STB Sets 4Q2021 RCAF
Written by William C. Vantuono, Editor-in-Chief
The Surface Transportation Board (STB) is required by law, on a minimum quarterly basis, to publish the Rail Cost Adjustment Factor (RCAF), defined as “an index formulated to represent changes in railroad costs incurred by the nation’s largest railroads over a specified period of time.”
Each quarter, the Association of American Railroads computes three types of RCAF figures and submits them to STB for approval.
The STB publishes an unadjusted RCAF, and two productivity-adjusted RCAFs, the second of which is RCAF-5. The RCAF (Unadjusted) is defined as “an index reflecting cost changes experienced by the railroad industry, without reference to changes in rail productivity.” The RCAF (Adjusted) is “an index that reflects national average productivity changes as originally developed and applied by the Interstate Commerce Commission, the calculation of which is currently based on a five-year moving average.” The RCAF-5 is “an index that 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.”
The STB has reviewed AAR’s submission and has adopted, per Docket No. EP 290 (Sub-No. 5), RCAF figures for fourth-quarter 2021. RCAF (Unadjusted) is 1.139; RCAF (Adjusted) is 0.473; and RCAF-5 is 0.446.
Download Docket No. EP 290 (Sub-No. 5):
The index of railroad input prices, RCAF (Unadjusted), RCAF (Adjusted), and RCAF-5 for the fourth quarter of 2021 are shown in Table A:
Table B shows the second-quarter 2021 index and the RCAF calculated on both an actual and a forecasted basis. The difference between the actual calculation and the forecasted calculation is the forecast error adjustment:
