Rolling Stock companies ('ROSCOs')

[David Sinnett]

How do Roscos increase their business?
From what I see they're sitting on regular revenue from old stock or purchase new stock for a major improvement in network/service like the Thameslink improvements.
There seems to be a regular complaint that there is inssufficient spare stock in the market place for strenthening services, new services or potential oao ..... is it time for one or two of the Roscos to pro-actively order some new stock of a class suitable for a fair part of the network?
Is it likely new stock, of current production classes obviously, would be parked unused?

 

[edwin_m]

Porterbrook ordered some 170s "on spec" in the late 90s when they were pretty sure they would be leased out as soon as they were delivered, as turned out to be the case. However these days it's unlikely a Rosco would order new stock without a contract with a TOC to cover leasing for at least a big chunk of the lifetime of the trains.

 

[WatcherZero]

Unless its a build and finance order like IEP the Tocs generally tender and agree a contract for new rolling stock with a manufacturer, they then have the ROSCO's compete to provide the cheapest financing for the order and lease the stock to them.

 

[Carlisle]

unless you have a totally free commercial market like we have in say leasing cars and vans , the system has emerged as little more than a faded Tory idealism (ie merely by being private is always going to end up cheaper and more efficient) by the Major government far more in hope than experience .I appreciate you really can't blame the firms themselves , they saw the option of a fairly long term steady almost risk free income which no one in their right mind would decline ,

 

[infobleep]

What would happen with train companies didn't use leasing companies and bought the stock out right or is that not allowed?

 

[Bantamzen]

What would happen with train companies didn't use leasing companies and bought the stock out right or is that not allowed?

I'm not sure if it's allowed or not, but the time it would take to decide on a new stock option, and it actually being delivered would probably be close to the timescales of their franchises. Given that no company is guaranteed to win their next franchise bid, they would be very reluctant to buy stock outright themselves.

 

[edwin_m]

If they bought new stock they'd be risking getting landed with it if they didn't win the next franchise.

 

[ralphchadkirk]

If they bought new stock they'd be risking getting landed with it if they didn't win the next franchise.

I doubt that, as a new franchisee is hardly going to refuse to buy/transfer the core stock they need to run statutory services.

 

[CalderRail]

What would happen with train companies didn't use leasing companies and bought the stock out right or is that not allowed?

Don't Virgin own the 390s outright?

 

[sprinterguy]

Don't Virgin own the 390s outright?

No, Virgin lease them from Angel Trains.

 

[Eagle]

FGW own a few of their HST vehicles.

Although if they lose the franchise then they will probably just sell or lease them to the incumbent, or just sell them to a ROSCO. Not really a problematic situation.

 

[gordonthemoron]

are Siemens Thameslink trains going to be leased from a ROSCO or direct from the manufacturer?

 

[swt_passenger]

are Siemens Thameslink trains going to be leased from a ROSCO or direct from the manufacturer?

The 700s are being procured by a PPP company specially set up for the purpose, known as Cross London Trains -(XLT). XLT is owned by three partners, Siemens Project Ventures, Innisfree, and 3i Infrastructure.

So two different parts of Siemens are involved, one being the train manufacturer and maintainer, and the other is a part owner.

If you've an hour to spare and understand the legal jargon the details are all here:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/226364/trsp-lease.pdf

 

[HowardGWR]

No, Virgin lease them from Angel Trains.

Thus the nonsense that is pedalled about renationalisation in the press and about which the public is quite ignorant. NR is of course nationalised and all that is privatised is 'the right to run trains for a few years'. The actual 'running' is done by the more than 90% of staff who are 'tuped', i.e. just transfer to the next franchise holder.

But that won't stop Bob Crow!

 

[transmanche]

Thus the nonsense that is pedalled about renationalisation in the press and about which the public is quite ignorant. NR is of course nationalised and all that is privatised is 'the right to run trains for a few years'. The actual 'running' is done by the more than 90% of staff who are 'tuped', i.e. just transfer to the next franchise holder.

Not forgetting that DfT (and hence the politicians) have more effect on the day-to-day running of the railways than they ever did under BR.

 

[HowardGWR]

Not forgetting that DfT (and hence the politicians) have more effect on the day-to-day running of the railways than they ever did under BR.

Yes that is (perhaps sadly) true. About the Roscos, one could say privatised, but they either get their money from the banks or are owned by the banks. If the Government paid for the stock, guess where they sell the bonds to borrow the money from?

 

[edwin_m]

I doubt that, as a new franchisee is hardly going to refuse to buy/transfer the core stock they need to run statutory services.

But what happens if the winning bidder says they will provide brand new stock, and only hires the old stuff for a couple of years before it is replaced?

