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Defense Freight Car Operations Yesterday, Today, and Tomorrow

In the language of railroading, a private car is one that is owned by an individual or organization other than a railroad. Private freight-car owners can be divided into nonshippers (such as leasing companies) and shippers. Becoming an owner-shipper is not an easy decision. The cost of purchasing a car is significant, and immersion in the arcane world of railroading is a necessity. Leasing cars instead of owning them yields nearly all the benefits of ownership and reduces the depth of commitment to shipping by rail that ownership entails.

Based on historical experience, three factors must be in place before private-car ownership becomes a plausible option for a rail shipper. First, the potential owner must expect the movements to continue long enough to recover the cost of the investment in cars—usually 15 years or more. Second, the cargo to be moved should require a specially designed car; more specifically, it must be capable of movement in bulk or have excessive weight or dimensions. Third, the specially designed cars must not be available from the railroads, at least not with attractive terms that encompass both the cost and the reliability with which the railroad can provide the cars when demand for them is at its peak.

The Armed Forces avoided owner-shipper status until World War I. However, they had extensive involvement in railroading before that. U.S. military railroads operated rail lines in the war zone during the Civil War, and the railroad’s dominance of transportation in the years between the Civil War and the U.S. entry into World War I affected the Armed Forces as it did nearly every shipper.

World Wars I and II

When the military did become owner-shippers during World War I, they purchased tank cars, which were primarily used to transport the chemicals used in making munitions. From the reporting marks on the cars, it is likely that most of the cars were bought used.

The number of cars owned dropped by the time Germany invaded Poland in 1939, and tank cars made up essentially the entire fleet. However, although the tank cars owned at the end of World War I were almost all chemical tanks, the tank cars owned at the start of World War II were mostly for petroleum, oils, and lubricants (POL).

Between the start of the war and the attack on Pearl Harbor, the purchase of tank cars for POL service outpaced the addition of chemical tanks. However, by the end of the war, the services owned equal quantities of chemical and POL tank cars. During World War II, the Army’s railcar fleet remained composed almost exclusively of tank cars; the only exception was 16 flatcars used for hauling canisters of chemicals. Yet, the Navy barely expanded its chemical tank car fleet and owned no POL tank cars; it purchased mostly boxcars and owned more hopper cars than tank cars.

Korean War

The inventory at the start of the Korean War shows that the services remained active in purchasing railcars even after the end of World War II. Although the overall number of cars owned dropped by about 200 and chemical tank cars dropped by almost 900, ownership of POL tank cars, boxcars, and flatcars increased. By the end of the Korean War, with the number of cars carried over from the previous war and the purchases between the wars, the number of cars owned by the services increased by more than 3,000.

Until the start of the Korean War, the services’ fleets had been largely composed of tank cars. That changed by the end of the war, as the services increased their purchases of other car types. Noteworthy were the Army’s purchase of flatcars (mostly to move the new and heavier Patton tank) and the Navy’s purchase of DF boxcars to move ammunition. (DF stands for Damage Free, the trade name of a load securement system that consisted of slotted steel bars fastened to the inner sides of the car and lateral crosspieces that locked into those slots.)

The Army had the largest owner-shipper fleet on the continent with 6,754 cars—about 1,800 cars more than the next largest fleet, which belonged to an oil company. The Navy’s 2,538 cars made it the fourth largest owner-shipper.

Vietnam War

By the time the first ground combat units landed in Vietnam, all of the services’ interchange freight cars were consolidated under the ownership and control of a predecessor of the Military Surface Deployment and Distribution Command (SDDC). The number of cars in the fleet had dropped significantly to less than the number owned at the start of the Korean War. Despite this, and despite the amazing growth of the number of cars owned during the preceding war, by the time U.S. involvement in Vietnam ended, the fleet had shrunk slightly for the first time during wartime. This was mainly caused by a reduction in tank car ownership. The Vietnam War therefore manifested two trends that continue to this day: the uncoupling of the size of the fleet from war and the reduction of the tank car portion of the fleet in both numbers and significance. Reflecting both of those trends, the delivery of 200 chemical tank cars in 1966 was the last significant wartime purchase of cars for the fleet and the next to last significant purchase of tank cars of any kind.

Post Vietnam

The first major delivery of flatcars after the Korean War took place in 1981, and more cars of the same design were purchased between 1983 and 1987. These cars were ordered for the same reason as their predecessors: a new tank, this time the M1 Abrams, was both too long and too heavy for the cars built for the M48. Unlike their wood-decked predecessors, the new cars had steel decks and chain tiedown devices for securing the tanks to the cars. They also had collapsible pedestals that, when raised, would permit the cars to carry 20- or 40-foot ISO [International Organization for Standards] containers.

