Railroads Chapter 6 Flashcards

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Questions and Answers

What is intramodel competition?

Trucking companies underbidding other modes to secure business.

What is a major reason for the decline in the number of rail companies?

Mergers and unification occurring in the railroad industry.

What is one of the benefits of a railroad merger?

Less frequent interchanges between companies means faster service.

What do the majority of rail movements involve?

Low value, heavy commodities. Signup and view all the answers

How is the demand for freight characterized?

It is a derived demand based on the demand for products. Signup and view all the answers

What do railroads primarily dominate the market for?

Hauling 30,000 pounds or more over 300 miles. Signup and view all the answers

What is one of the strengths of the railroad industry?

The railroads have large carrying capacity. Signup and view all the answers

What distinguishes TOFC from COFC service?

One method moves the trailer on its wheels and the other moves only the 'box' or the container. Signup and view all the answers

What is the primary reason for the decline in railroad car loadings since 1900?

Larger cars and increasing car productivity. Signup and view all the answers

What is the basic unit of measurement for railroad freight handling?

Carload. Signup and view all the answers

What type of railroad car has the greatest numbers in service?

Covered hopper. Signup and view all the answers

Who owns the greatest percentage of rolling stock in use?

Class I railroads. Signup and view all the answers

What is the major cost element of the railroad?

Operation and maintenance of rights. Signup and view all the answers

Which best characterizes the short-run cost structure of the railroads?

Larger proportion of indirect fixed costs. Signup and view all the answers

Why do railroad per unit costs decline as traffic increases?

A large proportion of fixed costs in the cost structure. Signup and view all the answers

What was the purpose of the legislation that created Amtrak?

It relieved railroads from the responsibility of providing passenger service. Signup and view all the answers

Intermodal traffic expanded by how much from 1980 to 2012?

<ol start="319"> <li></li> </ol> Signup and view all the answers

How do railroads compare to other modes of transportation in terms of energy efficiency?

More energy efficient than most other modes. Signup and view all the answers

When did scheduled common carrier freight and passenger service begin in the U.S.?

<ol start="1830"> <li></li> </ol> Signup and view all the answers

What is the standard track gauge in the U.S.?

4 foot 8.5 inches. Signup and view all the answers

What led to the erosion of rail dominance in U.S. transportation?

Government funded construction of roads. Signup and view all the answers

How many Class 1 rail companies are there?

<ol start="7"> <li></li> </ol> Signup and view all the answers

What percentage of rail revenue is earned by local carriers?

2.1%. Signup and view all the answers

How many rail mergers have occurred in the last 30 years?

<ol start="28"> <li></li> </ol> Signup and view all the answers

What commodity accounted for 6,204,000 railcar loads in 2012?

Coal. Signup and view all the answers

Who is the largest single customer of some railroads?

UPS. Signup and view all the answers

What is the major cost element borne by the railroad industry?

Right of way. Signup and view all the answers

Define intramodal.

One form of driving throughout the whole process, gives rise to oligopolistic market structure because there is a small number of interdependent large sellers, popular in many cities. Signup and view all the answers

Name the top 4 commodities transported by railroads.

Coal, chemical and allied products, farm products, transport equipment. Signup and view all the answers

Why is rail considered an oligopolistic market structure?

Small number of independent larger sellers and serve different market areas. Signup and view all the answers

What has been the result of mergers and acquisitions in the railroad industry after the passage of the Staggers Rail Act?

Side-by-side: strengthen financial positions to eliminate duplication. End-to-end: effective intermodal and intramodal competition. Both helped bring in the seven Class 1. Signup and view all the answers

What are the disadvantages of rail transportation?

Sensitive rail shipments can often arrive damaged because of harsh vibrations during transport. Rail accountability is lacking. Signup and view all the answers

Study Notes

Intramodel Competition and Market Dynamics

Intramodel competition involves trucking companies underbidding to secure business against other transportation modes.
Mergers and unification have significantly reduced the number of rail companies in the industry.

Benefits of Mergers and Rail Characteristics

Rail mergers result in fewer interchanges between companies, leading to faster service delivery.
Most rail movements consist of low-value, heavy commodities, which predominantly drive demand.
The demand for freight is derived from the overall demand for products.

Transportation Market Overview

Railroads are the leading choice for hauling loads of 30,000 pounds or more over distances of 300 miles or more.
A major strength of the railroad industry is its large carrying capacity, enabling efficient bulk transport.

Types of Rail Services

TOFC (Trailer on Flat Car) service moves trailers on their wheels, while COFC (Container on Flat Car) transport carries only containers.
Railroad car loadings have declined since 1900 primarily due to larger car sizes and increased car productivity.

Basic Freight Handling and Equipment

The fundamental unit of railroad freight handling is known as a carload.
The most common type of railroad car in service today is the covered hopper, essential for transporting bulk commodities.
Class I railroads own the majority of rolling stock used in the industry.

Cost Structures and Economic Principles

The highest cost element for railroads is the operation and maintenance of rights of way.
The short-run cost structure of railroads features a significant proportion of indirect fixed costs.
Unit costs in railroads decrease as traffic increases due to the substantial fixed cost component in their overall cost structure.

Historical Perspectives and Legislation

Scheduled common carrier freight and passenger service in the U.S. commenced in 1830.
Amtrak was legislated to relieve railroads from the burden of providing passenger services.
Rail dominance in U.S. transportation was challenged by government-funded road construction initiatives.

Current Industry Landscape

There are currently 7 Class I rail companies operating in the U.S., which have undergone 28 mergers over the last 30 years.
Local carriers contribute only 2.1% of total rail revenue.
Coal remains a significant commodity, accounting for over 6.2 million railcar loads in 2012.

Major Customers and Intermodal Factors

UPS stands out as the largest single customer for many railroads, reflecting the importance of reliable freight services.
Intermodal traffic expanded significantly by 319% from 1980 to 2012, showcasing growth in containerized transportation.

Oligopolistic Market Characteristics

Railroads operate in an oligopolistic market structure characterized by a small number of interdependent large sellers.
The industry's commodity transport is dominated by coal, chemicals, farm products, and transport equipment.

Service Advantages and Disadvantages

Railroads boast service benefits such as large carrying capacity, liability assumption for shipments, and technological advancements.
Disadvantages include the risk of sensitive shipments being damaged due to harsh vibrations during transit and a perceived lack of accountability in rail transport.

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Description

Explore the key concepts of Chapter 6 about railroads with these flashcards. Understand terms like intramodel competition and the impacts of mergers in the railroad industry. Ideal for students looking to reinforce their knowledge of railway economics and history.