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The Army May Be Able to Obtain Some Modest Cost Savings by Privatizing Rail Operations at Installations with Low Rail Activity Rates That Currently Have Government-Owned, Government-Operated (GOGO) or Government-Owned, Contractor-Operated (GOCO) Business Models

• When compared with the fixed costs of paying full-time rail crews and maintaining locomotives, we find that installations that ship an average of fewer than 30–40 rail cars per month are likely to have lower costs under the privatized model.
• However, the annual cost savings are modest, most likely less than $300,000 per year at each installation.

The Potential Cost Savings from Privatization Must Be Weighed Against Possible Risks

• The Army will be dependent on commercial rail carriers to provide locomotives and rail crews in a timely manner to load equipment and containers.
• The Army may lose some internal surge capacity, because GOGO and GOCO installations share rail crews when they need to conduct 24-hour operations to load a brigade combat team's equipment for a deployment or training rotation.
• There may be an increased risk of accidents or violations of safety and environmental rules if commercial rail crews are unfamiliar with the installation's rail infrastructure.
• There may be unexpected additional costs, because commercial rail carriers currently bid separately for each shipment and some have local monopoly power to raise rates.