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Full text of "The Jamaican railway -- a preliminary survey"

UNIVERSITY OF 

ILLINOIS LIBRARY 

ftf URBANA-CHAMPAIGN 

BOOKSTACKS 



Digitized by the Internet Archive 

in 2011 with funding from 

University of Illinois Urbana-Champaign 



http://www.archive.org/details/jamaicanrailwayp1152duej 






330 
B385 
No. 1152 



STX 



^V 



FACULTY WORKING 
PAPER NO. 1152 



RARY OF THE 



The Jamaica Railway — A Preliminary Survey 



John F. Due 



College of Commerce and Business Administration 
Bureau of Economic and Business Research 
University of Illinois, Urbana-Champaign 



BEBR 



FACULTY WORKING PAPER NO. 1152 
College of Commerce and Business Administration 
University of Illinois at Urbana-Champaign 
June, 1985 



The Jamaican Railway — A Preliminary Survey 



John Due, Professor 
Department of Economics 



Abstract 



This paper provides a survey of the experience of the Jamaica Railway 
Corporation, the last common carrier railway in the British Caribbean. One 
of the oldest railways in the Western Hemisphere, the portion between 
Kingston and Spanish Town has provided freight and passenger service for 
145 years. The system was built piece-meal, the main lines not completed 
until the late 1890s. The railroad has undergone a major transition over 
the last fifty years. Originally it was primarily a carrier of passengers, 
bananas for export, sugar cane and sugar, plus inbound general merchandise. 
The development of road transport caused a sharp drop in the banana and 
merchandise traffic, which was replaced by bauxite and alumina for ALCAN 
and ALCOA, as the bauxite industry developed in the 1950s. As of 1985 
the bauxite traffic remains the dominant source of revenue, despite decline 
in bauxite production. The passenger traffic, while below the peak years, 
has held up remarkably well; the traffic fluctuates primarily with the amount 
of service the railroad has equipment to provide. 

The railroad has consistently operated at a deficit. But it makes 
substantial contribution to the bauxite industry, and its passenger 
service is much cheaper and satisfactory than the mini-bus type otherwise 
available. Externalities in terms of road congestion and costs of road 
improvement and encouragement to economic development warrant continuation 
of and improvement to the railway. 



THE JAMAICA RAILWAY— A PRELIMINARY SURVEY* 

John F . Due 
Professor of Economics, University of Illinois, Urbana-Champaign 

The Jamaica Railway is the last common carrier railway in the British 
Commonwealth Caribbean, and provides an excellent example of a railway in 
a developing country that has undergone drastic transformation in its freight 
traffic over three decades. 

Development 

The railway was initially a product of several forces, the most 
important being the belief of local persons in the 1840s that a railway 
from Kingston would greatly facilitate the flow of produce into the city and 
of manure to the farm areas, thus increasing agricultural production. It 
was also believed that the railroad would lead to the building of sugar 
factories in the interior. Ironically, as history repeats itself, in the 1840s 
the Governor favored the project because of the traffic congestion on tha 
road between Kingston and Spanish Town. Specifically the Smith Brothers, 
one a local planter, the other a Manchester, England, merchant with land in 
Jamaica, were the principal promoters, The firm was incorporated in 1843, 
capital raised in England, construction began in 1844, and the line completed 
to Spanish Town, 14 miles, in 1845, not much over a decade after the first 
commercial railroad was built in Great Britain, and only a decade after the 
slaves were freed in the British West Indies. But the decline in sugar fortunes 
in the late 'forties made expansion of the line impossible, and for over 
20 years, all this time under Smith management, the line remained little 



*The author is greatly indebted to Mrs. Betty Ann Jones-Kerr of Peat 
Marwick and Mitchell, Kingston, and to Mr. Eric Shirley and Mr. Raymond 
Girard, former General Managers of the Jamaica Railway Corporation, for 
their assistance. 

1. This section is based on material in The Railway in Jamaica , A Short 
History, 1845-1970 , Kingston: 1970. 



-2- 

more than a passenger carrier "between the island's two major cities. In 
I869 the line was extended to Old Harbour, an additional 12 miles, but the 
financial position of the company deteriorated, and finally in 1879 the 
government purchased the railroad. 

Under government ownership and financial aid, the lines were extended 
to Porus and to Ewarton in the 1880s, primarily because of the growing banana 
and citrus production, to bring mileage to 64 by 1889. The government 
ultimately, however, decided to dispose of the company to an American syndicate, 
the West India Improvement Company, in the hope of seeing the lines extended 
by private capital, given the financial difficulties of the government. 

