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Abstract
There are several annual rail rate indices commonly used to depict changes in the prices paid for
rail service. While accurate for general analyses, each of these indices falls short in capturing the
three major components of total railroad grain rates – tariff rates, fuel surcharges, and secondary
railcar market costs. Grain is a rail commodity whereby bids in the secondary railcar market can
affect whether the actual rate paid by shippers is above or below the published tariff rate. The
seasonality of rates inherent in grain transportation is captured through the secondary market but
is neither contained in other grain rail rate indices nor apparent in annualized data. In addition,
most grain rate indices do not include fuel surcharges, which have become a major component of
the total rate paid for any rail commodity movement. In this paper, we develop new rail rate indices
for unit trains and shuttle trains and compare them against a rail cost index. The new indices are
an improvement upon past grain rail rate indices by including information from the secondary rail
market, fuel surcharges, and tariff rates into a weekly index between the years 1997 and 2011. The
improved indices show a higher level of detail when compared to other annualized indices, allowing
for a more thorough analysis of grain rates. These indices show grain rail rates generally higher
than do other indices with a notable departure from rail costs at the beginning of the economic
recession in 2009. A comparison of the rail indices with rail costs calls into question whether earlier
conclusions about rail market power still hold.