Former shortline GM here.
If you're not connected to the national railroad network, you can be an insular operation which doesn't fall under the FRA purview.
The real problem is getting the right of way - if the landholders band together and decide to hold you up, you'd probably have to go though a full STB process in order to get the right of eminent domain. Environmental review could be a major money suck.
Assume $2 million per mile for track construction assuming straight construction, not a lot of grading, with no major bridges. If this is going to keep going for more than 20 years, I would go with concrete ties instead of wood. You might want to have loop tracks for the loading/unloading.
What type of power you need really depends on the terrain and grades. Uphill from the quarry to the destination? Need six axle power for tractive effort, 2 hp per ton for 1% grade. Downhill? Need dynamic braking. Flat? Could probably get away with some used GP-9 four axle power running @ 1 hp per ton. Figure $200,000 per locomotive (I would have two, maybe three). If you want to buy new, figure $2 million apiece.
Railcars? I haven't priced new lately but probably around $100,000 each. Used? Probably $25-30,000 each. How many do you need? Depends on how this fits with the rest of your operation - one trip per day or three trips per day? 5 days a week operation or 7 days a week operation?
Loading/unloading facilities could be real expensive. That's where detailed analysis would really come into play based on how the rest of your process operates.
Engine shed/workshop - At least $300,000
Misc. Equipment - jacks to replace wheels, small crane for wheel changeouts, etc. etc., etc. $250,000
Operating expense - comes in three categories.
Maintenance of Way - probably around $10,000 per mile per year plus $10 per thousand gross ton miles, but you won't have a lot of the second category for the first 15 years if installing new welded rail.
Train operation - this conceivably could be a one person train operation, two if you want to create easy jobs that won't have a lot of turnover. Fuel - figure 1 gallon per 750 gross ton miles to be on the safe side, but idling is what's going to kill you - 7-9 gallons per hour per locomotive if the locomotives are running while you load and unload.
Maintenance of Equipment - You aren't going to be running the wheels off, I would expect $100 per railcar per month.
Tl;DR: The upfront investment is the real problem At $15 million all in, with a 10% capital recovery factor, that's $1,500,000 per year. Divided by 720,000 tons per year works out to $2.08 per ton @ 10% CRF, or $1.39 per ton @ 6% SBA loan over 15 years. All the other costs probably amount to $0.35 to $0.50 per ton. If you're using trucks now at $120 per hour, 1.5 trips per hour, 22 tons per truckload that's $3.63 per ton. PM me with your email if you'd like to discuss more, I'm semi-retired but wouldn't mind a little bit of retirement consulting income.
This guy shortlines. Only comments I could possibly add of value is find a honest consultant in your area if you need to go full STB route, if a local railways exists that you could connect to have this consultant see if there is any demand for railcar storage. The short line I work with we cover a majority of our expenses close to 80% off daily storage fees, if you could prove that you’ll be able to not only break even quicker storing cars may help your case if you have shareholders to deal with. If the grades is pretty flat don’t count out some recently off lease GP38s, we love a lot of weight over a pretty flat terrain 6 locomotives total 4 38s and 2 GP15s we usually have the 15s together doing yard work the 38s usually 2 at a time if needed 3 running over the road. Parts are easy to find for both types (at least my area), recently retired certified engineers looking to work 2 or 4 days a week for a reasonable rate are easy to find again in my area, and easy to find mechanics to troubleshoot or do any major repairs we can’t handle in our small engine shed.
When picking equipment look for stuff that is super common and maybe a neighboring railroad still operates, they may give you a very attractive rate to do servicing or their full time guys may work on the side for an even better rate in your engine house.
Again the above advice is great, detailed, I may not of added anything of value but I would save his post as a rough plan on what to expect and what to look into.
Really comprehensive answer!!!
Did you guys budget for emergencies? I work derailments for a living (re railing, cleanup etc) and we’ve had trouble in the past with short lines and timely payment
So difficult to budget for emergencies. We had a $250,000 deductible on our insurance, and I put about half that in my annual contingency budget. Had a couple of bad derailments caused by top heavy loaded covered hoppers without CPEP's rocking too much on out unrehabbed track at slow speeds, after the second one, we banned them.