With the railroad in private hands and with access to foreign capital, 

the system was rapidly extended. The 66 mile extension from Porus to 

Montego Bay was opened in 1894, and the 64 mile line from Bog Walk, on the 

Ewarton line, to Port Antonio in 1896. But traffic grew much less than the 

promoters anticipated; the company defaulted on its bonds in 1898, and in 

1900, once more the railroad was back in government hands. From 1900 to 

1959 the railroad was operated as a government department. The early years 

were plagued by a devastating hurricane, and then by the great earthquake of 

1907. Increased banana production led to building of lines from May Pen to 
Frankfield in 1925. During World War II, a line was built to the U.S. 

military base at Fort Simonds. The rail lines are shown on Fig. 1. 
Road Competition and Bauxite 

The railroad was operating its maximum mileage in the nineteen thirties 

and early forties; the main line Kingston to Montego Bay, the newly completed 

branch to Frankfield, and the long line from Spanish Town to Port Antonio, 

with the branch from Bog Walk to Ewarton. Outbound bananas, primarily to 

Port Antonio, sugar and citrus were key elements in the traffic; imports 

and domestic products from the Kingston area moved inbound. The passenger 

traffic was substantial. 



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-3- 

As of the late twenties, "bananas were the major revenue source, yielding 
over 80 percent of freight revenues. While road competition began in the 
1920s, it was not serious in the prewar and war years, and the fruit, sugar 
cane, and sugar traffic remained important up into the fifties, as shown by 
Table 1. Banana traffic was seriously reduced for a time by decline in 
production, but this later recovered. 



Table 1 
Freight Traffic by Type, 1958-1960, Jamaica Railway 

000 tons 







1956 


1958 


I960 


Bananas 




68 


83 


92 


Sugar Cane 




152 


130 


9^ 


Citrus 




1? 


6 


3 


Sugar 




56 


12 


13 


General Merchandise 


246 


291 


64 


Alumina and Bauxite 


199 


381 


636 


Processing 


Materials 


ns 


ns 


3^7 


Livestock, 


Head 


6600 


4600 


3186 


Vehicles, number 


na 


1700 


1483 



ns: not shown separately. 

Source: U.K. Colonial Office, Annual Report on Jamaica , 
respective years. 

As shown in Table 2, however, by 1970 the banana traffic had 
disappeared, as had a substantial portion of the commercial freight 
traffic. Even before the decline in the traditional traffic, the road had 
experienced substantial losses, as shown in Table 6. Had it not 
been for the development of the bauxite traffic, the railway might well have 
gone the route of the railway in Barbados (abandoned in 193? ) and those in other 
commonwealth Caribbean islands. The first warning came in 1948, when 
the Ewarton line was cut back to Linstead for lack of traffic (only to be 
rebuilt in 1957 for the bauxite industry) • 



-4- 

The railroad was essentially saved "by the development of the "bauxite 
industry. Bauxite deposits had been known to exist in Jamaica in the latter part 

2 
of the last century, but development came only after 1952. Reynolds began 

to mine in the Ocho Rios area in 1952, but without access to the railway; 

bauxite exported from Ocho Rios was brought to the docks by a conveyor belt. 

In the same year, Alumina Jamaica Ltd., a portion of ALGAN , began to produce 

bauxite and convert it to alumina at Kirkvine, and a short branch of the 

railway was built from Williamsfield to Kirkvine, and from Bodies Jet. to 

Port Esquivel, on the south coast, for this traffic. Then in 1957, ALGAN 

build a second plant at Ewarton; the railway relaid the track from L instead 

to Ewarton, and bauxite and alumina began to move on the Ewarton line to Port 

Esquivel. Then in 196l, ALCOA developed mines at Woodside in the Breadnut 

valley in Clarendon, and built a railway from Woodside to Rocky Point, 

crossing the Jamaica Railway main line at Jacob's Hut. Jamaica Railway 

operates the line for ALCOA. In 1968 Revere built an alumina plant near 

Maggoty in St. Elizabeth, and used the rail line to and from the port at 

Rocky Point, shipments commencing in 1971. Revere closed operations in 

October 1975- Jamaica Railway is not involved in the Kaiser or Alpart 

operations; Kaiser built and operates its own railway from the mines in 

Water Valley to Port Rhoades on Discovery Bay, west of Ocho Rios. Alpart 

(Alumina Partners, jointly owned by Kaiser and Reynolds) mines and produces 

alumina at Alpart and ships over its own railrad to Port Kaiser on the 

South Coast. 

