Only 27% of Amtrak trains are on-time — and it could be costing the railroad $42 million every year

Amtrak 's inspector general estimates that the railroad could save more than $40 million annually by increasing on-time performance.
Many of those rampant delays, however, are caused by the freight railroads responsible for most of Amtrak's service.
Still, Amtrak expects to be profitable by 2021, its CEO has said. There's plenty of work to be done.
Visit Business Insider's homepage for more stories .

Chronic Amtrak delays are hampering the railroad's efforts to break even by 2021, and are costing an estimated $41.9 million per year over the long term.

Even if Amtrak is able to increase timely trains by just five percentage points, the agency's inspector general estimated in a report published this week , the immediate impacts could see $8.2 million in reduced costs and $3.9 million in increased revenues.

"We identified a range of other financial benefits that could accrue if the company was able to improve OTP to a minimum level of 75 percent on long distance trains and sustain those improvements for at least a year," the report said, using the OTP acronym to describe on-time performance.

A bulk of those delays with which many Amtrak passengers are all too familiar happen because the trains rely on "host railroads" to operate when Amtrak doesn't own the trackage outright. Only 3% of Amtrak's 21,400 route-miles are owned by Amtrak itself.

"Although federal law requires host railroads to give passenger trains preference over freight trains," the inspector general wrote, "company executives have stated publicly that host railroads routinely disregard these laws, resulting in delays."

Those host railroads scored an average of a C grade for 2018, Amtrak reported earlier this year , meaning "many passengers are very late."

Business Insider reached out to the six host railroads that support Amtrak service. Canadian National, which scored second to last in Amtrak's latest report card, with a D-, blamed the delays on speed restrictions that are currently in place on certain routes CN operates for Amtrak.

"Once an effective solution has been validated and implemented, the speed restrictions should be lifted," a representative said. "There are still a number of steps to take in the testing process, but CN is dedicated to work as fast as possible with Amtrak on a solution that allows Amtrak's trains to run safely without a speed restriction."

On the road to profitability

The costs outlined by the inspector general are especially pertinent as Amtrak targets breaking even for the first time in its 48-year history by 2021.

It's "something people never thought could be done," CEO Richard Anderson said to a round of applause at an event in New York City in September.

But there's still plenty of work to do. In 2018, the railroad lost $817 million on total revenues of $3.39 billion. It's expected to report 2019 financials next month.

"The findings from these two important reports illustrate the real financial impacts of late trains," Dennis Newman, Amtrak's executive VP of strategy and planning, said. "Beyond that, they confirm late trains impact every aspect of our operations, from equipment usage and staffing, to trip-time competitiveness and reliability for our customers."

NOW WATCH: Here's what airlines legally owe you if you're bumped off a flight