U.S. freight rail figures point toward continued growth

By Freddie Pierce
With several leading economic indicators pointing toward expansion and growth, the freight rail industry within the United States appears to be headed...

With several leading economic indicators pointing toward expansion and growth, the freight rail industry within the United States appears to be headed toward a bright future in freight transport.

A piece on AreaDevelopment.com broke down why freight rail should see steady growth through the middle of this century. Coal shipments, which comprised about 37 percent of total U.S. railway carloads in 2010, appear to be one of the biggest driving forces behind continued freight rail expansion in the United States.

Industrial, manufacturing and intermodal numbers are all up, which should also continue to feed a growing freight rail business.

Rail continues to capture a larger and larger market share from trucking by offering a cheaper and more fuel-efficient mode of freight transport. While the transition away from trucking is expected to be slow, industry experts have predicted that freight rail activity could double by 2050.

Bill Rennicke of the Oliver Wyman Group told the Wall Street Journal that “If the traffic-level trajectories are correct, then ton-mile [one ton of paying freight shipped one mile] growth could be in the 80% range by 2035 to 2040, and on this basis, industry prospects are bright. Rail activity could possibly even double by the midpoint of the century.”

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Despite the anticipated growth, North American freight rail rates are expected to continue to be near the lowest in the world, and companies are expected to finance most or all of its own capital requirements, making public support unnecessary.

Freight rail companies spent a record-breaking $10.7 billion on capital investments, with the industry expected to break that record this year by spending a predicted $12 billion in 2011. Freight rail’s labor pool is also expected to increase, with 10,000 new hires predicted this year.

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