Larger Capacity Freight Cars


This is a classic economy of scale example. The higher the car's capacity,
the more efficient it is for the railroad to operate because the extra weight
does not result in a proportional increase in costs (either first cost or
operating cost). Thus the cost per ton-mile went down. Presumably this has been
the basis for the steady increase in railcar capacity over the past 150 years,
and it certainly is behind the present move from 100 to 110 ton capacity cars.
The Southern Rwy Big John hopper example (cited earlier today) is a good
case in point. The larger more efficient car meant the Southern could charge a
lower rate and still turn a profit on a commodity, thus altering the
competitive balance, much to the chagrin of Southern's competitors.


In a message dated 1/23/05 2:28:54 PM, timboconnor@... writes:

<< I am course wondering what the
big deal was about increasing car capacity from 50 to 70 to 100
tons each. Why would shippers have cared? I think it is because
they get a rate specific to each type of car, and bigger cars got
lower rates. >>

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