T. The bauxite industry is described in the article by Richard A. 
Thomas, "Jamaica: Government Partnerships and Recent Declines Shape 
Industry's Profile," g a gjnaering and Mining Journal . November 1979, pp. 98-101. 



-5- 

Creation of the Jamaica Railway Corporation 

In I960, following a policy common in other parts of the world, the 

Jamaica Railway Corporation Act was enacted, forming the Jamaica Railway 

Corporation, to take over the railway. The Act read, in part: 

(a) to manage and operate in accordance with this Law 
the Railway hereby transferred to the Corporation and any 
expansion or extension there of and any New Railway and to 
provide all reasonable facilities for carriage by the Corpora- 
tion of passengers and goods. 

Provided that the Corporation shall not be under an obli- 
gation to continue or introduce any particular service or facility 
which is uneconomic, or which appears to the Corporation unlikely 
to provide within a reasonable time adequate revenue to meet the 
cost to the Corporation 

Thus the organization was changed from a government department to a 
separate semi-autonomous but government-owned statutory corporation, with 
a distinct corporate structure; a government appointed chairman, a Board 
of Directors; and typical railway management structure. The railway has 
substantial financial and operational autonomy. This period also saw 
completion of dieselization, which began in the late 19^-Os. 

The fortunes of the railway since 1959 have fluctuated with the output 
of bauxite and alumina, and the adequacy of equipment to meet traffic 
potential. Freight traffic other than that of the bauxite industry continued 
to decline; comparison of the revenues from the various types of traffic for 
the 1968-70 period with those of the 1981-83 period, shown in Table 2, provide 
clear illustration. 



-6- 

Table 2 
Sources of Revenues, Jamaica Railway, 1968-70; 1981-83. Jamaica $s 

1968 1969 1970 1981 1982 1983 

Alumina and 

Bauxite* 1,388,200 1,583,607 1,778,613 12,100,000 10,270,000 12,440,000 

Bananas 10,750 6,533 377 

Commercial 

freight 132,148 134,809 139, 413 210,000 200,000 230,000 

Mail 6,800 6,864 7,184 

Passengers 499,042 563,808 561,698 1,680,000 1,740,000 1,280,000 

Total 2,120,004 2,395,692 2,575,209 13,990,000 12,210,000 13,950,000 

Source: Jamaica Statistical Yearbook , 1971, 1982: Jamaica Railway Corporation , 

Percentage Distribution of Revenue, Major Sources, 
Jamaica Railway, 1 968- 70, 1981 -83 



Alumina and 
Bauxite* 


65.5 


66.1 


69.I 


86.5 


84.1 


89.1 


Bananas 


.5 


.3 


neg 








Commercial 
freight 


6.2 


5.6 


5.4 


1.5 


1.6 


1.7 


Mail 


• 3 


• 3 


• 3 








Passengers 


23.5 


23.5 


21.8 


12.0 


14.3 


9.2 


Miscellaneous 


4.0 


4.2 


3.4 











Total 


100 


100 


100 


100 


100 


100 



* including inbound traffic for the industry. 

Thus nearly 90 percent of the revenue comes from the bauxite and alumina industr 
traffic; commercial freight is a very minor element, and the percentage of 
passenger revenue fell roughly in half between the two periods. The banana 
traffic was ending in the late sixties, before the sharp decline in commercial 
freight traffic occurred in the decade of the seventies. 

A Closer Look at the Passenger Traffic 

Table 3 provides information on passenger traffic and passenger revenue 
since 1950. Passenger miles are available for only a few years. 



