Revenue ton miles and more

Trains Magazine General Discussion
1

Sometimes I get a little hung up on railroad data.

For instance…revenue ton mile. Seems simple…the definition seems to be “one ton of freight hauled one mile.” If a hopper car hauls 150 tons one mile, it is 150 ton miles. But…is a ton mile the net tonnage of freight (actual weight of lading) or the gross ton (freight plus the car)?

Further…how do the rails figure the return empty movements of a car. Example 70,000 lb car is 35 tons. Is the revenue ton miles of the return empty 0 tons or 35 tons? Does this differ with rail furnished cars vs. private cars?

For instance…CN’s latest financials indicate 150,000 carloads of Petroleum and Chemicals. Is this loaded only or include the returns of those empty tank cars? So, is it 150,000 loads or 75,000 loads?

Also, revenue per carload is $4407 (petroleum and chemicals). Again…loads only with empties returned free of charge (doubt it) or is it $4407 both ways (doubt it).

Same with intermodal carloads…CN had 676,000 “carloads”. Is an intermodal container a “carload” or would a double stack with 2 containers be a carload? In other words is the double stack with 2 containers = 1 carload or 2?

There are more questions in my mind, but that is enough to start with.

Hopefully Greyhound and other former transportation professionals will be able to answer.

Ed

2

This is interesting. I always assumed revenue ton-mile referred to the load, as schlepping the cars contributes nothing to ‘revenue’ and of course there is no revenue purely from moving empties, unless someone needs them enough to pay to have them moved (I believe this is true of many intermodal services especially ocean containers in asymmetric lanes).

The associated metrics for car-mile and train-mile give you the sort of results in line with the uncertainties, as they are operation metrics rather than ‘achievement of what the railroad does’ which is move things for customers.

3

Revenue ton miles is tons of freight hauled one mile.

Tare weight and empty returns are do not generate revenue ton miles.

CN’s trafic data counts only the loads. The cost to return empty cars is built into the rate.

Intermodal is typically given in units, that is revenue loads. I do not know if returning empties generate revenue. That is in private contracts and each carrier’s intermodal rules.

Related o

4

I see a lot of empty containers listed as “revenue empty” on train lists. They are counted as loads on the consist totals. I assume (with the associated implications noted) that the railroad is collecting money for moving them.

I’m not sure now if they are domestic or ocean shipping boxes, or both. It seems like I see that more on westbound trains.

Jeff

5

Railroads haul loads of empty containers and trailers.[/pun]

6

Sailboat fuel…

7

Lots of sailboat fuel made in Washington DC

8

Mac:

Thanks for the definitions and explanations.

I will pull my slide rule out and make some rough estimates of revenue per mile…

It makes sense that return movement of empties are built into the rate for movements such as petroleum, coal, sand, etc. as those cars are generally used in dedicated service.

Intermodal is different in that there might be “loads”, although the intermodal load movements tend to move in one direction with backhauls a part of the trucking (and intermodal) model. My guess is there is a reduced rate for the empty “loads”…but just guessing.

Curious if the big IMCs and railroads split revenue rather than a flat rate per container (or trailer).

In other words rather than charging a flat $800 from Chicago to NJ, the rails would receive a % of the revenue of the movement (say 60% of $2000) with a reduced rate for return movement of empties.

When I see an NS or CSX intermodal with 300 containers, my mind starts wondering…how much revenue?

Ed

9

See today’s news.

10

“Revenue ton miles is tons of freight hauled one mile.” Which raises a question.

I see what appear to be unit grain trains on the BNSF in central Texas. Some of them are made up of BNSF cars, but others are made up of what appear to be shipper’s cars.

Would the rates to haul grain or any commodity in a shipper’s cars be less than the rates to have the stuff hauled in the railroad’s cars? Would the differences be significant?

11

The differences if any would be on account of who was the lease holder on the cars you are looking at. Railroads lease cars these days, not just shippers, when you are talking about covered hoppers.

Today, most carriage, is done on ‘contract rates’ - ie. Ship X tons and pay $ rate per ton; ship Y tons and pay $$ per ton. Contract will specify who is to supply the cars to obtain the rates specified in the contracts. If the railroad is the party to supply cars and they are short of system cars - they will lease private owner cars to fulfill their requirements. If the shipper is to supply the cars - all cars will be of private ownership. The contract rules define the rates. Each contract is its own world.

