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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

freight Rail's Private Investments


The U.S. freight rail network moves the raw goods and finished products that fuel the American economy, from the electricity powering businesses to the consumer goods filling shopping carts. This critical, efficient and cost-effective network is the best in the world thanks to railroads’ billions of dollars in annual investments. The U.S. Department of Transportation expects freight rail traffic to grow 40% over the next 30 years, which means the improvements made today are even more important for world-class service, tomorrow.

QUICK FACTS

  1. Privately Owned: The vast majority of America's freight railroads own, build, maintain, operate and pay for their infrastructure without government assistance.
  2. Capital Intensive: Railroads invest more than 40 cents out of every revenue dollar back into the rail network, more than any other industry and six times higher than the average U.S. manufacturer.
  3. Record Investments: Railroads have invested record amounts in the last five years, spending more than $635 billion between 1981 and 2016, and planning to spend $22 billion in 2017 (approximately $60 million a day).
  4. Policy-Enabled: Smart public policy allows railroads to make enough money to maintain and modernize the 140,000-mile rail network.


The Impact of Freight Rail’s Investments


Growing the Economy

The net economic effect of freight rail’s investments is profound; every $1 railroads spend generates $10 in other spending in the economy. In 2014 alone, U.S. freight railroads helped spur nearly $274 billion of economic activity and supported nearly 1.5 million jobs across the country. Railroads also generated almost $33 billion in total federal, state and local tax revenues, which helped build schools, pave roads and pay for teachers, police and firefighters as well as created almost $89 billion in total wages.

Keeping American Industries Globally Competitive

From automakers to homebuilders, manufacturers and utilities, nearly every American industry relies on rail to get their goods to market in the U.S. and beyond.

Freight rail’s record investments drive network efficiency and productivity, allowing railroads to offer 45% lower rates, on average, than in 1981. In fact, most rail shippers move nearly twice as much freight for the same price paid 30 years ago, helping American businesses stay competitive in the global economy. This essential network also enables railroads to haul one-third of all U.S. exports. In 2014, freight railroads moved 329 million tons of exports, 171 million tons of imports and 11 million tons of international transit freight.

Improving Rail Safety

Thanks to freight rail’s investments in innovative technology, operations and infrastructure, recent years have been the safest in rail history. From 2000 to 2016, the train accident rate was the lowest ever and down 42%, the employee injury rate was down 46% and the grade crossing collision rate was down 39%.

Helping the Environment

Investments in greener technologies, improved freight car designs and more efficient locomotives help reduce energy consumption, pollution and greenhouse gas emissions. Railroads can move a ton of freight an average of 468 miles per gallon of diesel fuel and they are four times more fuel efficient than trucks. That means that moving freight by rail instead of trucks reduces greenhouse gas emissions an average of 75%.

Easing Infrastructure Damage & Taxpayer Burden

The American Society of Civil Engineers awarded the freight rail network a B, the highest grade in their 2016 Infrastructure Report Card. The high mark for America’s privately funded freight rail system stands in stark contrast to aging and overused taxpayer-funded transportation infrastructures, such as bridges and roads. With a single freight train taking the load of several hundred trucks off the nation’s overcrowded highways, U.S. freight railroads’ infrastructure eases the burden on these transportation systems — and the taxpayers who support them.

 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.

 Natural Disasters

Freight Rail & Natural Disasters

The private 140,000-mile U.S. freight rail network crisscrosses the nation from Florida costal ports into Illinois flatlands and Montana dry plains. This backbone of the national supply chain is effectively a 24/7 outdoor assembly line, often putting railroads in the path of hurricanes, snow storms, wildfires and other natural disasters. With safety always a top priority, railroads collaboratively prepare for and respond to these weather threats to minimize network impact, swiftly restore service for customers and help communities rebuild.

  

Preparation

Railroads actively prepare for the variety of natural disasters that could impact the network. By monitoring weather closely and coordinating directly with customers and emergency agencies, the freight rail industry takes necessary precautions to protect employees, rail infrastructure and shipments. Detailed contingency plans govern operational changes, personnel and asset allocation, and company communication throughout the weather event. As part of general preparation, railroads could:

  • Utilize 24/7 command centers and work with contracted weather personnel using customized monitoring tools.
  • Begin customer communications — which will last until service is fully restored — and hold traffic if necessary.
  • Reroute trains, relocate business personnel, and move equipment, locomotives, rail cars and cargo out of areas likely to be affected.
  • Stockpile construction equipment to repair tracks/bridges; generators and fuel to restore signals/grade crossings; and ballast for tracks.
  • Position civil engineers, signal maintainers, track maintenance workers, inspectors and other critical personnel to begin recovery as soon as it is safe. 

        

 recovery

No matter the type of disruption, railroads work together to fully restore network operations as quickly and safely as possible. Through coordination with local, state and federal emergency agencies, railroad inspectors assess network safety and triage damage before working with civil engineers and maintenance crews to begin repairs. Once repairs are complete, railroads restart network operations in close communication with customers.

Assess Damage

  • Examine track damage and remove small debris where possible.
  • Inspect dangerous areas with drones and helicopters to keep employees safe and speed up assessments.
  • Inspect bridges, including deploying divers to look at underwater infrastructure.


Repair Infrastructure


  • Use cranes, bulldozers, chainsaws and other equipment to remove large debris from rail infrastructure, such as downed trees.
  • Replace track, add ballast and re-install or install new ties.
  • Repair damaged bridges and remove obstructions.
  • Coordinate with local utilities to restore electrical power and telephone communications.
  • Inspect and repair damaged train movement and grade crossing signals.


Restart Operations

  • Coordinate with customers to determine and prioritize which locations are ready to receive and dispatch traffic.      
  • Start traffic at reduced speeds where necessary while workers continue making repairs.
  • Fully restore network operations after workers safely complete critical repairs.                    

        


 relief efforts

Railroads care deeply about the communities they serve and often have employees living in affected areas. As part of relief efforts, railroads work with state, local and federal organizations to move critical supplies such as food, water, temporary shelter, fuel and lumber into communities and large debris out of disaster zones to help people begin rebuilding their lives. Railroads also often support the important efforts of relief organizations.



lessons learned

After recovery and relief efforts end, the rail industry modifies their natural disaster contingency plans to make a safe network even safer. Additionally, railroads take preventative measures to mitigate the impact of future weather emergencies. For example, railroads have:

  • Placed seismic, wind and water detectors along high-risk parts of the network.
  • Developed fire prevention programs that clear train routes of grasses and brush to prevent wildfires, as well as built specialized fire trains that carry thousands of gallons of water and hundreds of gallons of firefighting foam. 
  • Rebuilt and moved electrical equipment to higher elevations, and raised tracks and bridges to better protect against flooding.
  • Geomaped track to assess vulnerabilities.
  • Proactively cleared snow to prevent avalanches.

 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.