America's Railroads

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AMERICA'S RAILROADS - ECONOMIC IMPACT
A vital link in the national economy

America’s freight railroads—a $55 billion industry—are a vital link in the national economy, connecting producers with manufacturers and distributors at home and abroad, via a network of more than 140,000 route-miles that serve every major U.S. port and metropolitan area. Forty percent of the country’s freight ton-mileage, more than any other mode of transportation, moves across America's rail lines each year - that's seven tons for every person living in the United States.

U.S. freight railroads are more efficient and cost-effective than any other freight rail system in the world. On average, shipping by rail costs 54 percent less in inflation-adjusted terms in 2006 than it did in 1981, which contributes to the competitiveness of U.S. products in the global marketplace and improves our standard of living.

According to the American Association of State Highway and Transportation Officials (AASHTO), if all the freight that moves by rail today were switched to truck, shippers would pay an extra $69 billion annually in transportation costs.

Railroads also save billions of dollars for shippers and in highway maintenance costs. According to AASHTO, it could cost governments an extra $128 billion annually for highway improvements if all rail freight were shifted to truck tomorrow.

Unlike other transportation modes that rely on public investment in highways and airports, railroads are privately owned and financed, pay taxes and support local economies across the country. All U.S. railroads directly contribute over $17 billion a year to the economy in wages and benefits to 185,000 union and non-union employees. The average rail employee’s compensation puts them in the top nine percent of all wage earners in United States. In addition, railroads support 550,000 industry retirees and their families with $8 billion annually in industry-funded retirement and survivor benefits.

Railroads continually invest in new technologies, equipment and facilities to maintain rail as the most efficient and cost-effective way to transport freight. From 1980 to 2006, freight railroads spent more than $375 billion to maintain and improve infrastructure and equipment. Railroads are far more capital intensive than other major industries (17.2 percent of revenue compared to just 3.4 percent for the average manufacturer). In 2006, railroad net investment in plant and equipment was $662,000 per employee, more than eight times the average of $84,000 in all U.S. manufacturing.

Thanks to these investments and a long record of improvements across the board in safety, fuel consumption and operations, rail contributes to the competitive advantage American products have in global markets and the low cost that Americans pay for goods at home.