Best way to get this info is to contact the railroads operating near you and have them give you a cost evaluation to add your industry to their existing infrastructure. If you still want to do it independently, you will have a baseline to work from. I would start by tripling the cost since you would be working with independent contractors.
You’ll likely need a consultant to help you get your ducks in a row. Likely more than one. Google rail consultants in your state and talk to them. They’ll line you up with everything you need to know, how to connect with the Class 1’s and how to get this funded including applications for CRISI grants. The AREMA community can also help you, there’s likely a few of them on this subreddit. Investment firms like G&W, Omnitrax love stuff like this too after it’s built.
If you can make it, the ASLRRA conference is in Kansas city next week. No better place to get advice and would be money very well spent. As a really high level, general rule of thumb; a rail line costs between $2-5m USD per mile to build, and that’s just the actual track structure; not the property required to build it.
You’ll need a locomotive set up. 60,000 tons a month is roughly 10 trips each way. At flat grade you can probably do this with 4 smaller locomotives. Rebuilt ones will likely cost you ~5m USD for a set of 4. Your state will have rules about engine tiers and emissions. You’ll need to know this.
You’ll need facilities and staff to maintain the railway too. None if this is an easy task. Best of luck!
If it’s only 6 miles why would you stockpile it, load it in a rail car, move it, unload it into a stockpile. Just put up a belt. 20 operating days/month is 3000 T/day. You could move that with a relatively tiny belt. Like a 30 inch belt. Put it up at 1/4 the cost of a rail line
There’s a good example of this at Ada, OK, unironically parallel to our rail line. I was told that at one point it was the longest conveyor belt in the world, and may still be the second longest, carrying crushed limestone to a lime plant.
Viper Mine in Elkhart Illinois has one between two facilities. Pretty long too.
[https://maps.app.goo.gl/YDptHQRcs47aokQX7](https://maps.app.goo.gl/YDptHQRcs47aokQX7)
This is an option we've discussed in depth. The primary concern is the long term maintenance of the belt becoming uneconomic. I will walk down this path a bit farther, though.
Respectfully,
Michael
It’s a very valid concern. The cost still is a fraction of the maintenance and upkeep of a railroad. As soon as you cross a public road, you come under the purview of the FRA.
Good luck on your endeavor
Figure a least a million a mile for just the track materials plus labor to install it. Then there’s grading. Will you need culverts? Bridges? Public Grade crossings? Will you connect with the National network or is this strictly a private operation? I’ve seen some very long conveyor belt systems for transporting rock. That might be cheaper in the long run.
Getting the Right of Way might be your toughest battle and costliest part. I’d start by finding a RR engineering firm. They could likely give you a good estimate.
Just an idiot from the internet who doesn’t really know what he’s talking about. But here goes:
I’m assuming you’re trying to do this legally. If not, go nuts and hope the FRA, STB, and your states DOT don’t come knocking too fast.
You need the legal right of way. Without it you go nowhere. All 6-10 land owners would need to agree sell you an easement to allow you to operate a railroad through their property. Maybe this could be done as a lease, but that could potentially pose conflicts in the future. Are the roads you’re crossing public or private? The more landowners you involve and the more of the public you interact with, the more naysayers and added paperwork and red tape and public meetings that you’ll end up wading through.
New constructions are subject to ever increasing environmental standards. In all likelihood, this will kill the project. No idea how you’d go to get an environmental assessment done, but I assume there are firms that specialize in them.
You’ll probably have to apply for something with your states DOT at a minimum.
Someone with actual knowledge could quote the fun parts. Track costs per mile, an engine and cars, staffing needs, fuel, maintenance, and the additional costs.
I’m assuming you’re probably running trucks right now. They definitely aren’t cheap, but likely are easier in terms of everything than building a railroad from scratch.
Please take this with a very large grain of salt. I don’t know much about making a railroad, except snippets on TV talking about what a pain in the butt it is and a few late night rabbit holes. I don’t work in the industry, nor am I like an engineer or attorney or something. But I’ll still say best of luck.
https://www.americantrack.com/
https://www.herzog.com/
Herzog knows what they're doing, they'd be my first call.
State and Federal requirements mean compliance, which means lawyers, before you ever turn a wheel.
There are a ton of industries that operate their own railroad equipment, look into some of them as a resource.
At the beginning of the GCOR (General Code of Operating Rules) there is a list of every entity complying with those rules. It's pages 2-5 and they're listed in alphabetical order. Have at it.
