15 February 2008
US railways on the up
Brian Micklethwait

Quotulatiousness links to an interesting WSJ piece about a revival in the fortunes of the US rail industry.  Quote:

Railroad operators are pressing for advantage over their main competitor, long-haul trucking, which has struggled with rising fuel prices, driver shortages and highway congestion. Railroads say a load can be moved by rail using about a third as much fuel as it takes to haul it by truck. And rail transport is becoming more efficient still, they say, as operators speed their lines and logistics companies build huge warehouse areas along routes.

Demand for rail service increased sharply when the U.S. economy and Asian imports surged starting in 2003. Tight capacity on major routes enabled railroads to raise prices. The growth in freight volume has slowed along with economic growth, but shippers say they’re still planning to increase their use of rail transport because of the cost.

“The railroad industry is finally making some money,” says Charles “Wick” Moorman IV, chief executive officer of Norfolk Southern Corp., based in Norfolk, Va. “And we’re pumping that money into our infrastructure.”

Containers are, as so often these days, at the heart of the story.


  1. We shouldn’t forget that much of the credit for the US rail-freight industry’s stability (and growth) lies with the Staggers Act of 1980.  This sharply reduced the burden of regulation allowing rail capitalists to do whatever capitalists in other industries do that makes the world a better place.

    Posted by Patrick Crozier on  20 February 2008 at 02:13 pm

  2. US container trains are truly something to behold, particularly when you are watching them going past spectacular scenery in the West somewhere. The containers are stacked two high and the trains are sometimes quite literally miles long. As Patrick says, this is what rail transport turns into in a large continental setting when you just let capitalists be capitalists.

    (The biggest change in infrastructure in the US rail system in recent decades is ripping out many of the bridges over the railways and replacing them with higher ones to allow that double stacking of containers).

    Posted by Michael Jennings on  20 February 2008 at 08:32 pm

  3. A little late to the party here, but the US railroad industry would be in far better shape if the Staggers Act had happened 40 years earlier.  Basically, the industry needed to be deregulated the moment serious competition from roads became a factor, and that was in the 1920s with some 200,000 miles of new federal highway in that decade.  But they still had to charge shipping rates exclusively by flat rate by weight and not by value of goods; they were under all manner of other ridiculous restrictions, and when the diarrhoea started to really hit the fan hard in the 1970s, federal regulators tended to side with railroad management rather than customers, unions and shareholders—most catastrophically with the Milwaukee Road, where the government’s decision to take management advice rather than the collective advice of customers, trade unions and shareholders resulted in the closure of the shortest, fastest route from the Midwest to the Pacific Northwest—the Milwaukee’s Pacific Extension. 

    It subsequently turned out that the Milwaukee’s accountants had mistakenly calculated a loss rather than a profit from the Pacific Extension, and, well, it’s a long, very sad story, starting with de-electrification in 1974 (simply to strip the asset of copper wire at a time that copper was plummeting in price and diesel oil was soaring) and culminating with the decision of Milwaukee’s idiot management and the government’s idiot regulators to close the extension rather than loss-making branch lines in 1980, right before passage of the Staggers Act.  But what’s clear from it is that stifling regulation, more than anything else, breeds absolutely shockingly bad management just in the way that Pavlov’s experiments with dogs created some strange canine eating disorders.  Given a Staggers Act 30 years earlier or even 10 or 15, America would have an electrified freight railroad cutting the shortest possible line from Minneapolis to Seattle, and imagine what that would do for customers seeking efficient shipment of goods in this day of expensive fossil fuels.

    Posted by DB on  05 May 2008 at 07:26 am

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