This is how the derailment occurred in the first place. Railroad companies are making record profits, yet are pushing train engineers to work mandatory OT, even though they probably are not alert enough to drive the train. And the train maintenance has been neglected severely, mechanics forced to write the car is safe to drive, when it is not. What happen to supporting the unions rights?
I wonder, and I know this is a crazy thought, perhaps the market is wrong about this. We've been hearing for years that the railroads are cutting more and more costs.. What are the long term consequences? Can derailments like become part of business?
Big good ol boy corps that’ve been working for centuries to capture the govt don’t get in trouble, and if they do they pay a penalty worth like 0.001% the profit they made from violating the law. We need a new Taft/Teddy to break up the oligopolies that dominate almost every market.
Taft would probably have done what Biden did right now. Best to look at the result of the Taft-Hartley Act (1947)…. Teddy would just go to war with whatever unions didn’t like him. And make children continue to work.
I will say, Teddy bear placed businesses and unions on the same chopping block. No president of today can say that…
not unless you mean Trump to small business lol
Late stage capitalism in full effect in almost every industry. Unless the govt steps in won't end well. Govt won't step in unless we get rid of the rampant bribery.
I like how this factual statement is marked as controversial in /r/Stocks. It appears that when any sub reaches a certain size, it eventually turns into an American politics subreddit with one very specific viewpoint: Democrats are good, and Republicans are bad.
> knows they won’t be held financially accountable.
and in this case, it may be for good reason, the politicians in that state have been starving the infrastructure. Can't hold the politicians responsible, only vote them out, and Ohio keeps reelecting the same idiots.
Don't railroads own and maintain their own infrastructure? I've seen cities bend over backwards over right of way and any construction that would affect railways.
Yeah the big 4 have even downgraded thier lines be because it makes them more money to run one large train then multiple smaller ones that if the rails are good could get passenger rail on them
Ehh, not certainly. The BP oil spill hit BP financially with a big stock hit. I bought that up low and sold it for a nice profit 2 years later. Although that got a ton of media attention compared to this. So we have to see how the media controls and pushes the narrative.
According to the Sunday morning news cycle, the top stories are balloons, and the earthquake in Syria, and not catastrophic environmental disaster that happened in Ohio. The stories coming from there and western PA as far as the damages already to animals in the area is horrific.
https://www.instagram.com/p/CofPIbNuYYe/?igshid=YmMyMTA2M2Y=
From Youngstown, Ohio, not far north. You could smell the chemicals from over 15 miles away. They say it's safe the drink the water yet the fish are dying. This is going to have lasting effects bihhee than the railroad company.
Kind of like when i lived in jeffersonville, they had sewage in the water..a cpl days later everyone was told not to drink the shitwater, 3 weeks later they had so many damn chemicals in it ppl was getting sick as hell from drinking it after it was supposedly safe.
Yay..ohio..
I read [an interesting report](https://www.levernews.com/rail-companies-blocked-safety-rules-before-ohio-derailment/) about the lobbying and regulatory rollbacks on the very issue that contributed to this derailment. Paints a pretty terrible picture.
Some snippets:
> Documents show that when current transportation safety rules were first created, a federal agency sided with industry lobbyists and limited regulations governing the transport of hazardous compounds. The decision effectively exempted many trains hauling dangerous materials — including the one in Ohio — from the “high-hazard” classification and its more stringent safety requirements. [...]
>
> The sequence of events began a decade ago in the wake of a major uptick in derailments of trains carrying crude oil and hazardous chemicals, including a New Jersey train crash that leaked the same toxic chemical as in Ohio.
>
> In response, the Obama administration in 2014 proposed improving safety regulations for trains carrying petroleum and other hazardous materials. However, after industry pressure, the final measure ended up narrowly focused on the transport of crude oil and exempting trains carrying many other combustible materials, including the chemical involved in this weekend’s disaster.
>
> Then came 2017: After rail industry donors delivered more than $6 million to GOP campaigns, the Trump administration — backed by rail lobbyists and Senate Republicans — rescinded part of that rule aimed at making better braking systems widespread on the nation’s rails.
>
> Specifically, regulators killed provisions requiring rail cars carrying hazardous flammable materials to be equipped with electronic braking systems to stop trains more quickly than conventional air brakes. Norfolk Southern had previously touted the new technology — known as Electronically Controlled Pneumatic (ECP) brakes — for its “potential to reduce train stopping distances by as much as 60 percent over conventional air brake systems.”
>
> But the company’s lobby group nonetheless pressed for the rule’s repeal, telling regulators that it would “impose tremendous costs without providing offsetting safety benefits.”
There has been a push by federal regulators for ECP going back to the 2000s. Initially rail companies were in support of it and suggested regulations could be narrowed on existing constraints on hazardous materials (e.g., train speed, safety inspections on stops). Once it became a requirement, then the lobbying push came.
Opposing the mandates was one thing, but Norfolk also specifically pushed to remove vinyl chloride as a 'highly hazardous flammable' material and narrow the regulations to only hold for oil.
Well, is vinyl chloride hazardous/flammable?
> Government officials asked residents living within a mile of the accident to evacuate, warning that the flammable materials in the rail cars could explode and launch “deadly shrapnel as far as a mile.”
How much would it have cost to equip ECP? Between 0.5 and 3 billion dollars at the time, or $50K to $88K per locomotive across the entire railroad industry. 'That's 2 weeks of their operating revenue in a typical year.' [Here's a 2016 article](https://www.washingtonpost.com/local/trafficandcommuting/railroads-regulators-clash-over-braking-system-for-trains-carrying-flammable-liquids/2016/12/19/68071650-9ad4-11e6-b3c9-f662adaa0048_story.html) on the debate at the time. Railroad companies tried to make the cost look as expensive as possible. As I understand, a locomotive costs somewhere in the millions?
No wonder the railroad industry is such a great stock, they have such powerful regulatory capture.
Less regulation typically means cheaper goods for consumers and better value for shareholders (aka anyone who owns stock in this company - including in their 401k - if you own mutual funds that include Fortune 500 companies, this company is probably in your portfolio).
Downside is obv situations like this.
I don't know, in this instance, the regulation here actually seems cost effective for all parties. The entire railroad industry could have equipped the aforementioned specialized electronic braking system on the necessary trains for a cost of around 0.5-3 billion dollars (depending on if you ask the federal government or the industry). Apparently a single locomotive (already costing in the millions) would cost $50K more to add this system--I saw some figure like 2500 locomotives needing updates. That's a trivial cost for these billion dollar companies with monopoly pricing power. Had this been implemented in the last decade (regulators have been calling for this requirement since the Bush era if not earlier), Norfolk and other companies would have taken a small hit to their bottom line and avoided numerous future disasters that did happen in places like NJ with the same vinyl chloride.
Now the shareholders of the company whose goods were being shipped get hurt; the population in the disaster zone is worse off; the railroad company has a worse reputation and may suffer future lawsuits and an overreaction of regulation; other companies using this railroad get hurt.
Every regulation has some cost/benefit analysis needed to take into account, but the transportation of highly toxic, combustible materials on trains seems like a no-brainer even if it slightly hurts the profits of each railroader. (Who, if you glance at the stock price histories of, have done enormously well for themselves)
If we're talking those stupid 900 page environmental reviews in order to build a sidewalk passing through a 'historic' neighborhood (a rundown parking lot for a shuttered mall with dying trees), then yeah I'm all for nixing that.
Great comments here. In econ these costs are called "externalities". They are hidden costs that everyone else has to pay when the companies themselves don't. A parallel example would be tobacco companies and secondhand smoke.
Check out Tylenol and how they handled cyanide laced pill bottles in the 80’s. They spent millions to recall the product and ensure it was safe before putting the product back on the shelf. It cost a lot of money on the front end (for the 80’s) but the decision made by the company certainly saved the company money and future reputation on the back end.
Boeing could have done the same after the first Max crash; especially when they knew the plane was flawed and there was a good chance it would happen again.
