STB Proposes New Freight-rail Productivity Rate Adjustment

A new freight-rail productivity rate adjustment proposed by the Surface Transportation Board is now under review. This plan calls for a 1.5% annual efficiency measure covering the 2020-2024 period.

Represented as 1.015, this figure reflects a slight 0.1% uptick. This change compares to the average set for the 2019-2023 timeframe. Industry stakeholders have until April 15 to file comments on the STB proposal. Separately, the change is currently slated to go into effect on April 18.

Calculation Logic and the Rail Cost Adjustment Factor

These updates stem from federal cost recovery mandates established in 1989. Those rules require that the quarterly rail cost adjustment factor accounts for long-term efficiency changes. Also, it tracks how railroads move freight.

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Additionally, the board looks at year-to-year shifts in production costs. It measures the cost of a single unit of railroad output. To smooth out these trends, the STB applies a five-year moving geometric average. The latest adjustment arrived by replacing the 2019 value of 1.007 with a higher 2024 figure. For example, the 1.014 value for 2024 led to the marginal increase in the overall mean.

Deadline for the Freight-rail Productivity Rate Adjustment

While the five-year trend moved slightly higher, the standalone productivity mark for 2024 was 1.014. This specific figure shows a 2.5% drop. Additionally, it compares to the 1.040 growth rate seen in 2023 relative to 2022.

In addition, blending this 2024 data into the 2020-2023 period created the proposed 1.015 annual average. This result captures the specific input and output changes observed throughout 2023. At the same time, it reflects the freight rail sector as analyzed in the current decision.

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