In this blog series, we are tackling the question of what longer trains mean for the United States and the world. We are using three lenses to evaluate this policy issue: safety, costs, and climate impact.
The next analysis is on the cost associated with longer trains. We can view the question of costs in many ways: the cost imposed on others, the cost to transport goods, or the economic efficiency of moving more goods in a single train. While no resources can comprehensively tackle every dimension of this issue, we provide a useful analysis of economic (or financial) costs directly and some indirectly associated with train length.
Most costs are associated with a dollar figure. However, not all costs are financial. While most things can be translated into dollars – think “time is money” – we look at the costs associated with longer trains in at least four lenses: cost of goods, cost of fuel, productivity, and monetized expected value of accidents. These can be evaluated from multiple perspectives, so “productivity” includes both the railroad’s productivity and the community at-large that may gain or lose based on how they interact with long trains.
The question of costs is a particularly important element for cost-benefit analyses that must precede any law or regulation. Because existing literature is sparse or does not evaluate costs, much of this analysis is based on theory and available information, and will require more research. This high-level blog serves as an introduction to thinking through costs, with deeper analysis coming soon.
Cost of Goods
When we filter out all variables besides train length, the question of the cost of goods is determined by whether more goods can be moved and how efficiently they are moved. The price of goods at the store, for instance, are determined by a number of things, including supply and demand, but also the cost of raw materials, manufacture of the good, and transportation to get it to the store. Within this equation, it is the transportation question at issue.
The cost of transporting goods is itself dependent on a number of factors, namely time, personnel, and fuel. If more goods are placed on a single train that is efficiently run to a destination, the cost of goods will be cheaper than if half are placed on a second train that comes later. In other words, trains keep the cost of each good low based on having a high capacity. A second train requires a second crew, fuel for additional locomotives, and more time. Limiting train length may also increase diversions to trucks for the additional freight, which is less cost effective than trains because a single railcar can carry as much freight as four truckloads.
By the same reasoning, however, many goods do move on trucks. If longer trains block crossings, it could also add to the time it takes goods to move by truck. At present, there is little to no data to suggest this is the case – nor to evaluate the impact. Trucks blocked at railroad crossings are most similar to general traffic in terms of time and costs.
Cost of Fuel
Another measure of financial impact is the cost of fuel to power the train. Freight trains are capable of moving a ton of freight approximately 500 miles on a single gallon of diesel fuel. This is roughly four times more fuel efficient than moving similar loads by truck. This fuel efficiency helps keep the cost of shipping down and is partially attributable to the fact that trains can connect many railcars. Additional cars added to the same train take less marginal fuel than running multiple trains. One practical impact of limiting train length to 7,500 feet, for instance, is an approximate 13 percent increase in fuel consumption annually, according to the Association for American Railroads. That would require railroads to utilize over 420 million more gallons of fuel than present levels.
At an average per gallon price of diesel of four dollars, that would equate to $1.69 billion in added cost every year. This cost is ultimately incorporated into the cost of goods, and also strains the market for fuel, which drives up the cost of fuel for truck drivers, commercial operators, and even the general public.
The fuel question can be illustrated most simply by visualizing the impact of additional rail cars. One additional rail car does not require an additional locomotive and only diminishes the fuel efficiency by a small margin. By contrast, splitting a train or truck diversions directly require more engines to move the freight. For diversions, the difference between 100 train cars and 150 train cars moving intermodal containers between Abilene, Texas and Kansas City, Missouri would be a difference of 245 trucks to 367 trucks, or 122 new trucks. The same 50 train cars can run on one train. This has added implications for carbon emissions, which we will evaluate in the future.
Cost of Lost Productivity
As discussed in our first blog in this series, train length can contribute to blocked highway/road crossings. These blocked crossings represent two issues – first is that the train is not moving and second is that road vehicles are not moving.
Taking these in turn, the longer a train is, the greater likelihood of a blocked crossing at certain grade crossings. This will depend on both the train itself and any issues it may face, but also local track infrastructure and whether sidings or rail yards are nearby. One common occurrence is a train awaiting clearance to enter a rail yard and stopping short. This situation can result in blocked crossings if there are roads near the rail yard. Train length is related to this, because longer trains are more likely to block these nearby roads – but also longer trains may need longer sections of open track within the rail yard to enter, which may mean waiting longer for clearance. These delays have economic costs for the railroads, and by extension for the consumers of the materials and goods being transported.
Some delays are inevitable and uncorrelated to train length. Research finds that shorter trains experience disproportionate costs from delay relative to longer trains. This means that long trains generate some cost immunity from unexpected delays and also that rules capping train length may result in more short trains moving that would then be penalized by market forces beyond control of the railroad, shipper, or other stakeholder.
The second blocked crossing cost accrues to the general public waiting for the train to clear the roadway and allow traffic to flow once more. Wait times up to half an hour are common in areas with a large rail presence. Importantly, train length has two possible ways of blocking these crossings: by taking a long time to move through due to many cars or simply by stopping (and even if the locomotive is far down the track, the long line of cars still blocks the crossing). In each case, the driver on the road faces the same delay and is unable to make it to doctor’s appointments, grocery trips, gas stations, school or work, kid’s soccer games, and a host of other things directly and indirectly related to financial wellbeing.
Quantifying this is very difficult, in no small part because the axiom “time is money” is not literal for someone driving to get a late night snack and being delayed five minutes at a crossing, but also because the dataset on blocked crossings is not safeguarded against low-quality or duplicate reports.
Evaluating the cost of productivity must balance the increased efficiency of moving more goods on a single train – making the railroad more productive – with the potential lost productivity associated with longer trains taking more time to get to their destination or blocking/delaying others from reaching their destination.
A final consideration when it comes to costs is the expected value of something going wrong. Statistically, the the likelihood of an accident is a calculable cost. If a derailment is predicted to occur at a 10 percent chance for ever half million train miles and will cost a million dollars in damage (all of which is arbitrarily conjured for this example) then the expected value in cost can be calculated based on how many trains are moving and how far they go.
As we explored previously, there are reasons to believe that safety is positively correlated with train length for certain issues. In that case, the expected costs would actually decrease with train length. However, for any risks that are increased by longer trains, such as worker fatigue or injury associated with walking a train length, the expected cost would increase with train length.
Other research has modeled train accident rates by differentiating between car-miles and train-miles. “The concept of car-mile versus train-mile accident causes leads to the premise that, although longer trains are expected to experience more accidents than shorter trains, operation of longer trains results in a lower system-level accident rate.” This interesting finding helps explain the expected costs to individual carriers and to the general economy. Readers should note that this model and data predate key technologies and safety improvements made in the ensuing 15 years.
It is worth noting that if or where states prevent long trains, there may be additional economic impositions, such as trains stopping and offloading cars ahead of state borders. That may include splitting trains and running two trains through the state or moving cargo onto trucks. It may also mean railroad companies simply run multiple shorter trains from the beginning if they will move through states with this type of law or regulation. In each case, there are associated costs.
Written by Benjamin Dierker, Executive Director
The Alliance for Innovation and Infrastructure (Aii) is an independent, national research and educational organization. An innovative think tank, Aii explores the intersection of economics, law, and public policy in the areas of climate, damage prevention, energy, infrastructure, innovation, technology, and transportation.