A cost model of the Canadian railways

This paper applies the World Bank RAIL model to develop costs of Canadian Railway operations. Publicly available data from Statistics Canada is used to estimate railway activities and unit costs of these activities. Aggregate models for Canadian National and Canadian Pacific Rail are presented. These models are then disaggregated to estimate the cost of major commodity movements in Western Canada. We show how these models can be used by management to evaluate the marginal cost of changes in railway operations or equipment. We also demonstrate its value in calculating the cost of specific services. For example, the CN model shows that in 1983 it was more profitable for CN to move VIA trains than to move freight.