Importance of the New York Harbor carfloat operations in the nation's rail Fransportation system. Specifically, the reasons why the light-density branch lme analysis is not applicable are:

1 Float operations in 1973 consisted of 40,000 cars on nearly 2,000,000 tons wf freight, certainly not a light-density movement.

24 ulike most light-density lines of 20 to 50 miles in length which frequently werve only a very few or even one shipper, carfloating of some 2 to 8 miles in length handles a wide variety of commodities and services, and represents sential interline rail connections.

2 Marine operations are no more labor intensive than normal railroad oper#tions, usually involving five-man crews.

4. The harbor float operations will be carried out by private solvent railroads under operating agreements. Accordingly, the cost of providing this service will be more properly a revenue division question.

An analysis which will fully reflect the unique nature of this operation is required. The New York State Department of Transportation has extracted information for carfloat traffic which will reveal for the Penn Central, Lehigh Valley and Brie Lackawanna the following:

Carloands by originating territory.
Carlowds by originating railroads.

tal revenue per carload.

We believe these data to be most significant. Analysis of the data should wmut a full evaluation of the importance to ConRail of the New York Harbor jangrove operations. These data are being made available to USRA as a suppleMy this report.

Pe ace other factors bearing on the nature of these harbor carfloat oper4,60% 4% critical components of the Final System Plan.

de from the obvious time and service advantages to the shipper in avoidcbersome and circuitous routings via Selkirk, the harbor floating oper4 have other important economic, social and operational advantages. These itsaring operations to be performed by private solvent carriers are vital to a Age number of domestic industries employing hundreds of people. They also ve a critical part of the substantial volume of foreign trade handled in the Port of New York.

The preservation and strengthening of these harbor services permit high and wide loads which cannot be handled by all-land routes to be accommodated in the region. Their preservation is necessary to avoid large diversions to trucks, which would be highly undesirable in the densely developed and congested area A New York City and clearly rcognized as a goal in the Act. In addition, they constitute essential emergency routings available whe nthe land routes (such the present conditions existing on the Poughkeepsie Bridge) are forced to t down or lack the facilities necessary to handle special commodity loads. so, the floating of cars to shipside must continue as a form of marine lighter(floating-in-lieu-of-lighterage) to provide rail-to-ship transfer when rail cks at dockside are not available. Finally, these carfloat services are required deliver traffic between Manhattan piers and New Jersey and Staten Island ****heads for handling by freight forwarders.

Clearly, the harbor operations are a water link in a regional rail system, and not be classified as light-density rail lines.

FORECASTS OF FUTURE TRAFFIC

ased on the assumptions in the proposed plan of New York Harbor carfloat and rehabilitation of the Bay Bridge Secondary Track as discussed ve, our Joint Agency Committee has developed traffic projections for the ased combined water and all-land route operations. The key assumptions of course, that the New York Dock Railway and the Brooklyn Eastern Pet Terminal would perform all floating operations.

Ve York Dock Railway

Pole 1 shows the loaded cars handled by New York Dock in 1974 and fiveve projections for the period 1975-79. The table does not include some 10.000100 empty cars handled annually. Since New York Dock Railway handles e terminating traffic than it originates, the actual number of cars handled spected to be far greater than shown in the table-some 45,000 total cars in

Year

1974 (actual). 1975 (projection).. 1976 (projection). 1977 (projection). 1978 (projection).

1979 (projection)..

TABLE 1.-NEW YORK DOCK RAILWAY ESTIMATED LOADED CARS 1974-791

1 Excludes potential LIRR float traffic.

2 Growth relates to marine terminal developments. See table 2.

With respect to domestic traffic, the 1975 projection is conservatively estimated at the 1974 level to take into account the fact that the current business downturn has depressed volumes somewhat in the first quarter of 1975, but that anticipated economic recovery in the second half will result in a total 1975 carload volume equivalent to 1974. The future projections show a modest annual growth as the carrier picks up domestic traffic from the existing trunkline railroad business.

