New Detroit River Tunnel "On Hold"

[NYCMan]

http://www.crainsdetroit.com/article/20 ... ld-updated

The new (second) Detroit River Tunnel project is now on hold, due to their being no business case to support it. The present tunnel, spearheaded by Henry B. Ledyard in 1910, is able to adequately handle existing traffic.

[hoborich]

Doesn't say much for our future economy.

[Saturnalia]

TBH I didn't really see a need for it, either. It would of course allow more dimensional shipments through Detroit, but otherwise it wasn't really going to help anything.

[NYCMan]

Michigan's rail economy was destroyed when the U.S. Government created Conrail and decided to eliminate the route between Buffalo and Detroit and force all of the traffic to remain on the U.S. side of Lake Erie. The resultant decrease in overhead traffic had a domino effect: elimination of need for classification yard at Detroit, elimination of need for route from Jackson to Elkhart; elimination of need for double track mainline between Detroit and Porter. For the Chicago Line between Toledo and Chicago, the negative effect was the heavy increase in overhead traffic has created a bottleneck of congestion between Toledo and Elkhart.

Many pundits like to point to the decrease in automotive rail traffic in Michigan. But, bear in mind that most of the trains that ran on the NYC between points east of Buffalo and going to points west of Michigan, ran through Detroit and were not automotive rail traffic. I remember the days when NYC's Detroit Train Yard would hump 700+ cars during a work shift. The Penn Central merger came along, and that created its own problems, followed almost instantly by the bankruptcy, and then came along the creation of Conrail to "solve the problems." A lesson to be learned: NEVER LET THE GOVERNMENT RUN A BUSINESS!

[Saturnalia]

I'd argue that while we've lost many routes near and dear to railfan hearts, the system we have now greatly exceeds pre-Conrail and pre-Staggers years.

Think about it. North American Freight Rail is the only truly sustainable transportation infrastructure in the world. Aside from a few freight railroads such as Australia and a few other disconnected lines, everybody gets a subsidy or is run by the government. We may not like the private side of the business all of the time, but it works better than every other option every time. Even if we pulled all gov't subsidies in the way of public-private works, the railroads would still make a profit. That is amazing and something to cherish.

[PatAzo]

I thought it was competition from interstate highways, airlines, the St Lawrence Seaway and increased costs following WWII that took the tool on Michigan's railroad economy.

[chapmaja]

I thought it was competition from interstate highways, airlines, the St Lawrence Seaway and increased costs following WWII that took the tool on Michigan's railroad economy.

Both are correct answers. The interstate highway system certainly did take a lot of traffic off the railroads. At the same time the changes implemented by the formation of Conrail also removed a lot of traffic from the rails through Michigan as well.

IMO we need to separate the lost traffic in Michigan though. A lot of local traffic was lost due to the airlines (passenger), and interstate highway system. This was the traffic that originated or departed from locations in Michigan. This traffic was generally not high volume traffic and included many small grain elevators, lumber yards and other similar businesses. The highway system made it easier and cheaper to transport the materials to and from large distribution centers then to the consumer. This is why you see few small lumber yards with rail service. Other businesses totally dried up. You oil distributors and coal distributors closed as the way people heated their homes changed. I don't know anyone who still heats with coal. This accounted for a lot of the traffic losses on outstate lines and the short lines.

Bridge traffic generally was impacted by the loss of the route across southern Canada and the highway system, plus increased shipping via the St. Lawrence Seaway. The Seaway allowed products to be loaded on larger ships and sent to foreign destinations from Great Lakes ports rather than going via rail to east coast ports and then via ship. The highway system certainly changed how some traffic moved as well. The loss of the "duplicate" line across southern Canada really impacted Michigan's rails as the traffic was routed through Ohio rather than through Michigan.

Sadly, as time has passed the need for long removed rails pulled under the Conrail formation has increased. The EL across Ohio is an example. Much of it was pulled, however during economic boom times this line could have served a substantial amount of additional traffic. The problem is that in the era of the eastern bankruptcies, nobody could have imagined how successful the railroads would have become after the cuts made during Conrail's formation and as the regulatory acts changed. Once the government got out of its own way (regulations), railroads have become very profitable (except my GWR stock which tanked since I bought it a few months ago, but that's a different story).

