Not dead yet

The imminent demise of the freight railroads has been forecast, often with gusto, through many economic seasons. In my lifetime, it started when the railroads, then still exuberantly running streamlined passenger trains all over the country, began to realize they would not recapture the heavy passenger loads of the World War II era. Reports were that the railroads were going the way of the dodo to be replaced by trucks and airlines in no time flat.

Next came the end of small manufacturing and the tendency for larger manufacturers to globalize production—at least we call it that now. The railroads still had the passenger albatross hung around their figurative necks and their demise was, in fact, imminent from a financial analyst’s point of view. When New York Central and Pennsylvania Rail Road attempted a hat trick by merging, the resulting crash of revenues hitting rock bottom could be heard even at the doors to the boardrooms of the solvent western carriers. Reporters hovered like vultures. Private enterprise could not be trusted with such a critical enterprise, and the government would have to step in.

The feds did step in, creating Conrail and eventually the bastard child that is Amtrak. They also decided that enough was enough with regulation already. It didn’t make sense to regulate a business that wasn’t going to be around very much longer, so the Staggers deregulation regime took over and gave railroads another chance. Another twenty years or so.

Through the last recession—sorry, the Great Recession—the interested media reported that revenues would plummet and there would be wholesale bankruptcies. Interestingly, the railroads weathered the recession better than most businesses, and certainly better than brick-and-mortar retail, and blew that theory out of the water.

Next came the darling that the media and the political left loved to hate: Coal. A significant part of railroad revenue, coal was also on the sh(..) list for environmentalists and true global warming believers, so the media had the luxury of blasting any comeback by coal and, at the same time, lamenting, “Oh what will the railroads to without coal to haul? They are doomed!”

That was a few years ago. Today, doom of the railroads, according to the various railroad media, is short-haul freight. Here’s how it is supposed to play out: The railroads have remade themselves into point to point haulers of double-stack containers in long trains over distances greater than 500 miles. The only growth for railroads that anyone appears able to foresee is in short-train hauls of less than 500 miles and as short as 300 miles for which the keys appear to be frequency and timeliness. The railroads will be unable to adapt to this short haul for many reasons, the principle ones being smaller margins, costly new terminals, and a locomotive fleet that is uneconomical for short-haul of short trains.

The railroads are doomed, or so the mantra goes.

I say, don’t count the railroads out yet. I agree that the Class Ones have gone off the rails (pun intended) to make point-to-point long hauls in extra-long trains their bread and butter. But shortlines and regionals have been doing short-haul for years, and making money at it. If the Class Ones want to, they can hire hundreds of experienced shortline railroaders who know how to make short-haul work. They just don’t want to—yet.

Next time: What needs to be done, and what shouldn't be done.

©2018 – C. A. Turek – mistertrains@gmail.com

(Charles A. Turek is a writer and novelist based in Albuquerque, NM. After four decades working in areas of the insurance industry related to transportation, he now writes on all aspects of American railroading. Charles is a political conservative but believes in public funding of passenger rail as a part of the federal government’s constitutionally conservative obligation to provide for defense and public infrastructure so that private enterprise may flourish.)