Trackage Rights - Explained

Chessie:

When one railroad has trackage rights over another railroad, they will pay the host railroad a fee that covers their proportional share of maintenance and dispatching costs.  I won't say that all trackage rights agreements provide for this, but some allow the guest railroad's crews to operate their trains over the host railroad.  The guest railroad's crews must be qualified over the territory, of course.

Trackage rights agreements are typically "overhead" in nature in that they don't permit the guest railroad to serve customers along the line over which they have trackage rights. 

And, not to confuse things, but trackage rights differ from haulage agreements in that with haulage, the host railroad normally handles the guest's traffic in host trains at a fixed amount per car.

Curt

Curt,

 

Many thanks for the concise and clear explanation.  So trackage right might be best if let's say a railroad's track is "cut" by another railroad...so they would use trackage rights to haul the freight from one side of their system to the other. 

 

In the case of a haulage agreement, would the host railroad deliver the freight cars to any customers or does the customer exclusion along "trackage right" tracks apply almost in all cases.  Thanks again for the info. 

That situation would be a regular interchange situation. The Delivering Road would handle the cars as its own traffic and rates would be determined by tariff agreement between the roads which handled the car from origin to destination.

Chessie

It really depends on the original rationale for the trackage rights.  I'll give you two examples.  In Alabama, both the BN and NS served Mobile over their own lines.  At some point, BN lost a bridge on their line to Mobile.  At the same time, NS had a line that ran from Birmingham to Columbus, MS that had very little intermediate traffic.  Rather than give up the business they had at Columbus, they traded trackage rights with BN allowing them to use the NS line to reach Mobile, thus eliminating the need for BN to rebuild the bridge. In return, BN gave NS rights over their line into Columbus, which allowed NS to abandon their line from Birmingham.

In my other example, UP, as a condition of their takeover of the SP back in 1996, had to give BNSF trackage rights over their railroad between New Orleans and Houston.  The STB ordered this to preserve the competition that existed between SP and the UP (former MP) lines that ran between the two cities.

In the first example, neither carrier could serve intermediate points on the others line; they were, in effect, connecting isolated points on either carrier.  In the second example, since the idea was to preserve competition, BNSF was actually given the right to solicit traffic at intermediate points.

Curt

Sometimes, two or more railroads will want to:

 

1.  All go from point A to B.

2.  Want to build a common station or terminal.

3.  Or, need to cross a major body of water.

 

In such a case, the railroads involved will create a "third party" railroad.  The third party company will own the tracks, pay taxes, arrange to keep the ROW in good order.  The "owner railroads" will usually have full rights on the trackage.  However, in certain terminal areas, the railroads will own a switcher road, like The Belt in Chicagoland, or NS and CSX's Conrail Shared areas.

The growth in the volume of Bakken oil headed to eastern refineries is putting additional emphasis on trackage rights/agreements.

 

Poppyl

Guys...really appreciate the info.