-7- 







Table 3 










Passengers 


Traffic, 


Jamaica 


Railway, 1938; 


1950-1984 




Year 


Passengers 




Passenger Miles 


Passenger 




Carried 




millions 


revenue 




millions 








TT thousands 


1938 










25 




1950 










65 




1951 










77 




1952 










110 




1953 










124 




1954 


1053 








126 




1955 


1026 








139 




1956 


1088 








142 




1957 


1106 








145 




1958 


1254 








149 




1959 


1084 








131 




I960 


1045 








133 




1961 


816 








135 




1962 


801 








129 




1963 


974 








169 




1964 


1038 








204 




1965 


1156 








214 




1966 


1231 






35,705 


228; 


J$s 456 


1967 


1050 






30,436 




478 


1968 


1087 






31,510 




499 


1969 


1252 






36,300 




564 


1970 


1146 






44,724 




562 


1971 


1012 






39,474 




509 


1972 


1067 






41,606 




527 


1973 


1018 






39,506 




491 


1974 


1081 






42,167 




627 


1975 


1188 






86,400 




932 


1976 


1174 






101,200 




867 


1977 


2016 










1285 


1978 


2690 










2221 


1979 


na 










na 


1980 


na 










na 


1981 


990 










1680 


1982 


700 










1740 


1983 


573 










1280 


1984 


932 












Sources: U 


. K. Colonial 


. Office 


, Annual 


Report on Jamaica, various years; 


Jamaica 


Statistical 


Yearbook 


, various; Planning Ins 
Jamaica, 1983; Jamaica 


;titute of Js 
Railway, Net 


imaica, 


Economic 


and Social 


Survey , 


fsletter, 



December 1984. 



-8- 

The total volume of passenger traffic has remained remarkably stable 
over much of the period, close to 1 million in the entire period 1954-1976, 
and rose sharply in the mid seventies with greatly improved and additional 
service. Then it fell in the early eighties as the shortage of diesels made 
it necessary to cut service back sharply, and the line to Port Antonio was 
discontinued. Traffic rose again in 1984 close to the million mark as service 
was increased again despite elimination of service from Bog Walk to Buff Bay. 
The railroad has used diesel rail cars in several periods, first in the late 
forties to replace 45 year old passenger cars. Then in 1962, the .railway 
purchased 20 Metro Gammell rail cars, equipped with six cylinder Rolls 
Royce engines. But the equipment did not stand up well under the steep 
grades and sharp curves of the lines, and the cooling systems were inadequate. 
Thus the wear and tear on the engines and undercarriages was excessive, and 
parts proved difficult to obtain. Thus failures became common, and ultimately 
the engines were removed and the cars used as passenger coaches. The quality 
of the equipment was simply not adequate for the conditions. 

As of 1985, two trains are operated each way daily on the main line 
Kingston-Mont ego Bay. Two trains are operated each way on the Ewarton line, 
and one additional train from Porus and May Pen on the main line to Kingston. 
The latter are essentially commuter trains. As one illustration of traffic 
potential, since passenger service was restored on the Ewarton line, it has 
been carrying about 1500 passengers a day, including school children. In 
the fall of 1983 service was discontinued from Bog Walk to Buff Bay. 

Fares for many years were 3 J$ per mile (second class), a very low 
figure. Increases require cabinet approval, which has often been slow in 
forthcoming, because of the importance to the users of low fares. The basic 



-9- 

second class fare is (mid 1985) J0 10.6 (about two U.S. cents). The first 
class fare is double the second class fare. These fares are typically much 
lower than mini-bus fares; for example, in mid 1984, the rail second class 
fare from Kingston to Montego Bay was $9 ($12.50 as of mid 1985), compared 

A 4 

to a mini-bus fare of $17. 

Views differ on the profitability of the passenger service. The only 
clearly profitable passenger service consists of two special elements: 

1. The well-advertised "Governor's Coach" service, between Montego Bay 
and Appleton station, the trains operated by the railway but the tours managed 
by Jamaica Tours Ltd., a public corporation. 

2. Special trains, typically operated on weekends and holidays, for 
benevolent societies, social clubs, trade unions, etc. 

Passenger cars are relatively modern, most acquired in the last decade. 

The railway plans to improve and increase passenger service over the next 
several years, and believes that the volume can be restored to the 1978 level, 
which was twice that of the long period volume. 

There has been substantial complaint about the decline in service and 
closure of the service to Buff Bay; a feature article in the Daily Gleaner , 
July 1, 1984, was devoted to this question. Many letters have been written 
to the editor, and to the railway and the Ministry, complaining about the 
inadequacy and cost of the road transport, particularly in the area served 
by the line to Port Antonio. , 

The Volume of Freight Traffic 

It is not possible to provide a consistent picture of the freight traffic 
statistics over the 30 year period 1950-1984, because the base of the series 
in available form changes. However, some trends and comparisons can be noted, 
as shown in Table 4. The trend in tons carried was upward, with minor 
deviations from the trend, from 1950 to 1966, and the series for ton miles 



4. Kingston Daily Gleaner , July 1, 1984. 



-10- 



continued the same trend up to 197^, the all time high in total ton miles. 
This constituted about 60,000 net ton miles per mile of line, taking the 
system as a whole. For the lines on which most of the traffic moved, the figure 
was about 155,000 ton miles per mile of line. On the oasis of standards of 
other countries, this is great enough to allow many of the economies of 
scale. The 60,000 figure is relatively low, and thus suggests higher cost 
per ton mile— but is substantially more than many light traffic lines in 
the United States and Canada, and is not necessarily uneconomically low. 

