Mileage allowance is the least understood line in railcar economics. It decides whether owning a car beats leasing one, it is quietly built into every full-service lease rate, and it can turn into a bill instead of a credit if your tank cars run empty too much. This guide explains what the allowance is, who qualifies, what the current tables pay, how the miles are counted, who keeps the money under a lease, and the two traps that catch first-time car owners.
Working the numbers? The lease vs. buy calculator now takes annual loaded miles and an allowance rate so the credit shows up in the ownership math. For current lease rate ranges see the railcar lease rates tracker.
What a railcar mileage allowance is
When a railroad hauls freight in its own car, the cost of the car is inside the freight rate. When it hauls freight in a private car, one with a reporting mark ending in X, the railroad did not have to supply the equipment, so it compensates the car's owner with a mileage allowance: a payment in cents per loaded mile the car travels on that railroad's line.
The rules and the rate tables live in one industry tariff, RIC 6007-O, Mileage Allowances and Rules Governing Handling and Payment of Cars of Private Ownership, published by Railinc as agent for the participating railroads. The current edition took effect November 1, 2021, with the rate tables last revised September 2021. It has two halves: Section 1 covers tank cars, Section 2 covers every other car type. The PDF is free on Railinc's national tariffs page.
Who qualifies
- The car must carry a private reporting mark, assigned by the AAR to the owner or lessee, painted or stenciled on the car. Cards, placards or boards do not count.
- The car must be registered in Umler with its mechanical designation and, for the value-based tables, its original cost. Tank cars also need to be in the Official Railway Equipment Register with capacities.
- The owner of record gets paid. Allowance is reported and paid monthly to the single company the marks are assigned to, for cars on hand at month end. If the car is leased, the lease decides where the money goes from there.
- Some cars are excluded. Marks in certain series are assigned a zero rate. Railroad-controlled pool boxcars marked ABOX, GONX and RBOX are excluded from Section 2. CSX does not participate in the Section 2 (non-tank) allowance at all. Cars moving under the empty-handling provisions of Item 190 (tank) or Item 615 (other cars) earn nothing on those moves.
- Loading authority. Where a railroad requires it, the car needs an OT-5 (now OT-57) authority on file before it will accept the private car for loading.
What the allowance pays in 2026
Both tables key off two things: the car's original cost or fair market value as registered in Umler, and its service year. Service year one is the year built; the rate steps down sharply once a car passes 30 service years. All figures are cents per loaded mile.
Tank cars (Section 1, Item 195)
| Original cost or fair market value | Service years 1 to 30 | Service years 31 and over |
|---|---|---|
| Up to $1,000 | 39.4¢ | 39.1¢ |
| $20,001 to $21,000 | 50.8¢ | 39.8¢ |
| $50,001 to $51,000 | 68.0¢ | 40.9¢ |
| $80,001 to $81,000 | 85.2¢ | 41.9¢ |
| $120,001 to $121,000 | 99.7¢ | 40.0¢ |
| $158,001 to $159,000 | 107.7¢ | 37.1¢ |
The table runs in $1,000 steps, so a car anywhere between those rows lands between those rates. Notice the shape: a brand-new $150,000 tank car earns about $1.05 a loaded mile, and the same car in its 31st year earns about 38 cents. That cliff is why a tank car's 30th birthday matters to its lessor.
All other cars (Section 2, Item 620)
| Original cost or fair market value | Service years 1 to 30 | Over 30 years |
|---|---|---|
| Up to $1,000 | 10.1¢ | 9.7¢ |
| $10,001 to $11,000 | 18.5¢ | 10.5¢ |
| $25,001 to $26,000 | 31.1¢ | 11.6¢ |
| $40,001 to $41,000 | 43.6¢ | 12.8¢ |
| $50,001 to $51,000 | 52.0¢ | 13.6¢ |
| $53,001 and over | 54.6¢ | 13.8¢ |
The non-tank table tops out at $53,001, so a $140,000 covered hopper and a $60,000 gondola earn the same 54.6 cents. Two carrier exceptions matter: Union Pacific pays on actual loaded miles rather than short-route miles, and CSX does not participate in this section.
These are the published tariff rates from RIC 6007-O as of its 2021 revision, quoted for planning. Whether an allowance is actually paid on a given move depends on the applicable freight rate, which is the second trap below.
How the miles are counted
- Loaded miles only. The allowance is paid per loaded mile. The empty return earns nothing, and on tank cars it can cost you (see equalization below).
