By Darren Prokop, Freight Waves; January 16, 2020
Railroads and pipelines, unlike other modes of transportation, have to finance and build practically all of their support infrastructure. This is why they are very capital-intensive and bear a large proportion of fixed costs as opposed to variable costs. They take on a large amount of upfront costs before even one boxcar or one drop of crude oil, as the case may be, can be transported in order to begin earning operating revenue.
Railroads, like all other modes of transportation, must deal with various types of government regulation. Unfortunately, some of these regulations were developed in response to tragic events. Positive Train Control (PTC), a regulation under the supervision of the Federal Railroad Administration (FRA), is one of these. The FRA’s implementation of the Rail Safety Improvement Act (2008) included the first set of PTC regulations. The law was enacted in response to the collision of a Metrolink passenger train with a Union Pacific (UP) freight train in Los Angeles on September 12, 2008. The engineer of the Metrolink train ignored or failed to notice a stop light and proceeded onto the track of the UP train. The death toll was 25 (including the Metrolink engineer) and there were 135 injuries, making this one of the deadliest train collisions in U.S. history.