U.S. AGENCY FINDS RAILROAD REVENUES INADEQUATE
The Interstate Commerce Commission
(ICC), which regulates interstate freight rail service,
concluded that none of the 24 largest U.S. freight railroads
had adequate revenues in 1985.
    The finding is important because it means the ICC is likely
to look favorably on requests for rate increases by these
railroads made during the current year.
    Under federal law, the ICC must give harsher scrutiny to
rate increase requests for railroads with adequate revenues.
    Though freight rates are no longer strictly regulated by
the government, the ICC can still block a newly proposed rate
if it finds it to be unreasonable.
    In past efforts at calculating revenue adequacy, the ICC
has been accused of favoritism by both the railroad industry
and shippers. This year, the ICC used a new approach but two of
five commissioners nonetheless voted against the finding.
    "For the period from 1979 to the present, railroad returns
have fallen well short of their cost of capital, however
defined," commented ICC Chairman Heather Gradison, who voted
with the majority.
    The ICC concluded that the freight railroads with the
highest rates of return on investment were the Chesepeake and
Ohio with an 11.1 pct rate, the Burlington Northern with a 10.3
pct rate, the Kansas City Southern with a 9.2 pct rate, and and
the Norfolk and Western with a 9.1 pc rate.
    Four of the 24 largest railroads--the Boston and Maine, the
Delaware and Hudson, the Elgin, Joliet and Eastern and the
Western Pacific--had operating losses, the ICC found.
 Reuter