- Actual route distance, from the station where the car was loaded or received from a connecting line to the station where it was unloaded or handed off, using each railroad's filed mileage tables, without deducting miles through switching districts.
- No allowance inside a switching district. If a car is loaded and unloaded within the same switching district, no mileage is paid. Miles between an industry track and the freight station at origin or destination are not counted.
- Monthly settlement. Paid to the owner of record for the month earned. A railroad can deduct mileage paid in error for 24 months; an owner has 24 months to claim mileage that was omitted or paid at the wrong rate. Deductions of $25 or less are time-barred after about ten weeks.
Who keeps it under a lease
The tariff pays the company the marks are assigned to. On a leased car that is normally the lessor, so the lease governs what happens next:
- Full-service lease. The lessor almost always keeps the mileage. It is already priced into the monthly rate, which is one reason full-service rates on tank cars look high relative to the car's cost. If your cars run long loaded lanes, a lessor collecting a dollar a mile is earning a second rent on them.
- Net lease. The allowance is often credited to the lessee, either passed through directly or as a rate reduction. Read the mileage clause before you sign, and ask for the credit if it is not there.
- Owned cars. You collect it. In the ownership math it offsets depreciation, financing and maintenance, and on a high-mileage tank car it can cover most of them.
When we benchmark a renewal at the Railcar Lease Renewal Desk, the mileage clause is one of the first three things we read.
Two traps: empty-mileage equalization and mileage-free rates
1. Empty-mileage equalization on tank cars (Item 187)
Tank car owners are expected to keep empty miles close to loaded miles. If, across all cars under one owner's marks, the empty miles in a calendar year exceed the loaded miles by more than 6 percent, the owner pays the railroads 95 cents per excess empty mile, with no minimum. Repositioning a fleet across the country to chase a lane, or routing empties back a different way than they came, is how owners end up writing a check instead of cashing one. Moves to shops for mandated retrofits and FRA emergency orders are excluded from the count.
2. Mileage-free rates
Many railroad rates for private cars are published as private-car rates that pay no mileage: the discount for supplying your own car is built into the freight rate instead. On those lanes the tables above do not apply. Before you count on an allowance, confirm whether the tariff or contract rate you are moving under provides for one. A rate that looks cheaper by the car may simply be the mileage handed back in a different form.
A worked example
Twenty tank cars, valued at $120,000 each, each running 20,000 loaded miles a year on a lane whose rate pays mileage.
- Allowance: 99.7 cents × 20,000 miles = $19,940 per car per year, about $1,660 a month.
- Fleet: 20 cars × $19,940 = $398,800 a year.
- Under a full-service lease at roughly $1,000 a month, the lessor collects the lease and the allowance: about $32,000 per car per year in total for a car worth $120,000.
- Owned outright, the allowance alone covers depreciation and a large share of maintenance and requalification in year one.
Run it in the same lane with 25 percent more empty miles than loaded and the equalization charge on the excess above 6 percent takes about $3,600 per car back. Run it on a mileage-free rate and the allowance is zero, and the comparison collapses to lease rate versus ownership cost, which is what the calculator shows when you leave the allowance at zero.
Frequently Asked Questions
Do private railcars earn mileage?
Yes, when the car carries a private reporting mark, is registered in Umler, and the freight rate it moves under provides for a mileage allowance. The allowance is paid per loaded mile under RIC 6007-O, at a rate set by the car's registered value and service year.
How much is the railcar mileage allowance?
In the current RIC 6007-O tables, tank cars earn from about 39 cents per loaded mile for the cheapest cars to about $1.08 for cars valued near $159,000, while cars in service years 31 and over earn about 37 to 42 cents. Other car types earn from about 10 cents to a maximum of 54.6 cents per loaded mile for cars valued above $53,000, and about 10 to 14 cents once they pass 30 years.
Who gets the mileage allowance on a leased railcar?
The railroad pays the company the reporting marks are assigned to, usually the lessor. Under a full-service lease the lessor typically keeps it, priced into the rate. Under a net lease it is often credited to the lessee. The lease's mileage clause decides.
Is mileage paid on empty moves?
No. The allowance applies to loaded miles only. On tank cars, if an owner's empty miles exceed loaded miles by more than 6 percent in a year, the owner pays 95 cents per excess empty mile under the equalization rule.
What is a mileage-free rate?
A freight rate for private cars that pays no mileage allowance because the discount for the shipper supplying the car is built into the rate itself. Many current railroad rates are structured this way, so always check the rate before counting on an allowance.