WSU economist finds nation's railcar fleet in jeopardy

Farm and Ranch June 28, 2011 Over half the freight moved by U.S. railroads, 56 percent, moves not in railroad owned, but in privately owned railcars.

Casavant: “Even more importantly I think, 87% of the new investment in railroad cars is done by private car owners.”

That is Washington State University economist Dr. Ken Casavant who co-authored the report “Economic and Environmental Benefits of Private Railcars in North America.” So, the railroads aren’t investing much in new cars and because of the rules by which the railroads operate, Casavant says private car owners are not getting a good return on investment.

Casavant: “The return was like 30% below the lowest risk free Treasury Bond and significantly below the railroad revenue adequacy standard of 10%. It just simply says these folks can get higher returns somewhere else and as a result the whole issue of investment becomes precarious.”

And that could lead to shippers or states having to invest more in railcars.

The study found that if all the traffic that now moves in private rail cars was shifted to trucks the pollution cost associated with increased truck traffic could conservatively be 12 billion dollars. That’s not counting the impact on highways.

Casavant says the Surface Transportation Board could be a regulator on the private car owner versus the railroad issue and there is some legislation in Congress that would accomplish that.

I’m Bob Hoff and that’s the Northwest Farm and Ranch Report on Northwest Aginfo Net.

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