A stronger America flexes its muscle through trade

In today’s interconnected world, putting “America First” means embracing global trade.

The data are clear: Trade supports 40 million quality American jobs. One in four U.S. manufacturing jobs depends on exporting goods. And trade is now equivalent to roughly 27 percent of the nation’s GDP.

American consumers have benefited with access to cheaper goods, too.

Perhaps nothing exemplifies the benefits that come from trade as much as the free flow of goods between the U.S. and Mexico. Today, bilateral trade between the two nations exceeds $500 billion a year.

Like much global trade, the relationship is complex. Of all the goods imported to the U.S. from Mexico, around 40 percent of their value actually comes from parts and other components originally made in the U.S. To take just one example, American-made parts are exported to Mexico and used in the assembly of new cars and trucks. These vehicles are then sent back to the U.S. where they are sold—a win-win for businesses on both sides of the border.

The benefits of trade aren’t limited to just manufacturers, however. Aided by a familiar ally—freight rail—communities like Santa Teresa, New Mexico, are realizing new jobs, too.

In 2014, Union Pacific Railroad completed the construction of a $400 million terminal in this small town near the Mexico border. The railroad’s first delivery? Jobs. About 3,000 workers built the massive new facility, and today, 600 permanent jobs remain a windfall for this town of 4,200. Nearly a dozen new businesses have sprung up near the terminal too—from Penny’s Diner serving hungry rail workers, to ERO Intermodal Services, which maintains and repairs truck chassis and containers. State officials estimate that the Santa Teresa rail terminal has added nearly $500 million to the New Mexico economy since the terminal opened.

“Private rail investment was a critical and vital selling point for many businesses,” says Jon Barela, the former economic development secretary of New Mexico. “It signaled to the world that Santa Teresa was a strategic place to do business with the potential to be a vital part of the border and cross-border trade.”

Stories like Santa Teresa’s can be found in communities across the country that are thriving because freight rail enables global trade. Since 1980, North American railroads have spent more than $635 billion on building a modern, safe, and cost-effective freight rail network, and today, that network carries approximately one third of all U.S. exports (measured by volume). More than 35 percent of rail revenue is directly associated with international trade and about 50,000 rail jobs—worth over $5.5 billion in annual wages and benefits—depend directly on international trade, according to new research from the Association of American Railroads.

“The freight railroads’ extensive and improved network enables connectivity between buyers and sellers and facilitates trade both within the U.S. and between the United States and other countries,” says Clifford Winston, a senior fellow at The Brookings Institution in Washington, D.C., and an expert in transportation economics.

In 2014 alone, railroads carried 511 million tons of freight associated with international trade, including 329 million tons of exports. On board these trains were American-mined coal, American-made plastics and American-grown corn, all headed to U.S. ports and border crossings and onwards to foreign markets.

To see this supply chain at work, look to Miami, Florida, where freight rail has helped transform the city’s port, PortMiami, into a global gateway for trade. In recent years, Florida East Coast Railway has installed three 3,000-feet rail tracks directly onto the port’s docks. This investment allows the port to handle 225,000 intermodal containers per year and swiftly and seamlessly move goods across the country and around the world. In fact, thanks to the integrated freight rail network, the goods arriving at PortMiami are able to reach nearly 70 percent of the U.S. population within four days.

Putting up barriers to trade risks upending the U.S. economy and this carefully calibrated supply chain. While simultaneously working to address the negative impacts of trade, Washington can achieve its goal of putting America first by supporting open and free-flowing trade.

You might also likePolicy Issue: TradeLearn more about freight rail's role in enabling global trade and growing the American economy.

 

From Small Towns to Global Markets: How Freight Rail Drives Economic Growth

Nearly 150 years after the Golden Spike in Promontory Summit, Utah, completed this nation’s first transcontinental railroad, America’s freight railroad industry remains an emblem of innovation and a foundation for economic growth.

