Saturday, August 24, 2013

The IPD Boxcar Boom

The term shortline fever was used to describe the movement that swept through the North American boxcar fleet beginning in 1978. An impending shortage of newer, serviceable XM-class general purpose boxcars spurred changes to AAR car service rules. There was a shortage of boxcars for high-quality lading like paper. Railroads were buying lots of covered hoppers and container flatcars, not 50-foot boxcars. At the same time, scant capital funds on the part of the railroads for new cars encouraged a proliferation of savvy, opportunistic financiers ready to join in. (Above - Port Huron & Detroit 2196, built 10-77, leased from SSI Industries, at Bayview Junction, May 1981).

Financiers with available investment capital for the purchase of railroad equipment such as National Railroad Utilization Corporation (NRUC) and SSI Corporation emerged in the mid-70's. Seeking out some of the US's 300 shortlines, they selected those with few of their own boxcars, yet enough outbound carloads to justify a source of cars for their use. New IPD boxcars would receive priority loading and therefore higher utilization, thereby ensuring a constant return on the initial investment. At the time, most boxcars could only boast 12% of their time spent loaded. Incentive Per Diem (IPD)* car fleets were the result. 
Newly-built and eye-catchingly lettered for shortline railroads (those with less than 150 miles of trackage), fleets ranged from Lenawee County RR's 20 cars to St Lawrence Railroad's 2,000 baby blue boxcars. Lenawee County 2079 is three months old, passing through Kingston in May 1979 (above). In May 1981 at Bayview Junction (below), former NRUC boxcar 151003 has been repainted for Ontario Northland. An ONR chevron logo painted on a darker blue background covers the NRUC logo, and Ontario Northland lettering has replaced the NRUC lettering:
The majority of IPD cars were 50-foot cars, though 40-foot (Louisville, New Albany & Croydon) and 60-foot (Atlanta & St Andrew's Bay) could also be seen.

The bright colors, logos and new design features of the cars would enhance the sales and industrial efforts of the lessee railroad. A $32,000 boxcar would realize over $7,000 revenue annually at 1977 rates, with the vast majority going to the lessor, and 12-20% returning to the lessee railroad. Lessors used regional offices throughout the US to find loads for each leg of the IPD cars' journeys, so the cars spent as little time as possible empty, and rarely on home rails! These 'free-runners' were exempt from AAR Car Service Rules 1 and 2, which specified that empty off-line cars be loaded toward, or moved empty in the direction of, the owning railroad.

Efforts to close the IPD loophole by Class 1 railroads were predictably forthcoming. For example, Conrail began returning IPD cars on their system back to the shortline, purposely ignoring pre-existing shipper arrangements.

During 1979-80, I observed some early examples of the IPD fleet, which already numbered over 25,000 cars:
  • MD&W 8086-8087 blt 12/79
  • NSL 100586, 150296, 151226, 155573
  • P&W 60010, 60313, 60527, 60551 blt 10/78
  • LVRC 4089, 4099, 5052, 5093, 5105, 5215, 5366
  • VTR 11280, 12167
Bright yellow, double-door East St Louis Junction ESLJ 7731 is at Brockville, Ontario in August 1981 (above). IPD cars were built by several carbuilders, including ACF, P-S, Berwick, Golden Tye, Paccar and Thrall. Most were 70-ton, 10'6" height Plate B or 11'1" Plate C, 50-foot outside-braced boxcars with 10-foot sliding or plug doors, or double-door openings of 16 feet, optimized for mechanical loading. NRUC (comprising shortlines St Lawrence, Middletown & New Jersey, Pickens, Indiana Eastern, Peninsula Terminal) made a point of specifying modern Hennessy Slidewell wheel ratchet door openers. In conjunction with the NRUC logo steel plate welded to the top centre of the car door, these were easy spotting features of these cars in the post-IPD era with ONR and others. MPA and NRUC cars did not have 10-inch end-of-car cushioning, which most IPD boxcars had. The stencilled 'Cushion Service' appeared on most IPD boxcars, though very few IPD box cars had cushion-travel centre sills. This ex-NRUC Peninsula Terminal boxcar has been relettered for AT&SF with reporting marks SFLC 90036, in CN's Brockville, Ontario yard in August, 1981:
More than 60,000 new boxcars were built between 1974-81 for Class 2 railroads, shortlines and Railbox. Plans for a Railbox fleet were laid in 1973 by eleven solvent Class 1 railroads: ATSF, BN, Chessie, MP, NW, RF&P, SLSF, SCL, SR, SP and UP. Bright yellow RBOX boxcars with the Next Load, Any Road X-shaped logo operated as a subsidiary of Trailer Train. These cars were XM-class, with lading band anchors set into the post voids. Interestingly, the IPD rates did not apply to RBOX cars because Railbox was not an actual railroad. A new Illinois Terminal and repainted, possibly former NRUC mate with door opener repose among Queen Anne's lace and wild asters in the hot afternoon sun of CN's Belleville, Ontario yard in July, 1983:
The IPD cash cow was despatched during the recession of the early 1980's, aided by trucking deregulation, economic recession and renewed investment in boxcars by major railroads. Railroads were deregulated, and could offer lower rates in shipper-supplied cars. New investment dried up, as the railroads supplied their shippers with their own cars or Railbox. Car Service Rules were changed in a way that allowed IPD cars to be returned to the road whose marks were on the car - most of those roads had no loads for their own cars! Conrail recruited most of the large roads to go to the government and scrap the Car Hire compensation calling it deprescription. The car owner had to negotiate new Car Hire rates with each road in North America. Since the big roads had the negotiating power, Car Hire rates fell. The exception was to boxcars marked with shortlines marks as of Dec. 31, 1981. These cars were grandfathered and their car hire rates frozen for the rest of their life - many still exist today.