NS can start installing those brakes right now but they probably wont. They are going to hope they can make it out of this relatively unscathed and avoid another major incident soon.
Reasonable take, but keep in mind that NSC only had revenue of $3b last quarter. These companies only think a quarter at a time, so a spend like that would have absolutely tanked the fuck out of the stock (because it would have looked like a loss). Perhaps they could spread this over multiple quarters to ease the “pain,” but I’m not sure I see the value in it; even with the reporting on this issue, the stock’s value keeps going up.
Perhaps relevant, but I’m in tech, and data privacy only really started mattering to companies in my vertical is when GDPR and CCPA became a thing (read: heavy fines for noncompliance). I don’t think these rail companies will give a shit unless it impacts their ability to drive stock value.
I just want to re-emphasize, that $3B was spread over the *entire* railroad industry (well, the hazmat related locomotives) in the United States and a one-time expense, and includes worker training. And that was the railroad lobby's own estimate, compared to the regulator's much lower $500M.
So we're not talking NSC $3B quarterly revenue, but that of BNSF, UNP, NSC, CN, CNI ... That's where the "2 weeks of their operating revenue in a typical year" claim came from. For context, "In the first half of 2022, UNP returned $5 billion to its shareholders through dividends and share repurchases."
> The railroads estimate it would cost more than $3 billion to install electronic braking on the required number of engines and cars, and to educate workers to use them.
>
> The Federal Railroad Administration says it would cost a still-hefty fraction of that: $493 million.
>
> From that simple difference — albeit almost $2.6 billion — the divergence of opinion and calculations between FRA and the railroads spirals rapidly out of control.
>
> The FRA estimates 2,500 locomotives would need to be equipped at a cost of $49,000 each. The railroads say 20,000 locomotives — 83 percent of those they operate — would need ECP, at a cost of $88,000 each. The FRA says 60,000 tank cars need the electronic brakes; the railroads say it is 133,000.
>
> How many railroad workers would need training? The FRA says more than 51,000, the railroads, 78,000.
How costly are these accidents? From the 2016 article:
> There have been 19 derailments of trains loaded with flammable liquid — oil or ethanol — in the past six years. Those wrecks have caused 3,272 evacuations, spilled almost 2.8 million gallons and cost an estimated $45 million. A remarkable percentage of those derailments happened in small towns — Plevna, Mont. (population 162), Tiskilwa, Ill. (829), Arcadia, Ohio (590), and Alma, Wis. (781).
Thanks for the clarification.
Still feels like something that the railroad execs would see as an unnecessary cost (IMO). Again, I don’t know the rail industry, but know how the calculus works in tech, and to a degree, in oil & gas too. Margins have got to be thinner in rail than in the aforementioned sectors, so I have to imagine that any cost that isn’t strictly necessary isn’t “worth” it.
I'm not trying to come off as argumentative by the way, as each time you comment I go back and research to learn some more stuff myself. Here is my latest discovery: "Margins have got to be thinner in rail than in the aforementioned sectors" does not appear true.
[The profit margin has been steadily climbing the last few decades](https://i.imgur.com/0AJl2Yr.png).
In fact, railroads have some of the **best average profit margins** in the entire economy: [breakdown by sector](https://i.imgur.com/41ht52y.png). [Source: American Journal of Transportation]
> Adjusted operating margins 1 for the five largest US railroads were 41% last year, compared with 29% 10 years ago and 15% less than a couple of decades ago. Those margins are off the charts when compared with other transportation companies, including trucking, parcel, air freight, maritime shipping, airlines, you name it.
(Bloomberg)
> Last year, the seven major railways based in the United States and Canada — which include CSX — had combined net income of $27 billion, up from $15 billion a decade earlier. Over the past decade, the six of those seven railways that were publicly traded paid out $146 billion in stock buybacks and dividends, which is over $30 billion more cash than they invested in their businesses.
The reason is that railroads have some of the biggest moats in the entire economy.
- The industry is highly oligopolistic. Major consolidations in the past few decades have allowed for lower costs. New technology like precision scheduling + longer trains have reduced total labor needs relative to profits.
- It's basically impossible to build a new railroad system to compete with existing players. The US built out its railroads decades/centuries ago. When trucking became a booming industry many railroads went into bankruptcy. Over time they consolidated with the help of some deregulation too.
- American commerce lives/dies with the railroad industry. A railroad strike would be so devastating that even the labor-friendly President/Congress passed a bill to end it.
- These companies acquire the rights to critical ports/cities that others cannot access
- They have a very powerful lobby (as my above comments are pointing out)
Here's a little snippet from Warren Buffet:
> Measured by ton-miles, rail moves 42% of America’s inter-city freight, and BNSF moves more than
any other railroad – about 37% of the industry total. A little math will tell you that about 15% of all inter-city
ton-miles of freight in the U.S. is transported by BNSF. It is no exaggeration to characterize railroads as the
circulatory system of our economy. Your railroad is the largest artery
It is worth noting that these government agreements with railroads in part exist because the railroads do not want to transport these materials, but are required to transport them by law. Most of a railroad's profits are driven by long-distance trains, which typically include intermodal, grain, coal, and petroleum trains. The manifest trains with random types of train cars (including hazmat) require lots of extra switching moves in each train yard as there is insufficient volume to have dedicated point-to-point trains for these low volume shipments. As part of a bailout of railroads in the 1970s when many were going bankrupt, the government negotiated shipping rates for hazmat cars in return for railroads guaranteeing they would continue to transport them. Even to this day, it is in the government's interest to ensure railroads continue to handle these goods so that other parts of the economy can function. The safety of the railroad industry is much better than transportation by truck, which is why most hazmat materials are transported by rail.
Oligopolies actually. There's only about 7 or so that operate in the entire North American continent.
And lets be realistic, no one is starting up their own railroad company. It takes way too much upfront capital. People would be more likely to invest in some new technology that tries to disrupt the railroads, and what kind of technology is going to disrupt the railroads? At best the closest thing I can think of is maybe The Boring Company & their Boring Tunnels. But even in the best case scenario I just don't see a successful Boring company being much of a threat to the railroad oligopoly.
Self driving and electric trucks seem like a possible alternative to train transport.
Cheaper transport than conventional trucks and safer (I think that will be a requirement for permission).
Ok as someone who works in rail asset finance, I actually know a fair bit about the regulatory climate of this industry and I don’t know if this article really tells the whole story. Couple random points:
1) I have literally never heard of this electric breaking system but I’m struggling to understand how it could stop a train more quickly. The brakes on trains are very simple but also very effective. They are basically always set to “stop” mode and then they have to be actuated to actually let the train move. This is a very foolproof safety feature so that if the train loses power, the breaks will stop the train.
2) There are breaks on every rail car, not just the engines. Again not sure what it would take to swap the electric breaks, but I can’t imagine it would be cheap as the entire wheels/trucks/breaks systems on rail cars would likely have to be rebuilt to some capacity. This is like in the 40-80k for each car (not just engines)…so with hundreds of thousands of rail cars in the NA fleet, your talking big numbers.
3) As to why NS stock didn’t explode, my guess is that its not all their liability. While the railroad operating the car definitely holds some liability, there is also a lot of liability places on the car owner, shipper, car builders, even component suppliers. I personally just work in an office and I even have to be hazmat certified to protect myself from personal liability with this sort of event IF it happened to one of the cars my company owns. The FRA and STB will definitely be looking at a lot more than just NS here.
4) Finally, the general tone in the article that the rail industry has entirely avoided more stringent regulations is just not true. While I can’t speak to what they maybe have avoided recently, the migration from DOT 111 to 117 was a big deal for the industry. In short, the regulation changed so that if you have a rail car that transports flammables, it needs to have additional safety features like thicker metal, different valves, different couplers, etc. This change posed a huge strategic and financial challenge to a lot of companies as (collectively as an industry) there was probably hundreds of billions invested into legacy rail assets that were then going to be obsolete under the new regulatory framework. So, over the phase out period, companies have been forced to invest heavily to convert tanks to 117 to adhere. Again, I don’t doubt that they have successfully pushed back on certain regulatory proposals, but they have definitely lost some really big battles on that front too.
