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Exploring Public Sector Roles in Assuring Adequate Freight Car Supply among Short-Line Railroads

Description:

Patterns of railroad freight car ownership and use vary based on business conditions, commodity, car type, season, and the characteristics of available railroad infrastructure over which the cars are operated. Generally, however, freight cars are supplied by (1) large common carrier railroads (or organizations they create), (2) rail shippers, or (3) third-party interests that lease cars to both carriers and shippers.[1] Presently, with very few exceptions, the availability and disposition of freight cars is managed through complex and very fluid private-sector market interactions.

In most settings, this private management of railroad car supply is effective. However, as the railroad commerce continues to evolve, structural industry changes have created a setting where, at least some, smaller common carrier railroads (short-lines) are finding it increasingly difficult to secure the rail cars they need. The larger, Class I railroads continue to adopt longer freight cars and cars that are capable of carrying heavier loads.[2] However, many short-lines operate over infrastructure that cannot yet accommodate longer, heavier equipment.[3] Two additional factors exacerbate the problems this causes. First, because Class I railroads are no longer purchasing smaller equipment, the natural cycle of equipment retirements is shrinking the fleets of short-line-appropriate rail cars. At the same time, short-lines continue to grow in importance as a means of rail network access, particularly in smaller, rural communities.[4] Therefore, the demand for smaller freight cars is increasing.

A majority of state DOTs administer programs that provide varying degrees of support to short-line railroads operating within their jurisdictions. However, most of these programs limit the extent to which state funds can be used to purchase or lease equipment and many programs prohibit expending state funds for freight cars altogether. Instead, state-level programs are more often oriented toward remedying the bridge and track conditions that restrict the use of heavier equipment. Nonetheless, because the mismatch between the availability of and demands for smaller railroad equipment causes an immediate hardship for short-lines and their customers and because remedial infrastructure improvements are expensive, many state rail programs are now reconsidering the use of state program funds for car supply as a short-run substitute for longer-run infrastructure improvements.


[[1]](file:///C:/Users/Mark/Dropbox/ALL%20RAIL%20WORK/RR%202019/TRB19/NEEDS_STATEMENTS/TRB_RAILCAR_RNS_2018(2).docx#_ftnref1) For example, TTX is a rail industry-created firm (owned by nine North American carriers) that provide pooled access to specific types of rail cars to the owning railroads. By contrast, third party firms like GATX or Greenbrier acquire (or manufacture) railroad cars and lease them to both railroads and railroad customers. [[2]](file:///C:/Users/Mark/Dropbox/ALL%20RAIL%20WORK/RR%202019/TRB19/NEEDS_STATEMENTS/TRB_RAILCAR_RNS_2018(2).docx#_ftnref2) Freight railroads are divided into three classes based on annual operating revenues. For 2016, this revenue threshold was at least $447.6 million for class I railroads, at least $35.8 million for class II railroads, and less than $35.8 million for class III railroads. [[3]](file:///C:/Users/Mark/Dropbox/ALL%20RAIL%20WORK/RR%202019/TRB19/NEEDS_STATEMENTS/TRB_RAILCAR_RNS_2018(2).docx#_ftnref3) Generally, North America’s Class I railroads can accommodate cars with a gross (loaded) weight of 286,000 pounds and car lengths up to 90 feet. [[4]](file:///C:/Users/Mark/Dropbox/ALL%20RAIL%20WORK/RR%202019/TRB19/NEEDS_STATEMENTS/TRB_RAILCAR_RNS_2018(2).docx#_ftnref4) At the time of rail industry regulatory reform in the early 1980s, there were approximately 200 Class II and Class III carriers; today, there are roughly 600. Short-lines account for approximately 20 percent of car loadings, 15 percent of railroad ton-miles, and 10 percent of industry revenues.
Objective:

The proposed research has four objectives. These include:

·
Update and catalogue (geographically and by type of carrier), the extent to which weight and size restrictions mandate the use of freight cars that have less capacity than the equipment that is consistent with North American, Class I standards;

·
Analyze the age and composition of freight car fleets in order to predict the future availability of equipment of varying sizes and configurations;

·
Measure the extent to which freight car availability may, at some point, limit the availability of freight rail services, particularly in rural communities; and

·
Explore the nature and potential benefits of public-sector policies aimed at (1) assisting affected rail carriers in securing an adequate supply of appropriately sized freight cars or (2) eliminating the size and weight restrictions that make the use of smaller equipment necessary.

