The post-1984 experience with new small and regional railroads.
CHANGES IN THE PRE-1984 LINES, 1984-1992
Between 1970 and 1984, 118 new railroad companies were formed to take over lines abandoned or spun off by major companies, with total mileage of 7,479. By 1984, 19 had been abandoned (1,038 miles), leaving 99, with 6,441 miles. By January 1, 1993, 16 of the remaining lines, with 783 miles, had been abandoned, and 7 firms had abandoned portions of their lines, a total of 341 miles. Thus 5,317 miles remained. On the positive side, 6 lines added a total of 668 miles (414 being various lines of Indiana Hi-Rail). Thus the net figure of miles operated by the pre-1984 lines in 1992 was 5,985.
There was a substantial shifting from one short line to another. Transfers of entire lines totalled 1,449 miles; partial transfers, 188 miles. These changes reflected a variety of causes -- financial difficulties, with another enterprise willing to take the new line over, change in ownership, change in management policy, and change in policies of the track owners. In a few instances, operations were discontinued and then resumed by the new firm only after a year or so.
THE 1984-1992 EXPERIENCE: NEW SMALL RAILROADS
New Companies Take Over Lines
From April 1984 to January 1, 1993, a total of 184 new small railroad enterprises were formed to take over lines abandoned or spun off by major companies (plus nine that were abandoned before January 1, 1993), and were still in operation January 1, 1993. When a company started more than one line, ones separate from the other lines of the company are listed separately. The total mileage was 13,898. Thus a substantially greater number was formed in this eight-year period than in the 1970-1984 period. The appendix lists these lines. Omitted are ones that were taken over by other new small railroads, which are included in the list, with the notation R.
New Companies Formed To Take Over Other New Small Railroads
Nineteen new companies were formed after 1984 to take over other small railroads formed before 1984. Some of these changes involved nothing more than corporate reorganization or change in name. A few resulted in transfer of operating rights by the owner of the track or request of the operator to be relieved. But several reflected serious financial problems of the original company, such as Cedar Falls, which shut down and was replaced by the Cedar River, owned by a regional railroad. The Lewis and Clark resumed operations two years after the Chelatchie Prairie shut down.
THE REGIONAL RAILROADS
Basically distinct from the new small railroads formed in recent years are the carriers that have come to be called regional railroads. For purposes of this article, these are somewhat arbitrarily classified as new railroads that have taken over lines from major systems and that operate 400 miles or more in an integrated system. They do not include separated lines under common management, such as those of the Indiana Hi-Rail. In general the regionals have much heavier traffic volume than the small railroads and many have a more diversified traffic pattern. Only two such lines were formed in the 1970-84 period: Providence and Worcester in New England, and the Iowa Railroad, primarily in Iowa.(4) Since 1984, 11 such carriers were formed to take over lines from main-line railroads, as shown in Table 1.
These ventures have not all been successes. The Chicago Missouri and Western soon entered into bankruptcy, and was divided into two parts. The Springfield-Kansas City line became the Gateway Western, a new regional carrier, and the Chicago-St. Louis portion was acquired by the Southern
Pacific, thus reversing the trend, the line again being a portion of a main-line carrier (though technically separate).
The Gulf and Mississippi likewise proved to be less viable than anticipated, and was acquired by South Rail, a new company, but controlled by MidSouth, thus bringing these two former IC-owned lines back under one overall management. This system was purchased by the main-line Kansas City Southern, subject to ICC approval, in 1992, but is included as a regional carrier in this tabulation.
The new regional carriers totalled 8,714 miles, about 5 percent of the total national rail mileage. Of this, 1,123 miles were ultimately transferred into the hands of other new regional companies, and 218 reverted to a Class I carrier. TABULAR DATA OMITTED Thirty-three miles were abandoned. Thus as of January 1993, the net total mileage of the new regionals formed since 1984 was 8,463.(5)
Year of Formation of New Small and Regional Railroads
Table 2 shows the year of formation of the new companies. Of the small railroads, 1986, 1987, and 1990-1992 were the peak mileage years. There is no obvious trend. The regionals concentrated in the three years 1986, 1987, and 1988, with 1988 showing more than half of the total. The small number of recent new regional carriers (other than ones replacing others as shown in Table 1) is attributable in part to the fact that there were no obvious new potentials, partly to the financial difficulties of others as noted, and to the recession.