In fact, a recent study by Towson University’s Regional Economic Studies Institute found that U.S. freight railroads helped spur nearly $274 billion of economic activity and supported almost 1.5 million American jobs in 2014. This included $88 billion in wages and close to $33 billion in tax revenue—more than the annual tax receipts of 30 states.

Within the United States, freight rail’s consistent and strategic spending buoys once-stagnant desert towns like Santa Teresa, New Mexico, and quietly and efficiently serves the millions of people in a metropolis like Chicago. Meanwhile, Southern Florida has become a buzzing gateway to the global economy in part because of freight rail’s unique capabilities.

An infusion of cash, jobs in New Mexico

When Union Pacific Railroad decided to build a $400 million terminal in Santa Teresa, freight rail brought its first delivery: Jobs. About 1,600 of them. Today the terminal is complete, and more than 600 newly created permanent jobs remain a windfall for this town of 4,200. Additionally, nearly a dozen new businesses have sprung up near the terminal—from Penny’s Diner serving hungry rail workers, to ERO Resources, which maintains and repairs trucks chassis and containers. State officials estimate that the Santa Teresa rail terminal added more than $470 million to the New Mexico economy during the construction period alone.

“Private rail investment was a critical and vital selling point for many businesses,” says Jon Barela, the former economic development secretary of New Mexico. “It signaled to the world that Santa Teresa was a strategic place to do business with the potential to be a vital part of the border and cross-border trade.”

Santa Teresa’s story is a familiar one, as freight rail investments lift towns and cities from coast to coast. But sometimes the industry’s economic imprint shows up in surprising ways—such as helping the Windy City’s commuters get to work on time.

More than freight: Chicagoans on the move

Chicago and freight rail share a long and rich history, but when most Chicago commuters hear “rail,” they probably think of Metra. The city’s prompt and efficient commuter rail system powers 300,000 riders per weekday. Given Chicago’s role as a hub in America’s freight rail network, the cooperation of freight and commuter trains can determine whether hundreds of thousands of people have a good, productive workday.

Every week, Metra makes more than 750 trips across the Chicago Switching District’s 980-mile rail network, the majority of which is owned by freight rail. In addition to Metra’s traffic, the rail network hosts an additional 500 freight trains and dozens of Amtrak trains each day. In the face of so much traffic, freight rail executes a well-choreographed dance and helps facilitate open communications between all the railroads. This comprehensive proactive approach to managing the rail network in Chicago helped Metra achieve a 95 percent on-time performance for 23 consecutive months.

“The efficiency and effectiveness of freight rail transport in the Chicago region is critical to the economic development of Chicago,” says Jeffrey Sriver, director of Transportation Planning and Programming for Chicago’s Department of Transportation. “Likewise, the efficient and effective delivery of commuters to and from the city every day is also extremely important for the economic vitality of our city.”

This fine-tuning of the ebb and flow of rail traffic in Chicago is yet another example of railroads’ positive effect on American cities. Not only can rail rev a city’s economic engine with jobs, it can also keep its people and products moving efficiently. These efficiencies save time and money wherever the rails run, whether through our finest cities or into our most productive ports.

Go rail and go global

In southern Florida, PortMiami serves as a vital link between U.S. businesses, consumers and the global economy. Like its sister Port of the Everglades in Fort Lauderdale, PortMiami counts on the productivity gains that arrive by partnering with freight rail. PortMiami has worked with the Florida East Coast Railway to install three 3,000-feet rail tracks directly onto the docks. This investment allows the port to handle 225,000 containers per year, up from the 45,000 container maximum capacity before the tracks were installed. Thanks to the integrated freight rail network, the goods arriving at PortMiami are able to reach nearly 70 percent of the U.S. population within four days. This swift delivery benefits businesses in the U.S. and abroad.

A global marketplace facilitated by freight rail also serves American consumers.

“The freight railroads’ extensive and improved network enables connectivity between buyers and sellers and facilitates trade both within the U.S. and between the United States and other countries,” says Clifford Winston, a senior fellow at The Brookings Institution in Washington, D.C. “Without an efficient rail network, U.S. industries would incur higher costs, and those costs would raise the prices of a large share of consumer goods.”

