Short-term Gains for Rail but Long-term Problems

Improved productivity has helped railroads make incremental gains that are positive for the short term but insufficient to meet long-term demand, says a Rand Corp. study.

A weak peak shipping season in 2008 will not tax rail capacity. Major retailers are reacting to sluggish economic growth by cutting back on imports and reducing the volume of goods that typically move by truck and rail during what is usually the busiest shipping period in the third and fourth quarters, says the Rand study. One result is that railroads will enjoy the fruits of three decades of incremental improvements in productivity.

Longer term, however, the Rand study cites expectations that rail volumes will double. The 30-year projection for greater use of rail freight “could allow the supply chain to accommodate this increase while minimizing highway congestion and reducing fuel consumption,” according to Rand.

The study, “The State of US Railroads: A Review of Capacity and Performance Data,” observes that concern about railroad capacity constraints appears to be justified. Capacity is determined by many factors, including operating practices, signaling technology and car availability, in addition to miles of track. Given the complexity of the system, there isn’t enough information available today to determine whether rail performance is now stable, declining or improving, say study authors Brian Weatherford, Henry H. Willis and David S. Ortiz.

The railroad system is privately owned and operated. The RAND study maintains there is a public role for easing rail capacity constraints, because private decisions about transportation investment and freight shipping have public consequences for safety and the environment.

The authors suggest three areas for further research:

  • Improved reporting and public dissemination of railroad system and performance statistics to support transportation policy.
  • Continued examination of the public and private cost tradeoffs between shipping freight by truck and by rail.
  • Development of a national freight strategy that balances the private interests of the shippers and the railroads with the public interest associated with the relative social costs of different modes of freight transportation.

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