To the extent that merger would promote the acquisition of additional freight traffic or longer hauls on existing traffic, the use of freight cars would be increased. In other respects, however, the merged company would reduce freight car miles and days by the loss of some interchange with connecting lines, the elimination of duplicate car supply and service and the elimination or reduction of delays. The purpose of this study was to bring together all elements of car utilization. The net saving in freight car costs resulting from merger is estimated at $392,009.
When two or more railroads serve the same point and obtain business from the same shipper, each tends to hold sufficient cars to protect loading requirements. The merged company would do the same thing but the total number of cars held would be reduced. For example, the Erie and the Lackawanna both serve Buffalo. A study showed that an average of 272 box cars per day were held by the two lines at Buffalo for outbound loading. Total loadings actually averaged 168 box cars daily. After merger it has been estimated that this loading could be adequately protected with 255 box cars, a saving of 17 cars a day or 6,205 car days a year.
Savings of this type would be realized at five common points and in the Scranton-Avoca anthracite region, totaling an estimated 31,755 car days a year.
(b) Delays ordinarily encountered when a switch load is interchanged with another company would be reducxed when the other company is included in the merger. For example, a study showed that during the test period of March and October, 1956, the Erie delivered 109 loaded per them cars to the DL&W in switch movement at Buffalo, N. Y. It has been estimated that the present average per them delay per car on this traffic is 53 hours. After merger it has been estimated that the average per them delay per car would be reduced to 24 hours, a savings of 29 hours per car. On an annual basis, including an allowance for cars returned empty, this would produce savings of 1,125 per them car days.
Similar savings would be made at four other points, totaling an estimated 7,411 per them car days a year. (c) The interchange of road haul cars, both loads and empties, would ordinarily take longer between separately operated roads than the elapsed time between the arrival and departure of cars in trains of the merged company. An example would be the existing operations at Buffalo, N. Y., where, during the test period of March and October, 1956, Erie delivered 309 loads and 237 empties to the DL&W, a total of 546 cars. It has been estimated that the average per them delay per car on this traffic at present is 40 hours. After merger it has been estimated that the average per them delay per car on this traffic would be 10 hours, a reduction of 30 hours per car. On an annual basis this would mean per them savings of 4,095 days,
Savings of this type would be made at four other points producing per them savings of 12,732 car days a year.
The abandonment of duplicate lines ordinarily means the loss of some bus ess and consequently a reduction in both per them and mileage cars. However, as shown in Study II, estimated freight traffic revenue losses as a result of abandonment of duplicate lines would be very small and, therefore, savings from reduced per diem and mileage payments would also be small. Abandonment of the lines shown in Study II would produce estimated annual savings of 72 per them car days.
The results of eliminating duplicate freight trains have been discussed in detail in Study III. In addition to the savings shown in the report covering that study, it has been estimated that annual savings of 7,300 car days of per them cars would also be realized.
The rerouting of freight traffic has been discussed in detail in Study IV. No increase or decrease in per them costs has been estimated as freight train service via the proposed routes after merger would be the same as it is at present. However, due to greater mileage via certain routes, described in Study IV, it has been estimated that there would be an annual increase of 2,212,386 private line car miles.
As discussed in Study V, the merged company would obtain longer hauls on a certain portion of its business. Longer hauls increase the use of freight cars and it was estimated that there would be an increase of 74,095 car days of per them cars and 7,976,265 car miles of mileage cars.
Study VI described the changes that would result from merger in connection with the handling of less carload freight. It has been estimated in that study that 63,024 car days of per them cars would be saved annually.
Many short line carriers depend upon their connections for an adequate car supply. When the short line connects with two or more larger carriers each of these roads, for competitive reasons, tends to hold a sufficient number of cars to protect all of the potential outbound carloadings. For example, the Erie and Lackawanna furnish cars to the Genesee & Wyoming. A study showed that an average of 42 box cars and 19 covered hoppers were being held daily by the two roads to handle outbound traffic whereas daily loadings amounted to 28 box cars and eight covered hoppers. After merger it has been estimated that this loading could be protected with 37 box cars and 14 covered hoppers, a saving of 10 cars a day or 3,650 car days a year.
Study XIII dealt with changes in system revenues from changes other than those included in the studies described above. The net result of that study indicates a reduction of 55,930 car days of per them cars and 12,379,026 car miles of mileage cars.
For the purpose of this study, it has been assumed that the value of a railroad-owned car day, whether the car was owned by one of the companies included in the merger, or whether it was owned by a foreign line and on which per them was paid, was best measured by the per them rate of $2.75 per day.
Similarly, the rates of $0.04 and $0.045 per mile for tank, refrigerator and other mileage cars have been used in this study against such car miles regardless of whether the car was owned by a private line company or was owned by one of the companies included in the merger.
The net savings are summarized in Schedule A.
Schedule A
Summary of Savings - Freight Train Cars
Decrease in
Per Diem Mileage
Study Car Days Car Miles
I - Common Points
(a) Cars held for prospective loading 31,755
(b) Interchange of switch cars 7,411 ---
(c) Interchange of road haul cars 12,732 ---
II - Duplicate Lines 72 ---
III - Duplicate Freight Train Service 7,300 ---
IV - Carload Freight - Effect of Rerouting
Freight Traffic --- 2,212,386 I
V - Carload Freight - Longer Hauls 74,095 I 7,976,265 I
VI - Less Than Carload Freight 63,024 ---
VII-F - Cars Held for Prospective Loading
Account Short Line Railroads 3,650 ---
VIII - Effect of Merger on System Freight
Revenues 55,930 12,379,026
Totals 107,779 2,190,375
I - Increase
RECAPITULATION
Per Diem Cars
107,779 car days saved at $2.75 per day $296,392
Private Line Cars
Added Costs: (Studies IV and V)
4,361,781 car miles at $0.04 per mile $174,471
5,826,870 car miles at $0.045 per mile 262,209
Total Added Costs $436,680
Savings: (Study XIII)
4,951,683 car miles at $0.04 per mile $198,067
7,427,343 car miles at $0.045 per mile 334,230
Total Savings $532,297
Net Savings $ 95,617
Total Savings $392,009
