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 Economic Impact Report

Freight Rail's Economic Impact

​Freight railroads have played a transformational role in the development of America — revolutionizing transportation and catalyzing the country's economic development for almost two centuries. Today, America's freight railroads serve nearly every industrial, wholesale, retail and resource-based sector of the economy, operating over a network of nearly 140,000 miles. Together with their counterparts in Cana​​da and Mexico, North America's freight railroads form the world's most efficient, cost effective and reliable freight rail system in the world.  

U.S. freight railroads are overwhelmingly privately owned and operate almost exclusively on tracks the railroads build and maintain themselves. From 1980 to 2016, railroads spent more than $630 billion of their own funds on locomotives, freight cars, tracks, bridges, tunnels and other infrastructure and equipment to keep the economy moving. In 2015, America's freight railroads spent more than $30 billion to sustain and enhance their nationwide network.​ ​​​​

THE TOWSON UNIVERSITY REPORT


For the first time ever, major freight railroads' economic impact on America's economy has been quantified — and it's huge. According to a new study from Towson University's Regional Economic Studies Institute (RESI), freight railroads' private infrastructure and high wages generated nearly $274 billion in economic activity across the country in 2014 alone.​  ​​​

The study is the first of its kind. It directly measures the effect of investments by major U.S. railroads on the overall economy, including their impact on employment and tax revenues, and provides a lens into railroads' positive influence on local economies. Examining what they called freight rail's "wide footprint on the economy," the RESI researchers analyzed the impact of the nation's seven major Class I railroads with U.S. operations.​


Key Findings


In 2014, Class I railroads spent nearly $28 billion in capital and maintenance expenditures, an amount equal to more than half of all federal government spending on transit formula grants, federal highway construction programs and airport improvement programs. Freight railroad generated nearly $274 billion in economic activity — or 1.6% of total U.S. economic output. Additionally, they supported nearly 1.5 million jobs across the country; generated nearly $33 billion in total federal, state and local tax revenues, which helped build schools, pave roads and pay for teachers, police and firefighters; and  created almost $89 billion in total wages.

     


ADDITIONAL BENEFITS OF FREIGHT RAIL​ROADS 

  • Delivering Global Competitiveness: Railroads haul approximately one-third of all U.S. exports, allowing American industry to be more competitive in the worldwide economy.

  • Providing Affordable Freight Transport: Adjusted for inflation, average U.S. rail rates fell 43% from 1981 through 2014. That means the average rail customer today can ship nearly twice as much freight for about the same price it paid more than 30 years ago.

  • Increasing Fuel Efficiency: On average, railroads are four times ​more fuel-efficient than trucks. 

  • Reducing Pollution: Moving freight by rail instead of trucks reduces greenhouse gas emissions an average of 75%.  

  • Lessening Highway Congestion: A train can carry the freight of several hundred trucks — reducing highway gridlock, the cost of maintaining existing highways and the pressure to build expensive​ new highways.

 RAIL INVESTMENT

Rail Investment

Privately Investing in America's Rail Infrastructure

Private infrastructure investment sets freight rail apart from most other industries. From 1980 through 2016, freight railroads reinvested more than $630 billion to ensure that the U.S. continues to have a best-in-the-world freight rail system. In the last five years alone, privately owned freight railroads spent more than $26 billion annually to purchase new equipment and improve rail lines and facilities. From upgrading signal control systems and replacing aging bridges to expanding the capacity of intermodal yards and launching new train control systems, freight railroads pay for these initiatives with little to no taxpayer funds - unlike trucks, barges, and airlines.

These private investments are increasingly important as the U.S. Federal Highway Administration estimates that total U.S. freight shipments will increase 45 percent by 2040. Freight railroads are meeting this growing demand by investing billions of dollars each year in private capital to increase rail network capacity and improve the safety of rail transportation.

Privately Owned - The vast majority of U.S. freight railroads are privately owned and operated, and the vast majority of funds needed to maintain, upgrade, and operate the freight rail network comes from the railroads themselves, not taxpayers.

Record Investments - In recent years, railroads have been reinvesting record amounts on tracks, signaling systems, locomotives, freight cars and more. Including more than $25 billion in both 2012 and 2013. 

Capital Intensive - Railroads reinvest at six times the rate of the average manufacturer, building the rails that moves America's economy.