From 1979 on, the total traffic has run Somewhat lower as bauxite produc- 
tion fell, except for a good year in 1977, and has become somewhat irregular. 
The 1983 figure, in tons, however, is about 25% greater than the 1965 figure. 
In general, therefore, the trends in total traffic are dominated almost entirely 
by trends in the bauxite industry, which has not been in good financial 
shape in the last decade. At times, strikes and accidents reduced the 
production below expected levels. The 1984 predictions of ALCOA and ALCAN 
were for increased production over the next five years. ALCOA, however, closed 
its Clarendon works on February 20, 1985- In April, plans to reopen were 
announced, ALCOA operating the plant, the government taking over the 
marketing. ALCOA owns a 9^-percent interest, the government, 6 percent. 
In addition to the outbound traffic in bauxite and alumina, the 

railway carries substantial inbound traffic for the bauxite industry, 

primarily oil, caustic soda, and lime. 

Other Potential Freight Traffic 

The extreme reliance of the railroad upon the bauxite industry places 
it in a vulnerable position if production falls significantly. Accordingly 
the railroad has been seeking to rebuild the general freight traffic that 
it had lost over the years. There are several possibilities, in general 

involving bulk commodities: 

J". Based on information supplied by the railway. 



-11- 



Table 4. Freight Traffic, Jamaica Railway, 1950-1984 



Year 



1950 
1951 
1952 
1953 
195^ 

1955 
1956 
1957 
1958 
1959 

I960 
1961 
1962 
1963 
1964 

1965 
1966 

196? 
1968 
1969 

1970 

1971 
1972 
1973 
1974 

1975 
1976 
1977 
1978 
1979 

1980 
1981 
1982 
1983 



Ton miles 



62,718 
68,129 
71,652 
80,889 

77,527 
83,629 

113,227 
95,135 

123,158 

99,166 

97,231 

11^,035 

76,322 



na 
na 
na 



Tons 
000s 

3^7 
352 
383 
537 
570 

624 

733 

764 

1078 

900 

1009 
1263 
1200 
1345 
1930 

2172 
2275 



2864 



Freight Revenue 
000s 

Ls 



401 

41? 
518 
484 
620 
539 

585 
686 

667 
703 
762 

818 
823 



J$ 1531 
1725 
1918 



11,830 



Source: U.K. Colonial Office, Annual Report on Jamaica , 1947-1961; 

Jamaica Statistical Yearbook , various years; Jamaica Railway Corporation. 



-12- 



Sugar cane . With the closing of the sugar mill at Grey's Inn, near 
Annoto Bay, there is potential for hauling substantial volumes of sugar cane 
from Grey's Inn to the factory at Bernard Lodge, 2 miles southeast of Spanish 
Town station, and from Innswood to Bernard Lodge. This in total could con- 
stitute 320,000 tons a year. 

Cement . The road has sought, so far without success, to obtain the 
contract to move cement from. Kingston to Montego Bay, a potential revenue of 
J $1.8 million per year. 

Bottled Drinks , from Kingston to Montego Bay and other depot points. 
Use of containers has been considered. 

Goal . The alumina plants have been considering replacing oil by coal 
for processing; this would result in a net increase in the total volume of 
traffic. 

Containers. There is considerable potential for moving containers from 
Kingston to Montego Bay and other points on the main line. The railroad 
is willing to quote lower rates than the present road rates. But it cannot 
handle containers without new equipment for container handling. 

There are other possibilities as well, including lumber from Portland 
to Spanish Town, if the Port Antonio line were rebuilt, and milk products 
from Bog Walk to Montpelier, near Montego Bay (traffic the railroad retained 
until 1981 when inadequate service caused the shipper to shift to road 
transport) . Movement of aggregate and sand to Montego Bay is another 
possibility. 

