Railroad Cost Indexes

The Rail Cost Adjustment Factor (RCAF) is an index formulated to represent changes in railroad costs incurred by the nation’s largest railroads and is a useful data point for understanding if rate increases by the rail carriers are reasonable. The RCAF measures the rate of inflation in railroad inputs and is comprised of seven component indexes: labor, fuel, materials and supplies, equipment rents, interest, depreciation, and other expenses. It was created for regulatory purposes and is reviewed and governed by the Surface Transportation Board (STB).

There are five indexes associated with the RCAF:

1. The Forecasted All-Inclusive Index – The forecasted price index that underlies the RCAF.
2. The actual All-Inclusive Index – This index is calculated when the data becomes available.
3. The RCAF (unadjusted) – This index reflects cost changes experienced by the railroad industry, without reference to changes in rail productivity and is derived by adjusting the Forecasted All-Inclusive Index by the “forecast error” from the second prior quarter.
4. The RCAF (adjusted) – 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. It is derived by modifying the RCAF (unadjusted) for moving five-year productivity gains as soon as the latest quarter of productivity is available.
5. 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.

AAR’s detailed description.

Rail Cost Adjustment Factor

						Productivity-Adjusted RCAF			RCAF
Year	Quarter	Preliminary RCAF	Forecast Error Adjustment	RCAF (Unadjusted)	RCAF (Unadjusted Change)	Productivity Adjustment Factor	RCAF (Adjusted)	RCAF (Adjusted Change)	PAF-5	RCAF-5	RCAF-5 Change
2014	Q1	1.108	-0.004	1.104	0.64%	2.3110	0.478	0.42%	2.4480	0.451	0.45%
	Q2	1.122	-0.025	1.097	-0.63%	2.3168	0.473	-1.05%	2.4534	0.447	-0.89%
	Q3	1.119	-0.011	1.108	1.00%	2.3226	0.477	0.85%	2.4588	0.451	0.89%
	Q4	1.109	-0.009	1.100	-0.72%	2.3284	0.472	-1.05%	2.4642	0.446	-1.11%
2015	Q1	1.074	-0.010	1.064	-3.27%	2.3342	0.456	-3.39%	2.4704	0.431	-3.36%
	Q2	1.025	-0.036	0.989	-7.05%	2.3382	0.423	-7.24%	2.4766	0.399	-7.42%
	Q3	1.020	-0.086	0.934	-5.56%	2.3422	0.399	-5.67%	2.4828	0.376	-5.76%
	Q4	0.996	-0.025	0.971	3.96%	2.3462	0.414	3.76%	2.4890	0.390	3.72%
2016	Q1	0.992	-0.020	0.972	0.10%	2.3502	0.414	0.00%	2.4932	0.390	0.00%
	Q2	0.959	-0.014	0.945	-2.78%	2.3584	0.401	-3.14%	2.4974	0.378	-3.08%
	Q3	0.994	-0.046	0.948	0.32%	2.3667	0.401	0.00%	2.5016	0.379	0.26%
	Q4	0.985	0.005	0.990	4.43%	2.3750	0.417	3.99%	2.5059	0.395	4.22%
2017	Q1	1.011	-0.012	0.999	0.91%	2.3833	0.419	0.48%	2.5147	0.397	0.51%
	Q2	1.021	-0.004	1.017	1.80%	2.3797	0.427	1.91%	2.5235	0.403	1.51%
	Q3	1.016	0.000	1.016	-0.10%	2.3761	0.428	0.23%	2.5323	0.401	-0.50%
	Q4	1.010	-0.010	1.000	-1.57%	2.3725	0.421	-1.64%	2.5412	0.394	-1.75%
2018	Q1	1.038	-0.011	1.027	2.70%	2.3689	0.434	3.09%	2.5374	0.405	2.79%
	Q2	1.039	0.002	1.041	1.36%	2.3665	0.440	1.38%	2.5336	0.411	1.48%
	Q3	1.072	-0.011	1.061	1.92%	2.3641	0.449	2.05%	2.5298	0.419	1.95%
	Q4	1.081	-0.002	1.079	1.70%	2.3617	0.457	1.78%	2.5260	0.427	1.91%
2019	Q1	1.071	-0.013	1.058	-1.95%	2.3593	0.448	1.97%	2.5235	0.419	1.87%
	Q2	1.067	-0.002	1.065	0.66%	2.3621	0.451	0.67%	2.5210	0.422	0.72%
	Q3	1.082	-0.025	1.057	-0.75%	2.3649	0.447	-0.89%	2.51858	0.420	-0.47%
	Q4	1.077	-0.002	1.075	1.70%	2.3677	0.454	1.57%	2.5160	0.427	1.67%
2020	Q1	1.065	-0.022	1.043	-2.98%	2.3705	0.440	-3.08%	2.5190	0.414	0.12%
	Q2	1.057	-0.006	1.051	0.77%	2.3764	0.442	0.45%	2.522	0.417	-0.72%
	Q3	0.997	-0.008	0.989	-5.90%	2.3823	0.415	-6.11%	2.3823	0.392	-6.00%
	Q4	1.011	-0.070	0.941	-4.85%	2.3883	0.394	-5.06%	2.5280	0.372	-5.10%
2021	Q1	1.027	0.013	1.04	10.52%	2.3943	0.434	10.15%	2.5343	0.410	10.22%
	Q2	1.067	-0.008	1.059	1.83%	2.3991	0.441	1.61%	2.5406	0.417	1.71%
	Q3	1.113	0.021	1.134	7.08%	2.4039	0.472	7.03%	2.547	0.445	6.71%
	Q4	1.127	0.012	1.139	0.44%	2.4087	0.473	0.21%	2.5534	0.446	0.22%
2022	Q1	1.16	-0.006	1.154	1.32%	2.4135	0.478	1.06%	2.5585	0.451	1.12%
	Q2	1.186	0.011	1.197	3.73%	2.4285	0.493	3.14%	2.5636	0.467	3.55%
	Q3	1.243	0.007	1.250	4.43%	2.4436	0.512	3.85%	2.5687	0.487	4.28%
	Q4	1.253	0.042	1.295	3.60%	2.4588	0.527	2.93%	2.5738	0.503	3.29%

(2017 Q4 Base)