Key Takeaways

  • Railroads haul the iron ore, steel scrap and coke that make steel, which goes into the creation of automobiles, appliances and construction projects.
  • In 2016, U.S. Class I railroads originated 440,000 carloads of steel products (1.6% of total carloads), carrying 38.4 million tons (2.6% of total tons) and earning gross revenue of 1.8 billion (2.6% of total revenue).

Today, railroads continue to haul the iron ore, steel scrap and coke that are used to make steel, which is used to manufacture products like automobiles and appliances.

Railroads also play a role in moving intermediate products such as steel slabs, concrete reinforcing bar and various kinds of pipe for use in construction projects.

Railroads are closely bound to the steel industry and many stages in steel production. In a wide-ranging assessment of the freight rail industry, Towson University’s Regional Economics Studies Institute noted <link to report> that rail transportation “is an essential component of the process, allowing for movement between various intermediate inputs to final products.” The researchers also found that in 2014 alone, freight rail’s movement of steel and steel-related products supported more than 24,500 railroad jobs supporting this commodity and generated nearly $23.4 billion in economic output.

“At each phase of processing, Class I railroads keep the flow of steel and steel‐related commodities moving,” the researchers noted.

Here’s a look at how railroads support the steel supply chain:

  • Transportation of raw inputs, including iron ore, fluxing stone or lime, bentonite, coke produced from coal, and iron and steel scrap to steel mills for initial sorting and processing.
  • Steel mills produce intermediate steel and steel-related commodities such as pig iron, steel wire, steel ingots, billets and slabs, construction shapes and steel sheets and plates.
  • Steel mill products are transported to foundries and rolling mills for further refinement, forming and shaping, producing steel castings or manufacturing materials.
  • The refined steel and steel-related commodities are moved to metal forming or stamping plants where final consumer and industrial goods such as motor vehicles, machinery and household appliances are manufactured.
  • Final goods, such as motor vehicles, machinery and household appliances are then transported to end users.