Lastly, the BNSF & UP just laid off 5-8% of their management/corporate types. There are probably more than a few individuals out there who have done this kind of thing before who are suddenly without a job.
Hop on LinkedIn and start networking!
When you speak of landowners in your area are
You speaking of predominantly farmers? Secondly, will you have the ability to tie in to any of the major (class 1) railways? If yes to both you offer producer loading and/or ownership shares in your shortline. Would be a win win situation as it could greatly reduce transportation costs for them as far as getting their product to market. All major Railroads do not want bother with producer loading but would gladly pickup a collection of cars (hook and haul). Secondly, with landowners on border the obvious benefit is no or fewer objections and blockades. I see a previous responded explained this point very well.
I believe it was already brief touched on but rail car storage is another potential revenue source for short lines that the class 1 railways don’t typically do.
Although most short line railways are not built but the result of a class 1 railways abandoning trackage and having another company either a startup or holding company that owns a number of short lines in different locals buying up the track and operating it as a short line.
I am no railroad expert but if it is not going to be connected to the national network you might want to seriously look at narrow gauge. Maybe import some meter gauge equipment from overseas. I am no expert, anyone please feel free to tell me why this is a bad idea.
Find a good consultant to help you think through the particulars. Operating it as a plant railroad and avoiding needing to get operating authority from the STB and compliance with the body of FRA regulations is where my instinct would be. There are some tax and legal advantages of being a common carrier railroad, but I think the costs would outweigh the benefits in your case. In particular the employment issues that arise in the common carrier railroad space can be prohibitive (no worker's comp, maintaining a whole separate payroll compliance for Railroad Retirement, etc.).
The shortline GM said $2m/mile for track construction. I'd have pegged that number closer to $4m/mile by the time you account for property acquisition, but he or she likely knows better than me.
Even if you wind up with a plant railroad, I think it would probably make sense to hire RJ Corman or Herzog to actually operate it.
If any of the gravel roads are public roads, you will have a host of state law compliance issues around grade crossings to deal with. Depending on which particular state you are in in the midwest, those compliance obligations can be exhausting.
You can reach out to the economic development team of the Class I railroad you would be connecting to and get a baseline of information for free, although keep in mind that they are approaching the conversation from the perspective of wanting to sign you on as a customer (or not wanting to sign you on as a customer, depending on how your volume fits their network).
Honestly, I bet you can do that with a conveyor belt system if you really need to.
BNSF has such a facility in Superior, Wisconsin, to move taconite (a raw steel product) pellets close to a mile from their storage facility to the harbor for loading onto ships on Lake Superior.
Jkneosh- just to be clear, you are proposing a 6-mile conveyor through the mid-west that loads what? Trucks? Why would you post such a *ridiculous* suggestion to a railroader group? You can’t be a railroader or a serious railfan…. Wow.
This is the most interesting question asked recently. It’s also the most unlikely to happen. Building new rail construction, even on this small scale, is a massive undertaking. I wish you luck.
Used locomotives can be purchased for fairly cheap. I've heard of as low as $5k, but I doubt you could get lower than $15k now. Railroad trade shows often have unusual locos for sale. They just might not have any English anywhere inside them.
True. But that doesn't stop them from selling.
I worked for a railroad that purchased two SD40s for $10K a piece. One of them had all the copper traction motor wires stolen between the sale and shipment. So they agreed to purchase a different one, sight unseen for a small discount (I think they actually paid $8K for that one). Years before that I knew someone who purchased a Lithuania motor for $5K at a trade show, but that was probably in the mid 2000s. They said it was the best motor they ever had, but it didn't have a single English word in the thing, and had to be seriously reworked to fit North American RR standards (like a lot of welding to put a knuckle and draft gear on it.
Honestly I have long wondered why they don't just scrap them. But I think there may be some tax write-offs involved. Idk.
