What If new regulations descend on the industry?
Today’s balanced regulatory environment ensures that freight railroads can serve the American economy and that rail customers are protected. However, some shippers want to return to a regulatory environment that puts their narrow interests over the health of a functioning rail network.
If new regulations are enacted, the progress of the last 30 years would begin to recede. As railroad history demonstrates, the effectiveness of the freight rail network could begin to decline and the nation could expect something like this.
Jump to an Outcome
- Industry Becomes Risk-Averse
- U.S. Competitiveness is Undermined
- 320 Million Americans Pay the Price
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INDUSTRY BECOMES RISK-AVERSE
New regulations could immediately limit the ability of railroads to generate adequate revenue. Unable to price their services based on the marketplace, the amount of capital railroads would have available to reinvest is severely limited. In turn, individual railroads may be forced to cut investments in their networks and adjust long-term plans for growth.
FEWER BUSINESS OPPORTUNITIES MATERIALIZE
Under the burden of new regulations, railroads would be driven to reduce costs, and investments designed to grow the system could be greatly curtailed. By not having the ability to expand to serve new or growing markets, railroads could have a difficult time simply maintaining existing levels of revenue, which would limit the growth of new U.S. industries.
INFRASTRUCTURE FALLS INTO DISREPAIR
The expense involved with operating a railroad does not change simply because regulations are changed. If earnings are reduced, a railroad might decide to delay network maintenance. This, in turn, may necessitate rerouting traffic or enacting speed limits in sections of track that are no longer in top condition. Ultimately, delivery times for goods could be impacted, making rail a less desirable choice for shippers.
New regulations could make the once-robust 140,000-mile network contract, leaving many shippers without access to affordable freight transportation.
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U.S. COMPETITIVENESS IS UNDERMINED
The impact of regulation ripples well beyond the railroads. From higher prices for consumers to difficulty reaching the markets businesses need, the U.S. economy suffers the consequences.
Watch the video to see how railroads are delivering America’s economy today.
INNOVATION SUFFERS
Investments in new technologies that improve efficiency and safety and lower prices could be cut dramatically. After a generation of improvements, the demand for the next generation of locomotives and rail cars that would increase productivity, and lower emissions could severely drop off. Additionally, new innovations in safety technology may take many more years to develop and integrate into the network, and some may never be realized.
In short, the cutting-edge freight rail industry would regress and lose its place as the global leader.
RURAL, SHORT LINE SERVICE ENDANGERED
Short line railroads, which remain a vital link between small-town America and the global economy, feel the impact of regulations almost immediately. Because they often operate within very small margins, the short lines’ long-term prospects are threatened.
In regions where short line service ends, small-town economies can no longer fully engage in global commerce. Though trucks will still service these towns, the limited choices and higher costs cast a pall over business.
Finally, without the cost-effective option of short line rail service, many businesses that might have reached scale and new markets by utilizing freight rail will never exist.
RELIABILITY IS UNDERMINED
Railroads that compete in a “just in time” market may be forced to reduce existing levels of service.
Farmers would likely be among the first to feel the pain. Even as grain silos fill, many railroads could have difficulty maintaining service on rail lines that are only used during harvest season. Gas prices would likely creep up if regulations constrain the industry’s ability to move U.S. crude oil to market efficiently, which could threaten the once-celebrated U.S. energy revolution.
Individual railroads would need to reassess their long-term plans and might scale back investments in the expansion of intermodal, and shippers could lose the efficiency and savings of the intermodal revolution.
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320 MILLION AMERICANS PAY THE PRICE
From higher taxes to more traffic, the impact of the reregulated freight rail industry will span far and wide.
GOODS ARE MORE EXPENSIVE, CHOICES SUFFER
There’s simply no way around it — higher transportation costs for shippers translate to higher prices for consumers. From the cost of flour to Wisconsin cheddar cheese, Americans see an uptick in grocery and retail costs. Some manufacturers simply are unable to bring goods to market, thus reducing consumer choices.
MORE CONGESTION
On the highways, commuters navigate a heavier volume of 18-wheel trucks that are needed to compensate for the inability of the freight rail industry to meet shipping demands. More traffic on the roads means more roadwork is needed, seemingly causing detours and rush hours at all times of the day. More vehicle traffic also causes more smog and poorer air quality, since on average, shipping freight by rail instead of truck reduces greenhouse gas emissions by 75 percent.
TAXES RISE
The costs to maintain America’s highway infrastructure escalate with the additional truck traffic and taxpayers must foot the bill.
And, if the freight rail system continues the descent brought on by new regulations, the worst-case scenario would likely require the nationalization of the freight rail system and a staggering increase in cost to taxpayers would surely follow.
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