It is difficult to assess the likelihood of gaining this type of traffic. 
Despite the usual road transport advantages on short hauls , the special 
circumstances in Jamaica render use of rail a possibility. The high cost of 
petroleum products, the importance of conserving foreign exchange, the very 
congested condition of many roads, suggest the potential advantages of the 



-13- 

railway in handling "bulk traffic. But such traffic can be obtained and retaine 
only with high quality service, which the railroad is now seeking to provide. 
The only planned extension of track consists of lines to reach dock areas 
in Kingston and Montego Bay to facilitate handling of general freight traffic. 
Financing is not yet available for these. 

The Railroad as of Early 1985 

As of early 1985 » the railroad operates two lines and a short branch of 
its own: 

Kingston-Montego Bay, 113 miles 

Spanish Town-Ewarton, 15 miles 

Port Esquivel branch, 3 miles 

In addition, it operates the 20 mile line owned by ALCOA. Classified in 
a different way,' the road is operating two relatively distinct parts: 

The Bauxite Triangle, Williamsfield, on the main line, to Port Esquivel, 
and Ewarton to Port Esquivel via Spanish Town. This is the heavy density 
portion of the system, which generates most of the freight revenue. In 
addition the triangle includes the line owned by ALCOA in Clarendon from the m: 
Breadnut Valley to the alumina plant in Hulse Hall and the shipping point at 
Rocky Point. 

The remainder of the main line, Kingston to Spanish Town and Williamsfield 
to Montego Bay, operated for passenger and general freight service. 

The line from Bog Walk to Buff Bay, ^3 miles, is intact but not operated, 
and the portion from Buff Bay to Port Antonio, 15 miles, has been out of servic 
for five years because of a two mile washout from the 1980 hurricane. The 
23 mile line from May Pen to Frankfield was abandoned in 1975 • Most of the 
track is in place, but the ties and ballast have disintegrated. 

The line is standard guage. The maximum grade is 3-3%» Porus to Williamsf 
The maximum elevation is reached at Greenvale on the main line, 1705 fee~. 



-14- 

There are 90 miles of level line and 112 on grade (for the whole system, 
including the Port Antonio line) and very substantial curvature. There are 

232 "bridges and the phenominal number of 4l tunnels; 13 on the main line, 
28 on the Port Antonio line. 

Equipment . As of 1985. the line has 16 MLW diesels, not all in service 
because of parts shortages, and 6 Alsthom-Atlantique French built engines, 
delivered in 1984, with an additional six on order. Dieselization began in 
1946, but lack of funds and gre-atrr traffic required partial use of steam 
locomotives well into the 1970s. The original diesels were 750 hp. English Elec- 
trics. With the delivery of the last six French locomotives, the road will 
have 28, with 20 available at all times for operations. 

The company has a limited number of freight cars, since the cars for the 
bauxite and alumina service are provided by the shippers (covered hoppers 
for alumina, open hoppers for bauxite). The line has (1984) 30 usable box 
cars, with 65 that could be made serviceable if necessary, 8 tanker wagons 
for oil, and 6 flat cars. Attempts have been made in recent years to upgrade 
maintenance of equipment. 

Track . The track design has recently been reviewed with the assistance 
of consultants from France. The rail is primarily 80 pound; this weight will 
be retained, though some heavier rail may be used in the future. The track 
will tolerate weights of 17 tons per axle. The first several miles out of 
Kingston to Gregory Park (which does not have heavy freight traffic) will 
use welded rail on wooden sleepers. From Gregory Park to Porus on the main 
line and to Ewarton, continuous welded rail with concrete sleepers will be 
used, and wood sleepers from Porus to Williamsfield. The portion from 
Williamsfield to Montego Bay will be improved, particularly adzing tie 
replacement, and reestablishment of cant on the rails. The line has the 



-15- 

necessary equipment for this work. Rail removed from the bauxite lines will 
be used on this portion. Much of the reballasting and tie renewal has been 
done on the bauxite lines. 

Employees , Data on the number of employees are not complete for the three 
decades, but those for available years give a good indication of trends, shown 
in Table 5. 

Table 5 
Number of Employees, Jamaica Railways, Selected Years 



Year 


Number of 


Year 


Number of 




Employees 




Employees 


1966 


1505 


1973 


1448 


196? 