Finally, because the flatcar was designed to carry the tank but the tank was not equipped to ride on the train, the new cars also had shackles that were to be used to attach the chain tiedowns to the tank, instead of using the weaker shackles standard to the tanks. Personnel unloading a tank were supposed to remove the car shackles and secure them with one of the chain tiedowns to the deck of the car so that they would be available for the next shipper. Occasionally, that actually happened.

Gulf War

While the Gulf War was not marked by any railcar shortages, it had three very important effects on the interchange fleet. First, the lack of demand for the older flatcars during the deployment killed discussion about keeping them as a sort of reserve fleet, so they were disposed of because of their age. Second, dispatching the new flatcars to meet returning shiploads of tanks that turned out not to be tanks after all led to the cars being loaded with a wide variety of equipment, which in turn paved the way for dropping the requirement to leave the shackles on the cars. Finally, the length of time that it took to deploy the Army, though not caused by car shortages, led to the Army Strategic Mobility Program (ASMP), a part of which was the purchase of cars for placement at Army installations where they were not to be used until there was a deployment.

The result was the purchase of more than 1,000 68- and 89-foot flatcars, which were delivered between 1994 and 2001. This was the last significant purchase of railcars of any type by the military. Like the tank-carrying cars bought in the 1980s, two of the three new car series had steel decks, chain tiedown devices, and collapsible pedestals, though they had only four axles instead of the six axles of the M1 flatcars. The third series of cars was composed of 89-foot flatcars that were bought used and equipped with pedestals for carrying containers of ammunition.

1990s

The 1990s saw deletions and additions that resulted in historic changes in the size and composition of the interchange fleet. By the end of 1993, all of the cars delivered during the Korean War had been removed from interchange service because of the then-current age restriction of 40 years imposed by the railroads. The number of interchange cars was cut almost in half from the 2,267 cars at the start of the Gulf War to a post-World War II low of 1,181 in mid-1994. The inventory then started to climb because of the ASMP purchases, until it hit 2,239 at the start of 2001. Tank cars, which made up most of the fleet as late as February 1985, dropped to 37 percent of the fleet at the start of the Gulf War and to 18 percent at the beginning of 2001.

The current size of the fleet is slightly under 2,100 railcars, of which 87 percent are flatcars. The ASMP cars constitute more than half of the current Defense Freight Railway Interchange Fleet. They are followed in size by the cars bought for carrying the M1 and then the POL tank cars. The remaining cars are all special purpose—all bought by the Navy except for 12 chemical tank cars bought by the Air Force.

Ownership Changes

The changes over the years in the way cars were owned and managed are almost as interesting as the size and composition of the fleet. In the beginning, the Army and the Navy both bought and managed their own interchange cars. With the Army, ownership and management was further decentralized between the Ordnance and the Quartermaster Corps. Presumably, this ended with the formation of the Transportation Corps during World War II. After the war, the separation of the Air Force from the Army led to the Air Force subsequently purchasing and owning a very small number of railcars, although management of its cars remained with the Army.

In 1956, a Department of Defense (DOD) directive vested control and operation of all interchange freight cars in the Army’s Military Traffic Management Agency. The agency subsequently assumed management of the Army and Air Force fleets in 1957 and the Navy fleet in 1959. Ownership, however, remained with the purchasing services.

DTMS

By 1964, the military fleet was under the management of the Defense Supply Agency’s Defense Traffic Management Service (DTMS). An audit that year found that proper implementation of the 1956 common management directive was impeded by a DOD requirement that DTMS also recognize “the specific requirements of all of the military services for railway rolling stock.” Using this loophole, the Army required that DTMS pre-position over 50 percent of its heavy-capacity Army flatcars at certain installations.

DTMS obtained permission to use these pre- positioned cars at other locations during the 1962 Cuban Missile Crisis, but only after agreeing to obtain Army permission before using any Army-owned flatcars on behalf of the other services. The Navy, for its part, required that over 90 percent of the boxcars that it bought be pre-positioned at Navy ammunition depots. There, the DF cars, which were bought to simplify and accelerate interchange shipments, were used more for intraplant moves and storage than for interchange.

During the Cuban Missile Crisis, at least one facility shipped using railroad-owned boxcars so that it could use its pre-positioned interchange cars on the installation. In other findings, the auditors reported that installation transportation officers often did not bother to request cars from DTMS because DTMS rarely filled their requests, that the services prevented DTMS from disposing of unneeded cars, and that in 1 year shippers incurred $3.1 million in additional blocking and bracing costs because most ammunition shipments were made in plain boxcars rather than in DF cars.