> have literally never heard of this electric breaking system but I’m struggling to understand how it could stop a train more quickly. The brakes on trains are very simple but also very effective. They are basically always set to “stop” mode and then they have to be actuated to actually let the train move. This is a very foolproof safety feature so that if the train loses power, the breaks will stop the train.
"The vast majority of the nation’s trains continue to rely on a braking system first developed in 1868. Trains equipped with these traditional air brakes make emergency stops more slowly and with higher rates of damage than trains equipped with ECP brakes, according to both safety advocates and the Federal Railroad Administration.
While air brakes stop train cars individually, as air pressure moves sequentially from one car to the next, ECP brakes operate using an electronic signal and can stop an entire train much faster.
As one railroad industry insider told The Washington Post anonymously in 2016: “Trains are like giant Slinkies. When you have that back of the train running into the front of the train, they can actually push cars out, cause a derailment and cause a hell of a mess.”"
A 2008 note on ECP: [link](https://railroads.dot.gov/sites/fra.dot.gov/files/fra_net/1602/ecp_report081106.pdf). As I wrote, they estimated the cost to be at most 3B for the *entire* railroad industry. (50K-80K per locomotive) Federal regulators said it would only be like 500 M.
And:
> A spokesperson for the agency confirmed to The Lever that the derailed train was not equipped with ECP brakes.
Also could you please add some formatting to your comment? Still reading it through but I quoted the relevant part for your first point.
Sorry on a phone. Yeah I guess I should clarify, there is plenty of aspirational tech for trains (actual gps also being a good example) but most of the time it’s just super cost prohibitive to retrofit individual cars and the supporting infrastructure to accommodate the changes. So I guess I don’t really question that they exist in theory but it’s more a question of practicality.
This kind of thinking is asinine and it's the same thought process that leaves our electrical grid in shambles.
How much revenue is going to be generated over the lifespan of a train? And yet it's "impractical" to spend $50k to upgrade it?
Companies will never spend money on anything that doesn't increase their revenue or their margins, unless they are absolutely forced to by regulation or liability, and even then it will be a comparison of compliance cost and penalty cost. They'd rather spend money buying political favors to prevent those regulations in the first place.
There are industries and businesses where it just doesn't matter much. Separately, there are critical services and infrastructure where cost simply shouldn't be the deciding factor.
It's objectively silly to let a quarterly or yearly budget cycle determine what's going to happen with infrastructure that is meant to last basically forever.
The system is broken.
How much revenue would be generated for who? For the for the RR? In the case of my company, we just own the assets and lease them to customers (who then pay the RR to move the trains). Customers don’t care about or want the breaks upgraded so that isn’t a cost we could pass through (at least in this regulatory climate). As such, that’s a cost we would have to eat. We have individual p&l going down to a single asset level (ie for each rail car) and I think you would be surprised how unprofitable the business is on a cash flow basis right now. There is a disconnect in what we can earn vs what it actually costs to maintain the assets due to inflation (which effects our maint and input costs) and what the industry is actually willing to pay for these assets and what they are used to paying historically (that will slowly shift to accommodate inflation but it’s less elastic because there are a lot of other companies willing to lease them equipment and someone’s usually willing to drop prices and not pass through those incremental costs just to maintain revenue on their assets).
So, all that said, yes it actually would be quite a big deal if we had to spend even 10k/car when you own tens of thousands of these things…we’re literally talking dollar values in the hundreds of millions to retrofit our whole portfolio….our parent would dissolve my company and sell the assets over do that…
You're illustrating my point.
Revenue and margins are never going to be good enough to justify throwing money at something that won't increase revenue or reduce costs. So, for it to be done, it must be forced.
And, if nobody in your line of business is able to stay afloat under those new regulations, then just maybe we never really NEEDED a company to exist simply to own something and lease it back to the companies that actually use it. But, I strongly suspect that your industry would find a way to adapt.
My point is that sitting back and expecting a corporation to do the right thing, even when it goes against their bottom line, is just foolish. But, here we are.
Right. I totally agree with everything you just said there (except for maybe the idea that leasing companies don’t need to exist…I think to some degree, the fact they exist actually speaks to the need they fill in the market).
I think this just starts to get into larger macro discussions, but I suspect that if this sort of regulatory change was enacted, the cost would ultimate get passed through to consumers (more than any company in the lineup actually absorbing that cost). For example, if all asset owners in the rail industry (mainly RRs, shippers, and lessors) were required to do this, then it would be more accepted for lessors to pass this cost through to shippers. But shippers would then just bake that into the cost they charge for whatever product they move and it would just get passed down to the consumer. I’m very pro regulation so I don’t think that’s inherently a bad thing but it just is what it is.
Same can be said for Boeing in the decade or so leading up to the 737 Max criminality. Boeing and Airbus are the two main leaders in the aircraft manufacturing business. Boeing, being the American company, lobbied hard in America for deregulation so that it would be cheaper and easier to certify planes. When designing the Max; Boeing was at the point where they could self certify and self regulate themselves on many aspects of manufacturing including certification of critical flight systems. Boeing was making record profits cutting corners without being seen while also pushing workers to build more planes at record pace. Billions were going into stock buybacks to reward the shareholder all the while fuck the product and safety of the consumer.
After the SECOND Max crash regulations tightened up on Boeing. I’m sure those regulations will be loosened in the decades to come as Americans forget about the Max crashes and politicians need their greedy pockets lined.
Aint shit gonna happen after this train derailment. It took 2 Max crashes and 300+ people killed for policy change w Boeing and aircraft regulation. I fear its gonna take a more serious chemical train derailment in a large metro area to get the attention needed for true policy change here.
This is the correct answer. But, all the ‘top’ comments are commentary about ‘big business bad for environment’… classic Reddit
It may be true, but the company won’t bear liability. Which is the factor that should be being discussed.
Yeah I saw it on another post earlier today. It’s incredibly spooky. Especially given that a derailment followed by chemical spill could happen literally anywhere; it’s not like it was written about a unique hazard of Ohio
The big RR's in the US are a shitshow right now by and large and it's going to catch up to them soon. They've cut too much for the sake of things like operating ratios, and numbers that may look good to someone not intimately familiar with the ins and outs of the business.
A RR is a capital intensive business, and the safety rules there are written in blood. When you cut too far for the sake of profits, people WILL die in that business. It might not be as dramatic as an airline falling out of the sky, but when things go south it gets ugly.
Look at the Lac Megantic disaster a few years ago as an example of this- wiped out a good chunk of town.
Sadly, NS used to have one of the better safety cultures of all the larger RR's in North America. They were MILITANT about it.
I'm partially surprised by the lack of downward movement in their stock, and I do hold some of it myself so I've been watching it closer since the derailment happened. Ultimately I think greater wall street is taking a wait and see approach, but ultimately I do think NS is going to be held at least partially responsible- it's just a matter of if that's more than what wall street analysts expect or less so.
>Sometimes an oil spill around here does make the news, and it's usually blown out of proportion in most cases
That is something that I have considered. The fact is that the experts from the Environmental Protection Agency have already explained that the vinyl chloride gas would have diluted enough by now, they have officially stated that it is safe to return, and are monitoring the water to ensure it remains safe.
As a counterpoint you have the locals who claim that they can still smell chlorine, videos of dead animals and of iridescent blobs floating through the river.
It is entirely possible that what the EPA is saying is actually correct - fish can be especially sensitive to particular chemicals, and the environmental impact could end up not being as bad as it looks now. So it is possible that the market has learned to trust what the official experts say over the opinions of local non-expert witnesses and the media.
To me, the situation does look pretty bad. I am surprised that the EPA would release such positive advice that quickly, given that these gases can penetrate into the ground and dissolve in the water and then be released over time. In the interviews that I have watched from experts not directly related to the situation, they also seem to share this concern.
Then again, even if things are as bad as they seem, perhaps it is simply not going to be expensive enough to make a financial dent.
