STB Calculates Five-Year Change in Railroad Productivity
According to the agency, each year it calculates the change, if any, in how efficiently railroads move freight. The STB determines this figure by comparing year-to-year the average cost of producing a unit of railroad output.
The STB proposes to adopt 1.014 (1.4% per year) as the measure of average (geometric mean) change in railroad productivity for the 2019-2023 (five-year) period (download decision below). This is said to represent an increase of 0.2% from the average for the 2018-2022 period, which came in at 1.011 (1.1% per year), down 1.6% from the average for the 2017-2021 period.
According to the STB, the cost recovery procedures since 1989 have required that the quarterly rail cost adjustment factor (RCAF) be adjusted for long-run changes in railroad productivity. (For more, read: STB: Rail Cost Adjustment Factor Set for 1Q25) “This long-run measure of productivity is computed using a five-year moving geometric average,” the agency reported. “The productivity change for the year 2023 is 1.040, based on changes in input and output levels from 2022, and represents an increase of 7.0% from the rate of productivity growth in 2022 relative to 2021 (0.972). Incorporating the 2023 value with the values for the 2019-2022 period produces a geometric average productivity growth of 1.014 for the five-year period 2019-2023, or 1.4% per year. As the new geometric mean was computed by replacing the 2018 figure of 1.028 with the larger figure of 1.040 for 2023, there was an increase of 0.2% in the geometric mean from last year’s value.”
The STB is requesting comments by March 17 “addressing any perceived data and computational errors in the Board’s calculation.” It noted that “[a]ny party proposing a different estimate of productivity growth must, at the time it files comments, furnish the Board with one set of detailed workpapers and documentation underlying its calculations. The same information must be made available to other parties upon request.”
