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Railroad Productivity Gains..an Illusion or real?
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As a beancounter let me point out a few facts that most people are ignoring. 1) most road crews, which represents the largest % of crew costs on most class 1 railroads are paid by the mile. This means the the basic wage cost is reduced everytime an employee is cut. Because of this a reduction in crew districts has no impact on costs whereas a reduction in crew size does. 2) In addition some crew costs are semi-fixed such as medical benefits, which in the USA compared to Canada are substantial. This means that even if a crew only travels 1 mile in a month, the benefit cost is the same as if he works 10,000 miles in a month. This means a reduction in crew size reduces the number of semi-fixed costs and a reduction of crew districts if it results in fewer overall employee will have a favourable result (from the employer's perspective). Do I agree with the railways crewing levels? Yes and No. Yes, because railways are a long haul business and any reduction in crews over a long distance results in major cost reductions. There is also less division of labour which is a good thing although most union organizers would disagree. No, because trains 140+ cars are too long when there is a problem of any kind that needs to be responded to in person. In my honest opinion: Too long trains = too long time = too many derailments ( look at CN's record especially with respect to the BCR) The other thing that railways look at is risk management. They know there will be derailments. They probably even have a good idea as to location as certain sections of track are at the end of their replacement cycle ( which raises another whole argument). As railroads get constrained by insufficient capacity the costs to railroads in terms of lost revenue and performance penalties increases making accidents in total dollar terms more expensive. In % of revenue terms they are less important financially. The question is if you took the money spent on accidents and spent the same money on maintenance how much would the number of accidents decrease. At some point railways also will lose business if they cannot provide reliable transportation as they did in the past.
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