1500 


1974 


1450 


1968 


1489 


1975 


1420 


1969 


1454 


1976 


1242 


1970 


1476 


1977 


1369 


1971 


1500 


1978 


1277 


1972 


1504 


— 








1984 


1100 


Jamaica 


Statistical Yearbook, 


various years; 


Jamaica Railwa; 



The number stayed between 1400 and 1500 for a long period of time, and 
then declined with the elimination of service to Frankfield, Port Antonio, 
and Bog Walk- -Buff Bay. The number of employees relative to traffic is high 
compared to railroads of comparable size in the United States, but it is not 
necessarily uneconomic, given wage levels, and is desirable from the stand- 
point of the unemployment problem in Jamaica. 

Rates . The rates for ALCOA and ALCAN traffic, which are negotiated, 
are considered satisfactory by the railway. The general freight rates have 
been retained at low levels. Some idea of the railway's views about potential 
rate levels are indicated by 1984 proposals on bulk freight, a suggested rate 
per ton mile of J 40 cents (8 US cents at present exchange rates) on sugar cane, 

35 cents on bananas, 30 cents on fertilizer, 25 cents on cement, and 35 cents 
on oil. 



-16- 



The Financial Picture 



Complete series are not available on the railway earnings picture, but 

in most years of the last three decades, losses have been incurred. Sample 

years are shown in Table 6. 

Table 6 
Earnings of Jamaica Railways, 1946-1984 



Year 


Gross Revenue 


Total Expenses 


Net Profit 


LO! 


3s as Percent 








including 


or Loss 


of 


Gross Revenue 








Depreciation 










Ji 




JL 


JL 






1946 


428 




653 


-225 




.53 


1947 


345 




581 


-236 




.68 


1948 


338 




629 


-291 




.86 


1949 


337 




620 


-283 




.84 


1950 


336 




702 


-366 




1.09 


1951 


357 




734 


-377 




1.06 


1952 


463 




845 


-382 




.83 


1953 


560 




694 


-134 




.24 


1954 


919 




950 


- 31 




.03 


1955 


723 




1119 


-396 




.55 


1956 


773 




1142 


-369 




.48 


1957 


851 




1134 


-283 




.33 


1958 


778 




1179 


-401 




.52 


1959 


781 




1181 


-400 




.51 


1960 


784 




1098 


-314 




.40 


1961 


963 

J$s 




1153 
J$s 


-190 
J$s 




.20 


1968 


2120 




2951 


-831 




.39 


1969 


2395 




3135 


-740 




.31 


1970 


2575 




3309 


-734 




.29 


1981 


14,000 




20,600 


-6,600 




.47 


1982 


12,200 




21,300 


-9,100 




.75 


1983 


14,000 




20,700 


-6,700 




.48 


1984 


2i;300 




27,400 


-6,100 




.29 


Sources : 


Colonial 


Office, 


Annual Report on 


Jamaica, 1946-1961, 


Jamaica 


Statistical Yeart 


>ook, 195 


>5-1982; Planning 


Institute of Jamaica, 




Social 


Survey of 


Jamaica, 


1983. 









-17- 

The losses as a percentage of revenues are substantial, but no more so 
in recent years than in the late 1960s and much less than in the late 
'forties and 'fifties. The losses reflect failure of the revenues from the 
bauxite traffic and of the passenger service (over and above passenger train 
operating costs) to cover the cost of maintenance of all track and overhead 
expenses of the system. The bauxite industry traffic is profitable as is 
some passenger service, but together they do not cover all remaining costs. 
Projections by the railway in 1984 indicate hope that the deficit can be 
eliminated by 198 7. 

The losses have been made up in part by outright government subsidy, 
but in large measure by borrowing from the government- -though not always 
called this. The accumulated loss is about J$ 35 million. 

The General Picture 

For several years following the peak year of 1978, the fortunes of the 
railway declined. Passenger traffic fell as service was reduced and became 
less reliable, and general freight declined further. Since 1983 
major improvements have been made in track and through acquisition of new 
equipment, and traffic has risen. But the railway is heavily dependent upon 
the bauxite industry. 

Out of the preliminary review in this paper come several major tentative 

conclusions: 

First, the railway is vital to the bauxite industry. Despite recent 
problems of the industry, there is prospect for increased bauxite traffic. 
Retention of the railway and improvements are imperative for the industry. 

Secondly, the passenger service serves important functions to the persons 
using it, in providing low cost transport and in lessening congestion on the 



-18- 

overcrowded roads. The railway has been highly successful in retaining 
passenger traffic when it is able to supply adequate service. 

