded. I should point out that Marwood is owned by J.D. Irving, as are all the newspapers quoted below.

I know there are people who say government should not invest in private companies, and in general I agree with that. But a railway is not exactly a private company - it provides a public service as a transportation corridor. Governments should be very involved in transportation, especially to promote greener, more fuel efficient transportation methods such as railways. I would much rather see $18 million of my money go to a railway than to build a few miles of twinned highways for more gas guzzlers.

I also know many people don't think the Irvings should get any public funds. Ask yourself if NB Southern was owned by a publicly-listed company, if you'd feel any different. Irving has their faults but they have done a lot for New Brunswick.

I think this is a good investment by the federal and provincial governments.

More coverage: NB Business Journal, Daily Gleaner (again), Telegraph Journal.

3 comments:

Peter said...

Kudos Steve - a well written analysis of the NBSR story.

From a capacity versus capaital const perspective, nothing can beat rail through the terrain west of Saint John. It will allow heavier loads at greater speeds. Safety would be enhanced as well not alone mentioned the favourable impact on the environment.

I share your observation that people see railways as a private business but they pay the costs to maintain their infrastucture. Truck drivers, regrettably, do not.

Your cost estimates to change out the rail may be a little light depending on the cost of the rail. The market was overheated in 2008.

As the promoter of the Acadian Railway, we share the same design issued with the proper weight of rail. 286k is the bare minimum if you want to get the maximum tonnage per employee.

I would suggest that the NBSR consider leapfrogging the 286k limit and moving to the 315k limit thus placing the port as a potential key entry point in North America. slowly, key lines in the US are moving to this standard and I expect the Rockies and southern Ontario will move to that level in the next 10-20 years.

As for the Irving's, people either love them or hate them. One thing for certain, they do know how to run a shortline.

Funwithchuck said...

Any idea what kind of rail? Will it be Continuous Welded Rail perhaps? Good news for that railroad and the other connecting to it (Pan Am, MMA, CN)

Train Geek said...

Thanks, Peter.

FWC, I expect it would be continuous welded rail. In this day and age I wouldn't think anyone would redo this much track without using CWR and the appropriate machinery.