ClaimsBill Ackman

“Rail transportation is both cheaper over longer distances than trucking”

Pershing Square letter authors (Ackman) 2022 Bill Ackman's Pershing Square 2021 Annual Letter to Shareholders (GuruFocus) archived copy

Factual Economics and markets

Rail transportation is cheaper than trucking over longer distances.

Resolved true The record shows it happened or was so.

Factual: Statements about the present or the past, checked against the record: did they hold up?

Said for an organisation they lead or work for; it counts on both records.

What would count as true or false

Judge as of 2022 using the general cost comparison per ton-mile (or per unit of freight). TRUE: authoritative sources (US DOT/FRA, AAR, academic or industry freight-cost studies) show that rail is generally cheaper per ton-mile than truck over long hauls, for example beyond a few hundred miles. MOSTLY TRUE: rail is cheaper over long distances for most freight types, with stated exceptions (for example time-sensitive or low-volume freight, or once drayage is counted) that the claim does not address. MIXED: the evidence shows rail is cheaper over long distances only for a narrow set of commodities or conditions, and roughly as often not. MOSTLY FALSE: rail's cost advantage is shown to be small or absent in most long-haul comparisons, with only limited cases supporting it. FALSE: the evidence shows trucking is generally cheaper than rail over longer distances.

Set before the research began.

Evidence (4)

  1. E1 Assessing Rail Freight Solutions to Roadway Congestion: Final Report (NCHRP Project 8-42) Transportation Research Board (NCHRP Project 8-42); prepared by Global Insight, Economic Development Research Group, Carl D. Martland (MIT), Wilbur Smith Associates · October 2006

    “Intermodal rail, to use an obvious example, holds a commanding position for long haul transportation of containerized goods in dense intercity lanes. In these conditions, density supports dedicated trainload operations, and linehaul distance offsets inefficiencies in pickup and delivery; the result is that rail performs as well as a truck, with a lower cost.”
  2. E2 Emerging Freight Truck Technologies: Effects on Relative Freight Costs Final Report Midwest Transportation Center / Institute for Transportation, Iowa State University; sponsored by U.S. Department of Transportation Office of the Assistant Secretary for Research and Technology · May 2018

    “consumer would be indifferent between using rail and truck for any shipment with a distance around the 455 mile mark, and rail would have a price advantage above the 455 mile mark.”
  3. E3 Comprehesive Truck Size and Weight Study Volume 3 Chapter 4 U.S. Federal Highway Administration (FHWA)

    “Other rail traffic is either low-value goods where shippers are more concerned about the price of shipping than the convenience of door-to-door service, or goods of such a nature that rail has a formidable cost advantage over highway movement. Coal, grain, and most chemicals fall into this latter category.”
  4. E4 Assessing Rail Freight Solutions to Roadway Congestion: Final Report (NCHRP Project 8-42) Transportation Research Board (NCHRP Project 8-42); prepared by Global Insight, Economic Development Research Group, Carl D. Martland (MIT), Wilbur Smith Associates · October 2006

    “Access costs are a major contributor to door-to-door transportation expense, and are the primary component of cost at shorter distances.”

Reasoning

A DOT-sponsored university study finds a breakeven distance of about 455 miles, beyond which rail has a price advantage over truck (E2). A federal FHWA study says rail has a formidable cost advantage for coal, grain and most chemicals (E3). A TRB report finds that intermodal rail on long-haul dense lanes performs as well as truck at lower cost [E1], and notes that access costs are a major contributor to door-to-door transportation expense and the primary component of cost at shorter distances [E4]. That limit fits the claim's restriction to longer distances.

Cite this claim

Bill Ackman, “Rail transportation is cheaper than trucking over longer distances.” (said 2022). Verdict: resolved true. Reliability API, claim c_e453cea4dd21, method 0.1.0+c876030c, dataset release v1.1.2. https://epistacklabs.com/claims/c_e453cea4dd21

This claim is in dataset release v1.1.2, with the same verdict.

Reply to this claim

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All of them

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