Freight Rail Proves Private Industry Can Deliver Jobs & Prosperity

Market-based solutions, not overly burdensome regulations, can make America a more prosperous nation.

This belief is a valued principle for the thousands of delegates who are gathering in Cleveland for the Republican National Convention.

Looking at the American economy today, freight railroads are living proof of this idea. Today, America’s freight railroads are the best in the world. The average rail shipper can move nearly twice as much freight for the same price paid 35 years ago.

This story of success didn’t always ring true. That’s because, in the years leading up to 1980, the American rail industry was crumbling – sometimes literally – under overly burdensome regulations. During the 1970s, more than 21 percent of the nation’s rail mileage was accounted for by bankrupt railroads. The consequences were not just economic. By 1976, stationary railcars often fell off poorly maintained track.

In 1980, Congress passed the Staggers Rail Act and ushered in an era of balanced regulation. For the first time in decades, freight railroads no longer had to answer to the whims of regulators. Instead they could focus on serving their customers.

American railroads responded with one of the greatest economic turnarounds in modern history. Since the passage of the Staggers Act, average rail rates, not adjusted for inflation, are up just 24 percent sine 1981, far less than the increase in prices for most consumer goods. In addition, train accident rates are down 78 percent, rail traffic has roughly doubled, and railroads have poured over $600 billion of their own funds – not taxpayer dollars – back into the network.

The private marketplace delivered. And the benefits aren’t limited to freight rail customers. In 2014 alone, freight rail:

  • Supported nearly 1.5 million jobs across the country;
  • Generated almost $33 billion in federal, state and local taxes;
  • Contributed nearly $274 billion to the U.S. economy, doing its part to help our nation thrive.

Impressive as these results are, private freight railroads achieve them with little to no taxpayer funding. That sets freight railroads apart from other modes of freight transportation like trucks, barges and airlines. Railroads spend billions of dollars every year – an estimated $26 billion in 2016 – to maintain and grow the nation’s freight rail network.

The Federal Railroad Administration estimates a 35 percent increase in the volume of U.S. freight shipped between 2010 and 2050.  Will U.S. taxpayers be asked to foot the bill for moving this freight? With a strong private rail industry, the answer can be “no.”