Short Line Railroads Benefit Shippers

Short line railroads show large benefits to U.S. shippers, local communities and states. But short lines also face threatening financial challenges. Upper Great Plains Transportation Institute researchers John Bitzan, Denver Tolliver and Douglas Benson just published Small Railroads Investment Needs, Financial Options and Public Benefits (Report DP-145).

Short lines account for 29 percent of all rail miles operated, 12 percent of all U.S. railroad employees and 9 percent of all U.S. railroad freight revenues. Although accounting for a small portion of U.S. freight revenues, short lines serve as important feeders into the nation's large Class I railroads. This study estimates that nearly 14,000 U.S. Shippers rely on short lines for access to the U.S. Railroad Network.

In reviewing previous studies that examined the capital investment needs of small railroads, the authors find that the emerging needs as a result of an industry switch to larger rail cars are likely to be substantial. Moreover, it is apparent that some short lines may have difficulty in financing these needs.

In examining the ability of short lines to obtain financing to meet these capital investment needs, the authors find several potential problems, including:

• Few major banks have a specialization in small railroad financing.
• There is not good public information regarding small railroads, presenting a potential barrier to bank financing.
• Small railroads are offered short financing terms (5 to 8 years) for financing track and bridge improvements.
• There is some unwillingness by banks to make loans for track and bridge improvements because of an inability to liquidate these assets.

On the positive side, the authors find:

• Banks are interested in taking on more small railroad loans.
• Four of the six banks surveyed do not require large minimums for loans to short line railroads.

The study also finds important benefits conferred by short lines, including: continued access to the U.S. railroad network for lines that may not be viable under Class I ownership, and the resulting benefits of lower transportation costs, lower highway maintenance costs, safety benefits, and fuel efficiency savings.

To find out more from the study, contact the Upper Great Plains Transportation Institute, www.ugpti.org.

Nichols Joins UGPTI as Web Manager

With more than two years of experience in Web communications, Patrick Nichols is now the Web communications manager for the Upper Great Plains Transportation Institute. Nichols will work on his master's degree at the same time he focuses on improving the day-to-day operation of UGPTI's websites. He is also developing new ways to communicate with the Institute's Web users.

His research interests include Web accessibility issues with the disabled and developing interactive multimedia. Nichols is working on a database driven website for the Department of Transportation Support Center at North Dakota State University and the North Dakota Department of Transportation. He will develop the rural ITS Tool-kit CD-ROM for the Small Urban & Rural Transit Center.

Previous to coming to UGPTI, Nichols was the Web designer and maintainer at the Minnesota State University Moorhead Bookstore. In his spare time, he works on Web design and builds CD-ROMs.

He holds a bachelor's degree in graphic communications with a minor in computer information systems, which he earned in 2001.