Benefits:

The primary benefit is to state and federal planners and policy-makers who are charged with assuring adequate freight rail service throughout the United States. Specifically, the proposed research will:

·
Quantify the extent to which freight car supply issues pose a threat to the availability of freight rail services; and

·
Provide planners and policy-makers with a detailed and cogent evaluation of the various potential public-policy responses available to address any identified car supply issues.

Related Research:

A survey of both academic and popular literature reveals a rich set of materials describing the emergence of short-lines in the wake of regulatory reform, the issues posed by need to accommodate cars with a gross weight of 286,000 pounds or more, and state-funded rail programs.[1] However, this same literature reveals two shortfalls in the existing body of knowledge. First, the existing work is generally geocentric and highly fragmented, so that a synthesis and reconciliation of existing work is needed. Second, and more importantly within the current context, the existing literature is almost exclusively focused on long-run infrastructure improvements and largely fails to treat public-sector intervention in the form of improved car supply as a short-run, stop-gap remedy.

In practice, as noted, various states are considering liberalized policies regarding the use of state funds to support rail car supply. The most aggressive of these has been the state of Washington which since 1994, has owned a fleet of grain cars that are made available to Washington state shippers through a program known as . Not only, does Washington’s DOT actively intervene to help assure car supply, there is an indication that its forward-looking view supports providing cars of various sizes, depending on setting. Specifically, its most recent strategic plan states:

Recently, some of the cars have been used to move wheat short distances within the state in “scoot” trains between smaller elevators to larger elevators and/or shuttle facilities. At the shuttle facilities, the grain is transloaded into larger jumbo hoppers for delivery by the mainline rail companies to export terminals in western Washington and Oregon. (Emphasis Added)


[[1]](file:///C:/Users/Mark/Dropbox/ALL%20RAIL%20WORK/RR%202019/TRB19/NEEDS_STATEMENTS/TRB_RAILCAR_RNS_2018(2).docx#_ftnref1) What follows is an abbreviated list of useful resources: Michael W. Babcock and James Sanderson, “Should shortline railroads upgrade their systems to handle heavy axle load cars?” 42 (2006) 149–166; Thomas M. Corsi, Ken Casavant, and Tim A. Graciano, “A Preliminary Investigation of Private Railcars in North America,” , Volume 51 No. 1, Spring 2012; C. Phillip Baumel and Craig O’Riley, “Preserving Railroad Infrastructure: The Case of Iowa Branch Rail Lines,” , Volume 56 No. 3, Fall 2017; Eric J. Fitzsimmons, Stacey E. Tucker-Kuleszaa, and Lisa M. Shofstallb, “Case study of Class III (short line) system inventory to determine 286,000-LB. (129,844 KG) railcar operational status in Kansas, USA,” Journal of Rail Transport Planning and Management, 8 (2018), pp 158-166;
Tasks:

Based on the Research Objectives outlined above, the proposed research entails the execution of six specific tasks. These include:

·
Identify Weight/Size issues, in addition to the standard 286,000-pound gross car weights, that result in the need, for many Class II and Class III railroads to use relatively small freight cars;

·
Use state rail plans, information disseminated by the RRs, and other information sources to identify where and to what extent car size and weight restrictions mandate the use of substandard sized equipment. If possible, to some extent, quantify affected traffic.

·
Synthesize existing academic and state-sponsored research regarding the relationship between track and bridge improvements and short-line viability.

·
Carefully analyze the characteristics of existing and projected rail car fleets to determine whether those fleets will be sufficient to sustain rail network access in cases where carriers are unable to accommodate heavier or long rail cars. Predict when, where, and for what commodities, car supply may threaten rail access.

·
Evaluate the active / potential public-sector policies for improving car supply of target car types and evaluate the costs and likely effectiveness of these policies in comparison to alternative programs aimed at eliminating weight and size restrictions on short-line railroads.

·
Develop a detailed plan to discriminate research findings to state DOTs and other stakeholders.

Implementation:

As indicated above, the selected research team’s final task would a carefully conceived plan for discriminating research findings. At very least, this would involve close interactions with state DOTs, through the American Association of State Highway and Transportation Officials (AASHTO).

Relevance:

The proposed research will allow state DOTs to develop and execute more thoughtful and productive short-line railroad programs.

Sponsoring Committee:AR040, Local and Regional Rail Freight Transport
Research Period:12 - 24 months
Research Priority:Medium
RNS Developer:Mark Burton
Source Info:Committee members, existing research, and publicly available data.
Date Posted:10/31/2018
Date Modified:11/06/2018
Index Terms:Private enterprise, Governments, Short line railroads, Car supply (Railroads), Freight cars,
Cosponsoring Committees: 
Subjects    
Railroads
Freight Transportation
Vehicles and Equipment
Finance
Policy

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