As a result, in April 1964, DOD transferred ownership of all interchange cars to DTMS. In February 1965, ownership and management was transferred along with other DTMS functions to the Military Traffic Management and Terminal Service, a predecessor of the SDDC. In the next couple of years, the service reporting marks (USAX, USNX, and DAFX) were all changed to DODX. Although railroaders refer to the cars by their reporting marks, the unified fleet is formally known as the Defense Freight Railway Interchange Fleet (DFRIF).

Army Funding of General-Purpose Railcars

The 1964 DOD directive also charged the Army with funding the purchase of enough general-purpose railcars (cars capable of being used by more than one service) to meet the demand of all of the services. Since then, the individual services must fund the purchase of railcars whose design limits their usefulness to a single service. In the current fleet, the Army has funded the purchase of POL tank cars and chain tiedown or ISO container flatcars. All other car types are funded by the using service. Regardless of the funding, once a car is accepted from the seller, it belongs to SDDC.

The purchase of general-purpose flatcars under the ASMP for the special purpose of supporting the Army’s rapid deployment posed a potential problem reminiscent of the situation during the Cuban Missile Crisis. Because the Army was responsible for buying general-purpose cars for all of the services, what justification would SDDC have for refusing a request from another service to use the ASMP cars?

A resolution was reached that the cars would be considered special purpose and therefore could be assigned to Army installations for prompt response to a mobilization as long as there was no mobilization. Once there was a mobilization, then the purpose of pre-positioning the cars was accomplished and the cars could be used by all of the services until deployments ended. This policy is still in effect, and the ASMP cars have been used to support all of the services since the first deployment in support of Operation Iraqi Freedom.


Operating Cost

The cost of operating and maintaining the DRIF is supposed to be covered by the mileage allowances the railroads pay private car owners when their cars move loaded. Many years ago, these payments were usually enough to cover the capital as well as the maintenance costs of a car. Now, depending on the car type, the payments often are not sufficient to cover the cost of repairs. For example, the default tariff allowance for flatcars and boxcars (the rate charged in the absence of any special agreement) is 1.2 cents per loaded mile. At that rate, a car would have to move loaded 1,503 miles—halfway across the continent—to earn enough to pay for replacing a brake shoe, the most common repair.

Because the allowance earned per mile depends on the car type, the more private cars of a particular type owned by a private owner, the more clout the owner has in demanding compensatory mileage allowances. Since nearly all tank cars are private cars, the military’s fleet ownership costs were fairly well compensated until the boxcar and flatcar purchases during the Korean War.

Beginning in the mid-1960s, the decline of tank car loadings eventually produced deficits in mileage allowances. This continued until the late 1980s, when a special mileage-allowance rate was written in a way that only the new M1 flatcars qualified for it. The Army also eliminated Korean War tank cars, which were expensive to maintain and rarely used, creating mileage allowance surpluses again.

The arrival of the ASMP flatcars in the 1990s threatened a return to deficits. Too ordinary to justify a special allowance similar to the M1 flatcars, ASMP flatcars qualified only for the default tariff allowance. This was eventually resolved by modifying SDDC’s rail contract language to specify the mileage allowance to be paid on all DODX car types other than tank cars.

The ability to specify mileage allowances for DFRIF railcars, on general-purpose (chain tiedown and container) flatcars at least, is limited by another provision in the SDDC rail contract. This provision states that the freight rate must be the same for using a given car type, regardless of whether the car is supplied by SDDC or the railroads.

This longstanding provision of treating like cars alike, regardless of ownership, reduces empty car mileage, which in turn reduces overall costs and cycle time. If the freight rate is to be the same, then the cost of cars—whether DFRIF or commercial—should also be approximately the same. Otherwise, the railroads would shy away from using an owner’s cars and the practical capacity of the railroads to carry military traffic would be artificially reduced. The increased mileage allowances for flatcars not only raised revenue for SDDC, but they also increased system capacity because they reduced variations in railroad net revenues on particular movements based on what type of cars were used.

Maintaining Railroad Transport Capacity

The usefulness of the railroad system during mobilization is another current problem. Having enough cars in the DFRIF to provide all of the capacity needed for a mobilization is a requirement only with respect to the tank-carrying flatcars. All of the other materials shipped on DFRIF cars either do not have increased demand during mobilization or have commercial rail or road alternatives to being carried on DODX cars. However, around 2000, a railroader pointed out that a commercial chain tiedown flatcar shortage was just over the horizon because most of the cars would reach their maximum interchange life within the next 10 years and there was insufficient demand to replace them all. That crisis was postponed when TTX Company, the owner of nearly all of the commercial chain tiedown flatcars, undertook an upgrade to extend their cars’ interchange life, first from 40 to 50 years and then, as that age approached, to 65 years—the maximum interchange age permitted by waiver.