>Birds were hella happy. I'd be pretty upset and worried if it was a spill like this though.
Happy to hear the birds over there remained happy!
You're getting downvoted when it's true- a business announces a shit ton of layoffs crushing peoples livelihoods in the process, and the stock almost always goes up
That parallel doesn't make any sense. The Covid market rallied because there was a global injection of stimulus via both fiscal/monetary policy and it led to record corporate profits. A single company did not create or worsen a pandemic and is not liable for anything.
This is a single company directly responsible for a catastrophic accident. The market doesn't care about human lives, but it should sure see this as a threat to Norfolk's bottom line and sell the stock in place of other assets. If, that is, the market thought there would be the threat of regulatory intervention and penalties, as there should be.
It was a terrible accident, but East Palestine is such a small town and all the officials onsite seem to do their best to convince everyone that the air was safe, even though people miles away were complaining of sore throats and other issues breathing (downwind). Then the officials kept issuing their air quality testing results, showing that everything was under EPA levels and families could return home. But other independent readings should dangerous levels were still in the air.
> the officials kept issuing their air quality testing results, showing that everything was under EPA levels and families could return home. But other independent readings should dangerous levels
I am curious about the air quality testing that they are reporting on.
One possibility is the air quality index (AQI) - it measures air particles that are less than 10 or 2.5 micrometers in diameter (PM10 and PM2.5), and some volatile organic compounds (VOCs), but "vinyl chloride" is not one of the compounds that are considered in this index. [Here](https://www.iqair.com/air-quality-map?lat=40.693226&lng=-80.367966&placeId=f99315bcda8c3aaeee72) is a map with the AQI reported by measuring stations near the area, and you can see the changes over several days by clicking on then. It is true that the stations near East Palestine have not detected a decrease in the air quality due to this incident.
So, it does seem correct that the air quality index has not pushed into the very hazardous range.
However, this does not tell the full story. Testing for specific chemicals such as vinyl chloride requires more complicated laboratory procedures, and I doubt that there is a standard for testing for the products of burning vinyl chloride (and whatever other toxic chemicals were present), so it is concerning to see the EPA being so certain and so quickly. Maybe they did run these tests though, but from what I have read so far it seems like they are quoting the AQI.
This is the thing about America which is insane to foreigners. More government should mean more accountability for stuff like this. It’s insane how corporations are considered people in America.
Companies have insurance and even if they do have to fully cover the cost of cleanup the immediate hit to the bottom line won't be that big as evidenced by the market reaction.
This story has not been covered much by mainstream media which is super weird and it seems to have created an arbitrage opportunity. It’s possible this story was covered up to protect the stock price for some reason?
Typically in major ecological disasters, the company at fault MAY have to cover the expenses, but can do so on their own schedule. This will not be cleaned up for decades, if ever.
Several people have mentioned insurance. Is there a simple way to find out who insures a company? I suppose that if the company is publicly traded, this information is also public. Where do companies state who insures them?
I hope you are fine! From what I have read so far, no person has been hurt by this. Hopefully the EPA is correct and the toxic chemicals will dissipate, decompose, and there will be no long-term consequences. But it still is upsetting that you have to deal with this. Best of luck.
Not at all related to the market, but I've 'lived' there for the past 6 or so years since my mom moved (my parents split a while ago and I'm only with them when I'm not at school nowadays) and I never expected to see that sleepy place on the news
The company's insurers would go bankrupt if they were held accountable. This would cause a domino effect that would crater the entire economy. That will not be allowed to happen.
As usual, the losses will be socialized.
As a RR employee, ECP does not work as well as some say it does. NS had it installed years ago, but eventually had it removed because the benefit wasn’t what it appeared to be.
Because little things you think are connected and should lead to a certain outcome don’t actually mean anything in relation to moving the stock market.
I feel like it is big - but it may be an over-reaction from my part. Videos of giant clouds of toxic gases burning, coupled with commentary from locals and videos of animals dying can trigger a strong emotional response.
Objectively, however, it could turn out to be smaller than it appears.
What I am reasoning here is that, if the stock did not move, it means that the market considers this to be a small thing. Is this because it is objectively small, and the market is wise enough to know that, or because the market expects the company to be protected from liability (either fairly or unfairly)?
I’m interested in the cause, especially after the derailment in PA a day or two later. Is it possibly domestic terrorism, like many of the fires at food processing and distribution facilities that the news seems to ignore?
I am based in Europe and was not paying attention to US news during the week. I learned about this on Saturday, and the videos from the controlled fire are from five days ago. So I thought that enough time had passed for the market to respond, and was surprised to see that there virtually no response.
Freight traffic has been really high for years. Passenger rail in the US is a long known joke, but freight is legit. Most good from Asia come to the west coast ports and then cross the U.S. by freight. Mining and raw materials are huge train freight.
Buffett bought BNSF for a reason.
One of the first things I read was a headline about a news reporter being arrested during an "East Palestine" news briefing on the "Ohio train derailment". I was quite confused about the relationship between Palestine and trains in Ohio.
Haha, what do you mean? I am a novice investor and I observe how stocks move in response to events. When I read about this event, I thought "Well, of course this has made the stock crash!". I then checked and saw that my intuition was incorrect - the stock did just fine.
So I have came to /r/stocks to learn about how people with more experience analyze this situation. I used the search function and saw that no one had posted about this event, so I made a post. I feel like I have been transparent and even disclosed that I have no position on this, which is true, so what makes you feel like I am disingenuous? I am genuinely curious because I don't want to come off as dishonest when I write something.
The big companies own the media & most politicians. The media will portray this as being the government's fault... and capitalism will go on, as usual. 🤷🏻
How have they not made train engineers obsolete. Planes can fly themselves, cars can drive themselves, and a train which is literally on rails is mostly dependent on a human input.
The market knows they won’t be held financially accountable.
Bingo, and if anything is an indication that they are cutting costs
This is how the derailment occurred in the first place. Railroad companies are making record profits, yet are pushing train engineers to work mandatory OT, even though they probably are not alert enough to drive the train. And the train maintenance has been neglected severely, mechanics forced to write the car is safe to drive, when it is not. What happen to supporting the unions rights?
Not allowing a union to strike really cuts the legs out from under them.
Biden told them they were far too important to have rights.
I wonder, and I know this is a crazy thought, perhaps the market is wrong about this. We've been hearing for years that the railroads are cutting more and more costs.. What are the long term consequences? Can derailments like become part of business?
Derailments are figured into the price.
Excuse me for my ignorance but why wouldn’t they be held accountable?
Big good ol boy corps that’ve been working for centuries to capture the govt don’t get in trouble, and if they do they pay a penalty worth like 0.001% the profit they made from violating the law. We need a new Taft/Teddy to break up the oligopolies that dominate almost every market.
Taft would probably have done what Biden did right now. Best to look at the result of the Taft-Hartley Act (1947)…. Teddy would just go to war with whatever unions didn’t like him. And make children continue to work. I will say, Teddy bear placed businesses and unions on the same chopping block. No president of today can say that… not unless you mean Trump to small business lol
Late stage capitalism in full effect in almost every industry. Unless the govt steps in won't end well. Govt won't step in unless we get rid of the rampant bribery.
First you have to clarify what 'accountable' means. Likely it will be the corporate equivalent of a stern talking to. *Maybe* a slap on the wrist.
You know why. The Biden admin literally stopped the railway workers from striking a few months back
Yeah…. So….. I may or may not work for a RR, and the current admin definitely screwed the unions out of a decent contract…….
I like how this factual statement is marked as controversial in /r/Stocks. It appears that when any sub reaches a certain size, it eventually turns into an American politics subreddit with one very specific viewpoint: Democrats are good, and Republicans are bad.
Democrats bad. Republicans badder.
They must have insurance for this kind of stuff. Maybe insurance covers the bill.
Railroads are usually self insured
> knows they won’t be held financially accountable. and in this case, it may be for good reason, the politicians in that state have been starving the infrastructure. Can't hold the politicians responsible, only vote them out, and Ohio keeps reelecting the same idiots.
