Is it cheaper for a business to move freight by truck or rail? Long-haul shipments of at least 800 kilometers...

GMAT Multi Source Reasoning : (MSR) Questions

Source: Official Guide

Multi Source Reasoning

Case Study

HARD

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Business Consultant

Rail Advocate

Is it cheaper for a business to move freight by truck or rail? Long-haul shipments of at least 800 kilometers that weigh between 22,500 and 36,000 kilograms are economical to move by either mode. However, special cargo like coal and heavier shipments are only economical to ship by rail, and short-haul shipments are only economical to ship by truck.

The average cost to transport freight by truck varies, ranging from €0.1021 per ton- kilometer (where 1 ton = 1,000 kilograms) for shipments less than 400 kilometers, to €0.0371 per ton-kilometer for shipments more than 800 kilometers. The aggregated average cost for all rail shipments is approximately €0.0108 per ton-kilometer and is €0.0129 per ton-kilometer for intermodal shipments—those involving both trains and trucks. Intermodal shipments use trucking-trailers carried on flatbed railcars, allowing cargo to move between trucks and trains without having to be loaded into different containers.

Ques. 1/3

For each of the following questions about the freight railroad companies mentioned in the tabs, select Can be determined if it can be answered solely on the basis of the information provided. Otherwise, select Cannot be determined.

Can be determined

Cannot be determined

What percentage of their revenue did freight railroad companies spend to maintain tracks and machinery from 1980 to 2009?

Can be determined

Cannot be determined

On average, do freight railroad companies buy more fuel per year than freight trucking companies do?

Can be determined

Cannot be determined

Approximately how much revenue did freight railroad companies take in from 1980 to 2009?

Solution

OWNING THE DATASET

Understanding Source A: Business Consultant's Cost Analysis

Information from Dataset	Analysis
"Long-haul shipments of at least 800 kilometers that weigh between 22,500 and 36,000 kilograms are economical to move by either mode"	Both truck and rail work well for medium-weight shipments over long distances Inference: There's a specific "sweet spot" where businesses have genuine choice between transportation modes
"special cargo like coal and heavier shipments are only economical to ship by rail"	Very heavy cargo can only be cost-effectively moved by rail Inference: Rail has exclusive economic advantage for bulk commodities
"short-haul shipments are only economical to ship by truck"	Trucks are the only viable option for short distances Inference: Distance threshold appears to be below 800 kilometers
"$€0.1021$ per ton-kilometer...for shipments less than 400 kilometers, to $€0.0371$ per ton-kilometer for shipments more than 800 kilometers"	Truck costs drop significantly as distance increases Inference: Long-haul trucking (800+ km) costs about $36\%$ of short-haul (<400 km) per ton-kilometer
"aggregated average cost for all rail shipments is approximately $€0.0108$ per ton-kilometer"	Rail costs average much lower than trucking Inference: Rail average represents about $29\%$ of long-haul truck costs
"$€0.0129$ per ton-kilometer for intermodal shipments"	Combined truck-rail shipping costs slightly more than rail-only Inference: The convenience of not reloading cargo adds about $19\%$ to rail costs

Summary: The business consultant shows that rail is generally cheaper per ton-kilometer than trucking, but each mode has exclusive advantages—trucks for short distances under 800km and rail for very heavy cargo.

Understanding Source B: Rail Advocate's Policy Position

Information from Dataset	Analysis
"Trucks operate on publicly financed highways. However, freight railroad companies pay nearly all costs related to their tracks, bridges, and tunnels"	Trucking companies use free public roads while rail companies pay for their own infrastructure Inference: This creates fundamental funding asymmetry between transportation modes Linkage to Source A: This infrastructure disparity explains why rail achieves such low costs ($€0.0108$/ton-km) despite bearing all infrastructure expenses
"From 1980 to 2009, railroads reinvested approximately $$325$ billion...approximately $30$ percent of their total revenue"	Rail companies spent massive amounts on infrastructure over 29 years Inference: Nearly one-third of all rail revenue goes to infrastructure, showing heavy capital burden
"we propose tax incentives for any project that expands freight rail capacity"	Direct policy recommendation to address funding imbalance Inference: Focus on capacity expansion rather than maintenance suggests growth orientation Linkage to Source A: These incentives would help rail compete better in the 800km+ market where both modes are currently viable
"shifting $10$ percent of the long-distance freight that currently moves only by truck to rail instead would save $4$ billion liters of fuel per year"	Modest shift would yield substantial fuel savings Inference: Targets only long-distance truck freight for modal shift Linkage to Source A: The "long-distance" focus aligns with Source A's 800km+ threshold where rail becomes competitive
"using railroads helps reduce roadway congestion"	Rail provides additional public benefit beyond fuel savings Inference: Positions rail as solution to highway capacity issues