[M.D.Bentley]

THE real reason that they wanted a bigger tunnel was to let the influx of illegals in to the country. ( election time is coming! ). Then they looked around and seen that most of them were here already ! As soon as we get low on illegals the project will be back .

[Super Chief]

Let Donald Trump build it, he loves illegals

[GTW6401]

Once the government got out of its own way (regulations), railroads have become very profitable (except my GWR stock which tanked since I bought it a few months ago, but that's a different story).

Railroad stocks are down 18.4% YTD.

[J T]

Let Donald Trump build it, he loves illegals

Just the ones that don't bring crime into this country.

[Steve B]

NYCMan, if Conrail hadn't been created, Penn Central likely would have been liquidated, with probably much more severe cutbacks in Michigan than we ended up with. The PC trustee and bankruptcy court had determined in 1973 that PC couldn't be reorganized on an income basis.

If deregulation had happened in the early '70s instead of 1980, then maybe PC could have continued.

Conrail eliminated the Canada route because it was focused on paring excess capacity and operating more efficiently. In other words, acting like a business, which you seem to favor. Regardless of whether pulling out of Canada in 1985 seems dumb in hindsight, at the time it only increased Conrail's marketplace appeal as a lean and profitable operation, aiding its sale by the gov't to private investors in 1987.

[chapmaja]

NYCMan, if Conrail hadn't been created, Penn Central likely would have been liquidated, with probably much more severe cutbacks in Michigan than we ended up with. The PC trustee and bankruptcy court had determined in 1973 that PC couldn't be reorganized on an income basis.

If deregulation had happened in the early '70s instead of 1980, then maybe PC could have continued.

Conrail eliminated the Canada route because it was focused on paring excess capacity and operating more efficiently. In other words, acting like a business, which you seem to favor. Regardless of whether pulling out of Canada in 1985 seems dumb in hindsight, at the time it only increased Conrail's marketplace appeal as a lean and profitable operation, aiding its sale by the gov't to private investors in 1987.

What is sad is that many of the decisions that were the right business decision at the time they were made, in hindsight either were bad decisions, or were decisions that we now wish we could reverse.

After the Conrail split in the late 1990's, there was a definitely need for additional capacity in many areas that Conrail ran. Some of that additional capacity is still needed today, but was torn out either by the leaders of Conrail as they cut back, or by the government in the formation of Conrail.

I can think of other business decisions that were made over the years that now are costing companies. I know one business that closed one of it's manufacturing facilities about 20 years ago to consolidate it with another plant. That was great for business 20 years ago, but the company now just finished building a new plant about 10 miles from the location of the previous plant. The cost of the new construction, about 10 times what it would have cost to retool the old plant if they still had it.

This is an issue all businesses and even government's face. My local school district had about 200 acres of land in the mid-80's. This land was purchased and held with the idea they could build nee schools on the property. The early 1980's hit and the budget was squeezed so tight they were forced to sell the land. That kept them afloat, but then the late 90's hit and they needed to build two new elementary schools and a new high school. The land they sold 15 years early was perfect for that plan, but they no longer had the land. They ended up paying 5 times more for the land they acquired for the new schools than they received selling the old land. This decision, while good in the short term, was bad as a long term deal. On a side note, when the economy collapsed, Pfizer left AA and Ford Wixom closed, it really hurt the district. Since those new buildings were built, they have closed 3 elementary schools (one was new in the 90's) and consolidated the upper elementary and middle schools to one complex. They have been unable to sell the school properties for anywhere close to what they paid for them either.

The simple fact is businesses need to balance the short term, the long term and the far long term futures. Sometimes you win, sometimes you lose. It's part of business and part of life.

[NYC3001]

Let Donald Trump build it, he loves illegals

Very funny!