Table 2. Mileage by Year of Formation: New Small and Regional Railroads Year Small Regional Total 1984(*) 398 0 398 1985 293 0 293 1986 1,945 1,763 3,708 1987 1,969 4,738 6,707 1988 1,504 1,085 2,589 1989 1,305 0 1,305 1990 2,008 576 2,584 1991 2,241 0 2,241 1992(**) 2,235 552 2,787 Total(***) 13,898 8,714 22,612 * Including 25 miles actually started in 1983. ** Including 150 miles ready for starting in 1992 but actually commencing service in 1993. *** Including 218 miles ultimately shifted to main line railroad.
MAJOR FEATURES OF NEW SMALL AND REGIONAL COMPANIES
New Lines By Region
Table 3 shows the mileage of the small and regional railroads by regions. Two states -- Texas with 1,573 miles and Kansas with 1,128 miles -- are the only states with more than 1,000 miles.
The regional carriers are grouped by predominance of mileage, not exact amounts in each region. Of the small roads, the south and southwest have the greatest mileage, nearly half the total, whereas the regionals have the greatest mileage in the midwest. In total, the south and midwest have the largest amounts. When compared with the pre-1984 period, the sharp difference is the much greater importance of these lines in the south and southwest, plains, and mountain-pacific, and for obvious reasons less importance in the northeast.
Table 3. Rail Mileage by Region: Post-1984 New Small and Regional Carriers Mileage, Mileage Small New Total Region Railroads Regionals Total Pre-1984 Northeast 361 0 361 785 MidAtlantic 1,938 576 2,514 1,215 South 3,379 1,085 4,464 1,208 Southwest 2,537 552 3,089 Midwest 2,264 3,442 5,706 2,484 Plains 2,111 1,632 3,743 749 Mountain & Pacific 1,308 1,427 2,735 Total 13,898 8,714 22,612
The Previous Owners
The lines of the new small railroads (excluding those formed to take over other small new railroads) came from a large number of previous railroads, including a very few older small railroads, such as the Butte Anaconda and Pacific. But there was substantial concentration; details are shown in Table 4.
With the combined figures, Illinois Central, with 3,251 miles, is the chief source, followed closely by Burlington Northern with 2,830, CSX 2,753, Union Pacific 2,817, and Soo-Milwaukee 2,700. Most of the Illinois Central track spun off was the former Gulf Mobile and Ohio mileage, plus the Shreveport-Meridian east-west line.
Table 4. Major Source of Lines of the Post-1984 New Carriers, Small and Regional Miles Railroad Small Lines Regional Total Burlington Northern 736 2,094 2,830 Chicago Northwestern 543 989 1,532 CSX 2,753 0 2,753 Conrail & predecessors 1,375 0 1,375 Illinois Central 761 2,490 3,251 Norfolk Southern 994 351 1,345 Santa Fe 1,726 0 1,726 Soo-Milwaukee 687 2,013 2,700 Southern Pacific 923 0 923 Union Pacific 2,265 552 2,817 Other 1,135 225 1,360 Total 13,898 8,714 22,612
Of the small railroads, over 10,000 miles are owned by the new railroad companies themselves. The original main-line railroads (ORO in Table 5) own 1,243 miles, often being sold on a lease purchase basis, and governmental units, 2,141 miles, as noted in Table 5. Several states have acquired substantial mileage to ensure continued operation, as a major obstacle to a new firm is the capital requirement to buy the line. New Hampshire, North and South Carolina, Wisconsin, Minnesota, Michigan, Ohio, Montana, and Oregon have all acquired track, as has South Dakota, most of which is leased to a major railroad (BN), not to a short line. A substantial mileage is owned by port authorities (even though no port is nearby), simply because they were already authorized by law to acquire rail lines. The Kyle line across Kansas, a pre-1984 line, and the Port of Tillamook line are examples. Two cities or related units, San Diego and Austin, have bought substantial mileage, to use in part with present or future transit developments.(6)
Table 5. Ownership of Track: Post-1984 New Small Railroads Track Owner Miles SL company 10,141 Local development corp. 138 Original railroad owner 1,243 Historical society 17 Rail Users Association 30 Outside capital 159 Government: Local 633 Local rail authority 484 Port authority 77 State 947 Total governmental units 2,141 n.a. 29 Total 13,898 All of the regions own their track.