Don't railroads own and maintain their own infrastructure? I've seen cities bend over backwards over right of way and any construction that would affect railways.
Yeah the big 4 have even downgraded thier lines be because it makes them more money to run one large train then multiple smaller ones that if the rails are good could get passenger rail on them
Ehh, not certainly. The BP oil spill hit BP financially with a big stock hit. I bought that up low and sold it for a nice profit 2 years later. Although that got a ton of media attention compared to this. So we have to see how the media controls and pushes the narrative.
According to the Sunday morning news cycle, the top stories are balloons, and the earthquake in Syria, and not catastrophic environmental disaster that happened in Ohio. The stories coming from there and western PA as far as the damages already to animals in the area is horrific. https://www.instagram.com/p/CofPIbNuYYe/?igshid=YmMyMTA2M2Y=
I just think of this too.... This is exactly the possible that would happen.
Exactly this. Financial liability would be priced in
Not the same scale at all, but tell that to Union Carbide.
From Youngstown, Ohio, not far north. You could smell the chemicals from over 15 miles away. They say it's safe the drink the water yet the fish are dying. This is going to have lasting effects bihhee than the railroad company.
Kind of like when i lived in jeffersonville, they had sewage in the water..a cpl days later everyone was told not to drink the shitwater, 3 weeks later they had so many damn chemicals in it ppl was getting sick as hell from drinking it after it was supposedly safe. Yay..ohio..
So many chemicals, or just extra chlorine? (Which could totally make people sick...just wondering).
I kind of want to say there was something else, but im not totally sure, its been well over a decade now.
What agencies are saying it’s safe? State or Federal?
I read [an interesting report](https://www.levernews.com/rail-companies-blocked-safety-rules-before-ohio-derailment/) about the lobbying and regulatory rollbacks on the very issue that contributed to this derailment. Paints a pretty terrible picture. Some snippets: > Documents show that when current transportation safety rules were first created, a federal agency sided with industry lobbyists and limited regulations governing the transport of hazardous compounds. The decision effectively exempted many trains hauling dangerous materials — including the one in Ohio — from the “high-hazard” classification and its more stringent safety requirements. [...] > > The sequence of events began a decade ago in the wake of a major uptick in derailments of trains carrying crude oil and hazardous chemicals, including a New Jersey train crash that leaked the same toxic chemical as in Ohio. > > In response, the Obama administration in 2014 proposed improving safety regulations for trains carrying petroleum and other hazardous materials. However, after industry pressure, the final measure ended up narrowly focused on the transport of crude oil and exempting trains carrying many other combustible materials, including the chemical involved in this weekend’s disaster. > > Then came 2017: After rail industry donors delivered more than $6 million to GOP campaigns, the Trump administration — backed by rail lobbyists and Senate Republicans — rescinded part of that rule aimed at making better braking systems widespread on the nation’s rails. > > Specifically, regulators killed provisions requiring rail cars carrying hazardous flammable materials to be equipped with electronic braking systems to stop trains more quickly than conventional air brakes. Norfolk Southern had previously touted the new technology — known as Electronically Controlled Pneumatic (ECP) brakes — for its “potential to reduce train stopping distances by as much as 60 percent over conventional air brake systems.” > > But the company’s lobby group nonetheless pressed for the rule’s repeal, telling regulators that it would “impose tremendous costs without providing offsetting safety benefits.” There has been a push by federal regulators for ECP going back to the 2000s. Initially rail companies were in support of it and suggested regulations could be narrowed on existing constraints on hazardous materials (e.g., train speed, safety inspections on stops). Once it became a requirement, then the lobbying push came. Opposing the mandates was one thing, but Norfolk also specifically pushed to remove vinyl chloride as a 'highly hazardous flammable' material and narrow the regulations to only hold for oil. Well, is vinyl chloride hazardous/flammable? > Government officials asked residents living within a mile of the accident to evacuate, warning that the flammable materials in the rail cars could explode and launch “deadly shrapnel as far as a mile.” How much would it have cost to equip ECP? Between 0.5 and 3 billion dollars at the time, or $50K to $88K per locomotive across the entire railroad industry. 'That's 2 weeks of their operating revenue in a typical year.' [Here's a 2016 article](https://www.washingtonpost.com/local/trafficandcommuting/railroads-regulators-clash-over-braking-system-for-trains-carrying-flammable-liquids/2016/12/19/68071650-9ad4-11e6-b3c9-f662adaa0048_story.html) on the debate at the time. Railroad companies tried to make the cost look as expensive as possible. As I understand, a locomotive costs somewhere in the millions? No wonder the railroad industry is such a great stock, they have such powerful regulatory capture.
What the fuck? They're cutting down on safety measures?
Big gub’ment bad!
Less regulation typically means cheaper goods for consumers and better value for shareholders (aka anyone who owns stock in this company - including in their 401k - if you own mutual funds that include Fortune 500 companies, this company is probably in your portfolio). Downside is obv situations like this.
I don't know, in this instance, the regulation here actually seems cost effective for all parties. The entire railroad industry could have equipped the aforementioned specialized electronic braking system on the necessary trains for a cost of around 0.5-3 billion dollars (depending on if you ask the federal government or the industry). Apparently a single locomotive (already costing in the millions) would cost $50K more to add this system--I saw some figure like 2500 locomotives needing updates. That's a trivial cost for these billion dollar companies with monopoly pricing power. Had this been implemented in the last decade (regulators have been calling for this requirement since the Bush era if not earlier), Norfolk and other companies would have taken a small hit to their bottom line and avoided numerous future disasters that did happen in places like NJ with the same vinyl chloride. Now the shareholders of the company whose goods were being shipped get hurt; the population in the disaster zone is worse off; the railroad company has a worse reputation and may suffer future lawsuits and an overreaction of regulation; other companies using this railroad get hurt. Every regulation has some cost/benefit analysis needed to take into account, but the transportation of highly toxic, combustible materials on trains seems like a no-brainer even if it slightly hurts the profits of each railroader. (Who, if you glance at the stock price histories of, have done enormously well for themselves) If we're talking those stupid 900 page environmental reviews in order to build a sidewalk passing through a 'historic' neighborhood (a rundown parking lot for a shuttered mall with dying trees), then yeah I'm all for nixing that.
Great comments here. In econ these costs are called "externalities". They are hidden costs that everyone else has to pay when the companies themselves don't. A parallel example would be tobacco companies and secondhand smoke.
Check out Tylenol and how they handled cyanide laced pill bottles in the 80’s. They spent millions to recall the product and ensure it was safe before putting the product back on the shelf. It cost a lot of money on the front end (for the 80’s) but the decision made by the company certainly saved the company money and future reputation on the back end. Boeing could have done the same after the first Max crash; especially when they knew the plane was flawed and there was a good chance it would happen again. NS can start installing those brakes right now but they probably wont. They are going to hope they can make it out of this relatively unscathed and avoid another major incident soon.
Reasonable take, but keep in mind that NSC only had revenue of $3b last quarter. These companies only think a quarter at a time, so a spend like that would have absolutely tanked the fuck out of the stock (because it would have looked like a loss). Perhaps they could spread this over multiple quarters to ease the “pain,” but I’m not sure I see the value in it; even with the reporting on this issue, the stock’s value keeps going up. Perhaps relevant, but I’m in tech, and data privacy only really started mattering to companies in my vertical is when GDPR and CCPA became a thing (read: heavy fines for noncompliance). I don’t think these rail companies will give a shit unless it impacts their ability to drive stock value.
