#632 – Railroads Drive the American Economy

Agracel has two affiliate shortline railroad companies, Effingham Railroad (EFRR) and Illinois Western Railroad (ILW). Shortline railroads provide a crucial service to local manufacturers and warehouses in transferring product from Class I carriers. A study from Towson University, commissioned by the Association of American Railroads (AAR), examines the economic impact of Class I railroads on the U.S. economy. Below are excerpts from a post by AAR President and CEO Ed Hamberger regarding the study.

Railroads Drive the American Economy

Freight rail is the basic building block that allows a great sweep of economic activity to take place across the country. Without railroads, our economy would be vastly different.

Whether selling and building automobiles and houses, powering businesses or enabling manufacturers to reach new customers, American industries rely on rail to get raw goods and products to market in the United States and beyond. The net economic effect is profound.

New research from Towson University’s Regional Economic Studies Institute has found that in 2014 alone, major U.S. railroads supported approximately 1.5 million jobs, nearly $274 billion in annual economic activity, and almost $88 billion in wages and $33 billion in tax revenues.

Other key points from the study:

In the U.S. alone, there are approximately 140,000 miles of freight line, the majority of which (95,000 miles) are operated by Class I Railroads. There are seven major Class I Railroads operating in the U.S.:

• BNSF Railway Co.,
• CSX Transportation,
• Grand Trunk Corporation (the majority of Canadian National’s U.S. operations)
• Kansas City Southern Railway Co.,
• Norfolk Southern Corporation,
• Soo Line Railroad (all of Canadian Pacific’s U.S. operations), and
• Union Pacific Railroad Co.

These seven Class I Railroads account for approximately 90 percent of railroad employees, 94 percent of freight revenue, and 69 percent of freight rail mileage. Other common railroad categories include Short Line/Regional (accounting for 10 percent of railroad employees and 31 percent of freight rail mileage), Switching and Terminal Railroads, and Passenger Railroads; most of the track traveled by Amtrak (70 percent of miles traveled) is freight‐owned track.

The U.S. leads the world in freight rail at 1,770 billion ton‐miles, followed by China and Russia with 1,373 billion ton‐miles and 1,290 billion ton‐miles, respectively. Comparatively, Europe has just 240 billion ton‐miles in freight rail. On average, 5 million tons of goods are delivered using Class I Railroads each day. Coal transportation, historically the most important commodity for U.S. railroads, was responsible for 39 percent of tonnage, 20 percent of carloads, and 19 percent of revenue for all U.S. Class I Railroads in 2014.

For more information, visit www.aar.org.
For the full Towson University report, visit here.