[MSchwiebert]

Couple of factors in play here: 1. Does CP really need an enlarged tunnel? A single train a day via CSX to Buffalo isn't going to justify the spend. 2. Conrail was totally justified in ridding the CASO when they did, why carry two sets of fixed assets when the traffic wasn't there to justify it? Additionally, concentrating the traffic on core routes spreads fixed costs across more business so the fixed cost per unit becomes lower (this is also why the former PRR west of Crestline became basically a glorified branchline - which is something that Penn Central wanted to do in the 1970's but was unable to do so). 3. With the Port Huron tunnel underutilized, how much need is there for a second double-stack capable crossing in the same region? (Especially with CP being a minor player in intermodal).
As an aside, does NS still run to Buffalo via Canada, or did they do like CSX did years ago and vacate that route?

[AARR]

It's my understanding that NS no longer has the Canadian route and what traffic remains is hauled by CN to Buffalo. At least it was for a while.

As an aside, does NS still run to Buffalo via Canada, or did they do like CSX did years ago and vacate that route?

[MiddleMI]

http://www.crainsdetroit.com/article/20 ... ld-updated

The new (second) Detroit River Tunnel project is now on hold, due to their being no business case to support it.

As usual, you sound thrilled.

[railroadchoad]

Let us not forget that the way the auto makers do business changed, as well. As the "Big Three" were getting their complacent butts handed to them by Japanese companies in the early '80s, they did learn how to streamline their processes. Instead of having parts plants all over the country sending boxcars full of parts to assembly plants all over the country, they adopted a plan which required proximity. Sure, I know there are examples of stamped parts being sent from places like Grand Rapids to far flung locations like Arlington, Texas but for the most part, that has ceased. In the case of the new assembly plants located in the Lansing area, for example, GM requires that the "tier 1" suppliers be within a certain drive-time radius of the assembly operation. The sub-assemblies are already sequenced with bar codes that match those from other sub-assemblies that will all be put together to make the finished product. A truck backs up to a dock and the sub-assemblies come out the back and on to the assembly line. There is no warehousing needed on the part of the automaker.

This differs greatly from the old way of doing things when boxcars with transmissions would come from a Hydramatic plant, boxcars of steering columns would come from Saginaw division, boxcars of seats and trim would come from Fisher Guide, instrument clusters and radios would come from Delco plants, boxcars of motors would come from Powertrain plants. GM used to source most everything in-house and that put a great many boxcars on the rails as a result. Sure there are plenty of assembly plants in Michigan to this day but the way those plants are supplied has taken a lot of business off the rails in Michigan.

It is true that the lack of overhead business on the former New York Central lines through Michigan has killed much of the rail scene, as well. Though I lament the passing of the Michigan Central route from Buffalo/Niagra as a major artery for freight, what was Conrail supposed to do? In their first five years of creation, they received a great deal of federal loans to help shore up their operations and try to make up for years of deferred maintenance by their predecessors. They inherited the Canada Southern, the Water Level Route, The Pittsburgh-Chicago route and the Panhandle-all of which connected Chicago to points east. This is after they had already said that the Erie route would not be a part of their route map on day 1.

It made perfect business sense for Conrail to try to put as many eggs as possible into as few baskets as possible in order to cut down on the number of route-miles that needed to be maintained as well as the number of yards and crew terminals. I don't think a company for stockholders would have done things any differently. An arguement could be made that the amount of cuts and line abandonments could have been even more draconian if a newly-formed Conrail was being run by private enterprise in order to satisfy stockholders.

[Doktor No]

Well said Railroadchoad. Proverbial nail in the head...if you will.

[justalurker66]

Michigan's rail economy was destroyed when the U.S. Government created Conrail and decided to eliminate the route between Buffalo and Detroit and force all of the traffic to remain on the U.S. side of Lake Erie.

Not as big of a concern at the time, but do shipments through Canada have to pass customs twice?
Or would everything be pre-cleared with customs worrying more about stow-aways and loads actually originating across the border?

It seems that it would be simpler to not cross the borders if there is a way around. And the way around means more paid mileage in the US than paying for foreign rails.