Ownership of the Companies
There is a wide range of ownership patterns of the small companies, as distinguished from track ownership, which may rest with the companies, but often does not. The patterns are shown in Table 6.
Table 6. Ownership: Post-1984 New Small Railroad Enterprises 1992 Ownership of Company Miles Other SL railroad 1,433 Other railroad 390 Outside interests 1,697 SL groups 5,768 Local 3,297 Shippers 370 Commercial development corp. 84 City, county, and local authority 187 Port authority 94 Scrap dealer 403 n.a. 175 Total 13,898
One of the most significant developments of the post-1984 period, although some had started earlier, was the acquisition of several lines by a single parent firm. The reasons for the development of these groups include the economic advantage of large-scale management and utilization of equipment. They are also in a more strategic position to bid for other lines whose promoters or owners do not wish to operate them. Some problems of management, however, are created when the lines cover a wide geographical area, and the personnel may lose touch with local interests. The company may own the lines, operate them under lease, or simply operate them on a contract basis. A list of other owners follows:
1. Other short line railroads. A substantial mileage is owned by other short lines, and one by a regional carrier.
2. Major railroads. In general, the major carriers have not maintained ownership of these companies, with exceptions, and in these instances the owner is not the original carrier.
3. Outside promoters
4. Local promoters and interests, a total of 370 miles. Very commonly local persons -- sometimes former main-line railroad employees, local persons interested in running a railroad, persons in other lines of business -- have started the railroad.
5. Shippers. Closely related to the previous item are individual shippers on the line or groups of shippers. Eastern Illinois, for example, is operated by a shipper group, the principal firm being Archer Daniels Midland, which also has been a major owner of the regional MidSouth.
6. Governmental units. While, as noted above, track ownership by governmental units is fairly widespread, governments have been very reluctant to operate rail lines. Typically, when they own track, they contract for operation by private firms or lease the track. Of the post-1984 lines, only the Columbia Terminal is actually operated by a city (Columbia, Missouri), and the North Coast by a two-county rail authority, though some of the pre-1984 lines are operated by governmental units. The only state-operated lines are West Virginia's South Branch, a pre-1984 line, and the Alaska Railroad, acquired from the federal government. In several instances, there has been shifting between governmental and private operation -- the Chillicothe Southern, now the Wabash and Grand Valley, for example. Some city-owned track is operated by major railroads -- for example, that of the city of Henderson in Nevada.
The most recent venture into public operation arose when the Eureka Southern in California failed, and the line was purchased by the two counties served, and is now operated as the North Coast Railroad by a county rail authority.(7)
Table 7A shows the traffic volume on a sample of 101 of the post-1984 lines for which data are available. The figure of carloads originated/terminated per mile is not the best measure of the volume but the one most readily available. Data are not available for all of the new lines and the figures are not all entirely current.
Table 7A. Traffic Volume, Post-1984 Lines, Available Years, 1987-1992 Cars Originated- Number of Terminated Per Year Post-1984 Lines 400 and above 2 200-399 10 100-199 18 50-99 34 25-49 15 10-24 19 under 10 3 Total in sample 101
Some railroads show a substantial variation from year to year, and some of the new carriers have been showing substantial gains. But the figures give a reasonably good indication of the levels of traffic. If figures from 1987 alone are used, a much higher percentage of the lines had lower traffic than the figures shown in the table. Most recent data, also included in Table 7A though with a much smaller sample, shows 14 of 23 lines with cars in excess of 100, and only 2 under 50. These are shown in Table 7B. They were derived from a number of sources, and may not be entirely accurate.