Meanwhile, a joint SDDC-railroad-TTX study concluded that the only feasible way to address the age issue was to have cars that were not built for chain tiedown service modified so that they could be readily used in that service. In response to a request from SDDC, TTX agreed to modify its general-purpose flatcar design to incorporate holes for a new type of chain tiedown anchor and also for interbox connectors. So far, TTX has had 400 cars built to the new design. Except for test shipments to confirm that the concept works, none of the cars have ever been equipped with chains.

A 2002 Army study concluded that enough DFRIF and commercial railcar capacity was available to support even the most extreme mobilization scenario, provided that railcars were loaded or unloaded within a day of arrival. The beginning of Operation Iraqi Freedom (OIF) in 2003 brought an opportunity to test how closely we approached that level of efficiency. Because a couple of installations had prematurely ordered and loaded commercial chain tiedown flats during the Gulf War, SDDC, at the start of OIF, required that installations order both commercial and DFRIF cars from the DFRIF fleet administrator.

An analysis of the DFRIF and commercial car movement data from the first 3 months of OIF produced an efficiency level of only 43 percent. What was worse, twice during that period, over 85 percent of all the 89-foot chain tiedown flatcars in North America were in military service. In other words, we were approaching the limits of our ability to mobilize by rail in a situation that was not, from the perspective of the planners, a large mobilization.

Part of our inefficient use of railcars was the result of the way forces were mobilized, but we had plenty of opportunity to note that efficiency in the distribution of railroad-supplied chain tiedown flatcars was not a high priority. Since then, SDDC has been working in various ways to improve the empty-car distribution process and to accelerate the loading and unloading of chain tiedown flatcars.

Railcar Future

What is in the future for the military as the operator of an owner-shipper private car line? Nothing in the history of the DFRIF or its current situation indicates that the need for the fleet will disappear in the foreseeable future. But history has shown that the need for the DFRIF can change radically in a relatively short time.

At times, the impetus for change will come from outside the military and the railroad industry. For example, the near elimination of chemical tank cars from the fleet is due in part to changes in the regulation of hazardous materials. Those changes reduced the number of tank-car cleaning facilities licensed to handle certain commodities to the point that the manufacturers had to build their own cleaning facilities to be able to continue to ship the chemicals.

Having undertaken that risk, the manufacturers, for competitive and risk-avoidance reasons, limited access to their facilities to only the cars that they owned or leased. As a result, the only chemical tank cars in the DFRIF are for specialty chemicals whose market is so limited and sporadic that manufacturers could not afford to invest in buying or leasing their own cars.

The military has benefited greatly from the chain tiedown flatcar purchases made by TTX Company in the 1960s and 1970s to carry farm implements and truck tractors—two markets that are now much smaller than when the cars were purchased. Although the need to replace them has been pushed back by life extension programs, when replacement does take place, very few cars will be bought. Putting anchor holes in general-purpose flatcars bought to serve markets that do not use chain tiedown flatcars could be an economical way to bridge the transition, but much could change in the next 20 years.

The Army has never routinely replaced or expanded the DFRIF’s general-purpose flatcar fleet. Its first purchase was tied to the fielding of the M48, the second to the development of the M1, and the third to the desire to get to war faster. The M1 flatcars will need to be withdrawn from use or undergo a very expensive rebuild beginning in 2029. Whether or not another “important” program will come along to fund that replacement or rebuild is questionable.

Events since 2000 have led SDDC to become more involved with the military’s use of commercial chain tiedown flatcars. Since 2003, SDDC has acted as an intermediary between shipping installations and the railroads in requesting commercial cars. Initially, SDDC simply acted as a gatekeeper to restrict the premature commitment of the cars. Over time, however, SDDC and the railroads have gotten used to working together to provide the cars that make the most sense to use.

In 2004, SDDC testified for the first time in support of the antitrust exemption that permits TTX Company to operate a pooled chain tiedown flatcar fleet on behalf of the railroads that own it. Since 2005, SDDC and TTX have been working on ways to improve the efficiency of empty TTX flatcar distribution through central management of the cars by TTX, rather than through dispersed management by the individual railroads. With the objective of speeding up loading and unloading of commercial chain cars, in 2009 SDDC requested that the Federal Railroad Administration recognize the right of commercial owners of cars capable of carrying chain tiedown loads to eliminate handholds that project above the cars’ decks so that they can be loaded and unloaded as fast as DODX chain tiedown flatcars.

Railroads have been essential to transporting military materiel since the Civil War and will continue to be important in the foreseeable future. Maintaining an inventory of available railcars for moving military weapon systems and equipment is an ongoing concern for SDDC. Determining what types of cars are needed, who owns them, and how to fund their purchase and maintenance requires a communication network among SDDC, the services, the railroads, and TTX Company in order to ensure that they can provide the railroad support the services need when they need it.

George Gounley has managed the Defense Freight Railway Interchange Fleet since 1985.


 
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