Railroads Help Drive the U.S. Economy

The world’s great civilizations have all appreciated the importance of transportation.  

The ancient Romans built a highly advanced network of roads and ports connecting far-flung regions of their empire. In ancient China, a complex system of canals — including the famous Grand Canal — was instrumental in the economic development of that great culture. The Incas in South America used roads and bridges stretching thousands of miles over plains and mountains. The list goes on.

Fast forward to today and transportation remains crucial for economic success. Modern economies, though, are able to take advantage of a transportation resource that’s relatively new in historical terms: freight railroads.

Freight railroads have been playing a crucial role in America’s economic development for 185 years. Even today, freight railroads carry many things that Americans depends on, from the food on our tables and the cars we drive to the shoes on our feet.

A new study from Towson University’s Regional Economic Studies Institute (RESI) commissioned by the Association of American Railroads highlights the huge positive effect that freight railroads continue to have on the U.S. economy.

The report found that in 2014 America’s major freight railroads supported approximately 1.5 million jobs, (1.1 percent of all U.S. workers), $274 billion in economic output (1.6 percent of total U.S. output), and $88 billion in wages (1.3 percent of total U.S. wages). Railroads also generated nearly $33 billion in tax revenues. These impacts include direct, indirect, and induced effects.

Additionally, millions of Americans work in industries that are more competitive in the global economy thanks to the affordability and productivity of America’s freight railroads.

The reason for this economic impact is that railroads haul so much. 

In a typical year, railroads haul approximately 1.6 million carloads of wheat, corn, soybeans, and other agricultural products, plus another 1.6 million carloads of animal feed, beer, birdseed, corn syrup, flour, French fries, frozen chickens, wine, and countless other food products. 

The approximately 2.2 million carloads of chemicals that America’s railroads carry in a typical year help clean our water, fertilize our farms, package our food, build our cars and homes, and protect our health. 

Railroads also haul approximately 70 percent of new cars sold in the United States, as well the parts and accessories used to build them. And just about everything you find on a retailer’s shelves may have traveled in a shipping container or truck trailer carried hundreds of miles on an intermodal train.

All told, America’s railroads delivered more than 31.5 million carloads of freight to customers nationwide in 2015. And they did so at rates 45 percent lower on average than in 1981 (adjusted for inflation).

What’s more, America’s freight railroads are almost entirely privately owned and operated. Unlike trucks and barges, freight railroads operate for the most part on infrastructure that they build, own, maintain, and pay for themselves — meaning taxpayers don’t have to. 

In recent years, railroads have been spending more than ever before, including $28 billion in 2014 and $30 billion in 2015, on maintaining and growing their nearly 140,000-mile network. They are getting ready today to meet the freight transportation challenges of tomorrow. 

The RESI report reminds us that America’s best-in-the-world freight railroads will continue to deliver our economic future in the years ahead.