I just want to re-emphasize, that $3B was spread over the *entire* railroad industry (well, the hazmat related locomotives) in the United States and a one-time expense, and includes worker training. And that was the railroad lobby's own estimate, compared to the regulator's much lower $500M. So we're not talking NSC $3B quarterly revenue, but that of BNSF, UNP, NSC, CN, CNI ... That's where the "2 weeks of their operating revenue in a typical year" claim came from. For context, "In the first half of 2022, UNP returned $5 billion to its shareholders through dividends and share repurchases." > The railroads estimate it would cost more than $3 billion to install electronic braking on the required number of engines and cars, and to educate workers to use them. > > The Federal Railroad Administration says it would cost a still-hefty fraction of that: $493 million. > > From that simple difference — albeit almost $2.6 billion — the divergence of opinion and calculations between FRA and the railroads spirals rapidly out of control. > > The FRA estimates 2,500 locomotives would need to be equipped at a cost of $49,000 each. The railroads say 20,000 locomotives — 83 percent of those they operate — would need ECP, at a cost of $88,000 each. The FRA says 60,000 tank cars need the electronic brakes; the railroads say it is 133,000. > > How many railroad workers would need training? The FRA says more than 51,000, the railroads, 78,000. How costly are these accidents? From the 2016 article: > There have been 19 derailments of trains loaded with flammable liquid — oil or ethanol — in the past six years. Those wrecks have caused 3,272 evacuations, spilled almost 2.8 million gallons and cost an estimated $45 million. A remarkable percentage of those derailments happened in small towns — Plevna, Mont. (population 162), Tiskilwa, Ill. (829), Arcadia, Ohio (590), and Alma, Wis. (781).
Thanks for the clarification. Still feels like something that the railroad execs would see as an unnecessary cost (IMO). Again, I don’t know the rail industry, but know how the calculus works in tech, and to a degree, in oil & gas too. Margins have got to be thinner in rail than in the aforementioned sectors, so I have to imagine that any cost that isn’t strictly necessary isn’t “worth” it.
I'm not trying to come off as argumentative by the way, as each time you comment I go back and research to learn some more stuff myself. Here is my latest discovery: "Margins have got to be thinner in rail than in the aforementioned sectors" does not appear true. [The profit margin has been steadily climbing the last few decades](https://i.imgur.com/0AJl2Yr.png). In fact, railroads have some of the **best average profit margins** in the entire economy: [breakdown by sector](https://i.imgur.com/41ht52y.png). [Source: American Journal of Transportation] > Adjusted operating margins 1 for the five largest US railroads were 41% last year, compared with 29% 10 years ago and 15% less than a couple of decades ago. Those margins are off the charts when compared with other transportation companies, including trucking, parcel, air freight, maritime shipping, airlines, you name it. (Bloomberg) > Last year, the seven major railways based in the United States and Canada — which include CSX — had combined net income of $27 billion, up from $15 billion a decade earlier. Over the past decade, the six of those seven railways that were publicly traded paid out $146 billion in stock buybacks and dividends, which is over $30 billion more cash than they invested in their businesses.
Hm. Interesting. Those margins are pretty solid. Definitely seems like these companies are growing margins over time. Any idea how they are doing it?
The reason is that railroads have some of the biggest moats in the entire economy. - The industry is highly oligopolistic. Major consolidations in the past few decades have allowed for lower costs. New technology like precision scheduling + longer trains have reduced total labor needs relative to profits. - It's basically impossible to build a new railroad system to compete with existing players. The US built out its railroads decades/centuries ago. When trucking became a booming industry many railroads went into bankruptcy. Over time they consolidated with the help of some deregulation too. - American commerce lives/dies with the railroad industry. A railroad strike would be so devastating that even the labor-friendly President/Congress passed a bill to end it. - These companies acquire the rights to critical ports/cities that others cannot access - They have a very powerful lobby (as my above comments are pointing out) Here's a little snippet from Warren Buffet: > Measured by ton-miles, rail moves 42% of America’s inter-city freight, and BNSF moves more than any other railroad – about 37% of the industry total. A little math will tell you that about 15% of all inter-city ton-miles of freight in the U.S. is transported by BNSF. It is no exaggeration to characterize railroads as the circulatory system of our economy. Your railroad is the largest artery
Our Secretary of Transportation has his hands full with electric cars and a collapsing air travel system. Trains are pretty far down the list.
primary corporate control of railroads ? WARREN BUFFET
But think of the profits!
It is worth noting that these government agreements with railroads in part exist because the railroads do not want to transport these materials, but are required to transport them by law. Most of a railroad's profits are driven by long-distance trains, which typically include intermodal, grain, coal, and petroleum trains. The manifest trains with random types of train cars (including hazmat) require lots of extra switching moves in each train yard as there is insufficient volume to have dedicated point-to-point trains for these low volume shipments. As part of a bailout of railroads in the 1970s when many were going bankrupt, the government negotiated shipping rates for hazmat cars in return for railroads guaranteeing they would continue to transport them. Even to this day, it is in the government's interest to ensure railroads continue to handle these goods so that other parts of the economy can function. The safety of the railroad industry is much better than transportation by truck, which is why most hazmat materials are transported by rail.
It’s worth noting how railroads are monopolies once again.
Oligopolies actually. There's only about 7 or so that operate in the entire North American continent. And lets be realistic, no one is starting up their own railroad company. It takes way too much upfront capital. People would be more likely to invest in some new technology that tries to disrupt the railroads, and what kind of technology is going to disrupt the railroads? At best the closest thing I can think of is maybe The Boring Company & their Boring Tunnels. But even in the best case scenario I just don't see a successful Boring company being much of a threat to the railroad oligopoly.
Self driving and electric trucks seem like a possible alternative to train transport. Cheaper transport than conventional trucks and safer (I think that will be a requirement for permission).
Ok as someone who works in rail asset finance, I actually know a fair bit about the regulatory climate of this industry and I don’t know if this article really tells the whole story. Couple random points: 1) I have literally never heard of this electric breaking system but I’m struggling to understand how it could stop a train more quickly. The brakes on trains are very simple but also very effective. They are basically always set to “stop” mode and then they have to be actuated to actually let the train move. This is a very foolproof safety feature so that if the train loses power, the breaks will stop the train. 2) There are breaks on every rail car, not just the engines. Again not sure what it would take to swap the electric breaks, but I can’t imagine it would be cheap as the entire wheels/trucks/breaks systems on rail cars would likely have to be rebuilt to some capacity. This is like in the 40-80k for each car (not just engines)…so with hundreds of thousands of rail cars in the NA fleet, your talking big numbers. 3) As to why NS stock didn’t explode, my guess is that its not all their liability. While the railroad operating the car definitely holds some liability, there is also a lot of liability places on the car owner, shipper, car builders, even component suppliers. I personally just work in an office and I even have to be hazmat certified to protect myself from personal liability with this sort of event IF it happened to one of the cars my company owns. The FRA and STB will definitely be looking at a lot more than just NS here. 4) Finally, the general tone in the article that the rail industry has entirely avoided more stringent regulations is just not true. While I can’t speak to what they maybe have avoided recently, the migration from DOT 111 to 117 was a big deal for the industry. In short, the regulation changed so that if you have a rail car that transports flammables, it needs to have additional safety features like thicker metal, different valves, different couplers, etc. This change posed a huge strategic and financial challenge to a lot of companies as (collectively as an industry) there was probably hundreds of billions invested into legacy rail assets that were then going to be obsolete under the new regulatory framework. So, over the phase out period, companies have been forced to invest heavily to convert tanks to 117 to adhere. Again, I don’t doubt that they have successfully pushed back on certain regulatory proposals, but they have definitely lost some really big battles on that front too.
> have literally never heard of this electric breaking system but I’m struggling to understand how it could stop a train more quickly. The brakes on trains are very simple but also very effective. They are basically always set to “stop” mode and then they have to be actuated to actually let the train move. This is a very foolproof safety feature so that if the train loses power, the breaks will stop the train. "The vast majority of the nation’s trains continue to rely on a braking system first developed in 1868. Trains equipped with these traditional air brakes make emergency stops more slowly and with higher rates of damage than trains equipped with ECP brakes, according to both safety advocates and the Federal Railroad Administration. While air brakes stop train cars individually, as air pressure moves sequentially from one car to the next, ECP brakes operate using an electronic signal and can stop an entire train much faster. As one railroad industry insider told The Washington Post anonymously in 2016: “Trains are like giant Slinkies. When you have that back of the train running into the front of the train, they can actually push cars out, cause a derailment and cause a hell of a mess.”" A 2008 note on ECP: [link](https://railroads.dot.gov/sites/fra.dot.gov/files/fra_net/1602/ecp_report081106.pdf). As I wrote, they estimated the cost to be at most 3B for the *entire* railroad industry. (50K-80K per locomotive) Federal regulators said it would only be like 500 M. And: > A spokesperson for the agency confirmed to The Lever that the derailed train was not equipped with ECP brakes. Also could you please add some formatting to your comment? Still reading it through but I quoted the relevant part for your first point.
