When it comes to energy efficient transportation in America, no transportation option is better than the railroads. They have been the freight transportation backbone of America for nearly 200 years, which is why all the recent news about train derailments and union strikes deserves our attention. While more profitable then they have ever been for investors, the railroads are moving less freight and employing fewer workers now then they did in 2006. After underinvesting in their labor force, rolling stock, and tracks for decades, are America’s railroads entering a state of decline, and if so, should we start discussing the pitfalls and possibilities of public rail ownership?
A Brief History Of Railroads & Railroad Ownership In The US
For some context, it will be good to have a brief history lesson. Starting with the birth of America in the late 1700s and early 1800s, bulk goods were moved by waterways, as the only other option was horse-drawn carriage. In the early days of the country, cities were built around the navigable waterways to transfer goods and services. However, as the nation grew westward, it was harder and took longer to ship goods and services by waterway. Baltimore, wanting to retain its importance as a major shipping port, looked to Europe’s emerging train technology as an opportunity to more quickly deliver goods and people to inland areas of the country. Hence, starting in 1828, the Baltimore and Ohio railroad was built as the first major railroad in the US. The Baltimore and Ohio Railroad company was founded to build the tracks and run the trains, with significant investments from the State of Maryland and other private investors.
Beginning in the 1830s and 1840s, railroads were built across the young nation, bringing people westward, reducing travel times and shipping costs. Investors like Cornelius Vanderbilt, with money from their waterway shipping enterprises, started investing in the railroads and profiting from the new technology frontier.
The United States government, wanting to rapidly expand from the Atlantic to the Pacific, was not satisfied with the gradual growth of the railroads. Conversely, private investors were not interested in investing a large amount of money to build track in sparsely populated areas that may not give them a return for decades. Considering these factors Congress passes and President Abraham Lincoln signs the 1862 Pacific Rail Act which grants the railroad companies land and government bonds to build the tracks. In total, the legislation created four transcontinental railroads and gave away 174 million acres of public lands to rail companies. Union Pacific was founded during this time and took advantage of the legislation to build out the railroads and establish itself as a dominant player in the western United States.
Hence, the railroad companies have always been a private enterprise but with serious public backing from the state and federal governments.
The Current State of Freight Transportation
After the introduction of the automobile and Federal Highway System, railroads begin to decline in terms of profitability and passenger ridership. Seeking ways to boost profitability, precision railroading begins to be implemented in 1993. Before this time, the railroads often operate on a hub and spoke arrangement where small freight trains are loaded and then brought to a classification yard to be sorted and then delivered to their destination. Under precision railroading, trains operate on a set schedule with point-to-point train movements. Precision railroading and a push to lower labor costs has increased trains to 100 box cars long, and efforts to reduce the number of operators to one per train down from around 4-5 40 years ago.
The improvement in profitability to investors has been at the expense of reliable freight delivery and safety.
The Bureau of Transportation Statistics tells the story.
Whereas truck traffic has increased in response to the demands of our supply chain, the railroads are actually shipping less freight than they did in 2006. From an environment and labor supply standpoint, that’s not good. Trains are 4 times more efficient at moving freight than trucks, and one train can be up to 100 cars long. In terms of labor supply, it would take 100 freight truck drivers to move the same amount of freight as two railroad workers working on a 100-car train. On top of that, it was just recently reported that embargoes by the freight rail companies have exploded, rising from 5 in 2017 to more than 1,000 in 2022. A freight embargo is when a carrier or carrier company stops accepting freight. This puts a halt to all traffic from customers who rely on the railroads to move their goods.
Following the news of labor supply issues for truck drivers and the snarls at our nations ports, the question needs to be asked, how much of this is due to the current state of rail? While railroad companies are making nice profit margins, they are failing to move the supply chain at the time when we need them most.
There are different reasons a customer might have to ship by train or truck. Trucks can go faster and they have more flexibility in scheduling, which is partly why truck traffic has expanded into the have-it-now online shopping era. But that road scheduling and flexibility is not a native trucking feature. It’s because companies have open easy access to public roads, and when highways fill up, politicians lobby for public dollars for more lanes and better traffic flow. The underinvestment by freight railroads in infrastructure has resulted in single tracks connecting population centers with only a few locations of parallel tracks for passing.
