This research develops and applies a methodology for the determination of the level of a railroad's net income derived from the operation of a branch line. It is based upon post-1945 northern Canadian branch railways, to avoid any possible confusion with the completely different case of the pre-1945 grain gathering lines. Since new northern railways will continue to be important, a study of them is worthwhile. The performance of a sample of five branch lines is assessed using the author's methodology. Each line, representing major capital projects with the potential to significantly affect the development of the regions served, exhibits a different degree of governmental participation in its financing. The methodology is composed of: (1) a profit center model of the branch line, which separates the branch and system costs and revenues; (2) a procedure, which adapts known costing techniques to a typical branch operation; (3) a set of cost data, representative of actual northern railway operations. It was found that branch net contribution margins decreased with increasing governmental involvement. The returns on the railroads' committed capital did not follow the same ranking. This was due to the low railroad investment in the federally-subsidized rail projects, and the resulting high computed return on carrier investment. It is concluded that present governmental policy of subsidizing the construction of development railways, and the rail carrier policy of operating them, is sound. A continuing monitoring of branch performance by railroad management using the author's model is recommended.

  • Supplemental Notes:
    • This study was jointly funded by Canadian Institute of Guided Ground Transport and Central Mortgage & Housing Corporation of Canada.
  • Corporate Authors:

    Canadian Institute of Guided Ground Transport

    Queen's University
    Kingston, Ontario K7L 3N6,   Canada 
  • Authors:
    • MacDonald, J A
  • Publication Date: 0

Subject/Index Terms

Filing Info

  • Accession Number: 00054705
  • Record Type: Publication
  • Source Agency: Canadian Roads and Transportation Association
  • Files: TRIS
  • Created Date: Jul 15 1976 12:00AM