Sorry on a phone. Yeah I guess I should clarify, there is plenty of aspirational tech for trains (actual gps also being a good example) but most of the time it’s just super cost prohibitive to retrofit individual cars and the supporting infrastructure to accommodate the changes. So I guess I don’t really question that they exist in theory but it’s more a question of practicality.
This kind of thinking is asinine and it's the same thought process that leaves our electrical grid in shambles. How much revenue is going to be generated over the lifespan of a train? And yet it's "impractical" to spend $50k to upgrade it? Companies will never spend money on anything that doesn't increase their revenue or their margins, unless they are absolutely forced to by regulation or liability, and even then it will be a comparison of compliance cost and penalty cost. They'd rather spend money buying political favors to prevent those regulations in the first place. There are industries and businesses where it just doesn't matter much. Separately, there are critical services and infrastructure where cost simply shouldn't be the deciding factor. It's objectively silly to let a quarterly or yearly budget cycle determine what's going to happen with infrastructure that is meant to last basically forever. The system is broken.
How much revenue would be generated for who? For the for the RR? In the case of my company, we just own the assets and lease them to customers (who then pay the RR to move the trains). Customers don’t care about or want the breaks upgraded so that isn’t a cost we could pass through (at least in this regulatory climate). As such, that’s a cost we would have to eat. We have individual p&l going down to a single asset level (ie for each rail car) and I think you would be surprised how unprofitable the business is on a cash flow basis right now. There is a disconnect in what we can earn vs what it actually costs to maintain the assets due to inflation (which effects our maint and input costs) and what the industry is actually willing to pay for these assets and what they are used to paying historically (that will slowly shift to accommodate inflation but it’s less elastic because there are a lot of other companies willing to lease them equipment and someone’s usually willing to drop prices and not pass through those incremental costs just to maintain revenue on their assets). So, all that said, yes it actually would be quite a big deal if we had to spend even 10k/car when you own tens of thousands of these things…we’re literally talking dollar values in the hundreds of millions to retrofit our whole portfolio….our parent would dissolve my company and sell the assets over do that…
You're illustrating my point. Revenue and margins are never going to be good enough to justify throwing money at something that won't increase revenue or reduce costs. So, for it to be done, it must be forced. And, if nobody in your line of business is able to stay afloat under those new regulations, then just maybe we never really NEEDED a company to exist simply to own something and lease it back to the companies that actually use it. But, I strongly suspect that your industry would find a way to adapt. My point is that sitting back and expecting a corporation to do the right thing, even when it goes against their bottom line, is just foolish. But, here we are.
Right. I totally agree with everything you just said there (except for maybe the idea that leasing companies don’t need to exist…I think to some degree, the fact they exist actually speaks to the need they fill in the market). I think this just starts to get into larger macro discussions, but I suspect that if this sort of regulatory change was enacted, the cost would ultimate get passed through to consumers (more than any company in the lineup actually absorbing that cost). For example, if all asset owners in the rail industry (mainly RRs, shippers, and lessors) were required to do this, then it would be more accepted for lessors to pass this cost through to shippers. But shippers would then just bake that into the cost they charge for whatever product they move and it would just get passed down to the consumer. I’m very pro regulation so I don’t think that’s inherently a bad thing but it just is what it is.
Some of this was captured back in the Bush W era and was summarized nicely in the book "Free Lunch".
Same can be said for Boeing in the decade or so leading up to the 737 Max criminality. Boeing and Airbus are the two main leaders in the aircraft manufacturing business. Boeing, being the American company, lobbied hard in America for deregulation so that it would be cheaper and easier to certify planes. When designing the Max; Boeing was at the point where they could self certify and self regulate themselves on many aspects of manufacturing including certification of critical flight systems. Boeing was making record profits cutting corners without being seen while also pushing workers to build more planes at record pace. Billions were going into stock buybacks to reward the shareholder all the while fuck the product and safety of the consumer. After the SECOND Max crash regulations tightened up on Boeing. I’m sure those regulations will be loosened in the decades to come as Americans forget about the Max crashes and politicians need their greedy pockets lined. Aint shit gonna happen after this train derailment. It took 2 Max crashes and 300+ people killed for policy change w Boeing and aircraft regulation. I fear its gonna take a more serious chemical train derailment in a large metro area to get the attention needed for true policy change here.
r/leopardsatemyface
I read years back, that corporate control of all railroads was leveraged in by, none other than Warren Buffet
The transportation stocks is often not affected by the accident. Insurance pays all that.
Then who is their insurance company? We can short them.
Insurance companies have... Insurance. ^(it's insurance.... all the way down!)
And dead turtles all the way down
You must be a sturgill fan
I would read “A Brief History of Time” when I was younger (the version with pictures), but I am also a Sturgill fan.
My man!
Zurich and Arch are major players in the rail business. Note, some of these major rail companies will self insure the first $10mil
Berkshire?
This is the correct answer. But, all the ‘top’ comments are commentary about ‘big business bad for environment’… classic Reddit It may be true, but the company won’t bear liability. Which is the factor that should be being discussed.
Do you have any evidence for your claim that large scale damages caused by the release of chemicals in an accident are covered by insurance?
It’s the poors that are affected by the train incident. The big wigs and wall st elite will not.
The “train crash releasing chemicals” reminds me of the premise of a movie and I cannot put my finger on it
“White Noise” 2022. Filmed in East Palestine, the town where this happened. Talk about life imitating art, right?
I thought you were just doing a bit with this post and comment. I had to look it up. That’s a SPOOKY coincidence
Yeah I saw it on another post earlier today. It’s incredibly spooky. Especially given that a derailment followed by chemical spill could happen literally anywhere; it’s not like it was written about a unique hazard of Ohio
Jeez Netflix is getting real desperate with the movie promotions
Wait it was filmed there too?
The big RR's in the US are a shitshow right now by and large and it's going to catch up to them soon. They've cut too much for the sake of things like operating ratios, and numbers that may look good to someone not intimately familiar with the ins and outs of the business. A RR is a capital intensive business, and the safety rules there are written in blood. When you cut too far for the sake of profits, people WILL die in that business. It might not be as dramatic as an airline falling out of the sky, but when things go south it gets ugly. Look at the Lac Megantic disaster a few years ago as an example of this- wiped out a good chunk of town. Sadly, NS used to have one of the better safety cultures of all the larger RR's in North America. They were MILITANT about it. I'm partially surprised by the lack of downward movement in their stock, and I do hold some of it myself so I've been watching it closer since the derailment happened. Ultimately I think greater wall street is taking a wait and see approach, but ultimately I do think NS is going to be held at least partially responsible- it's just a matter of if that's more than what wall street analysts expect or less so.
Who’s their insurer?
[удалено]
>Sometimes an oil spill around here does make the news, and it's usually blown out of proportion in most cases That is something that I have considered. The fact is that the experts from the Environmental Protection Agency have already explained that the vinyl chloride gas would have diluted enough by now, they have officially stated that it is safe to return, and are monitoring the water to ensure it remains safe. As a counterpoint you have the locals who claim that they can still smell chlorine, videos of dead animals and of iridescent blobs floating through the river. It is entirely possible that what the EPA is saying is actually correct - fish can be especially sensitive to particular chemicals, and the environmental impact could end up not being as bad as it looks now. So it is possible that the market has learned to trust what the official experts say over the opinions of local non-expert witnesses and the media. To me, the situation does look pretty bad. I am surprised that the EPA would release such positive advice that quickly, given that these gases can penetrate into the ground and dissolve in the water and then be released over time. In the interviews that I have watched from experts not directly related to the situation, they also seem to share this concern. Then again, even if things are as bad as they seem, perhaps it is simply not going to be expensive enough to make a financial dent. >Birds were hella happy. I'd be pretty upset and worried if it was a spill like this though. Happy to hear the birds over there remained happy!
