US freight railroads plan to invest record $13B in 2012
Do jobs in freight rail equate to economic growth? We’ll find out in 2012 and the years beyond.
U.S. major freight rail operators are planning to invest a record $13 billion this year in an effort to expand, upgrade and enhance the nation’s rail network.
The Association of American Railroads confirmed that the industry is also expecting to add 15,000 new employees this year, who will take the place of retired workers in addition to working in new jobs.
“Unlike trucks, barges or airlines, America’s freight railroads operate on infrastructure they own, build and maintain themselves so taxpayers don’t have to. And this year they are investing at a record rate to meet the demands of the recovering economy,” Edward R. Hamberger, AAR president and CEO, told Supply Chain Brain.
“These investments help businesses get their goods to market more efficiently and affordably, so they too can innovate, invest and hire. That’s how freight rail spurs the American economy and supports jobs all across the country.”
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Though 2012 will be a banner year for freight rail, the industry had spent a good amount of capital on expansion in the past. Railroads spend roughly 17 percent of annual revenue on capital expenditure, while U.S. manufacturing companies reinvest approximately 3 percent of revenue.
“As the demand to move more freight by rail increases and a significant percentage of the rail workforce hits retirement age, freight railroads are continuing to add and fill jobs nationwide,” said Hamberger. “These jobs are well paying, highly skilled careers that cannot be offshored.”
XPO Logistics Completes Spin Off of GXO Logistics
XPO Logistics has completed its spin-off of GXO Logistics, creating two independent public companies.
GXO Logistics today marked the occasion by ringing the opening bell on the New York Stock Exchange. GXO leadership and board members were in Manhattan to mark the “exciting milestone in GXO’s history”, opening Wall Street and celebrating the business’s first day of regular way trading.
“We consider it a privilege to launch GXO as a new company at the top of the industry — the world’s largest pure-play logistics provider,” said chief executive Malcolm Wilson, in a statement. “We have a powerful platform for future growth, including our culture of innovation, strong customer relationships, seasoned leaders and a world-class team. This is day one of unlocking vast new potential for our company.”
GXO Logistics in Brief
- CEO: Malcolm Wilson (formerly CEO, XPO Logistics Europe)
- Employees: 94,000 approx.
- Warehouse capacity: 208m sq.ft
- Key customers: Apple, Nike, Whirlpool, Nestlé
XPO’s Pure-Play Strategy
XPO Logistics announced plans to spin off its logistics division in December 2020, with the intention of creating two pure-play entities focussed on contract logistics (GXO) and freight transportation (XPO).
In an interview last month, GXO Chief Investment Officer Mark Manduca said there is “massive scope” for growth both organically and through M&A activity. "A deep pool of potential new business exists for GXO, both through share gain and penetration,” he added, explaining that companies are increasingly looking to outsource logistics as supply chains become ever complicated.
GXO is a leader in logistics automation and robotics, leveraging AI and machine learning to ‘turn logistics into a competitive advantage’ for its customers. It has approximately 94,000 employees, and counts Apple, Nike and Whirlpool among its blue chip customers. The company says it will also look to strengthen its presence in other high-growth areas, primarily ecommerce, apparel, technology, food and beverage, and consumer electronics. The company has 208m+ sq.ft of warehouse space across 869 locations in 27 countries.