The Economics of Heavy Hopper Cars

Larger rail cars can create several efficiencies for railroads, including: (1) reduced car and locomotive ownership costs, (2) reduced labor costs, (3) reduced fuel costs, (4) reduced car and locomotive maintenance costs, and (5) increased system capacity. At the same time, the larger cars also cause accelerated deterioration of track and its components, and potential line upgrading costs. The following paragraphs discuss the potential efficiency benefits and the accelerated deterioration of track and upgrading needs, and review studies that have examined the magnitude of the efficiency gains from switching to larger rail cars for large railroads.

Many of the cost savings offered by larger rail cars on railroad main lines are the result of an ability to carry more commodity weight with only a small increase in the weight of the equipment needed to haul the commodity. The gain in commodity weight capacity relative to the weight of the equipment needed to haul that commodity weight is referred to as an increase in the net-to-tare ratio. A higher net-to-tare ratio means that a given commodity weight can be hauled with fewer locomotives, meaning a savings in fuel costs, labor costs, and locomotive ownership and repair costs.

Additional cost savings are offered by large rail cars simply from their ability to carry more tons of the commodity. This results in a reduction in car ownership and repair costs, and an increase in system capacity due to an ability to handle more payload at side track locations.

However, hauling heavy rail cars also can result in increased deterioration of rail, ties, ballast, turnouts, and bridges. This may cause the need for increased routine maintenance and/or cause the need for upgrading of facilities.

One recent study examined the impacts of heavy rail cars on the efficiency of mainline operations.⁴ In simulating operating and maintenance cost changes for larger cars in comparison to using 263,000-pound rail cars on a generic western coal route, the authors found 10 to 15 percent savings in crew costs, 10 to 2 percent savings in locomotive ownership costs, 10 to 1 percent savings in locomotive maintenance costs, 8 to 3 percent savings in car ownership costs, 3 to 12 percent savings in car maintenance costs, and 7 to 4 percent savings in fuel costs for 286,000-pound and 315,000-pound cars, respectively. They also found a 6 to 21 percent increase in track and bridge costs resulting from 286,000-pound and 315,000-pound cars, respectively. However, the overall effect of the larger rail cars was a net decrease in costs of between 7 and 2 percent for the 286,000-pound and the 315,000-pound cars, respectively. (See Figure 1). Studies by Zeta-Tech Associates performed for the Burlington Northern, and studies by the Association of American Railroads (AAR) have found similar results.⁵

Given these large potential cost savings, it is not surprising that there has been a shift to using the larger hopper cars in recent years. As railroads have started to replace portions of their grain car fleet, they have invested in 286,000 pound rail cars rather than the 263,000 pound rail cars used previously. Figure 2 shows the average payload capacity of the U.S. covered hopper car fleet from 1988 through 1997. As the figure shows, the average payload capacity of the covered hopper car has increased by three tons per car since 1991.

The shift in the use of the larger cars is even more dramatic, as shown by the proportion of railcars hauling grain that moved by the 286,000-pound cars in 1998. Figure 3 shows that the percentage of all U.S. rail grain hopper car loadings occurring in 286,000-pound configurations has increased from less than 1 percent of all covered hopper cars in 1993 to more than 27 percent of all covered hopper cars in 1998. This represents more than 28 percent of the tonnage of rail grain moved in hopper cars.

Similarly, as Figure 4 shows, the percentage of all covered hopper car loadings of grain in North Dakota using the 286 kip⁶ configuration has increased from 0 percent in 1993 to nearly 34 percent in 1999. For 1999, the 286 kip carloads loaded in the state of North Dakota amounted to nearly 38,000.

This shift to larger cars in North Dakota and nationwide reflects the rate incentives put in place by railroad carriers. Shippers located on lines equipped to handle 286 kip cars have benefitted through lower rates. Table 1 shows the per bushel wheat rate savings at various North Dakota locations resulting from fully loading 286 kip cars in comparison to fully loading 263 kip cars. As the table shows, North Dakota shippers save about three cents per bushel from fully loading the heavier rail cars in comparison to fully loading the 263 kip cars.

Table 1: Rail Rates for Shipping Wheat to the Pacific Northwest in Fully Loaded Rail Cars (52 car rate)

Problem for Light-Density Branch Lines

While the economics of larger hopper cars are positive for Class I mainlines, several factors suggest that the larger hopper cars may present a problem for Short Line railroads and for light-density Class I branch lines. Many of these light-density lines are built to lower standards than Class I main lines, and many have experienced deferred maintenance. Characteristics of light-density branch lines that may suggest a problem for hauling heavy hopper cars over those lines include:

• Light rail (e.g., rail weighing 90 pounds per yard or less)
• Thin ballast sections (e.g. less than one foot of ballast under ties)
• Poor tie conditions (e.g. less than 10 good ties per 39 ft. section - almost four feet between good ties)
• Old bridges

These characteristics suggest a problem because increased hopper car capacity places an increasing stress level on the track and its substructure. While the gross weight of the covered hopper car fleet and the gross weight of the covered hopper cars being used has been increasing over time, the basic axle design has remained the same. Most freight cars still have the same number of axles (four) and wheels (eight).⁷ Consequently, axle and wheel loads have been increasing with gross car weights.

Table 2 shows that the wheel loads placed on rail track increased by nearly 20 percent when the 1970s standard of 220,000-pound rail cars was replaced by the 263,000-pound standard. The wheel loads placed on rail track will increase by nearly another 9 percent when the 286,000-pound standard is put in place.⁸ For purposes of this study, the term used to describe cars with loads of more than the current standard (263,000 or 268,000 lb. gross weight) is heavy axle load (HAL) cars.

Table 2: Typical Freight Car Weights and Wheel Loads

This increase in wheel loads has important implications for the rail infrastructure needed to accommodate future grain hopper car shipments. The weight of the car is transmitted to the rails and the underlying track structure through these wheel loads. As wheel loads increase, track maintenance expenses increase and the ability of a given rail weight, ballast depth, and tie configuration to handle prolonged rail traffic decreases. Moreover, the ability of a given bridge to handle prolonged rail traffic also decreases as wheel loads increase.

On light-density branch lines that in many cases were built decades ago in an era of relatively light car weights, the increased wheel loads will likely require some form of upgrading. This is particularly true for branch lines with old bridges.

Because the negative impacts of heavier wheel loads on the track structure increase with increased speed, some Short Line railroads are trying to offset the negative impacts of heavier loads on their track by operating at slow speeds (e.g. 5 mph or less). However, it is doubtful that Short Line railroads can make the transition to HAL cars simply by operating at slow speeds. The opportunity cost of the freight cars, crews, and other productive assets is too great for these types of operations to work as a long term solution to the HAL problem. The next section of the study examines the literature that has made an assessment of the impact that HAL cars may have on track and bridge structures.

^4. Kalay, Semih and Tom Guins, "Heavy Axle Loads: The Dollars and Sense Case" Railway Age, March 1998, pp 59-63.

^5. See "BN: Big-Car Economics," Railway Age, April 1990, pp 43-45.

^6. One kip is equal to 1,000 pounds.

^7. The 1999 North Dakota Waybill Sample shows that all covered hopper grain car shipments originating in the state had four-axle configurations.

^8. The percentage increase in wheel loads will be somewhat smaller on the BNSF and CPR 268,000-pound cars (approximately 7 percent).