Opinion

With Smart Regulations, Freight Rail Spurs the American Economy

New statistics show that rail intermodal – the transportation of shipping containers and truck trailers by freight railroads – continues a torrid streak, continually posting double-digit growth compared to last year’s numbers. This helps customers, who receive the flexible service that trucks provide, but at a competitive rate that only rail intermodal can offer, as well as American taxpayers and consumers, who enjoy less congested roads as railroads move goods on their privately owned and funded rail network.

It also underscores that freight railroads play an indispensable role in the nation’s economy, providing behind-the-scenes benefits to rail customers and everyday Americans alike. This is a responsibility the industry embraces, and one that is made possible through smart regulations and policies.

In short, smart public policy, much of which was enacted in the 1980 partial deregulation of the railroad industry, allows the  freight railroads to compete and grow. As a result, the industry invests at record levels – more than $600 billion in the network since 1980 and an estimated $26 billion in 2016 – which directly correlates with rail safety, performance and, increasingly, the use of innovative technologies such as drones.

We are committed to sustaining this trend and telling the compelling intersection of business and policy.

While many are aware of freight rail’s role in moving huge amounts of goods across the country’s enormous rail network – 140,000 miles, to be exact – some of the industry’s biggest impacts on our national economy are less obvious.

For example, some chemical products, such as fertilizer used on farms, rely heavily on railroads, which means the industry helps ensure farmers are able to grow the crops that feed our country and the world.

Railroads are also unique in their ability to move especially large products, like wind turbines or manufacturing equipment, long distances. This scale of operations also enables commodities such as grain to move more efficiently and at a lower cost than shipping smaller amounts of goods via other modes.

Additionally, freight rail serves as a vital connector for the American shipping sector, acting as a link between trucks and merchant ships to allow for the most efficient shipment of goods possible.

According to the Federal Highway Administration’s most recent Freight Analysis Framework, the nation’s entire shipping ecosystem moves more than 17 billion tons of freight per year. For a population of more than 314 million people, according to the U.S. Census Bureau, that is roughly 54 tons of freight moved per year for every American. Together with these other modes of transportation, freight railroads make this a reality.

More broadly, within the context of this integrated transportation network, railroads help make our contemporary life and economy possible.

Yet this requires a smart and balanced regulatory environment.  Not only do smart regulations help railroads, but they also have an impact on customers:  Adjusted for inflation, in 2014, rail rates in the United States had fallen 43 percent since 1981 – shortly after regulations were passed allowing a more customer-focused approach to railroading.  This means the average customer can ship nearly twice as much freight for about the same price it paid more than 30 years ago.

The industry’s sizeable spending and investments go toward upgrading infrastructure such as tracks, bridges and equipment such as locomotives, to ensure the system is operating as safely and efficiently as possible.

These private investments ease the burden on taxpayers, who are forced to foot most of the bill for infrastructure investments for trucks, barges and airlines.  Freight railroads, on the other hand, operate almost exclusively on infrastructure they own and pay for themselves.

These contributions make it easy to see that while the freight railroad industry has played an important part in our country’s success for more than 180 years, its role in the well-being of the American economy is more important now than ever before.

As railroaders from all over the country head to Capitol Hill for the annual “Rail Day,” we hope policymakers will continue to work with us to ensure railroads can drive economic growth for customers, consumers and the entire country well into the future.

 

Hamberger is the President and CEO of the Association of American Railroads

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