Railroad Cost Indexes
Cost data provided by The Rail Cost Adjustment Factor (RCAF) and The All Inclusive Less Fuel (All-LF)
If you are trying to understand if rate increases by the rail carriers are reasonable, the Rail Cost Adjustment Factor (RCAF) is a useful data point. The RCAF is an index formulated to represent changes in railroad costs incurred by the nation’s largest railroads. The RCAF measures the rate of inflation in railroad inputs and is calculated by the Association of American Railroads (AAR) and reviewed by the STB. Seven component indexes comprise the All-Inclusive Index: labor, fuel, materials and supplies, equipment rents, interest, depreciation, and other expenses. The RCAF was created for regulatory purposes and is governed by the Surface Transportation Board (STB).
There are five indexes associated with the RCAF:
- The Forecasted All-Inclusive Index – the price index that underlies the RCAF
- The actual All-Inclusive Index – calculated when the data becomes available
- The RCAF (unadjusted) – derived by adjusting the forecasted All-Inclusive Index by the “forecast error” from the second prior quarter. This index reflects cost changes experienced by the railroad industry, without reference to changes in rail productivity.
- The RCAF (adjusted) – derived by modifying the RCAF (unadjusted) for moving five-year productivity gains as soon as the latest quarter of productivity is available. This index reflects national average productivity changes as originally developed and applied by the ICC, the calculation of which is currently based on a five-year moving average.
- The RCAF-5 reflects the five-year moving average productivity adjustment factor which is incorporated into the index during the first quarter of the year. This index also reflects national average productivity changes; however, those productivity changes are calculated as if a five-year moving average had been applied consistently from the productivity adjustment’s inception in 1989.
|Year||Quarter||Preliminary RCAF||Forecast Error Adjustment||RCAF
|Productivity Adjustment Factor||RCAF (Adjusted)||RCAF
(2017 Q4 Base)
All Inclusive Index Less Fuel
The AII-LF Index was created to provide a parallel measure of the Rail Cost Adjustment Factor without the influence of the fuel cost component. All of the components (Labor, M&S, etc.) used in the All-Inclusive Index Less Fuel match those of the All-Inclusive Index used to calculate the Rail Cost Adjustment Factor.
4Q/2017 = 100.0
|Year||Quarter||All Inclusive Less Fuel||Forecast Error||Error Adjusted|