Edit post

Edit your reply below.

Post Body
Enter your post below.
[quote]QUOTE: Originally posted by MP173 180% above variable costs seems a bit ... thin to me. How was that number derived? Railroading is a very capital extensive industry, with lots of fixed costs to absorb. ed [/quote] According to this link (scroll down to the "UGPTI" heading)... http://www.ndgda.org/Articles/42602dorganholdssenatehearing.htm .....at 160% of variable costs, "the railroad is said to be covering its fixed and variable costs plus a reasonable profit" (Gene Griffin, Director of the Upper Great Plains Transportation Institute at NDSU in Fargo, North Dakota). So logically, at 180% of variable costs, railroads are more than covering their fixed costs as well. My understanding is that the 180% figure wherein a shipper can theoretically challenge the captive rate is derived by the STB. If you read further through the link, there are some interesting revenue to variable costs ratios to consider: 1.85 for single cars 2.44 for 26-car units 2.71 for 52-car units 3.07 for 55-car units 3.11 for 110-car units This is for North Dakota to the PNW, and I am not sure of the date of this testimoney, but I think it is around 2001.
Tags (Optional)
Tags are keywords that get attached to your post. They are used to categorize your submission and make it easier to search for. To add tags to your post type a tag into the box below and click the "Add Tag" button.
Add Tag