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Precision scheduled railroading, demurrage, and shipper adjustments

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  • Ndembe, Elvis

Abstract

This study examines the likely linkage between reported precision scheduled railroading PSR implementation and escalating demurrage using Class I freight railroad traffic and financial data between 2002 and 2017. Our empirical analysis shows that PSR operational changes have led to higher demurrage. PSR implementation is associated with an estimated 71 percent increase in total real demurrage per car mile. Results indicate that shippers have not adjusted to PSR related changes to mitigate the increasing burden of railcar delay charges. However, railroads billed shippers with privately-owned railcars an estimated 0.43% less in total real demurrage per car mile compared to shippers using railroad-owned freight cars. This suggests that shippers using privately-owned railcars have been able to mitigate part of the effects and changes imposed by PSR. Results show that Class I freight railroad demurrage and operational policies have differential effects on total real demurrage per car mile compared to the base railroad when controlling for PSR. Even though we do not attribute escalating demurrage entirely on PSR, overall, these results support the idea that PSR adoption contributes to the higher-than-normal demurrage billed to shippers for railcar related delays.

Suggested Citation

  • Ndembe, Elvis, 2025. "Precision scheduled railroading, demurrage, and shipper adjustments," Research in Transportation Economics, Elsevier, vol. 109(C).
    • Handle: RePEc:eee:retrec:v:109:y:2025:i:c:s0739885925000058
    DOI: 10.1016/j.retrec.2025.101522
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    More about this item

    Keywords

    Freight railroads; Demurrage; Regulatory reform; Managerial innovation; Precision scheduled railroading;
    All these keywords.

    JEL classification:

    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law

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