"Rule of 100" for shortlines

Trains Magazine General Discussion
1

From the Blanchard Company:

http://www.rblanchard.com/resources/texts/rule100.htm

“The Rule of 100 says that to be profitable a shortline must average 100 revenue carloads per mile per year.”

I wonder if this rule of thumb applies to Class I branchlines in the same way it applies to shortlines. Since branchlines are feeding the Class I owner, would said Class I’s allow for lesser revenue carloads per mile per year and still consider such a line viable? The actions of Class I’s spinning off such lines would suggest there is a counterintuitive reaction to the “worth” of branchline traffic. It would seem that under shortline ownership, such lines must actually increase revenue carloads above that which they inherited, since the shortline must ostensibly be self supporting.

From an admittedly subjective observation, it seems to be that the local shortlines are only running at 70% of this rule of thumb. That would not bode well for such lines having a future under shortline ownership, yet they do supply the connecting Class I’s a few thousand carloads every year.

Have our Class I’s gotten so big that they can ignore this “gift” revenue for the sake of pursuing ostensible operating “efficiency”?

2

It’s a rule of thumb so it’s only a rough approximation in the first place. Also keep in mind that revenue must cover costs plus profit to be worth the effort. A secondary line, whether a branch of a Class 1 or an independent short line, still has to be maintained and manned if it is to continue to exist. No Class 1 can afford to keep branches as loss leaders.