12

Can be either one. A “revenue ton mile” is net tons, as you’d expect, but railroads often show the gross ton-miles per mile per year on a given line. A map of tonnage density will say which kind of ton-miles it’s using. (“Gross tons” includes engines, too.)

Looking at a SFe 1962 tonnage-density map, it shows net ton-miles per mile, where net tons means revenue tons plus company tons.

13

The carriers keep records for both revenue ton miles and gross ton miles. One is used in calculations pertaining to the income of a particular segment of track. The other is used in calculations pertaining to the wear rated of traffic moving over a particular segment of track.

Both are used when it comes to calculating the profitability of particular segments of track. How much income is generated versus how much does the track structure cost to earn that income. Engineering types keep the gross ton mile records on each track used in multiple track territory - which allow them to formulate tie, surfacing and rail replacement programs.

14

Ok…check my homework.

CN reported the following for 1Q21 for Petroleum and Chemicals:
Revenue $661 million

Revenue Ton Miles 10732 million

Freight Revenue /RTM (cents) = 6.16 (in other words, each net ton of freight generated 6.19 cents per mile)

Carloads - 150,000

Freight revenue / carload - $4407

My assumptions…loaded tank car of chemical/petroleum is 120 tons (based on 315,000 load limit and 75,000 tare weight).

Therefore, each 120 ton car of freight would generate $7.43 per mile (120 * .0619 = 7.43)

Average length of haul is 593 miles (based on $4407 per carload/$7.43 per miles).

The empty tank cars would return with $0 revenue for the next loading cycle…so therefore the effective rate per mile would $7.43/2 = $3.715/mile.

If there were 150,000 carloads, then there were actually 300,000 cars handled in trains based on 50% utilitzation…probably accurate for petroleum as those are unit trains. Obviously chemicals handled might have a slightly higher than 50% utilization.

Just trying to get an idea of revenue generated by CN trains when I get stopped at the crossing and count a 175 car train.

Full disclosure…shareholder of CN (legacy Illinois Central) since 1995.

I have talked to railroad people about revenue and rates and they shut up very quickly.

edit…my previous career (1980 - 1990) was in pricing for an LTL freight carrier…hence my interest in revenue, rates, etc. I was on a General Rate Committee for a tariff bureau…an interesting situation since immunity from anti-trust was granted…we literally sat in a smoke filled room and discussed establishing general freight rates (which were then discounted).

Ed

15

MP 173,

Chemicals are typically the highest rate commodity group. Your figures look ball park correct.

For quick and dirty just figure 100 or 110 net tons per car, unless you have accurate tare weight and net tons. Due to sometimes heavier tare weight, or light density of some products, chemicals (and petroleum) some times weigh less than above rules of thumb.

Railroaders tend to think of revenue per car or per car mile. That figure can vary based on what the product is, carload or unit train, and length of haul. Look at some other commodities to figure revenue per car and per car mile. The results are very general, as rates on specific moves can vary widely.

I would take grain as a good average/average.

Mac

16

Mac:

Thanks for the info…I will adjust my net downward in future calculations. I assumed chemicals and petroleum would be higher classified due to the risk involved. My former tariff and NMFC classification background kicked in.

Using ballpark figures of 105 to 110 net tons per carload, I estimated the carload rate per commodity as follows:

Grain/fertilizer - $4051 per car = 964 miles per load = $4.20 per mile

Forest Product - $4988 per car = 705 miles per load = $7.07 per mile

Coal - $1826 per car = 507 miles per load = $3.60 per mile.

Intermodal is next to impossible to determine as the net weight per load is difficult to estimate. However CN does show a revenue per carload at $1432. The intermodal rate compared to TL rates would be an interesting comparison and provide a true measure of intermodal cost advantage vs OTR trucking, but it is difficult to determine.

Thanks for help on this.

Ed

17

My personal observations of Intermodal pricing (from 30 years past) is that on the railroads the pricing was per box with minimal to no regard for commodity or weight of the box.

Years may have changed the pricing methods.

18

Balt:

Makes sense for intermodal. Tonnage on containers or trailers would be seemingly insignicant.

Ed

19

“Freight, All Kinds.” Or F.A.K. Rates were per vehicle used. STCC 44111 IIRC.

There were maximum weights. But every UPS load moved at 20,000 pounds to meet the paperwork/regulatory requirements.