Short-line railroads

Corporate culture issues also appear to have played a part in the increased risk associated with some new entrants to the airline industry for example, Gray (1987, pg. 34) stated that Many new carriers have little notion of or experience in how an airline must be run. By contrast, corporate culture issues did not appear to pose as much risk in the new spin-off railroads established after rail industry deregulation, in part because they were largely staffed by experienced personnel from the larger railroads. In addition, because of intercormections between the new short-line railroads and the major rail carriers, the smaller railroads were generally required to meet certain minimal levels of safety performance. Similarly, the recent trend toward partnerships between the commuter air carriers and the major airlines may be associated with a reduction in the average risk of the commuter carriers. 

The AAR (1997) estimates that there about 550 railroads in the United States. However, there are far fewer different corporate entities are involved in railroading. It is reasonable to suppose that a parent corporation will impose the same safety policies on all of its subsidiaries. Some small switching railroads are, and always have been, individually or jointly owned by the major railroads. Some of the newer short-line railroads are subsidiaries of other short-line railroads, or have been purchased by the aforementioned large holding companies. 

However, these railroads collectively represent only about percent of carloads moved nationwide, and an even lower proportion of industry ton-miles. Not only are many short-line railroads reasonably small, but many are reasonably inexperienced. Table 15.2 shows the dates of incorporation of the public common-carrier railroads. Over half of the railroads have been founded since 1985. The movement to spin off these lines continues unabated. The large eastern railroads... 

The second, and perhaps most important, reason is that short-line railroads are not in competition with the major railroads but are providing a complementary service. The major railroads rely on the short-line railroads to provide connections to and from shippers premises. The major railroads have considerable incentives to ensure the competence of the companies to whom they sell their branch lines. There are direct financial incentives. Often when goods are damaged in transit, shippers often cannot identify when and where the damaged occurred. The cost of any Carmack Amendment claim is split between participating railroads on the basis of the mileage the car traveled on the various railroads. Consequently, a large share is borne by the major line-haul railroad. 

The final reason is that many short-line railroads serve only a handful of shippers. These shippers will have personal contact with the railroad management, and can exert considerable influence to ensure that high-quality service is provided. They have leverage because each represents a high proportion of the railroad s business. Indeed shippers will have far more power to express their safety desires than in the former days when the branch line was run by a major railroad whose headquarters was many hundreds of miles away. 

There are also genuine concerns that some small new railroads may be myopic due to inexperience. Albeit, that there is little empirical evidence that they pose a serious safety threat. Small railroads represent 3.2 percent of national train miles, and account for 3.8 percent of total railroad fatalities. While they do have higher rates of collisions and derailments, these are not translated into higher fatality rates. Low speeds of operation mitigate the consequences of many accidents. While some individual small railroads might give cause for concern, it is likely that the inexperience of new short-line railroads would be far down the priority list of railroad safety problems that need to be attended to. 

The trade journal Railway Age conducted some investigative journalism into the inspection of short-line railroads (Miller, 1993, 1996). The 1993 article highlighted... 

Support for this last lesson comes from several sources. Independent review of FRA operations by the GAO has repeatedly drawn attention to the ineffectiveness of pursuing individual defects and has recommended that the FRA move toward conducting more in-depth investigations of the safety-management practices of railroads who appear to offer deficient levels of safety. Interviews with managers of short-line railroads in Railway Age suggest that they find the educational seminars and advice offered by the FRA in cooperation with ASLRRA to be more informative and useful than a stack of violation notices written by a FRA inspector during a random visit. 

The regional line manager that we interviewed acknowledged the safety challenges associated with limited resources and inheriting deteriorated track spun off from major railroads. However, he seemed to indicate that these challenges caused short-line management to be more proactive and to use their limited resources more efficiently. He also noted ... 

The following people at the Association of American Railroads provided me with helpful insights into the industry Peter French, William Browder, Patrick Ameen, Gary Held, and Louis Cemy. Alice Saylor and William Loftus of the American Short Line and Regional Railroad Association discussed with me their part of the industry. 

Data reflects subsequent mergers of large railroads. Switching lines that are owned, individually or jointly, by the major railroad companies are included in with their parent corporation(s). Short-lines owned by a common holding company are shown as one "railroad." Conunuter passenger railroads and Amtrak are not included. 

ASLRRA American Short Line and Regional Railroad Association CFR Code of Federal Regulations... 

The exponential factors usually given for total plants should be used for grass-root plants, and not for new units constructed at a developed site or expansions to existing plants. Grass-roots plants are those built in a location that has not been previously developed. They cost more than plants built in an area where the company has other plants. When other plants are nearby, access roads, railroad sidings, sewers, and water lines may only need to be extended a short distance. Dock and steam generation facilities may be available, and office, lunchroom, medical, and change-room space may already be adequate. 

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