Thirdly, the railway offers potential for shifting some of the bulk 
traffic off of the roads, lessening the congestion and the hazards to 
automobiles. 

In general, the railway plays an important role in the transport field, 
and in conserving foreign exchange through lessening total demand for 
imported fuel. The railway is a valuable asset to Jamaica, one that is under- 
utilized while roads are overutilized. 

On the basis of these conclusions, several recommendations are offered: 

1. The railway should most certainly be maintained, including the 
entire line to Montego Bay. 

2. Serious consideration should be given to restoring service from Bor 
Walk to Buff Bay, and ultimately to restoring the washed out portion of the 
line to allow resumption of service to Port Antonio. 

3. Not only should the railway seek to develop general freight traffic, 
but the government should encourage the government corporations to shift to 
the railway for bulk traffic when the rates ar§ reasonable. 

4. The government should take measures to ensure that foreign exchange 
is available for spare parts, and for additional equipment as needed. 

The basic difficulty in the way of an effective railway program is the 

deficit the railroad encounters. There is great merit in seeking to reduce 

this through increased traffic and through further economies in operation, 

but not through significant increases in charges to the bauxite industry or 
to passengers, because it is desirable to preserve as much traffic for the 

railway as is economic, to hold down cost per ton mile, lessen deficits, and 

maximize externality benefits. The government is of course under pressure, 



-19- 

internally, and by the World Bank and the IMF, to reduce expenditures 
and the deficits of public corporations. But this should not be done at the 
expense of services that, if eliminated, would result in increased foreign 
exchange drain, increased road congestion and demands for widening the 
roads--a very difficult and expensive task in much of Jamaica, and ultimately 
higher overall government spending. This was recognized in the 1978-1982 
Economic Plan, as shown by the statement: "the energy crisis has necessitated 
a more detailed examination of its (the railroad's) potential contribution 
to the transport system." (p. II; 96). The worldwide energy crisis may be 
less acute in 1985 than it was a few years ago — -but this may be temporary — and 
Jamaica's foreign exchange problem is no less severe. 

When the railway operates justifiable services that are unprofitable, the go 
ment should provide a direct grant, to lessen the reported deficit. The railway 
indicated its own goals to include rebuilding of confidence in the railroad, 
including general freight and passenger traffic, eliminating the operating 
deficit, and improving employee relations. It is recommended that the govern- 
ment facilitate attainment of these goals. At the same time the government 
should for the time being recognize the deficit, and advance funds to cover 
it each ^ear so long as it exists, rather than lending- -which simply builds 
up the railway's debt to the government. The government should recognize 
that the deficit is warranted by the contributions the system makes to the 
economy and the foreign exchange situation. 

The experience in Jamaica has significance for other developing 
countries as well. One is the contribution that a railway can make for 
passenger travel, providing more satisfactory and cheaper service than the 
typical minibus service in developing countries, and, of great importance, 



-20- 
in lessening congestion on the roads and demand for road improvements, a 
very expensive undertaking in countries such as Jamaica. But the railroad 
also, despite its short hauls, demonstrates the importance of rail transport 
for bulk traffic, and as a means of lessening congestion on the roads for 
bulk .freight. Acceptance of deficit on a railway may in the end be far 
cheaper, in terms of government spending and foreign exchange, than abandon- 
ment. A deficit is not evidence of inefficiency or lack of economic 
justification . 

In evaluating the economic justification of continuation of a railway 
line, a line is justifiable if the costs for which the line is responsible, 
including a return on salvage value and on new investment in the line and 
equipment as it is made, are covered by the sum of: 

1. Revenues from the line. 

2. The additional revenue that could be obtained if: 

a. fares were raised to optimal profit levels, but 
are held below these figures for equity reasons. 

b. freight revenues were raised to optimal profit levels, 
but are not for reasons of economic development and 
encouragement of exports. 

3. The externality gains from lessening of road congestion, 
in the form of savings in time and frustration, and fewer 
accidents, and lessened expenditures on road maintenance 
and construction. 

k. The gains to the economy from additional employment generated. 

5. The foreign exchange savings, from lessened importation of 
petroleum and motor vehicles and parts, adjusted for the 
foreign exchange required for the railway. 

It has not been possible in this preliminary survey to quantify these elements, 

but they are obviously of substantial magnitude. 



=1/5/85 



^CKMAN 

31NDERY INC. 

JUN95 

. N MANCHESTER,! 
nd-To-lW , N oiANA 46962_J