Amtrak OIG Critical of Private Car Practices

A report by Amtrak’s Office of Inspector General has found that the carrier has significant deficiencies in how it handles the financial accounting and policy making for its handling of private railroad passenger cars.

The IG report described it as a “longstanding management weaknesses in the company’s transport program for privately owned rail cars, including inadequate controls for cost and revenue management, a lack of standard operating procedures, and limited safety and parking guidelines.”

The report said additional steps are needed beyond those recently taken in order “to ensure the company can make sound business decisions about operating the program, covering its costs, and mitigating potential safety and liability risks.”

Between 2015 and 2017 Amtrak earned nearly $14 million for 1,144 private railcar movements and 315 long-term parking transactions,

However, Amtrak officials “did not know whether its billing and pricing model actually covered the costs of services provided to private rail car owners,” the IG report said.

Amtrak management told the IG it has not identified and accounted for costs associated with private rail car services because Amtrak has historically taken the position that it does not incur additional costs to move the cars on scheduled trains and that the program is relatively small compared to other activities the company must manage.

Amtrak officials also have provided at no cost some ancillary services as power, water and ice rather than deal with the administrative burden of tracking each time those services were provided.

The IG report also was critical of Amtrak for missing out on opportunities to generate additional revenue by not adjusting prices during periods of peak demand, such as during the annual New Orleans Jazz Festival or the Washington Cherry Blossom Festival.

Amtrak’s accounting practices have led to lost revenue because the carrier has not established standard operating procedures or guidelines to manage the handling of private cars.

The report said a review of 3 percent of transactions between 2015 and 2017 revealed that inconsistent billing practices—practices not previously established by operating procedures—led to a loss of $46,100 in revenue.

As the Office of Inspector General was undertaking its review, Amtrak “took steps to address these deficiencies, such as developing initial operating procedures for program staff, developing a safety manual to which private rail car owners must abide while in transit, establishing safety guidelines for private rail car owners parked in a Los Angeles rail yard, and establishing long-term parking permits requiring owners to adhere to company rules, regulations, and directives.”

However, the IG report concluded that these actions do not go far enough in addressing the weaknesses it found and recommended Amtrak better identify its program costs and factor them into decisions about the prices it charges private rail car owners for its services.

Another recommendation is that Amtrak “monitor the program’s financial and performance reporting, finalize and implement the program’s standard operating procedures, and implement guidelines and parking permits at all short- and long-term parking facilities.”

In an appendix, Amtrak said it agreed with all of the report’s recommendations.

Amtrak has hosted private railroad passenger cars since its 1971 inception, typically by carrying them on regularly scheduled trains.

The carrier has over the years charged various fees for such services as parking, switching, power, water and ice, septic pumping, and car washing.

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