Now the shortlines had a problem - clearing adequate storage space on their scant trackage to store their fleets. Hundreds of cars returned to their few miles of home rails empty and idle. Investors backed out, the cars were often foreclosed on and sold.

The May 1980 Railfan magazine painted the first brush-strokes of the end:
With the downturn in the economy, those flashy IPD short-line boxcars are [coming home]. This is no major problem for lines with enough on-line business to get their cars loaded and outbound again, but for lines with little outbound business, this means the boxcars are beginning to pile up at home. The little M&NJ is opening up about five miles of unused main line to store approximately 200 of their 600-car fleet. Similar situations have been reported on the Ma & Pa, St Lawrence and the Lamoille Valley. 

Model builders were blessed with an abundance of IPD models by Model Die Casting and Athearn. The rainbow-hued cars could live on in scale as they did on the prototype - their logos painted out and reporting marks patched for subsequent owners.

I've included more boxcars I observed in the IPD era - colourful ones that found their way to CN's Kingston Industrial Spur and CN-CP Interchange at Queens.

*IPD has nothing to do with iPad, which came along like, thirty-plus years later.

Running extra...

Just finished reading Ground Truth by Patrick Bishop. A grinding tale of the elite British 3 Para Battlegroup's mission among the green zones and sun-baked earth of Afghanistan. The book's glossary explained dickers and terps, kandaks and shuras while swimming in a soup of American-inspired acronyms like CIMIC, NKET and OMLT.

Speaking of breakfast, don't have the cronut* (croissant-donut) burger at the Canadian National Exhibition in Toronto. You will join the 100+ people who have become ill after eating fair food. Wait, this is news? It's food at the fair, people - served once a year by hastily-trained temporary staff during hot weather to a hungry, sweaty, impatient clientele. *Why didn't they call it the (David) Cronenberger? Ironic point: News conference featured Associate Medical Officer of Health Dr Lisa Berger.

I'm trying something new - outdoor model railroading with a table-top HO switching layout. Great for enjoying the nice weather while outside, even trackside, or at the park. (Now if I could only find a solar-powered transformer for the latter location I'd be all set.) Watch for an update as the layout progresses. Thanks to Prince Street Terminal's (see sidebar) Chris Mears for the inspiration.


BArailsystem said...

Great post Eric! Very interesting.
Funny how those boxcars came home to roost during the recession. The shortlines must have been scrambling to find places to store them as they kept showing up at the interchanges. Empty and no longer able to exploit the loophole for which they were built. I liked the looks of that bright yellow Illinois Terminal one. Seems like the 70's was a colourful time trackside.

Thanks for sharing.


Eric said...

Ben, you are fast! The bytes are barely dry on this post and I've received your kind comments - thanks!

Indeed, these cars were extremely colourful, and if you come across any photos online of a late 70's-early 80's freight yard, it will be a brightly-coloured view. Also, no graffiti!!!

Though today's hulking TBOX's and other hi-cubed monsters stalk the rails in surprisingly large numbers in Canadian (paper) service, as you can see from this post and its links, even Kingston attracted IPD boxcars in large numbers.

Somewhere I've seen photos of IPD boxcars stored, completely filling the shortline's trackage (oh no, not another boxcar to store!) and here's another post that discusses the IPD predicament:


Anonymous said...

That Warwick Railway boxcar is brand new and already the Hennessy Slidewell door wheel is broken. When the door is closed, the wheel should be right up next to it. I understand they were broken by forcing the door with a forklift.
Andrew Kerr
Sydney, Australia

Eric said...

Thanks for your insightful comment, Andrew. I guess that's one reason not every boxcar since comes equipped with that mechanism!

That could be an entirely separate Trackside Treasure post - forklift damage to boxcars. I can't believe some of the misshapen roofs I see going by sometimes!


Michael said...

I remember the PHD boxcars were very popular in Sarnia and Windsor into the early 1990s. Now I know why. Thanks for posting this.

Eric said...

Indeed, Michael. We know we're getting old when...our favourite songs are now on the oldies station, and our favourite freight cars are only available in model form!

Muuuuuccch more interesting than today's boxcars, for sure!

Thanks for your comment,

Unknown said...

I have always been a fan of railroads. But I know very little about how railroads worked financially, and the economics of owning and running a railroad during different eras. Your informative writing concerning the IPD era is appreciated. Thank you.

Eric said...

Thanks for your kind comments, U. The IPD boxcar boom was a colourful and noteworthy time for railfans and a money-maker for those who were able to cash in and get their cars built! Sure, some of the railroads were only a mile long!