Tom O'Connor Group

Economic and management consulting firm

Casualties and insurance costs on US railroads

An area near Columbus, Ohio was evacuated on Wednesday, July 11, 2012 at 2:05 a.m. CDT after 16 cars of a Norfolk Southern Railway freight train derailed. NTSB board member Earl F. Weener said the agency had a 12-person team reviewing data from the early-morning derailment on the Norfolk Southern Corp. tracks, north of downtown. Three tank cars each carrying 30,000 gallons of ethanol burned. Nobody aboard the train was injured. Investigators were expected to be in Columbus for up to 10 days. The NTSB said a preliminary report will be issued in about a month but that the full investigation could take a year.

This accident is reminiscent of an accident which also occurred on the Norfolk Southern Railway on January 6, 2005, in Graniteville, South Carolina.  That accident involved chlorine and led to a number of actions including a proceeding at the Surface Transportation Board (STB) at which I presented evidence on behalf of the Chlorine Institute.

The following chart summarizes my findings on behalf of the Chlorine Institute. 

Insurance and related costs, 2003-2007

As Chart I indicates, the five railroads taken as a group reported a significant decrease in casualties, insurance and related costs during the 2003 through 2007 period.  Each of the individual railroads except for KCS also reported declines in these costs.

 

The reported data did not support a conclusion that rail transportation during the 2003 to 2007 study period had led to higher casualties and insurance costs. In fact the opposite result had occurred.  The overall costs of casualties and insurance, as reported by the five US Class I railroads decreased significantly during the 2003 to 2007 study period.  

 My analysis showed that the overall casualties and insurance costs for the four largest US railroads had decreased by 40 percent during the study period.  This was before including KCS, the fifth and smallest US Class I railroad.  Including the KCS, the total casualties and insurance costs for the five railroads decreased by 37 percent during the 2003 to 2007 study period.  

There was a widespread perception at the time that casualties and insurance costs had increased due to transport of hazmat.  As the graph and the accompanying testimony showed, the railroads costs associated with casualties and insurance had not increased.  In fact those costs had decreased.  Even the Norfolk Southern showed a decrease in costs despite the fact that this period included the Graniteville accident which had occurred on the Norfolk Southern during the study period.

 

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