 

[D1009]

Not forgetting that DfT (and hence the politicians) have more effect on the day-to-day running of the railways than they ever did under BR.

But doesn't the railway get more public money than it ever did under BR?

 

[CalderRail]

But what happens if the winning bidder says they will provide brand new stock, and only hires the old stuff for a couple of years before it is replaced?

Then the ROSCOs cascade better stock elsewhere until we are finally rid of the pacers?

 

[edwin_m]

Then the ROSCOs cascade better stock elsewhere until we are finally rid of the pacers?

This is in a situation where the TOCs own all the stock and the ROSCOs don't exist...

 

[David Sinnett]

This is in a situation where the TOCs own all the stock and the ROSCOs don't exist...

Disagree. The cascade of stock, as suggested, doesn't happen because there is no slack in the stock pool until a major purchase and re-equipment comes along.
What would happen if a ROSCO speculatively ordered say 10 Desiro/Electrostar or Turbostar trains? Would there be a TOC that would take them up before delivery? Would it start a cascade or enable TOC expansion?

TOCs won't order new because of the length of franchise. TOCs won't expand services for the same reason and perhaps beccause they don't have to.

ROSCOs don't have a franchise period so can spread the cost much longer and do or did have the backing of financial institutions so access to funds.

 

[tbtc]

What would happen if a ROSCO speculatively ordered say 10 Desiro/Electrostar or Turbostar trains?

This is an interesting question.

Ignoring the Turbostars (due to the reduction in demand for DMUs over the next decade, caused by electrification), if I bought a handful of fairly generic EMUs (say adding an extra half dozen to the 387 order), how many years would I have to lease them to a TOC before they had paid for themselves?

Presumably the answer is much sooner than the thirtyish year lifespan that you may expect new stock to have?

So you could make a profit, even if you don't lease all of the trains all of the time?

 

[edwin_m]

TOCs won't order new because of the length of franchise.

That's exactly the point I was making when trying to explain why ROSCOs exist. So I think we're actually agreeing!

 

[LNW-GW Joint]

Ironically, Merseyrail with its 25-year concession was the TOC best placed to buy new stock for itself - but it didn't, choosing to soldier on with the old class 507/508 stock.
But the funds are controlled by Merseytravel, who still can't decide what to do.

 

[David Sinnett]

My disagreement was in your answer to CalderRail suggesting that cascading doesn't happen unless the TOCs owned the stock. If a ROSCO had stock on order that would become available on the lease market a TOC could commit to those and return its older stock to the ROSCO and so on.
Surprised the ROSCOs aren't more pro-active.

 

[CalderRail]

My disagreement was in your answer to CalderRail suggesting that cascading doesn't happen unless the TOCs owned the stock. If a ROSCO had stock on order that would become available on the lease market a TOC could commit to those and return its older stock to the ROSCO and so on.
Surprised the ROSCOs aren't more pro-active.

I didn't suggest any such thing.

 

[kieron]

Disagree. The cascade of stock, as suggested, doesn't happen because there is no slack in the stock pool until a major purchase and re-equipment comes along.
What would happen if a ROSCO speculatively ordered say 10 Desiro/Electrostar or Turbostar trains? Would there be a TOC that would take them up before delivery? Would it start a cascade or enable TOC expansion?

One of the points made in the Competition Commission's investigation of rolling stock leasing was that a ROSCO which has previously bought a class of trains is more likely to get a follow-on order. Why buy 10 extra trains no-one wants when they'll probably go back to you if they need more of them anyway?

And there is some slack. That's why people suggest new loco-hauled sets as a solution to something or other from time to time. All of the Voyagers (for example) are being used, though.

 

[eps200]

Yes that is (perhaps sadly) true. About the Roscos, one could say privatised, but they either get their money from the banks or are owned by the banks. If the Government paid for the stock, guess where they sell the bonds to borrow the money from?

international bond markets at a far lower rate. IMO ROSCOS seem like a no brainier to renationalise and fold into network rail you cutting out the profit and I don't really see where you get bitten.

 

[WatcherZero]

The debt appears on the public balance sheet.

That said most stock on regional railways on the continent is owned by local councils.

 

[CockneySparrow]

FGW own a few of their HST vehicles.

Although if they lose the franchise then they will probably just sell or lease them to the incumbent, or just sell them to a ROSCO. Not really a problematic situation.

Or transfer them within the group
--- old post above --- --- new post below ---

My disagreement was in your answer to CalderRail suggesting that cascading doesn't happen unless the TOCs owned the stock. If a ROSCO had stock on order that would become available on the lease market a TOC could commit to those and return its older stock to the ROSCO and so on.
Surprised the ROSCOs aren't more pro-active.

Why would a TOC return old stock which costs little to lease for new stock which will increase payments and reduce profits