The 1975 and future projections for Chessie traffic are based on the expectation that arrangements between New York Dock and Chessie will be concluded whereby New York Dock will handle this business for the second half of 1975 and in future years.

The export-import carloads handled rose from zero in 1969 to 2800 in 1974. The projected increases in export-import traffic are based on several important factors:

First, revised billing procedures and payment agreements between New York Dock, the stevedoring companies, and the trunkline railroads have resulted in the lifting of an embargo on import-export traffic maintained by New York Dock until October 1973. Import-export traffic has increased and is expected to increase in the future as a result of renewed interest by New York Dock in capturing this trade.

Second, with the assumed termination of lighterage and carfloat operations by the trunkline railroads, New York Dock Railway can be expected to handle a major portion of this traffic over the next five years. Brooklyn Eastern District Terminal, on the other hand, handles only domestic traffic and, therefore, would not participate in this traffic in the future.

Third, approximately 30,000 containers of export-import traffic are presently moved from the New Jersey railheads eastbound by truck and 25,000 of these containers go to the Brooklyn waterfront. A new tariff being established by existing railroads for direct TOFC/COFC rail service to the Brooklyn waterfront is expected to result in 2,500 to 3,000 carloads per year handled by New York Dock by 1979.

Fourth, new waterfront development (shipping and industrial) and new rail connections to be built along the Brooklyn waterfront will generate substantial new traffic as shown in Table 2 below:

Thus, it can be seen that a very substantial growth in traffic from 11,390 loaded cars in 1974 to approximately 30,000 in 1979 is conservatively forecasted for the private and profitable New York Dock Railway, on the assumption that that

57-280-75-15

carrier will handle virtually all trunkline export-import traffic generated by new waterfront development and a significant portion of trunkline domestic freight, as well as the domestic harbor business of the Chessie System.

Approximately 50 to 55 per cent of the carloads handled by New York Dock Railway in 1974 came from the south, southwest and southern midwest. Adding traffic tendered by the Chessie System from the south, it is estimated that 60 to 65 per cent of the carloads handled by the New York Dock Railway will be coming from that area. It is thus assumed that an approximate 60-40 ratio as between marine carfloat operations from Greenville and Staten Island and the proposed overland route, respectively, would prevail through the forecast period. Brooklyn Eastern District Terminal

BEDT shows projected growth for 1975-79 in Table 3 below. BEDT will not be directly involved in the all-land routing to Bay Ridge and is not expected to participate in export-import traffic. The prime element,therefore, in the growth pattern of this private and profitable carrier, as shown in Table 3, is the domestic traffic that BEDT will likely pick up from the trunkline railroads under the assumed plan of operation.

TABLE 3.—BROOKLYN EASTERN DISTRICT TERMINAL (BEDT) ESTIMATED LOADED CARS 1974–79

It is anticipated that by 1979, the two Brooklyn Terminal Railroads combined, under the assumed operating plan developed in the report, will handle approximately 53,000 loaded freight cars per year, an estimated total tonnage of more than 2,000,000 tons. These figures are exclusive of carfloat traffic to and from the Long Island Railroad. If that servic can be maintained under the restructured railroad plan, a total of 70,000 cars annually would be handled in the Port of New York by 1979.

STATEMENT OF T. J. REGAN, VICE PRESIDENT, MATERIALS MANAGEMENT DIVISION Mr. Chairman: Regarding some remarks I have heard this morning, I would like to enter for the record the following statement:

In regard to the remark, "Why should we pour more money down that rathole. the Penn Central?", my answer is that any system whose termination would have an immediate adverse impact of $70-billion to $80-billion on our GNP is hardly a "rathole." It is an enormously vital link in our transportation system, and must be made into a healthy, dependable operation. It will require an enormous infusion of capital, and this capital must come from public funds. as private sources--because of the immediate need and the enormous amountare not able to cope with the situation.

