Commentary
Companies are getting the message. Under President Donald Trump, America is once again open for business.
Major manufacturers—from automakers to semiconductor makers—are reinvesting in domestic production. After decades of outsourcing, we’re witnessing the return of “Made in America.”
That resurgence is long overdue. But to ensure that this manufacturing revival endures, our domestic supply chain must keep pace. The question is: How do we move raw materials and finished goods across a continent efficiently, safely, and at minimal cost to taxpayers?
The recently announced merger of railroad operators Union Pacific and Norfolk Southern is a step in the right direction. The combination would create the first U.S. transcontinental railroad, a long-overdue accomplishment that will accelerate domestic manufacturers’ ability to quickly and cost-effectively move goods and products from coast to coast.
This would be a profound change for the U.S. supply chain. Over the past few decades, long-haul trucking has increasingly overtaken rail as the main mode of freight transportation. Last year, trucks moved 73 percent of all U.S. goods, up from 63 percent in 1990, according to data from S&P Global. Rail’s share, meanwhile, has fallen to just 12 percent. That imbalance carries serious economic and safety-related consequences.
Our nation’s growing dependence on trucking isn’t free. The federal government spent $52 billion on roads last year, and roughly $20 billion of that came not from fuel taxes paid by drivers and truckers but from the general fund. In other words, every American, whether they drive or not, is subsidizing the upkeep of highways.
By contrast, railroads invest their own capital in maintaining their infrastructure. The United States’ 150,000 miles of freight rail lines are supported by $23 billion in annual private investment. As freight volume is rebalanced back toward rail, the burden of investment and upkeep shifts from taxpayers to the private sector.
There are safety benefits too. Rail freight transportation results in one-eighth the fatalities and one-sixteenth the injuries per ton-mile compared with trucking. According to the Association of American Railroads, the derailment rate for the largest U.S. railroads has dropped by 40 percent since 2005.
The numbers tell a simple truth: Moving goods by rail is safer, cheaper, and fairer to taxpayers. But if rail offers so many advantages, why has it lost ground to trucking? The answer boils down to logistics.
The U.S. rail network is fragmented, split between eastern and western operators. That means freight traveling from one coast to another must be transferred from one operator to another at a handful of interchange points in the Midwest.
A container shipped from Los Angeles to New York City, for example, might start on Union Pacific tracks but would need to switch to Norfolk Southern or CSX to traverse the eastern half of the country. Each railroad prioritizes its own trains, and that handoff can delay shipments by days as crews are swapped and paperwork is processed.
By Ken Buck