Summary: The rail advocate argues for tax incentives to level the infrastructure funding disparity between rail and trucking, emphasizing that shifting long-distance freight to rail would save fuel and reduce congestion—benefits that align with the cost advantages shown by the business consultant.

Overall Summary

The business consultant's data shows rail costs about one-third of trucking costs for long-distance freight (800km+), while the rail advocate explains this advantage exists despite rail companies paying for their own infrastructure while truckers use public highways
Both sources agree that rail excels at long-distance freight while trucks dominate short-haul, with neither advocating complete modal replacement
The rail advocate's proposal to shift $10\%$ of long-distance truck freight to rail through tax incentives is supported by the consultant's cost data showing rail's competitive advantage at 800km+ distances

Question Analysis

For each of the three statements about freight railroad companies, determine if the answer can be found solely based on the provided information sources.

Key Constraints:

Answer only based on the given information sources
Each statement requires a binary determination: can be answered or cannot be answered
There are exactly three statements to evaluate

Answer Type Needed: Binary fact verification (Can be determined / Cannot be determined)

Connecting to Our Analysis

The provided analysis includes data from Source B specifying that freight railroads spent about 30% of their revenue on maintenance AND improvement from 1980 to 2009, totaling approximately $325 billion. Fuel purchase volumes are not provided in any source. Total revenue can be calculated from these values.

Can Answer from Analysis: Partially - depends on careful interpretation of what the data actually represents

Extracting Relevant Findings

Evaluate each statement against the information in the sources to decide if each can be determined. Statements regard percentage of revenue spent on maintenance only, fuel purchases comparison, and total revenue of freight railroads from 1980 to 2009.

Hypothesis: Source B provides data for maintenance AND improvement spending combined, but fuel purchase amounts are not available.

Individual Statement Evaluations

Statement 1 Evaluation

Focus: Percentage of revenue spent on maintenance only
Available Data: Source B states approximately 30% was spent on "maintain AND improve" infrastructure
Analysis: Cannot separate maintenance costs from improvement costs based on given information
Result: Cannot be determined from the given information

Statement 2 Evaluation

Focus: Whether railroads buy more fuel per year than trucking companies
Available Data: Sources discuss fuel efficiency but not fuel purchase volumes
Analysis: Information missing for direct comparison of fuel purchase amounts
Result: Cannot be determined due to insufficient data

Statement 3 Evaluation

Focus: Total railroad revenue from 1980 to 2009
Available Data: $325 billion spent as 30% of total revenue
Analysis: Total revenue can be calculated as approximately $1,083 billion using the relationship between spending amount and percentage
Result: Can be determined through calculation from given data

Systematic Checking

Verify each evaluation point carefully against source content and analysis:

Statement 1: Source B provides 30% figure for maintenance AND improvement spending combined, not maintenance alone - insufficient data to answer the specific question
Statement 2: No provided data for total fuel purchases; only fuel efficiency is discussed - missing data
Statement 3: Total revenue calculated from maintenance+improvement spending amount and percentage - calculable

Final Answer

Statement 1: Cannot be determined
Statement 2: Cannot be determined
Statement 3: Can be determined

Answer Choices Explained

Can be determined

Cannot be determined

What percentage of their revenue did freight railroad companies spend to maintain tracks and machinery from 1980 to 2009?

Can be determined

Cannot be determined

On average, do freight railroad companies buy more fuel per year than freight trucking companies do?

Can be determined

Cannot be determined

Approximately how much revenue did freight railroad companies take in from 1980 to 2009?

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