Moving a growing economy

A healthy freight rail industry is vital to the nation’s economic recovery – and with America’s changing economy now the new normal, a strong and robust freight rail network is needed to meet the country’s transforming business challenges head on.

Freight rail today is transporting record levels of nearly all commodities. From coal to petroleum products, crushed stone, gravel, and grains – railroads are moving more traffic than since before the last recession. Business production and consumer demand are increasing, and rail is playing a bigger part in getting American goods to market, both domestically and internationally.

The rail industry is an indicator of the health of the economy at large and rail traffic figures for this October provide a telling snapshot. Fifteen of the 20 commodity categories tracked by the Association of American Railroads showed year-over-year increases. At the same time, October 2014 was the best month in history for U.S. rail intermodal, the shipping containers and trailer traffic that can travel by truck, rail, or both.

This surge in rail traffic is likely to continue through the holiday season and into the New Year, if UPS is any indicator. The world’s largest delivery company and one of freight rail’s biggest customers, UPS recently announced that it will deliver more than 585 million packages in December. That’s up 11 percent from a year ago.

While the traffic is indicative of a growing economy, the nation’s 140,000-mile freight rail network has seen a change from comparatively light to heavy traffic in a short time. This rapid increase in demand for rail service, as well as a sizeable uptick in passenger and commuter rail traffic, was something that neither railroads nor their customers fully anticipated. And as a result, the industry is doing all it can to remedy the periodic service challenges making news.

Despite what some reports say about service setbacks, rail traffic delays are not caused by increased demand to move any one commodity or product. Rather, a surge in demand to transport a mix of more and more commodities and products came on the heels of an unusually severe winter and spring flooding in the Midwest that, many months later, continues to affect rail operations.

The industry’s plan for improving service and increasing rail volumes centers on massive railroad investment – in new track and equipment, freight cars, locomotives, and people. Railroads also are rethinking logistics and planning to help mitigate the service challenges.

America’s freight railroads are privately owned and for the last several years have invested record amounts of capital – $26 billion in 2014 alone and $550 billion since 1980 – to maintain and modernize the nationwide rail network. Further, freight railroads by the end of this year will have hired more than 45,000 since 2012, in part to help meet this increased demand.

The industry’s ability to transport the goods and commodities our economy needs – while continuing record private investments in infrastructure, equipment, and jobs – rests on the ability of railroads to generate capital. That capital, in turn, has created the world’s safest and most efficient rail network. At a time when transportation infrastructure funding challenges dominate the national conversation, it’s vitally important to keep intact policies that encourage continued private investments by the nation’s freight railroads.

The industry’s ability to transport the country’s products and commodities and support tens of thousands of jobs rests on rail companies continuing their record investment in new equipment and new hires – investments that have made the U.S. freight rail network the envy of the world.

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