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U.S. and European Freight Railways: The Differences That Matter

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  • Andrade Furtado, Francisco Manuel Bastos

Abstract

This paper examines the differences between the United States (U.S.) and European (EU27) freight railways. The inherent or structural factors influencing the railways modal share will be evaluated. It was found that nearly all of the disparity in modal share can be explained by structural or inherent differences, like the competitiveness of non-surface modes, shipment distances (both influenced by geography), and commodity mix (namely, coal). More striking are the differences in productivity, to move the same number of tons seven times, more trains are required in Europe compared with the U.S.. Operational revenues per ton-mile are around two times higher in Europe, while the operational expenses in the U.S. are four times lower than in Europe. It is argued that setting a goal for modal share similar to the U.S. is not realistic for the EU27. A key concern for European freight railways should be the reduction of operational costs, by increasing the trains’ sizes. Distinct policy answers were given to the railroads’ crisis in the post WWII years. Soon after 1980 when reforms were introduced in the U.S. there was a revival of the sector. The same has not happened in Europe, where questions regarding infrastructure financing or the coordination of network investments and operational needs remain.

Suggested Citation

  • Andrade Furtado, Francisco Manuel Bastos, 2013. "U.S. and European Freight Railways: The Differences That Matter," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 0(Number 2), pages 1-21.
  • Handle: RePEc:ags:ndjtrf:207347
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    File URL: http://ageconsearch.umn.edu/record/207347/files/2013v52n2_04_FreightRailways.pdf
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    References listed on IDEAS

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    1. Ivaldi Marc & Mccullough Gerard, 2008. "Subadditivity Tests for Network Separation with an Application to U.S. Railroads," Review of Network Economics, De Gruyter, vol. 7(1), pages 1-13, March.
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    3. Christian Growitsch & Heike Wetzel, 2009. "Testing for Economies of Scope in European Railways: An Efficiency Analysis," Journal of Transport Economics and Policy, University of Bath, vol. 43(1), pages 1-24, January.
    4. John D. Bitzan, 2003. "Railroad Costs and Competition: The Implications of Introducing Competition to Railroad Networks," Journal of Transport Economics and Policy, University of Bath, vol. 37(2), pages 201-225, May.
    5. repec:eee:jotrge:v:19:y:2011:i:1:p:134-146 is not listed on IDEAS
    6. Rico Merkert & Andrew S.J. Smith & Chris A. Nash, 2009. "Benchmarking of train operating firms -- a transaction cost efficiency analysis," Transportation Planning and Technology, Taylor & Francis Journals, vol. 33(1), pages 35-53, October.
    7. Jose Vassallo & Mark Fagan, 2007. "Nature or nurture: why do railroads carry greater freight share in the United States than in Europe?," Transportation, Springer, vol. 34(2), pages 177-193, March.
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    Public Economics;

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