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A comprehensive review of the underlying economics of the railroad industry. Contains 4 volumes.
Executive Summary
pp. ES34 - ES38
Step 2
ES5 Service Quality Issues - This section highlight disconnects between the shippers and railroad companies. The main disconnect for the shippers is that inventory is not monitored well. The general disconnect for the railroad shareholders is the general traffic concerns, such as bottle necks and intermodal change variability. This section of the plan highlights the need for consistent service standards between the rail and shipping companies.
pp. ES18 - ES22
Step 4
Trend in Economic Cost - This section dictates the revenue trends (1986-2006) of the railroad industry. Revenue created by freight has remained adequate but is beginning to fall short due to increased operating costs (fuel, labor, materials and supplies) and lower growth differential between the private and public sector.
Volume 1
Chapter 2: pp. 2-1 - 2-16
Step 1
Overview of the U.S. Railroad Industry - explains the importance of freight rail to the US Economy, even though some industries are more dependent on rail access than others. Since the 1980's the railroads share of total freight ton-miles have increased due to market consolidation (the reduction of Class I Rail). Industries that are dependent on rail shipping (i.e. coal, raw construction materials, chemicals) are seeing an increase in revenue. This leads to an overall increase in rail revenue.
Chapter 4: pp. 4-1 - 4-16
Step 4
Review of Economic Studies of Railroad Pricing Costs, Productivity and Industry Structure - this chapter of the study contains the effects of partial deregulation on cost, productivity and merger of freight railroad companies. The partial deregulation of railroad companies have increased density on the existing tracks, resulting in an overall reduction in productivity costs. In contrast, the cost savings caused by the company mergers are variable due to specialized pricing that is steadily increasing (but a lower rate than other modes of freight transport). Partial deregulations created the rail companies tend to have unpredictable cost savings, since there is no universal standard for pricing.
Chapter 5: pp. 5-1 - 5-23
Step 8
Current Concerns About the Performance of the US Freight Industry - this chapter contains feedback from stakeholders from various freight industries on a variety of issues including: capacity, rates, competition among railroads, service quality, earnings and access. It is also noted that there is a consensus amongst the stakeholders that there are disconnects between rail infrastructure investment and transportation needs.
Volume 2
Chapter 15: pp. 15-1 - 15-9
Step 4
Analysis of Competition Intermodal Shipments - Market descriptions, the cost of changing modes and pricing analysis of standard shipping practices in freight rail transport are provided in this chapter. Within the pricing analysis, it is explained how intermodal shipping saves cost over longer distances (Miles) or heavier car loading (Ton-Car), than with shorter truck haul. These rates are also dependant to whether traveling distances are closer to a body of water. While intermodal shipping may be profitable, the lag time in between the changing of modes make intermodal an option less desirable for shorter haul distances.
Chapter 17: pp. 17-1 - 17-22
Step 4
Service Quality - Chapter 17 is all about the quality of service provided by Class I Railroads when shipping freight. The service quality is a function of the speed of the train and the network capacity, with the average speed variability being a threshold. "...one of the major complaints we heard from shippers regarding service quality was that variability in railroad performance was a larger problem than the absolute level of performance. That is, shippers found unpredictable service performance to be more costly and problematic to deal with than service that resulted in longer but predictable delivery performance."
Chapter 18: pp. 18-1 - 18-35
Steps 3 & 4
Conclusion of the State of Competition of the US Freight Railroad Industry - This Chapter is an assessment of the Class I railroad industry performance, commodity analysis, shipper captivity, network capacity and performance of freight rail. "Policies that would facilitate shippers’ access to competing railroads, such as reciprocal switching and terminal access agreements, could potentially increase competition among railroads. However, some shippers are subject to relatively high rail rates because of geography and shipper density characteristics restricts both railroad and intermodal (water) competition. These shippers are not likely to get as much relief from railroad-focused policy initiatives. While some shippers and shipment recipients might be able to relocate in response to modal competition, much economic activity is not able to do so."