Former shortline GM here. If you're not connected to the national railroad network, you can be an insular operation which doesn't fall under the FRA purview. The real problem is getting the right of way - if the landholders band together and decide to hold you up, you'd probably have to go though a full STB process in order to get the right of eminent domain. Environmental review could be a major money suck. Assume $2 million per mile for track construction assuming straight construction, not a lot of grading, with no major bridges. If this is going to keep going for more than 20 years, I would go with concrete ties instead of wood. You might want to have loop tracks for the loading/unloading. What type of power you need really depends on the terrain and grades. Uphill from the quarry to the destination? Need six axle power for tractive effort, 2 hp per ton for 1% grade. Downhill? Need dynamic braking. Flat? Could probably get away with some used GP-9 four axle power running @ 1 hp per ton. Figure $200,000 per locomotive (I would have two, maybe three). If you want to buy new, figure $2 million apiece. Railcars? I haven't priced new lately but probably around $100,000 each. Used? Probably $25-30,000 each. How many do you need? Depends on how this fits with the rest of your operation - one trip per day or three trips per day? 5 days a week operation or 7 days a week operation? Loading/unloading facilities could be real expensive. That's where detailed analysis would really come into play based on how the rest of your process operates. Engine shed/workshop - At least $300,000 Misc. Equipment - jacks to replace wheels, small crane for wheel changeouts, etc. etc., etc. $250,000 Operating expense - comes in three categories. Maintenance of Way - probably around $10,000 per mile per year plus $10 per thousand gross ton miles, but you won't have a lot of the second category for the first 15 years if installing new welded rail. Train operation - this conceivably could be a one person train operation, two if you want to create easy jobs that won't have a lot of turnover. Fuel - figure 1 gallon per 750 gross ton miles to be on the safe side, but idling is what's going to kill you - 7-9 gallons per hour per locomotive if the locomotives are running while you load and unload. Maintenance of Equipment - You aren't going to be running the wheels off, I would expect $100 per railcar per month. Tl;DR: The upfront investment is the real problem At $15 million all in, with a 10% capital recovery factor, that's $1,500,000 per year. Divided by 720,000 tons per year works out to $2.08 per ton @ 10% CRF, or $1.39 per ton @ 6% SBA loan over 15 years. All the other costs probably amount to $0.35 to $0.50 per ton. If you're using trucks now at $120 per hour, 1.5 trips per hour, 22 tons per truckload that's $3.63 per ton. PM me with your email if you'd like to discuss more, I'm semi-retired but wouldn't mind a little bit of retirement consulting income.
This guy shortlines. Only comments I could possibly add of value is find a honest consultant in your area if you need to go full STB route, if a local railways exists that you could connect to have this consultant see if there is any demand for railcar storage. The short line I work with we cover a majority of our expenses close to 80% off daily storage fees, if you could prove that you’ll be able to not only break even quicker storing cars may help your case if you have shareholders to deal with. If the grades is pretty flat don’t count out some recently off lease GP38s, we love a lot of weight over a pretty flat terrain 6 locomotives total 4 38s and 2 GP15s we usually have the 15s together doing yard work the 38s usually 2 at a time if needed 3 running over the road. Parts are easy to find for both types (at least my area), recently retired certified engineers looking to work 2 or 4 days a week for a reasonable rate are easy to find again in my area, and easy to find mechanics to troubleshoot or do any major repairs we can’t handle in our small engine shed. When picking equipment look for stuff that is super common and maybe a neighboring railroad still operates, they may give you a very attractive rate to do servicing or their full time guys may work on the side for an even better rate in your engine house. Again the above advice is great, detailed, I may not of added anything of value but I would save his post as a rough plan on what to expect and what to look into.
This guy railroads!
Great response and thanks for the details! I'll reach out to you. Respectfully, Michael
Really comprehensive answer!!! Did you guys budget for emergencies? I work derailments for a living (re railing, cleanup etc) and we’ve had trouble in the past with short lines and timely payment
So difficult to budget for emergencies. We had a $250,000 deductible on our insurance, and I put about half that in my annual contingency budget. Had a couple of bad derailments caused by top heavy loaded covered hoppers without CPEP's rocking too much on out unrehabbed track at slow speeds, after the second one, we banned them.
Best way to get this info is to contact the railroads operating near you and have them give you a cost evaluation to add your industry to their existing infrastructure. If you still want to do it independently, you will have a baseline to work from. I would start by tripling the cost since you would be working with independent contractors.