A global marketplace and strong domestic economy are possible, in part, because of decades of private spending by American freight rail. And as Towson University’s recent study shows, the beneficiaries are not merely shippers or businesses or the freight rail industry itself. Every American–whether taxpayer, consumer or business owner–benefits from the incredible economic ripple effect of our freight rail network.

5 Milestones in the Growth of Intermodal

In many ways, it seems that demand for rail intermodal has skyrocketed overnight, but in reality its success has been more than a century in the making. Below are five unique milestone that have contributed to the development of the safe, reliable and cost-effective intermodal rail network we have today.

1. Piggybacking

Also know as “circus style,” “piggybacking” of wagons was pioneered in 1872 by P.T. Barnum’s circus. Barnum developed a crossover plate that allowed horses to pull circus wagons onto and off of trains via a single ramp. Once onboard, circus wagons were rolled from train car to train car, a streamlined process that saved time, effort and money. In 1936, the Chicago Great Western Railroad built upon this approach when it modified several hundred truck trailers and loaded them onto its trains — making the railroad the first to move trailers and ushering in commercial intermodal.

2. Container Intermodal Service

While intermodal piggybacking existed as early as the 1930s, it was the invention of a simple steel container that established intermodal as we know it today. In 1952, Alaska Steamship Company created the first intermodal shipping container by converting World War II victory ships into vessels capable of handling shipping containers that could carry virtually any product. Starting in 1956, Malcom McLean and his new company, Sea-Land, began working with maritime shippers, freight railroads and truckers to develop a common standard, which allowed the containers to be easily transferred across modes of transport. Today, the shipping container has largely eliminated the need for handling individual pieces of cargo, resulting in drastically reduced shipping costs and delivery time. Alaska Steamship and McLean’s invention directly shaped international supply chains still used today.

3. Double Stacking

Early rail uses of shipping containers were inefficient since only a very limited amount of cargo could be loaded on a single railcar or train. In 1977, Malcom McLean partnered with the Southern Pacific Railroad (SP) to create and test the first double stacked intermodal rail car. The test was a success, and by 1980, efforts to improve rail economics led to the ability to stack containers on rail cars across America. This process — logically known as “double stacking” — allows a single train to carry as much freight as hundreds of trucks. Over the years, freight railroads have raised clearances, upgraded tunnels and strengthened rail lines throughout most of America’s 140,000-mile freight rail network to accommodate double stacked intermodal trains. Since railroads are four times more fuel efficient than trucks, double stacking has helped reduce greenhouse gas emissions, while greatly increasing intermodal efficiency for the industry and customers alike.

4. Intermodal Terminals

The first rail terminals were established in the 19th century during the peak of railroad development. With the advent of intermodal and McLean’s shipping container, many of these original rail terminals were converted into intermodal facilities by 1960. The success of modern intermodal is largely built upon strategically located rail terminals where freight is transferred between modes. In recent years, railroads have spent billions of dollars to build and expand intermodal terminals and install modern equipment, including GPS-enabled cranes that can transfer intermodal containers between trains, trucks and ships in a matter of minutes. The strategic locations of these terminals — there are more than 180 intermodal facilities in the U.S. alone — have made railroads tremendously competitive for domestic freight shipments, and in turn, helped reduce congestion on our nation’s roadways while improving shipping times for rail customers.

5. Domestic Intermodal Growth

In 1989, trucking magnate Johnnie B. Hunt traveled from Chicago to Kansas City aboard a business train owned by the Atchison, Topeka and Santa Fe Railway. He was so impressed with the journey that he soon signed an agreement to move truck trailers on the railroad’s flatcars, a major leap forward in the movement of domestic freight. Since then, truck driver shortages, increased fuel costs and congestion on our nation’s aging highways — together with massive private spending and improved reliability and cost effectiveness — have resulted in railroads carrying an increasing share of domestic intermodal freight historically moved by trucks. In fact, this affordable domestic freight service has now become a competitive alternative to all-truck movements for journeys as short as a few hundred miles — proof of railroads’ commitment to keep America’s economy moving, whether it is across the country or around the world.

