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62 � Transportation Statistics Annual Report 1996<br />
TABLE 2-18: EXPENDITURES FOR THE CLASS I RAILROAD INDUSTRY, 1988–93<br />
Between 1988 <strong>and</strong> 1993, railroad labor costs<br />
declined by 7.8 percent from $11.5 billion to<br />
$10.6 billion. Despite this decline, labor costs<br />
continue to be the main expenditure item for the<br />
railroad industry. Labor accounted for 40.5 percent<br />
<strong>of</strong> total expenditures in 1993, down from<br />
44.5 percent in 1988 (see figure 2-13). During<br />
this same period, railroad expenditures on purchased<br />
fuel rose by 25 percent from $1.6 billion<br />
to about $2.0 billion. Not surprising, fuel cost as<br />
a proportion <strong>of</strong> total costs increased from 6.0<br />
percent to 7.5 percent. As discussed in chapter 4,<br />
the energy efficiency <strong>of</strong> railroad freight operations<br />
improved significantly. Improvements in<br />
load factors accounted for 75 percent <strong>of</strong> the<br />
overall reduction in rail freight energy use.<br />
Operating Performance <strong>and</strong> Revenues<br />
Recent trends in revenues <strong>and</strong> expenditures<br />
suggest that the industry’s operating performance<br />
improved substantially between 1984 <strong>and</strong> 1993.<br />
The railroad industry’s operating ratio (expenditures<br />
over revenues) declined from 87.6<br />
percent in 1984 to 85.1 percent in 1993. Since<br />
1984, net railway operating revenue increased by<br />
18 percent, from $3.6 billion in 1984 to $4.3 bil-<br />
(MILLIONS OF CURRENT DOLLARS)<br />
Percentage<br />
Cost items 1988 1989 1990 1991 1992 1993 change 1988–93<br />
Annual payroll <strong>and</strong> benefits $11,541 $11,814 $11,316 $10,806 $10,726 $10,642 –7.8%<br />
Purchased fuels 1,564 1,796 2,170 1,968 1,913 1,962 25.4<br />
Lease <strong>of</strong> equipment <strong>and</strong> rental 2,518 2,512 2,538 2,749 2,786 2,945 17.0<br />
Insurance 1,256 1,403 1,246 1,734 1,195 1,248 –0.6<br />
Depreciation 2,208 2,225 2,295 2,506 2,320 2,386 8.1<br />
Taxes <strong>and</strong> licenses 1,048 981 1,162 1,173 1,124 1,339 27.8<br />
Other 5,818 5,331 4,993 8,229 6,330 5,785 –0.6<br />
Total $25,953 $26,062 $25,720 $29,165 $26,394 $26,307 1.4%<br />
SOURCE: American Association <strong>of</strong> Railroads, AAR Factbook (Washington, DC: 1994).<br />
lion in 1993 (see figure 2-14). The net loss <strong>of</strong><br />
$216 million experienced in 1991 was due to two<br />
factors: a steep rise in general <strong>and</strong> administrative<br />
expenses <strong>and</strong> a moderate increase in several<br />
costs, including maintenance, rights-<strong>of</strong>-way,<br />
structures, <strong>and</strong> equipment. Equipment is a major<br />
expenditure for the railroad industry. Despite the<br />
weak financial performance in 1991, the railroad<br />
industry appears to be recovering.<br />
References<br />
American Association <strong>of</strong> Railroads. 1994. AAR<br />
Factbook. Washington, DC.<br />
American Association <strong>of</strong> Railroads, Economics,<br />
Policy <strong>and</strong> Statistics Department. 1989. Railroad<br />
Facts. Washington, DC. September.<br />
American Automobile Manufacturers Association.<br />
1989. Motor Vehicle Facts & Figures.<br />
Washington, DC.<br />
_____. 1994. Motor Vehicle Facts & Figures.<br />
Washington, DC.<br />
_____. 1995. Motor Vehicle Facts & Figures.<br />
Washington, DC.