ECONOMIES OF SIZE AND DENSITY FOR SHORT LINE RAILROADS

This report describes a study that analyzes the extent that economies of size and density are available to short line railroads. The objectives of this study were: (1) To provide additional information about the reasons for and the nature of the evolution of the short line railroad industry; (2) To examine and further develop the theoretical framework of cost for the short line railroad industry; (3) To develop theoretically consistent estimates of short line costs using a short line simulation costing model; and (4) To provide guidelines to assist the rail industry, rail labor, and state and federal policy-makers adjust to the changing structure of the rail industry. Size economies are limited for short line railroads. However, increasing traffic density offers significant opportunities for lowering costs. Increasing the traffic density from 20 to 30 cars per mile lowers average total costs by 30%. The elasticity of total cost with respect to density was 0.16. Thus, the concern with new short lines should be with the traffic density, not the size of the network. The report is presented in six chapters. Chapter 1 is an Introduction. Background information about the short line industry is presented in Chapter 2. A review of the literature on economic costing theory is found in Chapter 3. In Chapter 4, the simulation costing model is detailed. The empirical results of the analysis are presented in Chapter 5. The report concludes with a summary and conclusions in Chapter 6.

• Record URL:
  https://www.ugpti.org/resources/reports/details.php?id=279
• Supplemental Notes:
  • This study was conducted at the Upper Great Plains Transportation Institute, North Dakota State University, and funded by the U.S. Department of Transportation's University Transportation Centers Program.
• Corporate Authors:

  Mountain-Plains Consortium

  North Dakota State University
  Fargo, ND  United States  58108
• Authors:
  • Dooley, F J
• Publication Date: 1991-4

Language

• English

Media Info

• Media Type: Digital/other
• Features: Appendices; Figures; References; Tables;
• Pagination: 126 p.

Subject/Index Terms

• TRT Terms: Cost estimating; Costs; Economies of scale; Elasticity (Economics); Estimates; Guides to the literature; History; Literature reviews; Short line railroads; Simulation; Size
• Uncontrolled Terms: Economies of density
• Old TRIS Terms: Economies of size
• Subject Areas: Economics; Finance; History; Railroads;

Filing Info

• Accession Number: 00639871
• Record Type: Publication
• Report/Paper Numbers: MPC Report No. 91-2
• Files: TRIS
• Created Date: Nov 30 1993 12:00AM