Intermodal Fuels the American Economy

Every day the intermodal network transports goods from around the world to the American consumer and American-made products to consumers around the world. Intermodal transportation is the seamless movement of goods utilizing multiple modes of transportation to produce the most efficient and cost-effective move possible. The efficiency gains realized by intermodal shippers help to make U.S. businesses more competitive in the global economy.  Freight rail is an integral part of this system, providing affordable and reliable long-haul movement of goods while working cooperatively with competitors like trucks who are better suited to short-haul freight movement.

Watch the video above for a complete overview of America’s intermodal network and learn how freight railroads are investing to keep America moving.

When America Goes Big, She Goes Freight Rail

America’s integrated transportation network of trains, trucks and barges carries 54 tons of goods and commodities for every American in a single year. This staggering haul contains the ingredients that are essential to the nation’s modern economy and our way of life: from the steel that frames our skyscrapers to the grain that feeds the world.

Freight rail serves a unique and integral role in this transportation network. When shippers need to go big, rail is ready. A single train can carry an incredible load of cargo efficiently, providing shippers a reliable and cost-effective way to meet their business needs.

The efficiencies achieved by freight rail benefit rail customers, consumers and the broader economy. To see an example of this, simply head over to your local car dealer or scan the many vehicles — cars, trucks, SUVs and minivans in every color, shape and size — on any highway or street. Each one has been designed by auto manufacturers to meet any driver’s taste and any family’s needs.

Such abundance and variety is possible because car manufacturers can roll out thousands of new vehicles in a single day. And that scale of production and delivery to consumers is possible because freight trains can move the raw materials, auto parts and millions of finished automobiles coast to coast seamlessly. At every stage of the production life of an automobile, freight rail serves a role. In 2015, automakers sold a record 17.5 million cars and light trucks in the United States, an achievement made possible by freight railroads and the larger integrated transportation network. How do you move that many vehicles? Well, a single train can move 750 vehicles at once.

Freight rail’s economy of scale serves car manufacturers, as well as industries and companies throughout the country — paper mills, power plants, big box stores and more. Today, rail customers can ship nearly twice as much freight for approximately the same price that they paid 35 years ago. That means manufacturers are better positioned to scale up to serve an existing market or to create a new one. Whether it’s to deliver auto parts for new cars or drywall for new homes, freight rail is ready to make it happen.

In business, reliability is critical, and freight rail customers can count on railroads to serve their transportation needs. In the last five years alone, America’s privately owned freight railroads spent an average of $26 billion a year to maintain and modernize their rail network — rather than relying on taxpayer funding. It’s just another way that rail feeds the infrastructure that feeds the economy.

So the next time you marvel at the endless gleaming options at a car lot, remember freight rail — and the work we do to deliver for our customers so that they can deliver for you.

Eight Unbelievable Facts About America’s Freight Railroads

Supporting the world’s largest economy is no small task. Every day, thousands of customers rely upon American freight railroads to safely and efficiently transport everything from the food on your table to the energy resources that power your home. What does it take to keep America’s economy moving 24 hours a day, 7 days a week and 365 days a year?

60 football fields: The length of the longest freight train in American history

4 American time zones: First established by freight railroads in 1883

107.3 billion pounds of steel: The amount of steel contained in America’s freight rail network

6,667 Eiffel Towers: Could be built with all that steel

489.4 million railroad ties: The number of railroad ties maintained by Class I freight railroads

5.6 trips around the Earth: The length of America’s freight rail network laid end-to-end

473 miles: How far a freight train can move a ton of freight on one gallon of fuel

75 percent: The reduction in greenhouse gas emissions achieved by moving freight by rail instead of truck

You might also likeWant to see what freight rail is moving for America?Check our our Rail Traffic Data on AAR.org

Rail Connects American Businesses to the World

A stretch of railroad track on its own may not be all that impressive, but the vast network that blankets America serves as a lifeline to the rest of the world. When U.S. goods are delivered to international customers, there’s a good chance freight rail played a vital role. That’s because America’s freight railroads carry one-third of all U.S. exports on their journey to markets around the world. Our investments in an efficient intermodal system are opening doors overseas and helping American businesses compete—and win—in today’s global marketplace.

