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Shared-Use: Background and Rationale for the Research 15 Freight Operations Perspective Project planners are encouraged to concede a legitimate interest by freight operators to ser- vice customers. That service may support local business enterprises that contribute to economic vitality in the region. The planner should understand the perspective of the freight operator. In this way, the freight operator's objections can be anticipated and respected, and perhaps certain needs can even be accommodated. It is essential that the public sector representatives be capa- ble of asking the right questions and appreciating the response. Railroads in North America are primarily privately financed, owned, and maintained. For- profit concerns have focused capital investments in the most profitable traffic lanes and ratio- nalized unprofitable track. Branch line tracks have low traffic density and high per-unit fixed costs. There are 545 short-line or regional railroads in the U.S., with in excess of 50,000 miles or 30% of the network. Such smaller railroads only account for 9% of the industry's revenue. These railroads are assets that offer opportunities for future passenger rail and freight railroad growth. Class I railroads generally operate long distances over a multi-state network and on corridors with high traffic densities. Shortlines provide feeder or distribution service to or between Class I, other railroads, customers, and suppliers. There are four major types of ownership arrangements for these shortlines: Class I, shipper, government, or private ownership. Shipper and government owned lines typically contract their operation to a designated freight rail operator who may be one of the large holding companies that operate a variety of multiple shortline holdings. Of the private shortlines, some are owned by national holding companies, some are established regional roads, but a significant proportion of shortlines are truly small and independent. These lines are at higher risk for abandonment if the traffic base becomes unstable. To operate light density lines, the shortlines need to lower their unit-costs to below Class I lev- els. The typical shortline expends about 70% of its revenues on above-the-rail expenses. This leaves 30% for fixed-plant (infrastructure) maintenance, overhead, and return-on-investment. In 2004, the shortline industry expended $264 million in maintenance. The annual track main- tenance costs turn out to be between $5,000 and $10,000 per mile. There are limited federal pro- grams for funding the rail freight industry. The Short-Line Tax Credit provides up to $3,500 per mile to qualified railroads. Railroads generally finance their operations and their capital needs using revenue derived from operations. Shortlines tend to be the sole track user and are usually centrally dispatched via radio. Car- loads are the dominant type of shipment on shortlines. Carload shipments are typically less "urgent," but require consistent timing. Temporal separation is often unacceptable for freight customers who demand specific car delivery, pick-up and spotting times. It is also more difficult to schedule MOW windows on a temporally-separated system. The FRA "Intelligent Transportation Systems Technologies for Integrated Rail Corridors" [unpublished; ITS Technologies for Integrated Rail Corridors, FRA Office of Research and Development Contract No. DTFR53-01-D-0030 (2006)] concluded that local transportation officials should be encouraged to work with the owners of urban low density freight lines to share facilities and infrastructure, creating synergies in urban passenger and freight mobility that would not be possible without cooperatively sharing scarce transportation resources. Preserva- tion of urban rail freight service offers economic development and congestion mitigation oppor- tunities not otherwise possible. The shortline rail industry provides an alternative to highway based urban freight services, while allowing some business operations to remain viable in con- gested urban areas. In summary: 1. Low density branch lines are an important part of the nation's freight system; 2. Low density branch lines are low speed, low volume operations;
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16 Shared Use of Railroad Infrastructure with Noncompliant Public Transit Rail Vehicles: A Practitioner's Guide 3. Insufficient revenue to cover fixed costs (maintenance of plant) is a continuous and ongoing threat to the sustained operations of low density freight lines; and 4. Shared-track provides a mechanism to defray fixed cost expense over more units of traffic, or provide an incentive for sale of the right-of-way that enables the preservation of the shortline and improves its financial position. The first two points underlie the appeal of shared-track. The last two points are primary incen- tives for a freight operator to consider shared-track.