Growing Freight Demand - According to government estimates, 56 tons of freight are moved per person in America each year. Over the next 30 years that amount is expected to increase more than 33 percent.

Policymakers can help ensure that America has adequate rail capacity in the years ahead by retaining the current balanced regulatory structure that allows railroads to earn what they need to keep their network in top condition, while protecting shippers and consumers.

We Invest So America Moves

How Railroads Spend Their Money

 

 

 

 Managing The Network

​Managing The ​Network

The nation's railroads are moving more goods now than since before the Great Recession. As business production and consumer demand continue to increase, rail is playing a central role in getting a huge range of American products to market, both domestically and internationally, as well as delivering imports from around the world.

Essential elements of our economy, including consumer goods, grain, energy products, chemicals, and automotive parts, are among the resurgent industries that rely on flexible, efficient, and responsive freight rail transportation. To meet the increased demand, freight railroads apply thoughtful management and continuously make strategic investments in the nation's 140,000-mile rail network.

Private Investments Support Capacity and Service

In 2015, privately owned freight railroads spent $30 billion to purchase new equipment and improve rail lines and facilities.​ That is more than ever before and comes on top of record spending the past few years. These investments support the efficiency of the network and include things such as new hires and new equipment. Railroads have also added hundreds of locomotives to their fleets this year alone to help ensure they have the power to meet customer demand.

Working with Customers to Forecast Demand

Proper management of the rail network means continuously working with customers to understand how the demand for their products affects the supply of trains, crews, and equipment. Forecasting transportation demand is very difficult, relying extensively on the input from customers, economists, and past experience. If demand exceeds forecasts, or if there is an unforeseen need for a particular type of rail car, this can have a temporary impact on service, especially given recent levels of freight traffic.

Railroads continuously work with customers and develop strategies to improve transportation demand, forecasting, efficiencies and investments that provide the needed capacity across the world's best freight rail network. Examples include: 

  • ​Strategic Planning: From redesigning yard and terminal processing plans to rethinking locomotive assignment and deployment, freight railroads are always looking to improve internal processes and planning to keep the network flowing more smoothly.

  • Information Technology: Developing and deploying new and improved information ​technology can improve network functions, from scheduling maintenance to "real time" movement planning.

  • People and Equipment: Railroads know that moving more goods requires more railroad assets:  trained employees, higher capacity freight equipment, maintenance machinery, and much more.  

  • Infrastructure: Over the longer term, new capacity can be added through main line and terminal upgrades, new signal and control infrastructure, new maintenance facilities and other network replacements, upgrades and additions.

 Types of Railroads

Types of RailroadS

The U.S. freight rail network is widely considered one of the most dynamic freight systems in the world, consisting of 140,000 rail miles operated by more than 560 railroads. Every day, railroads deliver an average of 5 million tons of goods to ports, distribution centers, businesses and more. While the nation’s 560 railroads typically own their own tracks and locomotives, they share a fleet of approximately 1.5 million rail cars. Moving goods along the freight rail network involves transferring cars from one railroad to another, a process called interchange, along the network’s 140,000 miles of track. An estimated one-third of all carloads travel over more than one railroads’ lines.

Several kinds of railroads share the network

Class I railroads have annual revenue exceeding $453 million and account for 69% of the industry’s mileage, 90% of its employees, and 94% of its freight revenue. They operate in 44 states and the District of Columbia and concentrate largely on long-haul, high-density intercity traffic. There are seven Class I railroads: 


Short line and regional railroads account for 31% of U.S. freight rail mileage and 10% of employees. They range in size from small operators handling a few carloads a month to multi-state operators close to Class I size. The more than 560 short line and regional railroads operate in every U.S. state except Hawaii and often feed traffic to Class I railroads and receive traffic from Class I railroads for final delivery. 

Switching and terminal railroads usually perform pick-up and delivery services within a port or industrial area, or move traffic between other railroads. 

Passenger railroads in the U.S. typically operate over tracks owned by freight railroads. Approximately 70% of the miles travelled by Amtrak trains are on tracks owned by freight railroads. In addition, hundreds of millions of commuter trips each year occur on commuter rail systems that operate, at least partially, over track or right-of-way owned by freight railroads.