The Grateful Dead catalogue is extensive in lyrics referencing railroads. However; after writing this article I can’t but help think of one of their songs that has no reference to railroads. If you are familiar with their music then you will know the song I am referring to by the end.
There are two types of repairs the railroad industry uses when discussing railcar repair. Running and Contract. Running is used to describe while the cars are in operation while contract is at a fixed shop location. For the purpose of this article we are reviewing running repairs. Running Repairs on railcars are required from time to time to ensure the equipment is safe for travel and to warrant train operations run smoothly. These types of repairs are performed by railroads and guided by rules issued from the AAR .
Repairs of any kind have a direct result on the operating costs of equipment and its necessary to understand the drivers of these expenses. Repair expenses are reflected in the costs of operating the equipment whether you own or lease railcars.
Running repairs are performed by each individual railroad or their contracted agent known as a running repair agent. For example, a railroad may deem its cost prohibitive to employ carman to make repairs to cars on their line and instead contract with a third party to provide the personnel and equipment to make repairs to railcars. These contractors are known as “Running Repair Agents”. The agents will bill for the repair work at the prevailing AAR labor and material rates. The car owner will receive these bills monthly along with other railcar repairs from other railroads. The invoices will appear to be from a railroad; however, there are certain attributes that shows the bills were initiated by a running repair agent.
The purpose of running repairs is for the safe, efficient handling of railcars while they are in service. For example, if a railcar needs a brake shoe or a wheel replaced while in transit then it makes sense for safety and practical purposes to perform these types of repairs as a running repair instead of shopping the car. Unfortunately, in many cases running repair contractors are doing a disservice to the industry by performing excessive repairs on equipment under the guidance of AAR running repairs. Part two of this article will go into depth on the issues of excessive repairs and how car owners and shippers can audit their monthly billing to detect if excessive repairs were performed.
