Freight trains and economies of scale

See Why Railroads Are Making Freight Trains Longer and Longer by Daniel Machalaba of The WSJ. Economies of scale happen when average total cost falls as a firm increases the scale of its operation (more capital). Total cost rises, but output or quantity rises by an even greater proportion. Excerpts:

"The freight train is now on track to stretch up to 3 miles long, with 200 cars or more. And it’s being powered, in part, by an unusual energy source: the activist investor.

Companies have plenty of reasons to keep adding train cars. Long trains save on fuel and crews, reducing the cost of rail transportation.

Longer trains also decrease the volume of trains through communities and improve productivity, said Raquel Espinoza, spokeswoman for Union Pacific Corp. And fewer trains on the network frees up track space for other traffic.

“Railroads thrive on economies of scale,” said Christopher Barkan, professor and director of the railroad engineering program at the University of Illinois in Urbana-Champaign, Ill. “Longer trains are the most important advance in achieving economies of scale in the past quarter century.”

A confluence of pressures—from the long-term decline of coal deliveries to competition from trucking to activist investors—are forcing railroads to improve efficiency and cut costs.

In a nod to activist investors, who have pressed for improved operations and the return of capital to shareholders, major railroads now report average train length with quarterly earnings. CSX Corp. , for instance, in April said its average train length rose 5% in the first quarter from a year earlier, a signal to investors and analysts that the railroad is gaining efficiency.

Operating trains that are double the length of standard size trains involves mastering the distribution of weight and pulling force. The longest, heaviest trains may have four locomotives in front, two in the middle and two at the end.

Some critics say the railroads are moving in the wrong direction, given the demand for faster, more frequent deliveries of smaller batches of raw materials and goods. Long trains take longer to assemble and disassemble in freight yards and can lead to delays on main lines."

"Long trains can block multiple crossings, delaying emergency vehicles and other motorists, as they take 5 minutes or more to go from front to back through a crossing."

"95% of trains are shorter than 10,000 feet."

"Some railroads are adding remotely controlled diesel locomotives at the end or in the middle of superlong trains so that locomotives are both pulling and shoving at the same time. Distributing the locomotive power reduces the heavy loads on the couplers that can break a train in two, improves train handling by reducing slack action and makes brake applications quicker and smoother."