The second remark is: "The voting public would never stand for such huge amounts of public money being allocated without some public ownership, i.e. nationalization." I am truly confused by this statement, as any person I have contacted-either businesswise or socially-has, to a man, displayed a negative reaction to any kind of nationalization of our railroad system. There is living proof of the ills of nationalization in Germany, France, England and Japan, all of which countries have nationalized railroads that charge anywhere from two to three times the freight rates and still run a deficit operation requiring public funds. As far as public ownership associated with public funds, I submit there were public funds in the amount of $160-billion put into the Vietnam effort, and I ask, "What ownership does the public have in Vietnam at the present time?"" The third remark is: "The railroads obviously cannot make money as a private sector operation; hence, they must be nationalized." I submit that your solvent railroads are all making money. Today, the "poor-mouth" statement about their low rate of return, as compared to other industries, is a misrepre

sentation of the facts. The railroads do not maintain accounting methods comparable to other private businesses. They maintain their capital items at full value without any depreciation. The maintenance, which is an expense item, is theoretically spent to sustain this condition. Therefore, the maintenance expense depresses earnings, while the no depreciation aspect maintains capital items at an inordinately high level; hence, the return on investment figure is of no value whatsoever.

One last statement: If and when public funds are allocated to the rehabilita. tion of the bankrupt railroads, not public ownership but legislation which prevents railroad disinvestments, such as occurred to the detriment of the Penn Central, must be provided for until the public debt is eliminated.

AN ANALYSIS AND PLAN FOR THE RESTRUCTURING OF MIDWEST AND NORTHEAST RAILROAD COMPANIES BEING REORGANIZED UNDER THE REGIONAL RAIL REORGANIZATION ACT OF 1973

Rail services are essential in the midwest and northeast regions of the United States. The public convenience and necessity require the continuance of adequate and efficient rail service in these regions. Rail service that is absolutely essential to the commerce of the regions, as well as the nation, to the social environment of citizens within the regions, and to the national defense must be maintained and improved. Profitable branch feeder lines, fairly determined, must not be wantonly abandoned.

The reorganization of bankrupt carriers within the regions should permit the maximum miles of track to continue operations as an economically viable system under private ownership and management. The track and traffic in the northeast corridor between Boston, Massachusetts and Washington, D.C. should be analyzed separately to determine whether it can ever be operated as an economically viable private system. If it cannot, it must be maintained either by the local states and communities it immediately serves or by the national government. The northeast corridor with its extraordinary rail commuter and intercity passenger service requirements should be separated from the remaining bankrupt railroads in the regions to enable those lines to be restructured into self-supporting private enterprises.

Rail facilities required by the public must not be liquidated. Feeder branchlines that would be profitable or break-even, providing sufficient revenue for normal maintenance at minimum operating levels; branch-lines necessary to maintain an intermodal presence in major territories; and branch-lines necessary to the support and survival of socially desirable and essential communities and rural populations must not be abandoned. Where branch-line traffic has diminished below the break-even point, a subsidy program should be developed by the national government based on a determination of the need for continued service by the state(s) involved. Participation by the state (s) in funding the subsidy payment is necessary along with the national government. Shippers, receivers, farmers and the general public have as much a need for rail service in small rural areas and communities as do urban populations on the eastern seaboard. Where the retention of rail service is required to maintain the existence of rural populations, the people have a right to expect the support of their state and federal governments.

Rational plans cannot expect solvent railroads either within the regions or beyond to voluntarily purchase essential branch-lines or the northeast corridor at liquidation auction. The coercive power of government must not be used to force purchase of railroads that might bankrupt the purchasing carriers. If it is necessary to grant federal funds for rehabilitation of bankrupt lines that have been divested of their capital through deferred maintenance policies of prior managements, that will be a reasonable and logical investment by the American government in its own interest and for its own people. The only restraints that state and federal governments should impose is that government funding not be drained-off in the future by conglomerate holding companies for purposes other than transportation services; that funding not be invested in rehabilitating lines not found to be essential by the states, which lines cannot provide a breakeven operation and for which no subsidy is authorized. Government funding for rehabilitation can be rationalized as a repayment grant for passenger losses sus

high, and the current rate of rail renewal is so low that our great grandchildren might have to finish the project.