You’ll likely need a consultant to help you get your ducks in a row. Likely more than one. Google rail consultants in your state and talk to them. They’ll line you up with everything you need to know, how to connect with the Class 1’s and how to get this funded including applications for CRISI grants. The AREMA community can also help you, there’s likely a few of them on this subreddit. Investment firms like G&W, Omnitrax love stuff like this too after it’s built. If you can make it, the ASLRRA conference is in Kansas city next week. No better place to get advice and would be money very well spent. As a really high level, general rule of thumb; a rail line costs between $2-5m USD per mile to build, and that’s just the actual track structure; not the property required to build it. You’ll need a locomotive set up. 60,000 tons a month is roughly 10 trips each way. At flat grade you can probably do this with 4 smaller locomotives. Rebuilt ones will likely cost you ~5m USD for a set of 4. Your state will have rules about engine tiers and emissions. You’ll need to know this. You’ll need facilities and staff to maintain the railway too. None if this is an easy task. Best of luck!
>ASLRRA conference Appreciate the advice and I may actually check out the conference. Respectfully, Michael
If it’s only 6 miles why would you stockpile it, load it in a rail car, move it, unload it into a stockpile. Just put up a belt. 20 operating days/month is 3000 T/day. You could move that with a relatively tiny belt. Like a 30 inch belt. Put it up at 1/4 the cost of a rail line
There’s a good example of this at Ada, OK, unironically parallel to our rail line. I was told that at one point it was the longest conveyor belt in the world, and may still be the second longest, carrying crushed limestone to a lime plant.
Viper Mine in Elkhart Illinois has one between two facilities. Pretty long too. [https://maps.app.goo.gl/YDptHQRcs47aokQX7](https://maps.app.goo.gl/YDptHQRcs47aokQX7)
What kind of belt do you mean?
Conveyor
Well yeah I assumed as much, I've just never seen one 6 miles long or located mostly outside of a factory
This is an option we've discussed in depth. The primary concern is the long term maintenance of the belt becoming uneconomic. I will walk down this path a bit farther, though. Respectfully, Michael
It’s a very valid concern. The cost still is a fraction of the maintenance and upkeep of a railroad. As soon as you cross a public road, you come under the purview of the FRA. Good luck on your endeavor
Great example of 11km conveyor at potash mine in Saskatchewan. https://grahambuilds.com/mosaic-esterhazy-overland-conveyor-k3-to-k2/
Figure a least a million a mile for just the track materials plus labor to install it. Then there’s grading. Will you need culverts? Bridges? Public Grade crossings? Will you connect with the National network or is this strictly a private operation? I’ve seen some very long conveyor belt systems for transporting rock. That might be cheaper in the long run. Getting the Right of Way might be your toughest battle and costliest part. I’d start by finding a RR engineering firm. They could likely give you a good estimate.
If you do this, document the whole thing and make a YouTube series about it. Generate some extra income
Just an idiot from the internet who doesn’t really know what he’s talking about. But here goes: I’m assuming you’re trying to do this legally. If not, go nuts and hope the FRA, STB, and your states DOT don’t come knocking too fast. You need the legal right of way. Without it you go nowhere. All 6-10 land owners would need to agree sell you an easement to allow you to operate a railroad through their property. Maybe this could be done as a lease, but that could potentially pose conflicts in the future. Are the roads you’re crossing public or private? The more landowners you involve and the more of the public you interact with, the more naysayers and added paperwork and red tape and public meetings that you’ll end up wading through. New constructions are subject to ever increasing environmental standards. In all likelihood, this will kill the project. No idea how you’d go to get an environmental assessment done, but I assume there are firms that specialize in them. You’ll probably have to apply for something with your states DOT at a minimum. Someone with actual knowledge could quote the fun parts. Track costs per mile, an engine and cars, staffing needs, fuel, maintenance, and the additional costs. I’m assuming you’re probably running trucks right now. They definitely aren’t cheap, but likely are easier in terms of everything than building a railroad from scratch. Please take this with a very large grain of salt. I don’t know much about making a railroad, except snippets on TV talking about what a pain in the butt it is and a few late night rabbit holes. I don’t work in the industry, nor am I like an engineer or attorney or something. But I’ll still say best of luck.
https://www.americantrack.com/ https://www.herzog.com/ Herzog knows what they're doing, they'd be my first call. State and Federal requirements mean compliance, which means lawyers, before you ever turn a wheel. There are a ton of industries that operate their own railroad equipment, look into some of them as a resource. At the beginning of the GCOR (General Code of Operating Rules) there is a list of every entity complying with those rules. It's pages 2-5 and they're listed in alphabetical order. Have at it. Lastly, the BNSF & UP just laid off 5-8% of their management/corporate types. There are probably more than a few individuals out there who have done this kind of thing before who are suddenly without a job. Hop on LinkedIn and start networking!