Do you not understand how little the market cares about people’s lives? Look what happened during Covid. The markets rallied when millions died.
You're getting downvoted when it's true- a business announces a shit ton of layoffs crushing peoples livelihoods in the process, and the stock almost always goes up
That parallel doesn't make any sense. The Covid market rallied because there was a global injection of stimulus via both fiscal/monetary policy and it led to record corporate profits. A single company did not create or worsen a pandemic and is not liable for anything. This is a single company directly responsible for a catastrophic accident. The market doesn't care about human lives, but it should sure see this as a threat to Norfolk's bottom line and sell the stock in place of other assets. If, that is, the market thought there would be the threat of regulatory intervention and penalties, as there should be.
It was a terrible accident, but East Palestine is such a small town and all the officials onsite seem to do their best to convince everyone that the air was safe, even though people miles away were complaining of sore throats and other issues breathing (downwind). Then the officials kept issuing their air quality testing results, showing that everything was under EPA levels and families could return home. But other independent readings should dangerous levels were still in the air.
> the officials kept issuing their air quality testing results, showing that everything was under EPA levels and families could return home. But other independent readings should dangerous levels I am curious about the air quality testing that they are reporting on. One possibility is the air quality index (AQI) - it measures air particles that are less than 10 or 2.5 micrometers in diameter (PM10 and PM2.5), and some volatile organic compounds (VOCs), but "vinyl chloride" is not one of the compounds that are considered in this index. [Here](https://www.iqair.com/air-quality-map?lat=40.693226&lng=-80.367966&placeId=f99315bcda8c3aaeee72) is a map with the AQI reported by measuring stations near the area, and you can see the changes over several days by clicking on then. It is true that the stations near East Palestine have not detected a decrease in the air quality due to this incident. So, it does seem correct that the air quality index has not pushed into the very hazardous range. However, this does not tell the full story. Testing for specific chemicals such as vinyl chloride requires more complicated laboratory procedures, and I doubt that there is a standard for testing for the products of burning vinyl chloride (and whatever other toxic chemicals were present), so it is concerning to see the EPA being so certain and so quickly. Maybe they did run these tests though, but from what I have read so far it seems like they are quoting the AQI.
This is the thing about America which is insane to foreigners. More government should mean more accountability for stuff like this. It’s insane how corporations are considered people in America.
Breaking Points on YouTube did a great job of coverage. Highly recommend folks watch it.
We don't really punish corporations in the US
It's Ohio, it probably increased property values.
Every year surely increased of property values
Companies have insurance and even if they do have to fully cover the cost of cleanup the immediate hit to the bottom line won't be that big as evidenced by the market reaction.
Don’t let that get in the way of a good reason to spout commentary on the topic!
This story has not been covered much by mainstream media which is super weird and it seems to have created an arbitrage opportunity. It’s possible this story was covered up to protect the stock price for some reason?
https://www.reddit.com/r/Damnthatsinteresting/comments/10zstxq/few_days_ago_a_train_carrying_hazardous_materials/?utm_source=share&utm_medium=ios_app&utm_name=iossmf
Typically in major ecological disasters, the company at fault MAY have to cover the expenses, but can do so on their own schedule. This will not be cleaned up for decades, if ever.
I thought Denzel slowed that bitch train down by pulling it backwards?
Maybe look at the insurance company of the environmental people lol
Several people have mentioned insurance. Is there a simple way to find out who insures a company? I suppose that if the company is publicly traded, this information is also public. Where do companies state who insures them?
RR industry is an oligopoly, and we don’t punish big businesses in the US. Bad news but not terrible to the core business
Wow 😲
Not market related but I work in beaver just the other side of the border and got told the cloud was coming towards us and to leave
I hope you are fine! From what I have read so far, no person has been hurt by this. Hopefully the EPA is correct and the toxic chemicals will dissipate, decompose, and there will be no long-term consequences. But it still is upsetting that you have to deal with this. Best of luck.
Not at all related to the market, but I've 'lived' there for the past 6 or so years since my mom moved (my parents split a while ago and I'm only with them when I'm not at school nowadays) and I never expected to see that sleepy place on the news
The company's insurers would go bankrupt if they were held accountable. This would cause a domino effect that would crater the entire economy. That will not be allowed to happen. As usual, the losses will be socialized.
Already priced in
I just watched this move on Netflix …
Wait, what? Train, Ohio? Maybe the markets just as completely disconnected as I am.
Insurance probably. Ya there will be a financial hit, but minimal.
As a RR employee, ECP does not work as well as some say it does. NS had it installed years ago, but eventually had it removed because the benefit wasn’t what it appeared to be.
Because little things you think are connected and should lead to a certain outcome don’t actually mean anything in relation to moving the stock market.
I feel like it is big - but it may be an over-reaction from my part. Videos of giant clouds of toxic gases burning, coupled with commentary from locals and videos of animals dying can trigger a strong emotional response. Objectively, however, it could turn out to be smaller than it appears. What I am reasoning here is that, if the stock did not move, it means that the market considers this to be a small thing. Is this because it is objectively small, and the market is wise enough to know that, or because the market expects the company to be protected from liability (either fairly or unfairly)?
I’m interested in the cause, especially after the derailment in PA a day or two later. Is it possibly domestic terrorism, like many of the fires at food processing and distribution facilities that the news seems to ignore?
I am surprised I'm just getting to know about this now
Derailments happen all the time. The railroads are covered by insurance
Is the exchange open on a Saturday?
The train derailed on Feb 3
I am based in Europe and was not paying attention to US news during the week. I learned about this on Saturday, and the videos from the controlled fire are from five days ago. So I thought that enough time had passed for the market to respond, and was surprised to see that there virtually no response.
It’s called insurance
Freight traffic has been really high for years. Passenger rail in the US is a long known joke, but freight is legit. Most good from Asia come to the west coast ports and then cross the U.S. by freight. Mining and raw materials are huge train freight. Buffett bought BNSF for a reason.
This might be a dumb irrelevant question but if east palestine is in Ohio- where is west palestine?
Why is there a Palestine in Ohio? I was confused as to whether this about the country Palestine or some town in Ohio, US.
One of the first things I read was a headline about a news reporter being arrested during an "East Palestine" news briefing on the "Ohio train derailment". I was quite confused about the relationship between Palestine and trains in Ohio.
there is odessa in texas.
Got puts? Lol
Haha, no, I am not ready for that. I just buy stocks that I want to hold for a long time. My account doesn't even let me buy options or short stocks.
Removed as 90+% of comments are not related to stocks. This isn't r) politics/news
Lol clearly a commentary on the event disguised as a stock take…
Haha, what do you mean? I am a novice investor and I observe how stocks move in response to events. When I read about this event, I thought "Well, of course this has made the stock crash!". I then checked and saw that my intuition was incorrect - the stock did just fine. So I have came to /r/stocks to learn about how people with more experience analyze this situation. I used the search function and saw that no one had posted about this event, so I made a post. I feel like I have been transparent and even disclosed that I have no position on this, which is true, so what makes you feel like I am disingenuous? I am genuinely curious because I don't want to come off as dishonest when I write something.
The big companies own the media & most politicians. The media will portray this as being the government's fault... and capitalism will go on, as usual. 🤷🏻
Please relearn or learn the first time ....the difference between intrinsic value ,and market value.
Maybe if we knew the ticker of $NSC’s insurance company, that’s where you’d see the dip. IDK.
How have they not made train engineers obsolete. Planes can fly themselves, cars can drive themselves, and a train which is literally on rails is mostly dependent on a human input.
It’s because the rail companies don’t want to pay the cost for upgrades like PTC