Executive Briefings

New Rand Corp. Report Questions Whether U.S. Railroads Are Ready to Handle Future Growth

U.S. railroads have done a good job of improving efficiency to accommodate a surge of demand over the last 15 years, says the Rand Corp. But whether they can continue to meet the needs of shippers remains to be seen. "As the volumes of freight being transported by rail approach the capacity of the network, it seems reasonable to expect a reduction in the performance of the railroad network," Rand says in a recent report on the state of U.S. railroads. It questions whether the industry can accommodate further growth through technology and operational efficiencies alone. If the railroads fail to invest sufficiently in new capacity, "rail market share will continue to fall and the number of trucks on the road will grow at an accelerating rate." In particular, Rand wonders whether the streamlining of infrastructure will render railroads unable to cope with disruptions. Many parallel routes have been abandoned or are currently operating near capacity, the study says. Yet the creation of redundant tracks or routes "is a capital-intensive solution." In the end, the ability of railroads to recover from serious disruptions might have more to do with operational flexibility and good planning than with redundant tracks and equipment, Rand says. It worries that railroads aren't collecting key metrics that measure system resiliency-specifically, the impact on routes that were not directly affected by the initial event, and the time it takes for all operations to return to normal. The report suggests that railroads model normal levels of activity, then calculate the impact of unusually slow speeds of lengthy delays. "This model could then be employed to see how a track closure disrupts the network and how long its effects last," Rand says.

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U.S. railroads have done a good job of improving efficiency to accommodate a surge of demand over the last 15 years, says the Rand Corp. But whether they can continue to meet the needs of shippers remains to be seen. "As the volumes of freight being transported by rail approach the capacity of the network, it seems reasonable to expect a reduction in the performance of the railroad network," Rand says in a recent report on the state of U.S. railroads. It questions whether the industry can accommodate further growth through technology and operational efficiencies alone. If the railroads fail to invest sufficiently in new capacity, "rail market share will continue to fall and the number of trucks on the road will grow at an accelerating rate." In particular, Rand wonders whether the streamlining of infrastructure will render railroads unable to cope with disruptions. Many parallel routes have been abandoned or are currently operating near capacity, the study says. Yet the creation of redundant tracks or routes "is a capital-intensive solution." In the end, the ability of railroads to recover from serious disruptions might have more to do with operational flexibility and good planning than with redundant tracks and equipment, Rand says. It worries that railroads aren't collecting key metrics that measure system resiliency-specifically, the impact on routes that were not directly affected by the initial event, and the time it takes for all operations to return to normal. The report suggests that railroads model normal levels of activity, then calculate the impact of unusually slow speeds of lengthy delays. "This model could then be employed to see how a track closure disrupts the network and how long its effects last," Rand says.

Visit www.rand.org