The Power of Privately Funded Freight Rail

When it comes to the quality of America’s infrastructure, railroads have moved to the top of the class. In a newly released infrastructure report card from the American Society of Civil Engineers (ASCE), America’s rail network received the highest grade awarded this year, a B.

The high marks for America’s privately funded freight rail system stands in stark contrast to taxpayer funded transportation infrastructure. Bridges, ports and roads, for example, continue to age and suffer from overuse. Reflecting their poor condition, ASCE respectively gave these systems grades of “C+” “C+” and “D.”

By spending billions of dollars to sustain, modernize and grow the freight rail network, U.S. freight railroads are easing the burden on these transportation systems—and the taxpayers who support them. In fact, since 1980, freight railroads—not taxpayers—have spent more than $630 billion to build the safe and cost-effective network that exists today. The industry is on track to spend more than $22 billion this year too.

These investments have resulted in innovative breakthroughs, including new ultrasound technology and acoustic listening devices that can identify track flaws before an accident occurs. It has also enabled the industry to increase capacity by upgrading existing and laying new track, expanding siding extensions and increasing rail yard capacity.

Perhaps most importantly, freight rail spent billions of dollars to accommodate double-stacked containers used to ship consumer goods. In doing so, the industry built the backbone of America’s intermodal freight network, which carries the goods and commodities of a globalized economy to businesses and consumers across the country and around the world.

Thanks to freight rail’s private spending, the industry now returns $10 to the U.S. economy for every $1 spent. In fact, in 2014, U.S. freight railroads helped spur nearly $274 billion of economic activity and supported almost 1.5 million American jobs. This included $88 billion in wages and close to $33 billion in tax revenue—more than the annual tax receipts of 30 states. Meanwhile, average rail rates paid by shippers have fallen 45 percent since 1980. And building upon decades of safety improvements, rail accident rates have reached an all-time low.

This incredible record of success is only possible in an environment of smart and balanced regulation. Through the choices made today, Washington can help write another chapter in freight rail’s story of success—or close the book on an era of incredible infrastructure investment and widespread economic growth. 

Misguided Proposals Undercut Important Public Policy Goals

Right now, a powerful few freight rail customers are lobbying the U.S. Surface Transportation Board (STB) to change the rules and require freight railroads to carry competing railroads’ cargo. This proposal, known as forced access, not only inserts government into a private industry that is the most cost-effective of its type in the world, but also punishes other rail customers and the economy by slowing rail shipments nationwide.

At the same time, a second group of special interests is asking Congress to raise the federal weight limit on trucks from 80,000 pounds to 91,000 pounds per truck. Doing so would double down on years of uncompensated highway damage caused by trucks and further increase the burden on taxpayers to cover the cost of crumbling public roads.

In fact, both of these proposals, if approved, would incentivize more freight shipments to move from freight rail’s privately funded, world-class network onto underfunded and overused roads. A 2010 study showed that a similar proposal to increase truck weights to 97,000 pounds could reduce overall rail traffic by 19 percent, while adding as many as 8 million more trucks on our nation’s roads and bridges—a 56 percent increase from 2010 traffic levels.

By rejecting these two misguided proposals, Congress and the STB can avoid overburdening aging public infrastructure and further exacerbating funding needs.

Together with tax reform that makes business more competitive, trade policies that both protect American workers and the benefits reaped by trade, and a regulatory environment that empowers private industry to find innovative solutions to shared goals, Washington can ensure that freight railroads have the resources to continue investing in a world-class rail network, and can keep America’s economy moving swiftly, affordably and safely for years to come.

Further Reading

The Growth of Intermodal

Continued innovation in the U.S. intermodal rail network reduces shipping costs, delivery time and congestion on our nation’s roadways.

Learn More 

5 Innovations that Have Strengthened Railroads’ Muscle

Thanks to innovations like these, freight rail helps carry the weight of the American economy and continue to prepare for future demand.

Continue Reading 

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