Association of American Railroads

Association of American Railroads

Association of American Railroads

Freight Railroads: A 24/7 Link in the U.S. Supply Chain

Freight railroads are working with customers and other transportation modes to find solutions to the current supply chain disruptions, including increasing fluidity in Chicago, expanding network capacity, ensuring appropriate staffing levels and collaborating closely with trucking partners.

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First-rate Economic Power Requires First-rate Freight Transportation

No country or region can be a first-rate economic powerhouse without first-rate freight transportation capabilities — and the U.S. is home to a world-class freight rail network that is second to none. Nonetheless, global freight supply chains are complex systems driven by various international and domestic actors’ decisions, actions and capacity. These participants include steamship lines; truckers; railroads; ports; drayage providers; owners of truck chassis, shipping containers and warehouses; manufacturers; wholesalers and retailers of goods. All stakeholders must do their part to maintain a consistent flow of freight at every step of the process to avoid bottlenecks and ensure that freight is delivered safely, efficiently and when expected.

Freight Railroads are Managing Disruptions While Preparing for Tomorrow

Thanks to consistent private investments in infrastructure and equipment, technology and operational enhancements, railroads are confident they have the people, equipment, and capacity to serve their customers’ needs and help the nation’s economy recover from the pandemic and current supply chain disruptions. Railroads have and will continue to keep trains moving across the nation to provide a critical, reliable lifeline to manufacturers, retailers and other rail customers today and to ensure they can meet an anticipated 30% increase in future freight demand. Case in point: during the first half of 2021, railroads handled the highest volume of intermodal traffic ever moved in a January-June period. Some weeks in late 2020 and the first half of 2021, U.S. railroads were handling more than 300,000 containers and trailers per week, levels that no one expected when the pandemic began.

Railroads are diligently working to help their customers address the current supply chain problems and are taking whatever reasonable steps they can — and even extraordinary ones — to find creative ways to modify their terminal operations and maximize efficiency. Here are some examples:

Increasing Fluidity in Chicago

  • Railroads are improving coordination across railroads in busy rail hubs to manage traffic flow better and anticipate potential problems ahead of time. In particular, railroads are managing the flow of intermodal containers into Chicago — the busiest hub in the nation. For the first nine months of 2021, when the industry saw the record levels of intermodal traffic noted above, railroads were completely fluid in Chicago for all but eight days when winter storms struck the city.
  • Railroads are also increasing storage capacity to offload intermodal containers to address their largest supply chain challenge and keep other trains moving fluidly across the nation. One railroad took two 8,000-foot track segments out of service and laid down specialized mats over the tracks to provide space to hold the ground containers coming into the Chicago terminal, which created significant additional staging space while the railroad worked to clear congestion. This voluntary action came at a high financial and operational cost and the loss of a considerable amount of productive rail capacity.
  • Some railroads have coordinated in the Chicago region to directly interchange containers and trailers between two railroads instead of requiring short, cross-town truck movements known as drayage. This operational adjustment has alleviated pressure on the trucking community in the region.

Expanding Network Capacity

  • Some railroads have reopened dormant terminals to minimize the congestion in other terminals and are re-routing traffic from one terminal to another.
  • Some railroads offer financial incentives to customers to encourage weekend in-gating at certain facilities, while others offer incentives to those who can take a container out when they bring a container in to expedite freight flows. Collectively, all users of supply chains benefit when there is accountability across all users for effective management of resources.

Ensuring Appropriate Staffing

  • Railroads are recalling rail workers who were furloughed during the pandemic.
  • Railroads are also hiring new train operating employees in key markets to handle increased and unpredictable shipping demand as well as providing bonuses to workers who provide new hire referrals.
  • Response teams are on hand to quickly and safely restore services impacted by weather, and maintenance teams are prepared to swiftly bring idled locomotives back online, if needed.

Closely Collaborating with Trucks

  • Railroads are working with trucking partners to move shipments from intermodal terminals as quickly as destination warehousing capacity becomes available.
  • One railroad keeps a pool of truck chassis (the base frames of trucks) in their yards to help maximize truck hauling capacity. Another railroad will mount intermodal containers on any chassis brought to it to help reduce truckers driving without any cargo.

Adapting to Changing Traffic Patterns

A report from the Northwestern University Transportation Center predicts that “post-pandemic, freight rail can lead the logistics industry and its customers forward in what is certain to be a volatile future.” Freight rail responded with speed and reliability as intermodal freight traffic exceeded its 2018 and 2019 levels in late 2020. As consumers continue pivoting to e-commerce in the years to come, railroads stand ready to continue being as responsive as they possibly can to the needs of our customers regardless of the nature of a particular crisis.

Continuing to Respond to the COVID-19 Pandemic

Freight railroads are part of the integrated supply chain network that ships around 61 tons of goods per American annually. During the height of the pandemic, railroads moved intermodal containers filled with consumer goods and e-commerce purchases, plastics for food packaging and personal protective equipment (PPE), grains, lumber and everything in-between. Today, railroads continue to move the goods and raw materials that will help with economic recovery.

Freight Railroads Check President Biden's Supply Chain Criteria

After the White House’s recent supply chain roundtable, President Biden outlined criteria he considers necessary for a successful supply chain.

  • 24/7 Operations: In a typical year, U.S. freight railroads move around 1.7 billion tons across nearly 140,000-miles of track running across the country.
  • Well-paid Workforce: Class I freight rail employees earn 64% more than the average U.S. employee.
  • Environmentally Responsible: Railroads are the most fuel-efficient way to move freight over land, moving one ton of freight more than 480 miles per gallon of fuel, on average.
  • Top-rated Infrastructure: Thanks in part to billions of dollars in annual private investments, the ASCE awarded rail the highest grade in its last two infrastructure report cards.

The Cause of Global Supply Chain Disruptions

A complex web of issues impacts every phase of the supply network — from sourcing to manufacturing to last-mile delivery. For railroads, by far the single most problematic supply chain development in recent months has been the inability of many rail customers to effectively process the flow of traffic — especially intermodal containers — into and out of rail terminals. This backup has created severe problems that have reverberated throughout the supply chain. While major railroads operate 24/7, not all other participants in the supply chain do. Additional challenges include:

  • Lingering Trade & Pandemic Impacts: Effects from trade disputes and continued pandemic-related labor shortages at ports, warehouses, manufacturers, retailers, and elsewhere, negatively impacting the ability to “turn” containers and leading to a global shortage of containers and back-ups at import-receiving warehouses.
  • Trucking Shortages: There is a continuing shortage of truck drivers, drayage and long-haul truck capacity, and chassis in North America.
  • Import Surge: Container and container ship availability concerns are driving many firms to purchase large quantities of goods that may not be needed for months, which further clogs supply chains.
  • Extreme Weather: It can take weeks or even months to recover from weather events such as the wildfires in British Columbia and the western United States, the hurricanes in the U.S. Gulf Coast and the eastern United States; severe flooding in various areas; and an unusually harsh winter storm in Texas.
  • Suez Canal Blockage: A nearly week-long blockage of the Suez Canal in March 2021 prevented hundreds of ships from navigating the canal, creating delays and congestion that required several months to clear.

Now is Not the Time for Rail Regulations

While there is never a good time to implement ill-advised regulations, doing so when supply chains are already facing severe challenges would be especially unwise. There are many examples of federal regulators either implementing or considering rail regulations that would cause unintended consequences or harm the efficiency and quality of rail service. Supply chain impacts must be top-of-mind, and Congress and the administration should proceed cautiously when considering new requirements or regulations on the industry.

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