Service-cost tradeoffs for carload freight traffic in the U.S. rail industry

Railroad technology permits a single train to move a large number of individual freight cars. However, cars which are not in dedicated unit train or intermodal service experience considerable delay due to the consolidation and breakup of trains. Rail operations thus involve a tradeoff between the economies of shipment consolidation, and the resulting delays. More direct and/or more frequent train connections will increase costs, but reduce transit times. This article quantifies the cost of providing a range of transit times for general carload traffic for several representative U.S. rail systems. It shows that significant reductions in transit time will require a large increase in the number of train connections and operating cost. Changes in labor contracts to reduce train crew cost will provide some incentive for higher service levels, but reductions in crew cost alone cannot be expected to dramatically improve the performance of the carload segment of the industry.     

The impact of U.S. rail regulatory reform on railroad management and organizational structure

The management structure of U.S. railroads has been historically characterized as static and bureaucratic. Many writers have attributed this to years of restrictive government regulation. This paper tests the hypothesis that observable characteristics and organizational structure of railroad management have changed in conjunction with recent regulatory reform. Management characteristics are analyzed in both 1977 and 1983. Major findings are that managers in 1983 are significantly younger and better educated with fewer years of company and industry service. Railroad organizational structures are also reviewed before and after deregulation to assess whether management structures are becoming leaner and less mechanistic.     

Effect of mass on multimodal fuel consumption in moving people and freight in the U.S.

The United States transportation sector consumes 5 billion barrels of petroleum annually to move people and freight around the country by car, truck, train, ship and aircraft, emitting significant greenhouse gases in the process. Making the transportation system more sustainable by reducing these emissions and increasing the efficiency of this multimodal system can be achieved through several vehicle-centric strategies. We focus here on one of these strategies – reducing vehicle mass – and on collecting and developing a set of physics-based expressions to describe the effect of vehicle mass reduction on fuel consumption across transportation modes in the U.S. These expressions allow analysts to estimate fuel savings resulting from vehicle mass reductions (termed fuel reduction value, FRV), across modes, without resorting to specialized software or extensive modeling efforts, and to evaluate greenhouse gas emission and cost implications of these fuel savings. We describe how FRV differs from fuel intensity (FI) and how to properly use both of these metrics, and we provide a method to adjust FI based on mass changes and FRV. Based on this work, we estimate that a 10% vehicle mass reduction (assuming constant payload mass) results in a 2% improvement in fuel consumption for trains and light, medium, and heavy trucks, 4% for buses, and 7% for aircraft. When a 10% vehicle mass reduction is offset by an increase in an equivalent mass of payload, fuel intensity (fuel used per unit mass of payload) increases from 6% to 23%, with the largest increase being for aircraft.     

Distribution of the transit tax burden in five U.S. metropolitan areas

As transit subsidies increased twelve-fold in the United States between 1970 and 1980, metropolitan areas responded in very different ways to the challenge of financing burgeoning transit costs. The variety of approaches to transit finance has led to variation in the income-redistributive impacts of taxation. This paper reports on the results of disaggregate analysis of transit tax incidence in Chicago, Portland, northern New Jersey, San Antonio, and Phoenix. In cases where alternative tax shifting assumptions can be made, a range of tax burden distributions is calculated. Causes of the variation in redistributive impact are discussed. The analysis concludes by comparing the regressivity of financing transit through higher fares with the regressivity of taxes needed to support subsidies.     

