Railroad net revenue is directly related to motor-carrier rates and costs on all traffic for which motor carriage can be substituted easily for rail service. Increases in maximum lawful truck sizes and weights will lead to lower motor-carrier costs. Competition and regulatory pressure will translate these lower costs into lower rates. Railroads will have to either match the lower rates or lose traffic to the competing mode. In either instance, railroad revenue will decline as a result of the increased truck sizes and weights. The amount of loss depends on the reduction in motor-carrier costs and rates brought about by the increase in capacity, and by the proportion of existing rail traffic that will move by motor carrier if the relative rates of the two modes change. If motor-carrier capacity increases from 33 249 kg to 40 834 kg (from 73 280 lb to 90 000 lb), costs of operation and rates are estimated to decline by 16.8 percent. Potential for diversion from rail to truck was estimated by examining market shares of each commodity in each distance grouping. Available market share data suggest that railroads compete with motor carriers for traffic accounting for approximately 75 percent of rail revenue. Thus, a 16.8 percent decline in motor-carrier costs and rates would force railroads to make competitive adjustments that would cost the industry up to $2 billion. /Author/

Media Info

  • Media Type: Print
  • Features: References; Tables;
  • Pagination: pp 30-35
  • Monograph Title: Freight movement and demand
  • Serial:

Subject/Index Terms

Filing Info

  • Accession Number: 00189864
  • Record Type: Publication
  • Files: TRIS, TRB
  • Created Date: Apr 12 1979 12:00AM