California State Rail Plan 2007-08 to 2017-18

Chapter XVI – Major Freight Issuesmarketing, efficient operation and financial support can help, the crucialrequirement will be the profitable handling of carload traffic for the Class I roads.Short line interface with the Class I Railroads in California, the Union PacificRailroad (UPRR) and Burlington Northern Santa Fe Railway (BNSF), is at timesproblematic. Interface in this case meaning pick up and delivery of mostly mixedcarload commodities. In conversations with the California Short Line RailroadAssociation (CSLRRA) they state that the Class Is for the most part providerelatively good service and that to say there’s a larger problem in California is notquite accurate. The Class Is are generally not geared towards providing the sameservice level to all customers, so generally speaking the smallest customers don’tget quite the same level of service as larger customers who provide regular,predictable, larger volumes.TRACK INFRASTRUCTURE CAPABILITYA major trend in the railroad industry is the use of heavier rail cars as a means ofmaximizing load potential, thereby generating cost savings. The upper limit ofthese new car weights has been increased to 286,000 pounds and in some cases to315,000 pounds. To handle these heavier cars, short lines must have track,roadbed, and bridges capable of handling the increased loads. This means asubstantial investment that many short lines cannot afford given the limitedrevenues that they earn moving cars between shippers and the Class I railroads.Without the necessary infrastructure, many of the commodities moving by railtoday have to be hauled by trucks to and from transload facilities located at majorrailroads. This shift from short line rail to trucks will further congest the State’shighway system, create more traffic delays, and increase air pollution and highwaymaintenance costs. The loss of revenue to short line railroads could force some togo out of business leaving some California rail shippers without rail services.The additional truck transportation costs will have to be passed on to consumers,making goods more costly to purchase.CAPITAL AVAILABILITYSecuring adequate funding for infrastructure upgrades and other capitalinvestments is the most pressing issue for independently owned and operated shortlines. Some short line railroads were spin-offs from the Class I railroads and werealready suffering from years of deferred maintenance when created. Maintenanceof-wayprocedures on these railroads typically are highly labor intensive andexpensive. Because short line railroads operate on low profit margins they areunable to take on major infrastructure improvement projects. The major freightrailroads are pursuing such strategies as legislation to allow them to claim taxcredits for infrastructure and equipment investments. They believe that the currentsystem, which limits or prohibits this, places them in an unfair competitiveadvantage compared to others in the goods movement sector.231