Supply Chain Digest Says...
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| The report does note the environmental friendliness of rail versus its rival truck transportation. It says, for example, that rail transport on average is 3-4 times more fuel efficient than trucking. |
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Trying to get credit for the impact of railroads on the US economy and more, the Association of American Railroads (AAR) is fresh out with an analysis on that topic, similar to what the American Trucking Associations (ATA) does annually for trucking.
Kicking off the report, the ATA says that “Rail transportation is a critical pillar of the US economy, powering industries, facilitating trade, and supporting high-wage jobs - all while operating on a self-funded infrastructure network that reduces strain on taxpayer-funded roads and highways.”
So, let’s start with this: US railroads employ 153,000 workers directly, with a total of 749,000 total jobs when indirect jobs as factored in. Those indirect jobs include areas such as steel makers, equipment manufacturers, and construction companies. The reports says that every rail transportation job supports 3.9 additional jobs across the US economy, reflecting the industry’s deep supply chain linkages.
In an executive summary, the report also touts the role of rail carriers in trade. Data points in that area include the following:
• 38% of rail traffic was tied directly to trade-related shipments. We’re surprised that percentage isn’t a little higher.
• 543.5 million tons of goods moved through US ports and across borders via rail.
• $29.8 billion in rail revenue - or 37% of Class I railroad earnings - came from trade-related shipments.
“Without rail’s efficiency in handling bulk commodities and intermodal freight, the cost of US exports would rise significantly, impacting competitiveness in global markets,” the report notes.
The report also briefly explains its approach and scope, first noting that the study used a method called Impact Analysis for Planning, a model that maps inter-industry relationships to estimate how economic activity in one sector influences others through supply chain linkages, labor income spending, and capital investments.
In terms of scope, the report includes the following sub-sectors:
• Freight Railroads: Class I and short line railroads responsible for moving carload traffic, bulk commodities, and intermodal freight.
• Switching & Terminal Operations: The movement, classification, and handling of railcars within rail yards, terminals, and industrial facilities.
• Intercity Passenger Rail: Includes Amtrak and other long-distance passenger services.
Interestingly, the report does not include the following societal benefits because the model used does not support them:
Environmental Benefits: Freight rail significantly reduces greenhouse gas emissions compared to trucking.
Highway Congestion Mitigation & Infrastructure Cost Savings: Shifting freight from highways to rail reduces highway congestion, pavement wear and tear, and saves taxpayers money through lower highway construction and maintenance costs.
So the report is saying that the benefits from rail transportation it calculates are understated.
The direct jobs created by the rail sector are well paid. The report finds that In 2023, the average US Class I freight rail employee earned total compensation (including benefits) of $149,000.
(See More Below)
 The report also notes the level of investments railroads makes. It finds that In 2023, Class I railroads alone invested $26.8 billion in capital expenditures and maintenance expenses, including track, terminal, and bridge upgrades; locomotive and railcar procurement:; and intermodal infrastructure.
The report does note the environmental friendliness of rail versus its rival truck transportation. It says, for example, that rail transport on average is 3-4 times more fuel efficient than trucking.
It also says that rail can move one ton of freight nearly 500 miles on a single gallon of fuel, and reduces greenhouse gas emissions by up to 75% compared to trucking, as emissions are directly tied to fuel consumption.
There’s more, but you get the idea. The full report is availability from the AAR here: Rail Transportation and the US Economy
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