RAILROAD REGULATION: ECONOMIC AND FINANCIAL IMPACTS OF THE STAGGERS RAIL ACT OF 1980

The Staggers Rail Act of 1980 reduced regulation of the railroad industry, but continued Interstate Commerce Commission (ICC) regulation in areas where competition was absent. In response to Congressional Requesters, the General Accounting Office (GAO) identified how the Staggers Rail Act has affected railroads and shippers, determined whether the railroads' financial performance has improved since the act's passage, and compared the railroads' financial performance with that of other transportation modes. Briefly, GAO found that, overall, the Staggers Rail Act has helped improve Class I railroads' financial health and rehabilitate rail facilities. In addition, the shipping industry has gained from lower rail rates and improved service. However, not all shippers have benefited because rates have not changed to the same degree for all commodities. Moreover, some shippers have complained about ICC's relief procedures and questioned whether ICC has adequately protected their interests. In response to shippers' concerns, ICC has adopted new policies and procedures since 1985. By most measures, Class I railroads' financial health has improved since 1980. Profitability, as measured by return on investment, averaged 4.9% during the 1980s, compared with 2.5% during the 1970s. In addition, debt has generally declined from about 36% of capital in 1980 to about 24% in 1988, and the ability to pay long-term obligations has improved. The railroad industry continues to lag behind other transportation modes in profitability. GAO compared railroads' financial performance with that of the trucking and natural gas pipeline industries. Both the trucks and gas pipelines selected provided transportation services for others. Between 1980 and 1988, returns on investment for the trucking and gas pipeline industries ranged between 8.0 and 17.0%, while the railroad industry's returns ranged from 3.5 to 5.9%. Two factors contributed to these results: railroads must build and maintain their own rights-of-way, while trucks do not, and railroads have higher cost structures than gas pipelines.

• Record URL:
  • http://www.gao.gov/docdblite/summary.php?recflag=&rptno=RCED-90-80
• Supplemental Notes:
  • Report to Congressional Requesters.
• Corporate Authors:

  U.S. General Accounting Office

  441 G Street, NW
  Washington, DC  United States  20548
• Publication Date: 1990-5

Media Info

• Features: Appendices; Figures; Tables;
• Pagination: 68 p.

Subject/Index Terms

• TRT Terms: Alternatives analysis; Financial analysis; Gas pipelines; Impacts; Profitability; Railroads; Rates; Regulations; Traffic managers; Trucking
• Identifier Terms: Staggers Rail Act of 1980; U.S. Interstate Commerce Commission
• Uncontrolled Terms: Class I railroads; Shippers
• Subject Areas: Economics; Finance; Freight Transportation; Highways; Law; Motor Carriers; Railroads; Society;

Filing Info

• Accession Number: 00497312
• Record Type: Publication
• Report/Paper Numbers: GAO/RCED-90-80
• Files: TRIS
• Created Date: Sep 30 1990 12:00AM