STB Calculates Five-Year Change in Railroad Productivity
Each year, the STB calculates the change, if any, in how efficiently railroads move freight. It determines this figure by comparing year-to-year the average cost of producing a unit of railroad output.
The Board in its decision (download below) proposes to adopt 1.015 (1.5% per year) as the measure of average (geometric mean) change in railroad productivity for the 2020-24 (five-year) period. This represents an increase of 0.1% from the average for the 2019-23 period, which came in at 1.014 (1.4% per year). The average for the 2019-23 period rose 0.2% from the average for the 2018-2022 period (1.011 or 1.1% per year), which was 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 Sets 2Q26 Rail Cost Adjustment Factor) “This long-run measure of productivity is computed using a five-year moving geometric average,” the Board reported. “The productivity change for the year 2024 is 1.014, based on changes in input and output levels from 2023, and represents a decrease of 2.5% from the rate of productivity growth in 2023 relative to 2022 (1.040). Incorporating the 2024 value with the values for the 2020-2023 period produces a geometric average productivity growth of 1.015 for the five-year period 2020-2024, or 1.5% per year. As the new geometric mean was computed by replacing the 2019 figure of 1.007 with the larger figure of 1.014 for 2024, there was an increase of 0.1% in the geometric mean from last year’s value.”
The STB is requesting comments by April 15 “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.”
