THE ECONOMICS OF RAILROAD OPERATIONS: RESURGENCE OF A DECLINING INDUSTRY. IN: HANDBOOK OF TRANSPORTATION ENGINEERING

This chapter describes how the post-deregulation productivity gains achieved by U.S. railroads effectively reversed a trend that would have otherwise signaled their elimination as an important transport mode. Fortunately, 20 years after the implementation of the Staggers Rail Act, a healthy railroad industry is well positioned to respond to the capacity constraints that challenge other transport modes. However, whether U.S. freight railroads play an increasingly important role within the overall transportation landscape depends on many factors, some of which are out of the railroads control. First, policy-makers must realize that the productivity gains that restored the vitality of the railroad industry were the direct result of competition. Shippers (even bulk commodities) continue to increase the level of service they demand from transportation providers. Thus, if the currently observed rail renaissance is to continue, it will be necessary for U.S. railroads to continually improve the level of service they offer to customers. This, in turn, will require the railroads to invest in improving the quality of both vehicles and infrastructure. Currently, the trend toward the pooling of private and public funds to support rail infrastructure projects that benefit both rail customers and other affected constituencies. This chapter discusses how such partnerships may well be necessary to achieve the required level of future investment.