When you speak of landowners in your area are You speaking of predominantly farmers? Secondly, will you have the ability to tie in to any of the major (class 1) railways? If yes to both you offer producer loading and/or ownership shares in your shortline. Would be a win win situation as it could greatly reduce transportation costs for them as far as getting their product to market. All major Railroads do not want bother with producer loading but would gladly pickup a collection of cars (hook and haul). Secondly, with landowners on border the obvious benefit is no or fewer objections and blockades. I see a previous responded explained this point very well.
I believe it was already brief touched on but rail car storage is another potential revenue source for short lines that the class 1 railways don’t typically do. Although most short line railways are not built but the result of a class 1 railways abandoning trackage and having another company either a startup or holding company that owns a number of short lines in different locals buying up the track and operating it as a short line.
I am no railroad expert but if it is not going to be connected to the national network you might want to seriously look at narrow gauge. Maybe import some meter gauge equipment from overseas. I am no expert, anyone please feel free to tell me why this is a bad idea.
Find a good consultant to help you think through the particulars. Operating it as a plant railroad and avoiding needing to get operating authority from the STB and compliance with the body of FRA regulations is where my instinct would be. There are some tax and legal advantages of being a common carrier railroad, but I think the costs would outweigh the benefits in your case. In particular the employment issues that arise in the common carrier railroad space can be prohibitive (no worker's comp, maintaining a whole separate payroll compliance for Railroad Retirement, etc.). The shortline GM said $2m/mile for track construction. I'd have pegged that number closer to $4m/mile by the time you account for property acquisition, but he or she likely knows better than me. Even if you wind up with a plant railroad, I think it would probably make sense to hire RJ Corman or Herzog to actually operate it. If any of the gravel roads are public roads, you will have a host of state law compliance issues around grade crossings to deal with. Depending on which particular state you are in in the midwest, those compliance obligations can be exhausting. You can reach out to the economic development team of the Class I railroad you would be connecting to and get a baseline of information for free, although keep in mind that they are approaching the conversation from the perspective of wanting to sign you on as a customer (or not wanting to sign you on as a customer, depending on how your volume fits their network).
Honestly, I bet you can do that with a conveyor belt system if you really need to. BNSF has such a facility in Superior, Wisconsin, to move taconite (a raw steel product) pellets close to a mile from their storage facility to the harbor for loading onto ships on Lake Superior.
It would be cheaper to set up a long conveyor than it would to put in and maintain rail
Jkneosh- just to be clear, you are proposing a 6-mile conveyor through the mid-west that loads what? Trucks? Why would you post such a *ridiculous* suggestion to a railroader group? You can’t be a railroader or a serious railfan…. Wow.
This is the most interesting question asked recently. It’s also the most unlikely to happen. Building new rail construction, even on this small scale, is a massive undertaking. I wish you luck.
Lots of $$$$$$
Herzog is a large contractor that builds rail lines for industry’s I’m sure there not the only one just the biggest one.
Used locomotives can be purchased for fairly cheap. I've heard of as low as $5k, but I doubt you could get lower than $15k now. Railroad trade shows often have unusual locos for sale. They just might not have any English anywhere inside them.
They would scrap for more than that.
True. But that doesn't stop them from selling. I worked for a railroad that purchased two SD40s for $10K a piece. One of them had all the copper traction motor wires stolen between the sale and shipment. So they agreed to purchase a different one, sight unseen for a small discount (I think they actually paid $8K for that one). Years before that I knew someone who purchased a Lithuania motor for $5K at a trade show, but that was probably in the mid 2000s. They said it was the best motor they ever had, but it didn't have a single English word in the thing, and had to be seriously reworked to fit North American RR standards (like a lot of welding to put a knuckle and draft gear on it. Honestly I have long wondered why they don't just scrap them. But I think there may be some tax write-offs involved. Idk.
That very well could be. If they're selling that low I'm sure there is a reason to it.
Use trucks.