The nation’s $90 billion fleet of privately owned freight railway cars may be in jeopardy, according to a report released today by the Transportation Research Group in Washington State University’s School of Economics.
The fleet is integral to the efficient movement of goods by rail and drastically reduces the environmental impact of shipping by eliminating the equivalent of 30 million truck shipments a year. The report finds that private owners of railway freight cars may not be making high enough returns to justify their continued investment in the cars.
“Economic and Environmental Benefits of Private Railcars in North America” was jointly authored by Dr. Thomas M. Corsi, Michelle Smith, professor of logistics at the Smith School, and Dr. Ken Casavant, professor of economics and director of the Freight Policy Transportation Institute at WSU.
Corsi and Casavant find that the poor rates of return for private railcar owners are due in part to changes in the railroad industry’s interchange rules, which have resulted in a number of new rules with major efficiency benefits to the railroads and only marginal safety benefits to the public and private car owners. Nevertheless, the entire significant cost of the new rules has been borne by the private car owners.
“In the past, railcars were typically owned and operated by railroads, but increasingly, railcars are privately owned these days,” Casavant said.
The report notes that unless there are major changes in process by which new interchange rules are promulgated to more equitably allocate benefits and costs, the economic value of private car ownership will be further eroded and the availability of this capacity will be in doubt with severe consequences to the national economy.
Click here for a full copy of the report.