Introduction

North Dakota's grain producers rely on an efficient rail system to move their products to export and domestic markets. Because of the low-valued, bulky nature of grain products, and because of the long distances of North Dakota grain producers from points of consumption, rail is the least costly mode for transporting grain products to the market. In the 1999-2000 crop year approximately 69 percent of all North Dakota grains and oilseeds transported to export and domestic markets were transported by rail.

A large component of the North Dakota rail system is light-density branch lines. Currently, nearly two-thirds of all North Dakota route mileage is comprised of light-density branch lines. This branch-line mileage accounts for all of the state's Short Line mileage (1,287 miles) and nearly half of the state's Class I mileage (1,268 miles).

A recent shift to larger grain hopper cars may threaten viability of the state's light-density branch line network. The old industry standard of 263,000-pound cars that are capable of hauling 100 tons of grain is being replaced with 286,000-pound cars capable of hauling 111 tons of grain. Many light-density branch lines can not handle these larger cars, as they have light rail in place, shallow or poor ballast, and/or deferred tie maintenance. Although it is possible to load the larger rail cars at lighter weights or operate at lower speeds on such lines, railroads operating over such lines eventually will face a decision between upgrading and abandoning lines that cannot handle the 286,000 pound cars at full weight.

It is estimated that nearly one-third of U.S. grain currently is being hauled by these larger hopper cars.³ While the shift to larger hopper cars provides benefits in the form of improvements in efficiency for railroads hauling on mainline track and in the form of potential rate incentives to shippers that are able to use such cars, it also may result in increased costs to shippers located on lines that can not handle such cars. Such shippers may be forced to transload at an alternative rail facility via higher-cost truck transportation - a shift that may cause accelerated highway deterioration and secondary economic impacts to affected communities.

This study examines the shift to 286,000-pound cars in the hauling of railroad grain and the potential impacts on the state of North Dakota. Specifically, the study:

• Examines the economics of larger cars for railroads, and their historical share of railroad activity;
• Reviews studies examining the rail infrastructure needed to handle 286,000 pound cars;
• Provides simulations of hauling 286,000-pound cars on lines with different rail weights, tie conditions, and ballast depths;
• Estimates the costs of upgrading North Dakota lines where such upgrading is likely;
• Provides a description of the North Dakota light-density network, including traffic levels, rail conditions, and competitive conditions, providing a preliminary assessment of lines that will likely need upgrading, and those that are likely to be abandoned;
• Presents a theoretical model of the railroad upgrading decision, making use of information provided in interviews of railroads serving North Dakota;
• Develops estimates of traffic densities where railroads are more likely to upgrade rail lines;
• and discusses the types of impacts that the upgrading decision could have for North Dakota communities.

The next section of the report examines economics of the heavier loading rail cars.

^3. Source: U.S. Public Use Waybill Sample, 1998.