North American Freight Transportation
North American Freight Transportation
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Nowadays, rail transport usually just refers to freight train shipments. Though in the past when railways were first introduced, they were predominantly passenger-based systems, times have changed. With the shifting economic needs and the rise in bus transportation, it led to the downfall in passenger-rail industry (North American Transportation, 2002). Though there is still the one passenger carrier left called Amtrak as well as commuter rails or subways, they only remain in small compartments of the country. Other than that, nation-wide routes cater only to shipments and cargo.
North American railways are known to be the fastest moving and most cargo carrying trains in the world. These railways were actually patterned after European ones in the early to mid 1800s, but now have doubled their progress over European transits with respect to speed and cargo quantities annually since then (North American Transportation, 2002). In fact, the average ton-miles of cargo annually falls somewhere in the figures of 1.5 trillion. A very impressive figure indeed.
Freight Train Categories
In North America, freight train companies are generally segregated into three categories using comparison of annual revenues: Class I for freight railroads that operate revenues above $277.7 million, Class II for those that operate revenues between $10 million and $50 million, and Class III for the rest of the freight railroads (American Railways, 2001).
Back in 1939, there were as many as 132 Class I railroads (History of American Railroads, 1997). However, that number has greatly decreased due to mergers and bankruptcies. Today, there are just seven railroads left that meet the standards of the Class I category. While the aforementioned Amtrak does qualify for Class I standards with regard to its annual revenues, it is mostly not a freight railroad. Therefore, since 2003, most railroads are noted as “standard gauge rail tracks” or those falling in the third, untitled category (American Railways, 2001).
Figure 1 - North American Freight Transportation introduction. Map of the North American Class I railroad network
Source: North American Transportation, 2002
Flailing Rail Industry
It was inevitable that with the extinction of wagon trains and the reduction in river systems, freight trains would suffer the same fate eventually. In the 1930s, automobile had emerged as a new form of dominant transportation means (North American Transportation, 2002). It was the establishment of the Interstate Highway System and of commercial roads in the 1950s and 1960s that served as the heaviest blows to rail transportation, both passenger and freight (North American Transportation, 2002). In addition, more and more people found it to be unnecessary to travel and to load shipments by freight services as it became popular to have your own automobile. Larger amounts of packages were only an issue for a short period. Within a matter of a time, there were trucking companies that became the railroads’ biggest competitors as they had the capacity to pack a lot of cargo in a lot of individual trucks.
Companies were starting to find appeal in using railroads for freight traffic that would be profitable business endeavors. The only delay with this situation was clearing legal obligations. Chances for survival of passenger trains were slim to none in the 1960s and freight trains seemed to be falling in the hands of corporate figures. Nevertheless,
freight transportation did continue to operate under heavy regulations. It seems that rail transport had made a problem with inter-city traffic as railroads were competing with one
another out of desperation to progress business-wise. Unfortunately, an entire regime-worth of rail managers were forced to go through training in order to operate under these new rules and regulations that had been set (North American Transportation, 2002).
Managers that had been in the business for decades, found this training to be a huge insult and referred to this change as “over-regulation” (North American Transportation, 2002).
Obviously, they had gone through their respective trainings many, many years before. Yet labor unions were unwilling to let down their guards. This management or lack thereof, led to stagnant business for the rail networks as well as frustration for political leaders. Subsequently, there was the file of bankruptcy of the Penn Central Railroad of New York as well as a lot of blame toward non-support coming from the government.
The Present Situation and Forecast
Starting 1970, privately owned rail transportation no longer exists. These days, all forms of rail transit are under The National Association of Railroad Transportation (NART) for the continuation of the same (North American Transportation, 2002). Under the Rail Service Act, many more regulations were enforced. For instance, any railroad operating service could stay in business for as long as it contracted with the NART, thereof a part of the national system (North American Transportation, 2002). Also, railways started to run on federal funds. In short, they had basically been altered into operations run by the government. They were funded and their return on investment was directly given back to the government as well, making it a business transaction more than ever. Notwithstanding that though the outcome may not be the most desirable, rail systems have still survived into the 21st century.
It is seemingly unnecessary to advertise freight services. For this reason, railroads in competition with one another make their trains as fast, luxurious, and affordable as possible. According to the Association of American Railroads, renovating the trains would be the best way to advertise their freight services, with the purpose of making profits. As compared to before, not just anything owned by anyone can be boarded on a freight train. Likewise, there are different types of equipment used, which are separated by a standardized set of reporting marks known as “rolling stock reporting marks” (American Railways, 2001). These marks make it easier to determine whether the equipment being used is a common carrier, like a diesel locomotive, or a different type of carrier. Since the demand of freight transport mostly focuses on chemicals, pipelines and the like, the diesel equipment is of the greatest use.
As for a forecast of the future, at least the near future, it is safe to assume that freight transportation is viewed in a stereotypical way – as cheap labor. It is not exactly being given much priority and it is at times viewed as something significant of the past. More and more restrictions and guidelines are being given rather than assistance in technology and development. Business may be business as usual, but with respect to any field, survival in the long run is all about keeping with the times. More labor and more trains may be established, but there is little to no change in the technology aspect. The factors that keep the freight transportation business afloat may be outweighed in the future when other forms of transportation can do what freight trains do, except better. In other words, there lie many uncertainties as compared to certainties. Hopefully, certainties will come to balance that out soon.