Table 7B. Volume of Traffic Per Mile of Line, Sample of Small and Regional Railroads, 1990-1991 Cars Originated/ Terminated Per Railroad Mile of Line Paducah and Louisville 554 Indiana Railroad 323 Rochester Southern 277 South Carolina Central--Carolina Piedmont 235 Gulf and Mississippi 216 Fort Smith 212 Indiana Southern 185 Atlantic and Gulf 169 Chicago Central and Pacific 138 Georgia Central 130 Buffalo and Pittsburgh 127 Eastern Alabama 118 Acadiana 116 Southern Kansas and Oklahoma 115 Gateway Western 86 Ohio Southern 84 Reading Blue Mountain and No. 81 Ouachita 77 Texas Northeastern 66 Alabama 66 Wichita Tillman and Jackson 59 Eastern Illinois 28 Adrian and Blissfield 20 Table 8. Sample, Purchase Price Per Mile of Line MidSouth $317,580 Fox River Valley 294,118 Paducah and Louisville 210,840 Montana Rail Link 159,744 Chicago Central and Pacific 93,750 Wisconsin Central 60,606 North Coast 36,145 Dakota Minnesota and Eastern 26,943 Columbia Terminal 15,476 Maine Coast 14,596 South Orient 12,836
Purchase Price Per Mile of a Sample of Lines
Figures of purchase price are not available for many of the roads; the sample available shows a very wide range, as indicated in Table 8.
Since there is no open market for these lines and seldom more than one potential buyer, the outcome is largely a matter of bargaining. The ones that brought high figures per mile are essentially lines that were "going concerns," ones the owner was not willing to sell except at a good price, and the buyer believed that an adequate return could be earned on a relatively high figure. At the other extreme are lines for which the seller knew the buyers could pay very little. The physical condition of the line of course played a part; the high-price lines were ones in good condition, the low-price lines were ones requiring substantial reconstruction. But the figure is also influenced by the amount of equipment acquired with the track, and the desire of the selling railroad to get rid of the line but at the same time keep it in operation, either as a feeder or for good will of shippers.
ABANDONMENTS OF POST-1984 LINES
As of mid 1992, the extent of abandonment of lines started since April 1984 has been limited; the roads have been remarkably successful in surviving, if not always easily. The total abandonments are shown in Table 9.
Thus the total post-1984 small railroad mileage abandoned by January 1993 was 518, or less than 4 percent of the total of new post-1984 small railroad mileage. There were several apparent reasons why the 1984-92 roads did so much better than those formed before 1984, of which 14 percent of the mileage had been abandoned by 1984, and 28 percent by 1993. First, the lines had on the average substantially more traffic as the major systems began to spin off lines that had considerable traffic, and for which complete abandonment would have been strongly resisted. Second, the bad experience of persons with inadequate knowledge of railroad operation and the attempts to operate lines with submarginal traffic became well known and dampened the enthusiasm of possible promoters. Finally, subsidy money was much less readily available; some early lines were started only because of the potential subsidy.
There are, however, several lines which are likely to be abandoned in the near future, perhaps by the time this appears in print:
Terre Haute Brazil and Eastern, 30 miles, from Terre Haute to Limedale, Indiana, on a former Pennsylvania RR line, fire curtailed operations of its major shipper, a cement plant, caused loss of most of the traffic.
T and P, 43 miles in Kansas, from Topeka to near Atchison, as noted above. It may have been purchased with the expectation of scrapping.
Mineral Wells and Eastern, 22 miles, from Weatherford to Mineral Wells, Texas, because of loss of subsidy from the city.
Floydada and Plainview, connecting the towns of the corporate name, on a former Santa Fe line, expected traffic did not materialize.
The General Picture of Failure
Pinpointing the precise cause of failure and abandonment of particular railroads is difficult, partly because all of the relevant information is not available, partly because of the interrelationship of various causes. But some of the major influences can be indicated, updating previous work in the field.(8)
First, it should be noted that a few of the new railroads were promoted by persons who probably had no intention of attempting to continue operation; they were primarily interested in the scrap value of the lines.(9) The T and P (Topeka and Parnell), noted above, has virtually no traffic since the SF rerouted its through traffic off the line. The Texas North Orient is another example.
