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Productivity Growth In Transportation

Productivity Growth In Transportation


  • From 1990 to 2000, labor productivity rose in

    all transportation modes, but only exceeded the productivity growth rate

    for the overall economy in three – railroads, local trucking, and


  • From 1990 to 1999, rail transportation

    experienced a substantially higher growth of multifactor productivity than

    did the private business sector.

  • Increases in multifactor productivity in rail

    transportation have been affected by improvements in capital inputs (e.g.,

    equipment investments) and changes in the organization of service delivery.

In the 1990s, labor productivity growth in railroads, local trucking, and

pipelines surpassed labor productiv­ity gains in the overall

economy. Meanwhile multifactor productiv­ity (see Box A) gains

for rail, spurred by im­prove­ments in capital inputs and

the organization of service delivery, far outstripped those in the

private business sector.

Labor Productivity1

In recent years, several transportation modes

had considerably higher labor productivity increases than the U.S.

business sector. According to the data shown

in Figure 1, labor

productivity of the U.S. business sector (measured in real output

per employee) increased from 1990 to 2000 at an annual rate of

2.1%. By comparison, labor productivity in local trucking grew by

5.2% per year while railroad transportation grew by 5.1%. In

petroleum pipelines, labor productivity increased by 3.3% per


On the other hand, labor productivity in air

transportation increased by 1.8% per annum; in “trucking

except local” it grew by 1.7% per annum; and for bus carriers

it increased by 1.5% per annum.

The basic factors that affect labor

productivity in the transportation industries, as well as in

others, are increased use of capital in

production—which increases the amount of capital (i.e.,

equipment) per worker—and technical progress.

“Technical progress” is a general term that includes

improvements in the organization of the production process, in the

quality of the inputs, and in the information technology used in


These two basic factors—increased capital

in production and technical progress—are responsible for

labor productivity increases in rail transportation. Higher output

(in ton-miles) has resulted from more frequent and heavier loads

moving longer distances. Labor input is down because of crew

downsizing and because mergers have allowed a decrease in

interchanges between railroads, which means fewer employees are

needed. An index on “employee hours” for railroad shows

a steady decline from 1990 to 2000 (from 91.0 to

71.6).2 Moreover,

other data show significant decreases in employment in

“railroad brake, signal, and switch operators” from

1990 to 2000.3

Increases in labor productivity of “local

trucking without storage” were positively affected by the

increasing use of computer technology (hardware and software)

– such as optimal routing and load matching.4

Increases in labor productivity for petroleum

pipelines likely resulted from increasing pipeline sizes and the length of the

haul.5 These factors affect economies of scale (as

output increases faster than inputs, cost per unit of output


The relatively slow growth of labor

productivity in air transportation was likely affected by

diminishing returns from factors that in the past positively

influenced air transportation labor productivity, such as the

introduction of larger and faster aircraft, computerized passenger

reservation systems, and the hub-and-spoke flight network.

Multifactor Productivity

The only data presently available on

multifactor productivity, from BLS under the SIC system, for the

transportation sector relate to rail transportation. These data

indicate that from 1990 to 1999 rail transportation experienced a

substantially higher growth of multifactor productivity than did

the private business sector (see Figure 2). Multifactor

productivity in rail transportation in­creased at an annual

average growth rate of 3.0%, while the private business sector

increased at an annual rate of 0.9%. Thus, the rail industry has

contributed positively and substantially to increases in

multifactor productivity in the private business sector and, hence,

to the U.S. economy over this period.

Technical Progress Spurs Growth in Rail


Increases in rail transportation multifactor

productivity can be traced to technical progress, such as improved

capital inputs and technological changes in the form of improved

methods of service delivery. Improved technology for locomotives,

freight cars, and track and structures have increased reliability

and reduced maintenance needs. Reduced maintenance translates into

less downtime for equipment and, consequently, increased output and

productivity. Moreover, information technology, through computers,

improved operational efficiency. Industry restructuring, including

mergers, permitted a more efficient use of labor and rail traffic

moving over longer distances without interruptions. The

consolidation of railroad companies has likely resulted in more

efficient use of equipment and lines.6

Freight railroads also are making more

efficient use of fuel. This is a form of productivity increase and

can result in higher output with a given amount of fuel and, thus,

lower transportation costs. To make their operations more

fuel-efficient, railroads have been moving longer distances between

interchanges, buying more fuel-efficient locomotives, using

innovative equipment (e.g., aluminum freight cars and lightweight

double-stack container cars), and reducing locomotive idling time.

Data show that the number of “Btu per ton-mile” for

Class I freight railroads decreased from 420 Btu in 1990 to 352 Btu

in 2000.7

Currently, work is being carried out at the

Bureau of Transportation Statistics to estimate multifactor

productivity for several additional transportation

industries/subsectors. This includes the development of data on

publicly owned capital stock for airports, waterways, and transit.

The results of estimating multifactor

productivity for transportation subsectors should clarify the

extent to which increases in transportation outputs have occurred

because of changes or increases in inputs (labor, capital,

intermediate inputs) or because of increases in the productivity of

those inputs (e.g., due to changes in the organization of the

industry or improvements in the inputs). Also, this research should

provide information on the relative importance of transportation in

increasing multifactor productivity in the U.S. economy, and thus

estimate an important contribution of transportation to economic


For More Information:

Anthony Apostolides, Economist

U.S. Department of Transportation

Bureau of Transportation Statistics

Office of Advanced Studies

400 7th Street SW, Suite 3430

Washington, DC 20590

Phone: 202-366-4394

Fax: 202-493-0568


1 Labor

productivity is measured by the Bureau of Labor Statistics (BLS) as

output per employee-hour, for industries under the Standard

Industrial Classification (SIC) system. That output is gauged by

quality-adjusted ton-miles and passenger-miles for rail and air

transportation; by quality-adjusted ton-miles for trucking and

pipelines; and by passenger-miles for buses.

“Quality-adjusted” refers to differences in service and

handling—for example, the difference between flying first

class and coach or the differences in the handling requirements of

fragile versus durable commodities. A “ton-mile” is the

movement of 1 ton the distance of 1 mile. Ton-miles are calculated by

multiplying the weight in

tons of each shipment transported by the miles hauled.

“Passenger-miles” are the number of passengers carried

in a vehicle or aircraft multiplied by the number of miles

traveled. BLS data on labor productivity are not presently

available for water transportation.


website, Office of Productivity and Technology,



BTS, National Transportation Statistics, 2002, p. 232.


Personal communication with the American Trucking Associations.

5 Association of

Oil Pipelines/AOPL, Pipeline Monthly, Vol. I, No. 7, Dec. 18, 2001.

6 “Railroads,” U.S. Industry and Trade

Outlook 2000, U.S. Department of Commerce,

and The McGraw-Hill Companies, Inc.

7 U.S. Department

of Energy, Transportation Energy Data Book, Edition 22, Oak Ridge

National Laboratory, September

2002, Table 2.15, p. 2-20.

Updated: Sunday, May 21, 2017