After the nation’s first railroad was chartered in 1827, the freight rail industry quickly became the preferred heavy hauler.
From grain to coal to steel — freight rail moved the goods needed to power America’s Industrial Revolution. However, by the 1970s, heavy-handed regulation had pushed the industry toward collapse, making it ill-prepared to meet the challenges of a burgeoning global economy.
Things began to turn around, however, beginning in 1980. Aided by bipartisan Congressional reforms that triggered the beginning of unprecedented private investment, freight rail pulled off a remarkable comeback: reinventing itself from a domestic heavy hauler to an enabler of global commerce, charting the course for another century of success.
Packing Smart Unleashes Freight Efficiency
Ask virtually anyone involved in transporting freight — from a rail yard worker to your neighborhood UPS driver — and they’ll tell you that smart packaging creates efficiency. In the mid-20th century, however, freight packaging wasn’t very smart. Freight came in all shapes and sizes (barrels, pallets and boxes) with each piece needing to be individually loaded and unloaded anytime it moved from truck to train to barge. This method known as “breakbulk” was exceedingly time-consuming and expensive. As a result, shippers sought to minimize the number of times freight had to be handled and rarely moved freight between transportation modes, which limited their shipping options.
As the economy expanded globally and more consumer goods moved through ports, solving the costly inefficiency of breakbulk cargo became critical. Through a series of innovations, intermodal transportation — the movement of freight between trucks, trains and barges — took off. At the forefront of this change was the invention of the intermodal container. For the first time, a wide variety of freight could be loaded into standardized containers and easily transferred between multiple modes of transport, reducing both shipping time and cost. This simple breakthrough helped launch the global economy we know today.
Intermodal Investments Pay Dividends to the Economy
Freight railroads quickly embraced the potential of intermodal. Enabled by regulatory reform in 1980, the industry began to pour billions of dollars into building world-class intermodal rail service. Between 1980 and 2016, freight railroads spent more than $660 billion on the nation’s rail network.
Freight rail’s massive, long-term investments have paid off: The U.S. boasts the most cost-effective and efficient intermodal rail network in the world. Railroads have high-tech intermodal facilities across the country that improve the speed and efficiency of cargo transfers and reduce shipping times. Today, 42% of rail carloads and intermodal units are directly associated with international trade.
Ongoing investment is more important than ever as intermodal continues growing. Today, railroads handle millions of containers and trailers each year. October 2017 was the strongest month for intermodal in freight rail history, and freight demand is only expected to increase in the coming years.
Driving Freight Rail’s Legacy Into the Future
As Congress and the administration work to appoint and confirm new members to the U.S. Surface Transportation Board (STB) — freight rail’s economic regulator — it is time to build on, not reverse, this legacy. While some shippers want the STB to exert broader control over crucial areas of rail operations, including routing and pricing, this would be destructive to the broader economy. Government price controls that favor certain rail customers would undermine freight rail’s efforts to ensure adequate capacity to meet current and future freight transportation needs.
As overall freight demand is expected to grow 37% by 2040, it is just as important for Congress to map a sustainable path forward for the nation’s Highway Trust Fund — one that levels the playing field for all modes of freight transport. Lawmakers should embrace the simple premise that users of infrastructure should pay their full share for using that infrastructure — just like private freight rail does today.
By ensuring stable and balanced regulations, Congress and the administration can keep railroads delivering for the economy in the years, and centuries, to come.