Uncertainties in North American Freight Transportation
While the freight railroad industry has survived thus far, it is still an issue among transportation experts that railroads are not progressing enough to meet rising demand based on other services (Freight Transportation Activity and Trends, 2004). By not being
up to par with other technology-advanced systems, the result could be higher costs for anyone involved in the shipment process. It would be a problem for the shipper, the handler, as well as taxpayers. Those in need of shipments that would want a no-frill deal
may end up opting for a truck service instead. In turn, more demand for truck services would mean more cost with respect to construction of roads and highways.
It is already understood that railroad business is diverse from other transportation businesses in that others reinvent themselves to meet market demands. Railroad services,
on the other hand, provide the same type of service despite growing market desires. What’s more, most companies that exist in a market economy increase in revenues and profits upon expanding their services. Perhaps the reason why railroad industry does not answer to heightened demands as other industries do is because of the lack of political
support, specifically willingness to invest in new features. For one, building a new track is definitely costly as well as space consuming. The same problems that arose back in the conception stages of railways may return with respect to fixing a railroad on a specific location. This, of course, is not a problem that trucking and water carriers face.
Yet another hindrance to the railroad investments may be the laws that were enacted and are specific to the industry of rail transportation. Every aspect of railroad industry from rates to routes to mergers and more were regulated and crucially analyzed by the federal government. These are amongst other laws that appear to treat railroad industry different from others in a negative light.
When railroads did make an effort to better their services by hiring more workers, adding more locomotive vehicles, and reaching out to shippers for help, not much had
changed. They were able to meet and accommodate rising demands for a time, but this seemed to be merely a peak season, which also had a meltdown. Other ideas to make up for the fallen peak season were either disregarded or disapproved. While attempts at
making new investments has continued, the profitability has often fluctuated and remains relatively low in the eyes of the Surface Transportation Board (North American Transportation, 2005). Fortunately, in a tiny ray of light for railroad industry, it was said by the Board that rail capacity is less burdensome for highways as it can relieve them.
Segment Best Situation From Trends
There is actually a demand for freight transportation. While such a demand may have seen absolutely unlikely, it seems that economically, it exists after all. The demand basically depends on the type of transaction or activity that is being made. “As an example, the amount of goods, which must be shipped and the distance between locations makes that difference” (Railroads Triumphant: The Growth, Rejection, and Rebirth of a Vital American Force, 2002). While new technologies have not yet come out cheaper, though they have increased productivity, railroads are still somewhat attractive in that sense. Railroads are also valued by specific industries such as coal, pipelines, plants, chemicals, and domestic automobiles (Railroads Triumphant: The Growth, Rejection, and Rebirth of a Vital American Force, 2002). Again, traffic being a rising problem, is something that the railroad industry can alleviate.
Importantly, freight traffic has recently risen above that of water transportation due to several sunken cargo ships. When dealing with ton-miles, freight trains has come
out with a more colorful resume. While studies do show that freight traffic has suffered up and down trends in periods, each up trend has been an improvement of the last (Railroads Triumphant: The Growth, Rejection, and Rebirth of a Vital American Force,
2002). Besides, it may be an idea to consider that rail traffic will continue to increase as the economy grows.
Figure 2. Modal Share of Domestic Ton-Miles, 1990 and 2001
Source: National Transportation Statistics, 2004.
Segment Worst Situated From Trends
It is truly hard to please the critics these days. The fact that there are very little Class I trains left and that the ratio of trains and labor to demand is imbalanced, depicts some major problems for the industry. It is said that in due time, other forms of transportation also dealing with shipping will end up lowering their rates while still improving their services (North American Transportation, 2005). This would undoubtedly be a big blow to the service of the freight trains. For one, there are only so many trains that can be accommodated on a track as opposed to flexible roads and highways, oceans, or even air routes. Another factor to consider is that the tracks themselves are neither cheap nor simple to institute whereas other industries, excluding trucking, just need to map out. It is costly as well as time consuming and even controversial to create more railroad tracks. Even roads and highways have their own controversies attached, but the advantage that they may be elevated leaves less burden on land taken from owners. Laying out train tracks must require the use of very specific, non-problematic pieces of land. The trains themselves, are not all that environmental friendly. They serve the risk of added pollution by means of their emissions from the heavy diesel engines. Fuel cell-powered trains have cut back on pollution, but these trains are not made for the freight industry (North American Transportation, 2005). This is, but another negative standpoint that affect the trends of freight transportation.
It is apparent that while means of transportation in the past have suffered the fate of extinction or near extinction, freight transportation in North America has prevailed. While railroad industries are somehow still making a mark with respect to how much cargo they carry, rates, and distance, they will be forced to make more changes eventually. Furthermore, they will be forced to create new routes, tracks and advance with respect to equipment and technology within the next few years. They need to beat the odds of pollution, layout of tracks, and even the stereotype of cheap labor (while still remaining cheap). Clean diesel must be reinforced or even production of fuel cell-powered trains for freight purpose as well as elevated freight tracks. It is important for those in the industry to realize that they have to ride the heightened trend that says that they are the answer to reduced road and highway traffic. This is also relative to the need to have better and more routes and tracks. There may be hindrances like lack of political support, but Boards and Councils in the field of transportation must make these issues louder. It is hard to say whether or not railroad industry will suffer the same fate as the means of transportation before it, including its sister form – the passenger railway system. Nevertheless, it is managing to survive as of now. Freight transportation has a fighting chance, and I think that this certain industry deserves that chance. It was an industry that assisted many people whether they are passengers, shippers, handlers, etc., and it is an industry that should not be set aside and taken for granted. To conclude, a certain phrase comes to mind as a forecast as to how to up heave the future of freight transportation: “back to the drawing board”.
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