Helping America Compete – And Win

You read that right – thanks to efficiency and productivity improvements made by freight railroads – American rail rates are lower than China’s. And Germany’s. And Japan’s. In fact, today the average rail shipper can move nearly twice as much freight for the same price paid 30 years ago. Lowering the cost of business is just another way that U.S. freight railroads help America’s farmers and manufacturers compete – and win – against China. And Germany. And Japan…

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Notes: Data are adjusted for purchasing power parity. Based on 2009-2013 averages. Index: U.S. = 100

Sources: Association of American Railroads, World Bank and international railroads and rail associations

A Business Expands With the Help of Freight Rail

Freeport-McMoRan, one of the largest producers of copper in the world, operates the Morenci copper mine and four other production sites throughout Arizona. The Morenci mine — located near Clifton, Arizona — has produced copper for over 100 years, while supporting several small communities in the area. Today, the company is writing a bright new chapter in their history — a testament to the possibilities that are realized when American businesses leverage the power of freight rail.

business-expands_in-article-imageIn recent years, the demand for copper has grown rapidly, particularly in China, where today more than 40 percent of the world’s copper is consumed. In order to help meet this demand, Freeport invested almost $2 billion into an expansion of their Morenci operations. One of the company’s largest priorities was improving the first step of the supply chain: carrying copper products from the Arizona mines to a transfer facility in Lordsburg, New Mexico.

Traditionally, Freeport had relied upon a small short line railroad, the Arizona Eastern, for this leg of the journey. However, over the years, underinvestment in the rail line had led to regular service interruptions as infrastructure fell into disrepair. In September 2011, the Arizona Eastern was purchased by Genesee & Wyoming, North America’s largest owner of short line and regional freight railroads, and immediately sat down with Freeport to discuss what the company needed from a freight rail partner.

“When the new Arizona Eastern management came in and saw the state of the railroad, they put in motion significant upgrades all the way around,” said Jason Tininenko, Freeport’s global supply chain manager.

Among the changes, the short line railroad reached out to others involved in Freeport’s supply chain, including Union Pacific. Together, the two companies collaborated to improve service schedules for Freeport. The Arizona Eastern also invested heavily in its infrastructure by replacing inadequate bridges, upgrading track and standardizing equipment.

One of the biggest changes was the railroad’s decision to replace a mix-and-match fleet of aging locomotives with a uniform fleet of modern engines. Before the change, Freeport struggled to plan their shipments since some locomotives could pull more than others, and packing the same commodity into different car types would add time and expense to the loading and unloading process. A uniform fleet has helped to streamline the loading and unloading process, reduce delivery times, increase efficiency, and increase safety throughout the network.

Today, thanks to this collaborative effort, Freeport has the reliable and cost-effective rail service it needs to succeed. For more than three years, the Arizona Eastern has operated injury-free, and since 2011 monthly carloads have increased 30 percent. This safe and reliable service has, in turn, helped Freeport continue to expand its Arizona operations. In fact, Freeport and Arizona Eastern recently opened a new rail yard near the mine that will increase throughput by 25 percent.

For Freeport, having a partner dedicated to improving service has been invaluable. Today, the company is delivering American copper throughout the world, from Shanghai to Connecticut to Spain, while also delivering local economic benefits to communities in the state of Arizona — all with the help of safe, efficient and cost-effective freight rail.

What Does Freight Rail Ship For You?

Freight rail is a crucial part of an integrated network of trains, trucks and barges that ships 54 tons of goods per American every year. You’d be surprised just how many of the goods you use each day were at one point carried in a railcar. So, what exactly does freight rail ship for you? Take a look below to find out.

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