Serious as the contact pressure problem is, heavy cars can affect the track structure in other ways. Flexural fatigue can also shorten rail life where the rail weight is less than 112 lbs per yd. Many 100-ton cars move over branches and secondary mains having rail lighter than 112 lbs; thus flexural fatigue may be a real limitation for major parts of some railroads. Also, abrasive wear, or curve wear, has also been observed to shorten rail life as wheel loads increase. Furthermore, AAR findings indicate that tie renewals and surface-lining will cost substantially more per gross ton mile when a railroad shifts toward larger-capacity equipment.

CRUCIAL QUESTION

But these technical observations leave unanswered the crucial question: how much of a cost penalty do the railroads really pay for the operation of extremely heavy cars?

I. A. Reiner, manager engineering research projects, Chessie-System, has prepared an answer by combining a system of formulas for abrasive and contact rail wear with the AAR data on tie renewals and surface-lining. He concludes that a hypothetical railroad with a given set of curvatures will experience a 54 percent increase in the demand on its engineering budget for rails, crossties, surfacing, lining and ballasting if it moves the same net tons in 90-ton cars with 36-in. wheels rather than in 50-ton cars with 33-in. wheels.

In 1971, the Southern Pacific had an average load of almost exactly 50 tons. Applying the Reiner computations, I adjusted this road's engineering budget and its car miles to reflect a hypothetical average load of 90 tons at an unchanged level of volume. This produced an average maintenance penalty at 1973 cost levels of about two cents per mile of jumbo car operation, loaded and empty.

There is recent field evidence confirming that heavy loads exact a significant toll on the track structure. Recently, the Burlington Northern has been moving large volumes of low-sulfur coal in 100-ton cars. A BN engineering officer told me that unit coal trains are having a significant impact in the following ways: Rail and tie life shortened-More lining and surfacing required-More rail anchors needed where unitrains operate-Curve superelevations reductions required so unitrains can operate at slower speeds-More track inspectors, section gangs, and maintenance equipment, including spot and production tamps needed-Stabilization need for subgrades previously solid for many years. He indicated that the cost increases were much more than proportional to the increase in gross tonnage.

There are at least three reasons for estimating that the track-related cost penalty associated with jumbo cars may exceed two cents per car mile. First, jumbo cars not only generate higher M/W expenses but can necessitate additional roadway investment (bridge strengthening, tunnel enlargement, etc.). Second, the Reiner formulas assume heavier cars would improve the net-to-gross weight ratio, but even though jumbo cars can carry very large loads, they tend to be so specialized as to prevent back-hauls. Thus there has been little improvement in the industry's over-all net-to-gross-weight ratio. Third, Reiner's formulas assume there will be no long-term deterioration of the track structure; yet the industry's maintenance deficit continues to accumulate and more and more track is reaching the critical limits beyond which track deteriorates rapidly. Poor track tends to lessen the utilization of jumbo cars and increases the M/W penalty.

Heavier axle loads make trains more difficult to stop, thereby increasing the stopping distances and minimum train spacing. Thus a predominance of heavy cars, combined with higher speeds, may significantly reduce the maximum throughput of a line. Railroads are already carrying far more net ton miles on much less track than they were 50 years ago; many lines are much nearer to their liimts of physical capability than is generally realized.

To the extent they justify lower rates, jumbo cars help keep railroads competitive; and customers do like the belt rails and other paraphernalia of today's cars. However, some jumbo cars may actually be a marketing deterrant because they increase customers' inventory carrying costs for a given rate of usage. A corollary is that railroads will tend to concentrate on lower-value commodities as they acquire ever-larger cars. I strongly believe that railroad market