Toby Kolstad’s Take on The Freight Rail Industry’s Top 5 Challenges

Freight railroads will need to:

• Improve equipment utilization rates. New rail-car and locomotive prices will continue to increase in the future, but falling interest rates no longer will mitigate their effect on operating income as they have in the past.
• Improve traffic scheduling — not trains, but shipments. Rail-car scheduling has been around for almost 30 years, but single car point-to-point transit times are as erratic as ever and need to be tightened.
• Reduce the costs and time of handling intermodal traffic in the 500-1,000 mile shipment range. Domestic containerization will continue to evolve and highway congestion will only get worse; railroad intermodal operations will have to improve to handle this traffic efficiently and economically.
• Invest wisely. During the past 50 years, there have been more divestitures than investments. In the next 50 years, investments in new plant and equipment will determine the future for individual railroad companies and the industry as a whole.
• Increase track capacity by raising train density through ECP brake systems and PTC operating systems. Today’s technology can reduce train spacing requirements better than any new technologies introduced in the last 50 years and save billions in funds that would otherwise be spent on new track.

Toby Kolstad has been in the railroad industry for more than 30 years, with stints at Illinois Central Gulf Railroad, Denver & Rio Grande Western Railroad, a car builder and lessor. Currently a consultant on rail-car matters and president of Rail Theory Forecasts L.L.C.