The impacts of time of day pricing on the behavior of freight carriers in a congested urban area: Implications to road pricing

This paper describes the key findings from a major research project aimed at assessing the impacts of the Port Authority of New York and New Jersey’s time of day pricing initiative on the behavior of commercial carriers. The paper, believed by the authors to be the first comprehensive study on the subject, highlights key implications for road pricing policy.One of the most interesting findings is that carriers respond to time of day pricing by implementing multi-dimensional responses involving Productivity increases, Cost transfers, and Change in facility usage. This implies a more nuanced response than suggested by micro-economic theory, which would only predict a change in facility usage. In fact, no carrier was found to have responded by implementing only changes in facility usage, which leads to the authors to believe that this is a last resort alternative.In terms of numerical importance, three combinations of strategy groups represent almost 90% of the cases: Productivity increases (42.79%), followed by Changes in facility usage and Cost transfers (27.60%) and Productivity increases and Changes in facility usage and Cost transfers (19.32%). The fact that some of these responses impact only the carrier (i.e., Productivity increases) while others mostly impact the receivers (Changes in facility usage and Cost transfers) lead the authors to believe that the nature of the response is determined by the balance of power between carriers and receivers. If carriers dominate the relationship, then it is likely that policies that mostly impact receivers are implemented; otherwise, the carriers have no choice but implementing strategies that help them cope with the impacts of pricing without impacting their customers, i.e., productivity increases. In this context, the authors’ conjecture is that carriers consider changes in facility usage to be a very disruptive alternative that forces them—and more importantly their customers—to alter their shipping/delivery patterns. It should be pointed out that, although carriers stand to benefit from working during the off-peak hours, they could only do so if their customers are willing to work during the off-peak hours.The data indicate that 36 carriers (20.2%) changed behavior because of the time of day pricing initiative. This number includes 17 carriers (9.0%) that reacted by increasing shipping charges to receivers, which illustrates the need to find out more about how receivers reacted to the time of day pricing initiative. If the carriers that only increased shipment charges are excluded, 15.3% of carriers changed behavior because of time of day pricing.     

Challenges raised by freight for the operations planning of a shared-use rail network. A French perspective

Operating rail infrastructures that are shared among different uses is complex. In Western Europe, the predominance of passenger traffic over freight has traditionally led to thorough scheduling of capacity use, with an increasing tendency to anticipate through the design of regular-interval timetables. The paper discusses the specific challenges posed by fitting freight into the timetabling process for a mixed-use rail network, based on current French experience. The analysis is carried out from the perspective of the infrastructure manager. It is mainly supported by the results of a series of about 30 interviews, carried out in 2012 and 2013 with the parties involved in the timetabling process. The paper provides a comprehensive understanding of the process in terms of organization, rules and practices, with an emphasis on the characteristics of freight traffic compared with passenger traffic. The author highlights three key management issues for the French infrastructure manager when dealing with freight: (1) the uncertainty surrounding the mid-long term development of the rail freight market at the national level; (2) the heterogeneity resulting from the diversity of commodities, convoys and profiles and behaviors of the capacity applicants; (3) the volatility of some freight traffic resulting in a great amount of activity in the later stages of the timetabling process. If uncertainty about the future appears to be a highly sensitive issue in the French context, heterogeneity and volatility of freight traffic can be perceived as management challenges that may be experienced, to a greater or lesser degree, on other rail networks.     

The merits of accelerated depreciation for promoting investment in clean transport technologies: A simulation study in the Australian rail freight industry

This article ascertains the viability of promoting accelerated depreciation for newly acquired locomotives and other rolling stock as a means of encouraging technological investment in more efficient and environmentally friendly assets. The study uses a tax-adjusted asset replacement model to evaluate the merits of accelerated depreciation, and then compares the outcomes with alternative incentive schemes. It also examines what would occur if various schemes were used simultaneously.     

Car-deficit households: determinants and implications for household travel in the U.S.

Transportation - In the U.S., households with less than one car per driver (auto-deficit households) are more than twice as common as zero-vehicle households. Yet we know very little about these...     

The use of equilibrium network models in logistics management: With application to the U.S. coal industry

This paper discusses the use in logistics management of the freight network equilibrium model, developed in Harker and Friesz (1985a, b), called the Generalized Spatial Price Equilibrium Model, or GSPEM. After this discussion, computational techniques for solving this model are presented. The application of GSPEM to the analysis of the U.S. coal economy is then presented and future extensions of this line of research are discussed.     

