The Sex Appeal of Freight Rail

Rock Island Railroad

Rock Island Railroad

As President Obama prepares to address a joint session of Congress on job creation and the state of the economy, he would do well to consider casting a light on the freight rail industry in his remarks. Freight rail? Freight rail--a surprising pocket of growth, investment, hiring and innovation in the much-maligned US infrastructure network.

Perhaps unsurprisingly, investor Warren Buffet saw it coming, when Berkshire Hathaway took full ownership of BNSF, the country's second largest freight railway, in February 2010. Since then, the company, like the rest of the industry, has experienced double digit revenue expansion, thanks to rising coal, industrial and agricultural product volumes. Shippers are switching from road to rail as fuel prices and traffic congestion impact cost, efficiency and reliability of highway transport.

The well-funded, well-organized Association of American Railroads (AAR) has developed a web site--Freight Rail Works--that is a visual crib sheet for anyone looking to understand the basics of the freight rail industry and its positive role in the US economy. The charts and graphs, videos and slideshows--including one on transporting jumbo jet-sized wind turbines cross-country--are all terrific.

Perhaps the most striking point of all, in this era of tight federal and state budgets: the rail industry pays much of its own way, reinvesting 40 cents of every dollar to maintain and improve its own tracks and equipment. This year's expected combined industry outlays: in excess of $12 billion. Over the last five years total capital investment has exceeded $40 billion.

Look beyond the freight rail industry's own finely-tuned pitch materials, there's plenty more evidence of game-changing innovation, effective collaborative partnerships and successful, scrappy entrepreneurial risk-taking leading to job growth and community building around the country.

There's RailEx, a state-of-the-art refrigerated train and warehouse facility that allows east coast, west coast and even non-US farmers to move goods cross-country by rail in five days or less. In 2008, two years after it first came online, RailEx introduced a second west coast location in California. Earlier this summer it increased the frequency of services running out of this facility. RailEx's hauling: provided by Union Pacific and CSX.

Then there's GE's Evolution Series Locomotives, a cornerstone of the company's ecomagination product line. Demand has been so strong that the company is opening a new $95 million manufacturing, service and repair facility in Texas. There's FreightCar America a Chicago-based company with manufacturing facilities in Roanoke, Virgina that recently re-opened, hiring to accomodate growing demand for its railcars in the wake of the industry's surge.

There's 550 regional and shortline railroads that have expanded their track network from 8,000 to 45,000 miles over the last three decades, many, such as the Iowa Interstate, leveraging off of their rich heritage to build customers, loyalty, business. And there's the public-private National Gateway Initiative to expand and upgrade essential east coast rail infrastructure, leading to CSX's just-announced $59 million investment in Columbus, Ohio's intermodal freight terminal.

While the freight rail industry may not have the flashy sex appeal of high-speed passenger rail service, it employs 170,000 people, generates over $50 billion in revenue annually and keeps the US economy moving. These days, nothing could be sexier than that.

In July the Financial Times ran a multi-part story on the renaissance of the US freight rail industry. You can watch the video portion of the story here (subscription required). The Infrastructurist is a highly readable blog devoted to infrastructure projects and policy, co-founded and published by Alexander Jutkowitz and Mitch Stoller of consulting firm Group SJR. Progressive Railroading's annual freight rail conference, RailTrends, will be held November 1-2 in New York. Industry leaders, including Ed Hamberger, President of the AAR, and Joseph Szabo, Head of the Federal Railroad Administration, will participate.

Photo: Chris Lastovich