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Essay / Research Paper Abstract
This 3-page paper discusses some of the costs involved in running a freight railroad. Also discussed are charges for switching and demurrage. Bibliography lists 2 sources.
Page Count:
3 pages (~225 words per page)
File: D0_MTcostrail.rtf
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Unformatted sample text from the term paper:
railroad companies. Running a railroad is not for the faint-of-heart, though. There are many fixed costs and variable costs -- not to mention the fact it is a capital-intensive business.
For one thing, capital involves the railcars themselves and the tracks on which they roll. Though the United States government is responsible for much of the tracks maintenance, the tracks
are actually under ownership of the various rail companies, which lease out the rails to the U.S. government for Amtrak to run on. This means the railroad companies are responsible
for ensuring upkeep of many of these tracks. This can be a daunting task, especially with recent rises in steel prices. Additionally,
many of the freight railroad companies must maintain the cost of its terminals and storage (which is why its starting to charge more for demurrage, which well get into later
on in this paper). Fixed costs of many railroad companies can be quite high, due to maintenance and in some cases, building new intermodal facilities and track to serve those
facilities. As a result, this meant that the average cost of capital for the industry after taxes in 2006 was 9.9%
(Traffic World, 2008). This was down from 2005, which was 12.2% (Traffic World, 2008). Another factor to consider when it comes to
cost considerations for a rail road company is that of labor. Unionized labor, especially, tends to really run costs up for rail lines.
In short, though rail roads are starting to show some profit (thanks to the increasing price of fuel), the capital costs are starting to eat away at some
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