Re: San Juan Extension and profitability

I have another way of measuring these services. I would measure them by the labor hours required to produce a ton-mile. The problem with all these mountain and branch railroads, is they are slow, and have a lot of out of route distance. As you follow economic development in the 20th century, wages rise, and they are only able to rise because productivity per labor hour rises.

The problem with the San Juan, is that productivity per labor hour was flat for a hundred years. The standard gauge mainline railroads dramatically increased their labor hour productivity in the same time period, with longer, heavier trains, mechanization, and dieselization. Meanwhile, rubber tire on road technology allowed much better labor productivity for smaller shipments.

Among many problems, the laws of physics can not change for curvy, narrow gauge railroads. There is a fundamental speed limit for sharp curves. This is why in Switzerland, very modern, electrified railways still struggle to compete with trucks and personal autos.

So with the San Juan, you have a transport service where wage rates are rising every year, and the labor productivity is flat, and the allowed tariffs are below market rates. From the 1968 examiners report, deficits only declined marginally with cuts to maintenance, even while actual tonnage declined significantly. This is clearly the result of poor labor productivity and rising wages.