How Much Did It Cost?

Trains Magazine General Discussion
1

The December issue of TRAINS answered a lot of questions about how much it cost to run a railroad, but it raised a couple of questions for me:

  1. I wonder how much it costs to man the theoretical $17 million dollar coal train mentioned in the article? I heard years ago that a corporation could expect to expend some huge proportion of their gross income on personnel- the number I heard was 60%. I know senior engineers (“the old heads”) make a comfortable living- of course, they don’t have time to spend it. And if we are looking at the personnel costs of running the train, how much does it cost for all the support people- maintenance of way, administration, dispatchers, even signal maintainers?

  2. I’d also love to see a comparison between the cost of a similar railroad train of say, 1945, and now. How much did a top of the line freight steam locomotive cost? How much did a standard coal hopper cost? TRAINS has told us that a coal train has a $17 million inventory tag; how does this compare with a similar train running out of, oh, West Virginia back in “The Day”?

Thanks!

2

When you take into account how many people lost their jobs with dieselization and demise of the caboose, personnel costs are nowhere near what they used to be. A two-person crew is all that is on most trains today, but there used to be five (Engineer, Fireman, Conductor, and two brakemen; sometimes more). One video I have mentions that there used to be over 5,000 people employed by the Union Pacific in Cheyenne, Wyoming during the glory days of steam. Today there are only about 200 or so required to maintain the equivalent horsepower in diesel locomotives at Cheyenne.

All railroads had similar reductions in personnel with the switchover to diesel power.

3

If we assume that it’s a unit coal train that pretty much stays on the move you can figure about $75 an hour in labor costs, assuming a $50k per year base salary for two crew members and factoring in bennies. Adjustments to salary will change that, of course - I’m just throwing out a number. And the manpower cost per mile (perhaps more important than an hourly number) will depend on how many miles the crew can cover. Time in the hole, etc, drive that up, as will OT.

4

Not much.

But it is an expense that the Shareholders will like to see go away.

5

About 25-years ago a Class 1 carrier officer told me that the fully allocated cost of running a switch engine was $300/hour. This includes

  • wages, payroll taxes, and fringe benefits for the crew;
  • diesel fuel, lube oil, radiator water, sand, and depreciation for the locomotive;
  • track maintenance and associated fixed facilities costs;
  • property taxes;
  • all of the maintenance and depreciation associated with the equipment being handled such as freight and passenger cars;
  • the costs of supervision;
  • utilities charges;
  • headquarters cost; and
  • who knows what else.

Allowing for asset utilization and employee productivity improvements, I should think those costs would be at least 50% higher today.

6

I ran that $300 reference point through an inflation calculator and got $641, based on 1982 and 2006. Given all the variables, I’m guessing current reality is somewhere between Bob’s $450 and the $641 although I’m tempted to lean more toward the high end.

7

What your looking for is the crew start…the cost of what it takes to man and run the train for an average 8 hour shift.

On my railroad, a Class 3, Switching and Terminal railroad, the crew start is $1100.00 to $1200.00; depending on hire date of the crew consist.

Pre 1985 employees are more expensive than post '85, and the perks are different.

We have three men crews, engineer, engine foreman and a switchman.

Crew starts are wages, arbitraries, insurance and any wage costs additions included by local contract.

Depreciation of locomotives, fuel cost, and the other associated cost, like track and equipment wear and maintenance, are carried on the books separately.

For a Class 1, a crew start is double that, and depending on the local contract, you can figure on having an engineer and a conductor…maybe a brakeman.

On unit trains, the norm is a two man crew, so price a crew start at $1800.00 to $2400.00, based on a rested crew working out of their home terminal.

Keep in mind most of the “good” jobs are held by senior employees, guys with whiskers so to speak, and unit trains are pretty much gravy jobs, you get on and ride from point A to point B, and if you catch the tail end of the run, you might have to line a switch into the plant, but beyond that, it’s a riding job.

If memory serves me, the article quoted the value of the coal train contents as $650,000.00…assume the crew cost as $3000.00 per crew, and take 2 crews to get it from the mine to the plant…so the math works out at $644,000.00 value after the cost of on site employees…and these trains run 24/7…any wonder why BNSF and UP love unit coal trains?