BIGGS APPRAISAL Railroading 101 American Society of Appraisers Conference June, 2018 It is likely that you will encounter rail equipment if you are appraising a large industrial facility • Your asset list may include locomotives, freight cars, rail car movers, track maintenance of way equipment as well as track. • The purpose of this presentation is to give you an understanding of what you have and where you might look for information to support a credible valuation. The Association of American Railroads (AAR)is the Railroads centralized governing body. • It develops: • The Interchange Rules • The Standards and Recommended Practices • General Railroad Operating Practices • Processes Car Hire • Processes Movement records and car tracing information • Processes Car Repair Billing • Maintains the Rail Equipment Registration File (Commonly called Umler) • Develops Rail Equipment Specifications Federal Governing Bodies that impact Railroads • Department of Transportation • Federal Railroad Administration • Environmental Protection Administration • Surface Transportation Board The Interchange Rules The term Interchange rules applies to the rules found in the Field and Office manuals published by the Association of American Railroads. These rules apply to the running gear, couplers, safety appliances, brakes, wheels. A railcar could having a gaping hole in the side and still meet the interchange rules. The term suitable for loading the intended commodity is an important qualifier. Rail Car Identification • As of May 1, 2018 the North American Rail Fleet was comprised of 1,644,507 units in over 700 car types. • There are seven major rail car classifications: Boxcars, Covered Hoppers, Flat Cars, Gondolas, Hoppers, Tank Cars and Other Cars. • The Gross rail Load Capacity (GRL) or freight railcars fall in to three general categories 220,000 pounds (70 ton) 263,000 pounds (100 ton) • 286,000 pounds (100 Plus tons) is the modern standard car capacity. The Official Railway Equipment Register lists cars by operating company. Modern Boxcars come in 50’ and 60’ lengths with various door configurations • Boxcars can come in many configurations and sizes. • The Clearance plate is the size of the Car coded to the size of the obstacles on a line that they will clear. Plate B being the smallest and Plate G the largest. • Cars can have a rigid or cushioned underframe. A Typical 50’ boxcar with a 10’ sliding door A boxcar can have a single door, double doors and there have even been all door cars. Doors can be sliding or plug. Door opening widths of 9’ to 16’ What is the importance of the car type? • In the case of the green boxcar shown two slides ago. It is an A302, 50’ Rigid underframe boxcar of 70 ton capacity with a 10’ sliding door. The Red boxcar in the last slide is an A402, 50’ cushion underframe boxcar of 110 ton capacity with a 10’ sliding door. The value drivers are the cushion underframe and the heavier capacity. • Field 1 A = Equipped Box Car • Field 2 3 = 49’ and less than 59’ inside length • Field 2 4 = 49’ and less than 59’ inside length cushion draft gear. • Field 3 0 = XP Specially equipped, designed for specific commodity service • Field 4 2 = Sliding Door, opening 9’ less than 11’ The Value at a point in time of a Freight Railcar is directly related to the demand for the cars commodities Commodities Carried in the A302 Over Time Commodities Carried in the A402 Over Time Commodity 2015 2014 2013 2012 Commodity 2015 2014 2013 2012 Fibreboard, Paperboard, Pulpboard 38,436 46,730 47,609 48,841 Fibreboard, paperboard, pulpboard 102,444 61,281 58,292 56,510 Pulp 14,768 19,065 21,825 23,962 Pulp 13,540 16,686 17,478 14,672 Beer, ale, porter, stout or other fermented malt liquors 6,560 11,600 10,407 12,038 in barrels, bottles, cans, or kegs Beer, ale, porter, stout or other fermented 13,160 14,800 14,364 14,519 malt liquors in barrels, bottles, cans, or kegs Paper waste or scrap 14,520 8,722 9,358 9,600 Primary aluminum blooms, pig, slab or ingots 2,560 1,360 2,680 1,996 Printing paper, coated, uncoated 7,400 10,840 13,643 14,358 Paper waste or scrap 7,992 7,997 8,257 6,002 Catsup or other tomato sauces 1,920 2,720 2,480 3,439 Catsup or other tomato sauces 3,600 5,001 6,600 4,520 Rice, cleaned 1,000 1,701 2,238 2,543 Sugar, granulated or powdered, sugar cubes or tablets 1,400 1,281 2,081 1,996 Freight train cars 3,726 1,705 1,619 3,654 Rice, cleaned 1,116 1,076 1,808 1,363 Plywood or veneer or built-up wood 1,000 1,400 1,480 1,240 Wood products Included in Other Included in Other 1,404 1,020 Freight Train Cars Included in Other Included in Other 8,238 Revenue move of shipping devices, consisting