California State Rail Plan 2005-06 to 2015-16

Chapter XVI – Short Line Analysis
CHAPTER XVI
SHORT LINE ANALYSIS
Short line railroads play an important role in moving goods to and from California
regions and local communities. The commodities moved tend to have a low
transportation cost to weight/volume ratio, which contributes to their attraction to
short lines, instead of trucks.
There are 28 short line and regional railroads in California today. Most of them
are privately owned and employ between ten and 50 employees, as shown by the
summary from the American Association of Railroads in Figure 16A. Revenues
for the majority of the short lines are less than $5 million annually.
None of the short lines have revenues exceeding $40 million per year. Operating
costs were not cited. However, in California, operating costs range from about
75 percent to 110 percent of revenues. 13 The latter figure would suggest that short
lines with operating costs higher than revenue have other income sources such as
income from rental property.
SHORT LINE RAILROAD ISSUES
SECURING INFRASTRUCTURE FUNDING SOURCES
Securing adequate funding for infrastructure upgrades and other capital
investments is the most pressing issue for independently owned and operated short
lines. Some short line railroads were spin-offs from the Class I railroads
(Class Is), and were already suffering from years of deferred maintenance when
created. Maintenance-of-way procedures on these railroads typically are highly
labor intensive and expensive. Because short line railroads operate on low profit
margins they are unable to take on major infrastructure improvement projects.
TREND TOWARDS HEAVIER CARS
A major trend in the railroad industry is the use of heavier rail cars as a means of
maximizing load potential, thereby generating cost savings. The upper limit of
these new car weights has been increased to 286,000 pounds. To handle these
heavier cars, short lines must have track, roadbed, and bridges capable of handling
the increased loads. This means a substantial investment that many short lines
cannot afford given the limited revenues that they earn moving cars between
shippers and the Class I railroads.
Without the necessary infrastructure, many of the commodities moving by rail
today have to be hauled by trucks to and from transload facilities located at major
13 Per conversation with Mr. Andrew Fox, CSLRRA president, August 2000.
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