Second, some new enterprises were started with the intention of operating when there was no rational possibility that traffic would be adequate. Some never actually started operations -- for example, the planned operation on UP track between Starbuck and Pomeroy in Washington.
Third, some lines that initially had adequate traffic to be viable lost traffic to the point at which costs could no longer be covered -- the most common situation. The basic problem is that no rail line can operate without a certain minimum level of traffic because of economies of scale and indivisibilities -- mainly relating to track maintenance and train operation.(10)
TABULAR DATA OMITTED
The amount of traffic available depends upon two general considerations: the level of economic activity in the area, and the share of traffic the railroad can obtain. Decline in the type of economic activity generating traffic has clearly played a part in some of the failures -- and more specifically, closure of the major or sole shipper.(11) Historically the decline in mining has been a major cause of closure of short lines and branches of major systems.
Of much more general importance has been the rise in the severity of truck competition, particularly for nonbulk shipments. While total rail ton mileage nationwide has held up well, that of many types of traffic has not.(12)
It is difficult to develop satisfactory figures of the minimum volume of traffic necessary for continued success of a line, since viability depends not only upon the volume of traffic but other considerations as well, such as the rate level, the share of the joint rates (if any), the operating conditions, the effectiveness of management, and the length of the line. But such data as are available, together with views of persons familiar with operation of smaller railroads, suggest some general figures, assuming typical rates, operating conditions, and other influences on costs. A figure over 100 cars originated or terminated per mile should ensure the possibility of continued operation. This includes about one third of the lines in Table 7A and two thirds of those in Table 7B. Lines with traffic between 50 and 100 have a chance of success if other conditions are not unfavorable, but not all lines with this density have succeeded. If the railroad is not responsible for track maintenance and taxes -- for example, if track is owned by a government unit which takes over these responsibilities -- the minimum may be as low as 35 to 50 cars. Below 25 viability is almost impossible except under special circumstances, such as shipper ownership, willingness of governments to subsidize the line, or a very short line with optimal operating conditions.
The significance of the length of a line for viability is subject to conflicting influences. There are obviously economies of distance, particularly in better utilization of equipment and personnel. The diesel on a very short line may be idle most of the time. On the other hand, costs on the small railroad, per ton mile, are almost certain to be higher than on the main line, and thus the shorter the line, the smaller percentage of the total distance that shipments move on the high-cost line. Certainly with very light traffic density, a long line -- a hundred miles or so -- cannot remain viable. This is the problem faced by some of the light traffic regional carriers.
A second major influence is management -- a problem that was particularly evident with some of the earlier roads, less so with those formed since 1984. Many of the early lines were started by persons who had neither substantial knowledge of railway management nor of management generally. Some developed poor relations with their shippers; others sought to build a much larger system than they had funds for, and the whole undertaking collapsed. Some promoters were train operating personnel, others were rail fans, enthusiastic about railroads but with little knowledge of their operation.(13)
A third influence is the cooperation of the connecting major railroad. A small railroad is in a sense at the mercy of the connecting line, unless it has large shippers also shipping on the main line. Otherwise the major has almost complete discretion with regard to treatment of the small line, rate divisions, supply of cars, and other considerations. If the major road will not give the small line a reasonable share of a joint rate, the small line has little chance of success. Failure to provide a joint rate will cause shippers to ship only to or from the junction point and truck the goods in or out. The willingness of the major road to adjust its overall rates in terms of competition is also significant.
Since small roads rarely have their own freight car supply, they are dependent upon major lines for providing cars. Typically they do -- but there are exceptions.(14) The actual attitudes of the major carriers vary widely. If the management seeks preservation of the smaller road to serve as a feeder, it will treat the small line much more cordially. Connecting with two major roads instead of one is an advantage -- but not foolproof as the major roads may not compete for the feeder traffic.(15)
In some instances traffic might be adequate with effective management except for serious physical problems. With some lines the track was or became in such bad shape that it was impossible to provide adequate service. With other lines, particularly in previous years, loss of a major bridge or substantial washouts from flooding brought an end to the line; the firm lacked funds for replacement and profit prospects were such that funds could not be obtained from outside sources. The failure of the Eureka Southern and its replacement by a government authority was a product of the same flooding that caused the SP to seek to abandon the line. The South Branch Valley was devastated by a flood and would have been abandoned had not the owner, the state of West Virginia, financed rebuilding in the interests of development of the area.