of blocking, bolsters, cradles, pallets, racks, Included in Other Included in Other 1,480 1,440 Hydraulic Cement Included in Other Included in Other Included in Other 1,544 skids Printing Paper, Coated and Uncoated Included in Other 1,120 Included in Other 1,120 Primary copper or copper base alloy pig, slab Included in Other 1,393 1,205 1,309 Industrial Sand Included in Other Included in Other Included in Other 1,072 or ingots Plywood or Veneer or built-up wood Included in Other 1,080 Included in Other Included in Other Mixed loads of food or kindred products Included in Other 1,760 1,080 Included in Other Primary copper or copper base alloy pig, slab or ingots, Included in Other 1,721 Included in Other Included in Other Included in Other Included in Other Included in Other etc. Railroad Car Wheels 1,080 Other (Carloads under 1,000) 8,048 11,549 8388 12,249 Other (Carloads 1,000 or under) 8,900 8,407 9,888 8,745 Total 90,180 104,882 109,540 124,974 Total 162,990 136,113 136,124 133,016 Covered Hoppers are Classified by Cubic Foot Capacity, Outlet Type Many Covered Hoppers and Tank Cars are Lined Articulated Intermodal Double Stack or Well Cars Freight Car Trucks Friction Bearing Type These are prohibited in interchange mostly used in Plant. Cars with this type of truck generally are at less than scrap value as the need to be cut up on site. Flatcars Freight Car Truck Roller Bearing Type Gondolas Open Top Hoppers Tank Cars Recertification Information Panel HM 201 The Umler Data Specification Manual is the Key to the Description of a Car The Major attributes of a car type are broken down into a 4 digit car Equipment Identification Code (ETC) You can get to the current manual by typing Umler Data Specification Manual into your search engine. Locomotives • Modern Locomotives are a diesel electric. The diesel turns a generator or alternator to make electricity that turns traction motors connected to the axles. An air compressor connected to the main engine produce air to operate the air brakes on the locomotive and the cars. • Locomotives fall into three general categories. Switchers, Road Switchers and High Horsepower Road Locomotives. The two major builders are EMD and General Electric. You may encounter older locomotives built by Alco, Baldwin, Fairbanks Morse, Plymouth and Whitcomb as well as newer locomotives built by National Railway Equipment, Brookville, Knoxville Locomotive Works and Motive Power Industries. • Generally a switcher can be very low horsepower of about 230 horsepower up to about 3,000 horsepower. They can have 4 or 6 axles. The majority of switchers are in the 600 to 1,500 horsepower range with the most popular being built by EMD. Switchers EMD SW 1500 Typical Gen Set Switcher Road Switchers Prime Mover or Main Engine Road Locomotives Locomotive Value Divers • It is important to identify the builder, the locomotive built date and rebuilt date. What type of prime mover (main engine)? What is the EPA Tier rating. Identify the alternator and auxiliary alternator or if equipped with a generators the main and auxiliary generators. How many axles? Many details can be gleaned from the locomotives blue card. • Does it run? Does it smoke excessively when started? If it does smoke does it clear up quickly? Excessive smoke is an indicator of worn cylinders and rings or weak power assemblies. • Does it appear to be in general good condition? Is the engine compartment dirty? Does the engine sump have excessive oil accumulation? Do the wheels have any apparent damage. Are the wheels thick or thin? Keys to value for older locomotives • When was it last rebuilt or had a major overhaul? • When was the prime mover, main generator or main alternator, trucks, air compressor last rebuilt. • Has the locomotive been rewired? In part or totally. • Older locomotives had wire with a braded cloth covering over insulation that became brittle with age and are prone to shorts and ground faults. New Exhane type wiring on the low voltage side eliminates ground faults. • Is there anything missing. Some locomotives get parts robbed to keep another locomotive running. Missing parts take away from the value. • Alignment control couplers are now required by many large railroads to move an older locomotive. Costly to retrofit. Rail Car Movers • Railcar movers are used in industrial settings to allow an industry to switch its own cars within the plant on demand. • Age and condition are key to value. • These vehicles generally have an hour meter and one can determine the annual use hours. Figuring an 5 to 7 hour use in a shift of 5 days a week use gives you a base range of 1,300 to 1,800 hours a year.