By having the railroad tracks owned by the railroad companies, they have little incentive to invest in expanding infrastructure. In fact, having limited capacity on the tracks means they can keep others out. Amtrak is currently in a twitter war in the gulf coast trying to return service to tracks while the rail companies claim there is no room for them to return. It’s a convenient argument when you consider they have had a century to expand the tracks to accommodate more rail movement and they haven’t done so.
Organized Labor Pushes For Public Ownership
Water lines are public infrastructure because they allow the free flow of water to homes and businesses. Roads are public infrastructure because they allow the free flow of goods and services between various entities within the country. Rail should be public infrastructure because it does the exact same thing. It’s a fluke of history and an oversight of past government administrations to keep our railroads privately owned. The results cannot be more clear — road traffic for freight and people has exploded across the country, whereas rail has stagnated and declined.
On 10/5/2022, Railroad Workers United passed a resolution supporting public ownership of the railroads. I encourage you to read the full resolution, but a few of the highlights are below:
“Whereas, in the face of today’s crumbling infrastructure, crowded and clogged highways and city streets, poor air quality, lack of transportation alternatives and deepening climate crisis, expanded rail transportation – for both freight and passenger – presents a solution to these social ills and problems; and
“Whereas the rail industry today however is contracting – rather than expanding – at a time when we need more trains, trackage, rail workers, and carloads, not fewer; and
“Whereas the private rail industry is moving 5 to 10% less freight than it did 16 years ago, and in recent years has shuttered diesel shops and classification yards, and has drastically reduced the number of employees; and
“Whereas the private rail freight industry is generally hostile to proposals to run any additional passenger trains on their tracks – despite having legal common carrier obligations to do so – making it difficult if not impossible to expand the nations’ passenger rail network.
“Be it finally Resolved that RWU urges all labor unions, environmental and community groups, social justice organizations, rail advocacy groups and others to push for a modern publicly owned rail system, one that serves the nation’s passengers, shippers, communities, and citizens.”
What Are The Pitfalls & Possibilities Of Public Ownership?
The knowledge base has always rested with the private rail companies, which is why the government has historically shied away from getting too involved. It will take considerable investment to acquire the rail, let alone hire the labor force to see that it is maintained and runs properly. It’s just not a political priority for politicians, but that may change if our rail continues to decline and more safety issues emerge from the East Palestine, Ohio, derailment. In the end, it may be an inevitability, as there just is no appetite to tell investors that they are going to have their dividends used to invest heavily in labor and material to move the same freight 10 years from now as they are today.
If it ever could happen, the possibilities couldn’t be greater than seeing what our great-grandfathers built for us. American cities were built around our railroads and claim some of the most valuable real estate. 140,000+ miles of completely interconnected right of ways connecting our communities, industries, and ports. We could electrify train travel. We could make intermodal freight transport more efficient and reduce semi truck traffic on our freeways. We could build light rail lines and increase passenger travel.
This has the advantage of avoiding all the cost increases, time delays, and politics of building new infrastructure. As anyone who has been following the California High Speed Rail project will know, the costs of trying to acquire new land and move existing water and electrical lines are staggeringly high. Acquiring the existing tracks avoids all this. No major destruction of homes and businesses and much fewer complex infrastructure projects.
I live in Corvallis, OR, and we hear the few small freight trains that run early in the morning, but largely ignore the railroad tracks. I wondered what would happen if we saw the possibility of our existing infrastructure. What I found was that we could build a truly transformational light rail system that would connect every high density location between Linn and Benton counties without destroying a single building. Tracks connect downtown Philomath, downtown Corvallis, downtown Albany, Oregon State University, Linn-Benton Community college, Samaritan Hospital, North Corvallis, and North Albany. If we owned the tracks, what could you build in your community?
By Jason Clifford
Featured image: Courtesy of Parallel Systems
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