The Attitude of Government Units
The discussion above suggests the important role that state or local governments may play in preservation of a line that would otherwise be abandoned. The government may believe that the best interests of the community and the state are served by covering deficits, at least for a time. Two examples were given above; extensive track purchases by such states as Pennsylvania and South Dakota are other examples, as is the Madison Railroad in TABULAR DATA OMITTED Indiana. But there are limits beyond which subsidy support is not economically warranted and is politically impossible. This limit is difficult to determine.
Several small railroads operate excursion passenger service or contract with other firms to do so. This may be profitable for a time, but in other instances traffic declines as the novelty wears off. Liability hazards are substantial.(16)
Prospective Lines, Past and Future
Most of the proposals for lines listed as prospective in the 1984 article were implemented. But over the last six years several potential lines, despite substantial effort to promote them, were never initiated.(17) At present there are a number of major potential ones, including, for example, 300 miles of Southern Pacific lines in the Willamette Valley in Oregon, which are likely to begin operation in early 1993, a possible 180-mile extension of lines of the Montana Rail Link in southeastern Washington, a number of Santa Fe lines in the southwest and in Kansas, Conrail lines centering on Danville, Illinois, and resumed operation of the Nevada Northern Railway, the track owned by the city of Los Angeles.
The overall picture, in terms of numbers of companies and mileage, is shown in Table 10.
Thus, as of January 1993, 258 small and 11 regional companies new between 1970 and 1992 were operating over 29,000 miles of line, or roughly one fifth of the rail mileage of the country.
The continued expansion of the new small carriers and the survival of most of them has been remarkable, given the recession in recent years, the drying up of much of the government support of earlier years, and the increased severity of truck competition. The success can obviously be attributed to two major long-recognized considerations: the ability of smaller companies to operate more cheaply than the major railroads on relatively low volume lines, and the ability to provide more personalized service established in terms of knowledge of local needs. Lower costs reflect lower wage levels, much greater flexibility in the use of workers in a variety of tasks, and the ability to use more part-time labor. Companies affiliated with their major shippers may be able to use labor from the shipping firms on a part-time basis.
Success along these lines has not been universal and the expected gains have not been universally realized. More than one new line or a rebuilt line has suffered from failure of expected traffic volumes to be attained; the former Union Pacific line to Burns in eastern Oregon (now Oregon Eastern) is a good example; service has been discontinued on most of the line.
PROSPECTS FOR THE FUTURE
Given the expressed desire of the major railroads to spin off additional trackage, undoubtedly more new small and regional carriers will be formed. Of the existing lines, the great majority appear to be viable for the immediate future. In a sample check for this article of four states, with a total of 35 new small railroads, state rail planning officials indicate that seven appear to be marginal, the remaining viable. A more complete study in 1989, of 107 lines on which state DOT officials reported, nine were shown as submarginal, 40 marginal, and 58 as clearly viable. A 1987 study by the state of North Dakota reported that in 44 of 48 states, 56 percent of the lines were believed by the state DOT to be financially sound.(18)
The longer-range prospects are more difficult to assess. These depend in substantial measure on the future of the railroad industry as a whole, and this in turn on such unpredictables as changes in weight and length limits on trucks and ability of the railroads to hold down their own costs to maintain a competitive position. Another consideration is the attitude of the major roads toward cooperation with the small lines; this can be crucial, and is also difficult to predict. Provision of funds by government units to assist purchase is more problematic than in the past because of the severe budget constraints facing many states and localities.
1 John F. Due, "New Railroad Companies Formed to Take Over Abandoned or Spun Off Lines," Transportation Journal, Vol. 24 (Fall 1984), pp. 30-50. Material in that article was updated in John F. Due, The Causes of Failure of Small and Regional Railroads, Caterpillar Working Paper #28, University of Illinois Bureau of Economic and Business Research, Champaign-Urbana, 1987.
