Page ContentThough the Great Recession of 2008-2009 ravaged U.S. automakers, the auto industry has since been transformed and has staged a remarkable comeback story. The results are visible in new and expanded factories as well as in the number of vehicles sold. In 2015, Americans purchased approximately 17.5 million new cars and light trucks—a record high. This impressive figure is welcome news for consumers, auto manufacturers and the eight million American workers who depend on auto-related jobs. Yet such rapid growth presents its own challenges—not least among them, maintaining a smooth and efficient supply chain. “With tremendous growth has come a lot of demand, particularly for finished automobiles moving on the railroads,” said Jon Haselwood, assistant vice president of automotive at CSX Transportation (CSX). Major railroads across the country have responded by making significant investments in their networks and refining their operations to better serve the auto industry. Since freight railroads move approximately 75 percent of all new cars and light trucks sold in the United States, these efforts are starting to pay off in a big way. In 2010, U.S. Class I freight railroads delivered 955,000 carloads of finished automobiles; in 2015, they delivered 1.45 million carloads—a 52 percent increase. And since about three percent of U.S. gross domestic product is derived from the auto industry, freight rail’s responsiveness is also yielding big dividends for the U.S. economy as a whole. Beyond Motor City Over the past two decades, the geography of the North American auto industry has changed dramatically. Far from the days when Detroit’s ‘Big Three’ dominated the auto scene, auto manufacturing in the United States now includes both foreign and domestic brands, as well as automobile assembly plants in 14 states and Mexico. Given the expansive nature of today’s auto industry, rail is an essential cog in the automotive wheel. “Efficiency-wise, in terms of long-haul movements, you can’t beat what railroads bring to the table,” said David Schwietert, executive vice president of federal and government relations and public policy at the Alliance of Automobile Manufacturers. “The rail network is the backbone of the entire automotive supply chain,” added Mark Boucher, general manager of vehicle logistics at Volkswagen Group of America. “Railroads can move big volumes, long distances, both safely and cost effectively, while our trucking partners help deliver our shorter hauls quickly and economically. However, for most routes for a single manufacturing plant serving an entire continent, it would be difficult, if not impossible, to be successful without utilization of rail.” Delivering on a Promise EfficientlyNot content to simply connect this far-reaching North American network, railroads are constantly investing and innovating to maximize efficiency for all of their customers, including American automakers.Case in point: Railroads have expanded their fleet of autoracks, which are multilevel rail cars designed to carry finished vehicles. “In the last four years, the industry as a whole purchased 10,000 autoracks,” said Dave Fleenor, assistant vice president of automotive at BNSF Railway (BNSF). “That’s a $2 billion investment since 2011.”Those purchases include thousands of convertible, multi-level autoracks. Unlike traditional autoracks, convertible autoracks can accommodate trucks, SUVs and sedans, and can be used to transport vehicles even if consumer purchasing patterns change. In 2015, railroads successfully handled a 13 percent increase in demand for trucks and SUVs, thanks largely to convertible autoracks."Railroads are staying ahead of automotive demand by ramping up orders of equipment,” said David Sellers, assistant vice president of automotive at TTX, a leading railroad-owned provider of rail cars, including autoracks. “In 2016, railroads will add over 3,000 TTX-managed autoracks to their rail car inventory. We anticipate this trend will continue as automotive manufacturers expand capacity."Additionally, railroads have continued to invest heavily in rail network improvements that are designed to meet the needs of their auto customers. For example, to better serve new auto facilities in the southeastern United States and Mexico, railroads have invested millions of dollars in rail facilities specifically designed to handle automobiles. Tunnel expansion projects initially done to accommodate intermodal traffic also accommodate larger autoracks, increasing the number of autos that can be shipped on a single train.Railroads have also improved network fluidity by reducing the amount of time rail cars sit idle, improving scheduling, boosting the number of crews devoted to auto-related trains and running dedicated trains of automobiles when possible.These improvements collectively are yielding big results.“Compared to a few years ago, the rail industry as a whole has made significant progress in its service performance,” said BNSF’s Fleenor. “We expect to continue to see improvements in our service to automotive customers and will remain focused on ensuring all vehicles reach their destination on time and damage free.” Fostering Global GrowthIn 2015, two million new cars and trucks built in the United States were shipped to other countries, including China, Saudi Arabia and South Korea. In order to meet this demand, railroads worked closely with automotive customers. “It really is the wish of the customers: Do they want to be near the port or do they want to be inland?” said CSX’s Haselwood. “Either way, we work closely with our customers and port authorities to support their exporting needs.”Such customer service is emblematic of freight rail’s relationship with automakers and its other customers in industries spanning the economy. Despite weather and equipment availability challenges in the wake of the recession, today the railroad-automotive industry relationship has improved, said the Auto Alliance’s Schwietert. Railroads remain, he said, an irreplaceable part of the automotive supply chain. “Nothing beats the capacity and sheer scale of what a unit train can carry,” Schwietert said.In the coming years, the business between the auto industry and freight railroads will continue to grow. Many analysts predict 2016 will be another record year for U.S. new car sales. Thanks to billions of dollars in spending on their infrastructure and equipment and improved processes to aid on-time performance, America’s railroads will help that projection become a reality.