The effect of fuel economy standards on the U.S. automotive market: An hedonic demand analysis

Both federal Corporate Average Fuel Economy (CAFE) regulations and market forces resulting from sharply higher gasoline prices are forcing auto manufacturers to dramatically improve the fuel economy of cars built for sale in the United States. Because these fuel economy improvements are being accompanied by significant changes in other car attributes that are believed to be important determinants of consumer choice among car models, there is currently considerable uncertainty about the likely effects on the automotive market. This paper analyzes market demand for automobile attributes, including those that are likely to be affected by fuel economy improvements, and presents estimates of dollar market valuations of key attributes. Market share effects of various assumed changes in car prices are analyzed in order to gain insight into competition among car models and the sensitivity of new car fleet average fuel economy to possible manufacturer or size-class-specific pricing strategies. Effects of gasoline price changes are also analyzed. These analyses make use of the hedonic demand model (also known as the “random coefficients logit model”), an extension of the multinomial logit probability choice model which explicitly incorporates variations in consumer tastes across the car-buying population. A data base measuring attributes and observed market shares of some 150 car models and submodels for the 1977 and 1978 model years is used.     

Own and cross-price elasticities of demand for domestic flights and intercity trains in the U.S.

In 2009, the U.S. Federal Government announced its plan to invest in the expansion of the passenger rail system, instead of adding to the freeway or aviation systems. On the other hand, environmental studies show that passenger rails have a lower polluting impact than flights or cars. In order to evaluate whether consumers would switch from flights to trains and use the new rail system, this paper estimates the own and cross-price elasticities of demand for domestic flights and passenger trains using the methodology described in Berry (1994). Specifically, the changes in demand for domestic flights and trains with respect to their prices are evaluated. The static model in this study suggests that the substitutability between these two modes of transport is minimal, in other words, travelers will to change their choices is very small given the configuration of the transportation system when the notice was made. In particular, train trips are substituted more easily.     

Public financing of private freight rail infrastructure to reduce highway congestion: A case study of public policy and decision making in the United States

As goods movement continues to increase it is expected to outpace infrastructure capacity in the United States. Moving a larger share of goods by rail rather than truck is a potentially cost effective part of a solution. Freight rail not only offers a substitute for truck trips but is a cleaner, more energy efficient, and safer alternative. Recently a number of private freight rail projects have received public funding. The public funds are aimed at increasing freight rail capacity with the goal of diverting some goods currently moved by truck to rail. While the benefits of moving goods by rail are relatively clear, it is unclear if public decision makers can effectively identify strategic rail investments that will achieve their policy goals. This study critically examines the analytical methods, models, and data that are commonly used to support decisions to provide public funds for private freight rail projects. This is accomplished through a case study of California’s Trade Corridors Improvement Fund program which provided $680 million for 11 freight rail projects. The study’s contributions include identifying critical analytical flaws and challenges affecting the benefit estimates that public funding decisions rely on. Improvements to current evaluation methods are also identified as are regulatory reforms and policy interventions that may offer more effective and reliable outcomes.     

Regulatory policy and economies of scale in the U.S. intercity bus industry

After nearly a half century of federal and state regulation, the U.S. intercity bus industry is the subject of proposals which would drastically reduce the extent of governmental control over fare setting, service abandonment, and market entry. An essential requirement for understanding how these regulatory changes might affect the industry is knowing the extent to which economies of scale are present in the provision of intercity bus services. This paper reports on the analysis of economies of scale for both Class I firms and for Class II and III firms. The results show nearly constant returns to scale beyond very low output levels but very strong dependence on the mix of charter and regular-route service provided.     

The deregulation of U.S. interstate aviation: an assessment of causes and consequences (part 2)

After forty years of economic regulation, the U.S. interstate aviation industry was ‘deregulated’ in 1978. This paper offers an assessment of the reasons for this radical change in official federal policy and an evaluation of the longer term impact of the reforms. Further, it provides a number of observations regarding the universality of the experiences of the U.S.A. in the context of the gradual liberalization of aviation regulation in general and the ‘deregulation’ of European aviation in particular.