2 Major sources of information include Edward A. Lewis, American Short Line Railway Guide (Milwaukee: Kalmbach Books, 1991); numerous issues of The Short Line, published in Pleasant Garden, North Carolina; Trains Magazine; the Rail Planning units of State Departments of Transportation, and contacts with certain individual lines. The authors are greatly indebted to these sources.
3 Two excluded by the 400-mile figure, Buffalo and Pittsburgh and Dakota Missouri Valley and Western, are often grouped with the regional carriers.
4 These two lines were listed with small railroads in the 1984 article and are not reclassified for this article. The Iowa was in financial difficulties by 1984 and was reorganized as the Iowa Interstate, with extended mileage, 672.
5 The two regionals formed before 1984, Providence and Worcester and Iowa, operated 886 miles. Thus the total in 1992, plus 162 miles excess of Iowa Interstate over Iowa, was 9,249 if these two carriers are included, with the pre 1984 total for small roads reduced accordingly.
6 The original Nevada Northern in eastern Nevada is owned by the Los Angeles Department of Water and Power. It has not operated in recent years, but plans are under way for private operation. The city retains the line for possible future coal development. Some city-owned track is operated by major railroads and is not included in the tabulation.
7 The one example of long-term (nearly 75 years) operation of a railroad by a city is that of the City of Prineville in Oregon, built in 1918 and always operated by the city.
8 Due, Causes of Failure, op. cit., p. 13.
9 Scrap dealers have bought declining railroads for a number of years for this purpose -- the Tonopah and Goldfield and the Nevada County Narrow Gauge in the 1940s, for example.
10 Nancy Sidhu, Alberta Charney, and John F. Due, "Cost Functions of Class II Railroads and the Viability of Light Traffic Railway Lines," Quarterly Review of Economics and Business, Vol. 17 (Autumn 1977), pp. 7-24.
11 A coal mine in the case of Falls Creek, for example; a lumber mill on Marion County RR.
12 For example, combined east and westbound rail traffic across Nevada, on both northern and southern routes, was 80 million gross tons in 1970, 73 million in 1980, 82 million in 1990. Nevada Department of Transportation, 1992 Nevada Rail Plan (Carson City: State of Nevada, 1992), pp. 4-36, 37.
13 Examples of roads that are reported to have suffered from management problems were North Central Oklahoma, Moxahala Valley, Lykens Valley, Michigan Northern, Kewash, etc. At least two roads were so damaged by careless train operation that continued operation became impossible.
14 There is reason to believe that the Union Pacific has been denying cars to shippers in adequate amounts on some branch lines in the northwest in order to facilitate abandonment of the lines. Several small lines reported serious problems with the Union Pacific.
15 One small road in Oregon, the City of Prineville (not a new carrier) lost its inbound tire traffic because the UP and the BN would not allow it a share of a joint rate.
16 Examples include the Kalamazoo Lake Shore and Chicago, Leadville-Climax Short Line, Mt. Hood, Napa Valley Wine Train, Oil Creek and Titusville, Reading Blue Mt. and Northern and the Santa Cruz Big Trees and Pacific. Passenger service is operated on the Nittany and Bald Eagle by a nonprofit society. Fremont West Point and Pacific, the Dodge City Ford and Bucklin are currently solely passenger carriers.
17 Examples include an IC line from Freeport to El Paso, Illinois, the Rio Grande's Marysvale line, and Dixie River in Arkansas and Louisiana.
18 Planning Division, North Dakota State Highway Department, An Analysis of the Impact of Proposed Federal Legislation Regarding the Creation of Short Line Railroads on North Dakota Railroad Policy (Bismarck: December 1987), p. 92.
TABULAR DATA OMITTED
Mr. Due is professor emeritus of economics, University of Illinois, Champaign-Urbana, Illinois 61820. Ms. Leever, CPA, is budget director, Covenant Hospital, Urbana, Illinois 61801.
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|Author:||Due, John F.; Leever, Suzanne D.|
|Date:||Sep 22, 1993|
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