Information published on 11 April 2017 in the UIC electronic newsletter "UIC eNews" Nr 543.

United States: New report confirms freight railroads are deeply connected to international trade

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The Association of American Railroads (AAR) released an assessment of trade’s impact on the freight railroad industry on March 29, finding that at least 42 percent of rail carloads and intermodal units, and more than 35 percent of annual rail revenue, are directly associated with international trade.

Approximately 50,000 domestic rail jobs, accounting for more than $5.5 billion in annual wages and benefits, depend directly on international trade, the analysis of 2014 data also found. If rail traffic indirectly associated with trade was included, the figures would be notably higher.

With ample discussions in Washington policy circles today on the role of trade, imports versus exports and manufacturing, the data provide a reminder that today’s global economy is firmly established and cannot be easily undone with rushed policy modifications. Doing so could have damaging and counterproductive effects on American workers and various industries – including a freight rail network that serves nearly every industrial, wholesale, retail and resource based sector of the economy.

“Efforts that curtail overall trade would threaten thousands of U.S. freight rail jobs that depend on it and limit essential railroad revenues used to modernize railroad infrastructure throughout North America,” said AAR President and CEO Edward R. Hamberger. “For a highly capital-intensive industry that has spent $26 billion annually in recent years, private investment is the lifeblood of a freight rail sector that must devote massive sums to safely, efficiently and affordably deliver goods across the economy. Upending the ability of railroads to do so by undermining free trade agreements that have done far more good than harm would have far reaching effects.”

The report looked at a host of rail movements, analyzing data from the 2014 Surface Transportation Board (STB) Waybill Sample – the most recent data available at the time of the analysis – other government data, information from U.S. ports and Google Earth, among others. Waybill Sample contains data from a stratified sample of waybills submitted each year by freight railroads to the STB. Each waybill contains, among other things, information on the origin and destination of the shipment and the volume and type of product moved.

The scope of operations and reach into the U.S. economy discovered through the analysis was stark. In 2014, there were 329 million tons of exports handled, nearly double the still-sizeable 171 million tons of imports moved by rail.

Rail traffic associated with trade included movements of coal for export out of ports in Maryland, Virginia, the Gulf Coast and the Great Lakes; paper and forest products imported from Canada into the Midwest, as well as paper products exported from the Southern U.S; imports and exports of Canadian and Mexican automotive products to and from auto factories in dozens of U.S. states; containers of consumer goods from Asia coming ashore in Los Angeles, Long Beach, Oakland, Tacoma, Savannah, Norfolk, and Newark; plastics shipped by rail from Texas and Louisiana to the East and West Coasts for export to Europe and Asia; iron ore mined in Minnesota and shipped by rail to Great Lakes ports; and grain grown in the Midwest and carried by rail to the Pacific Northwest and the Gulf Coast for export.

“These numbers validate our view that U.S. policymakers should proceed with caution in their quest to reverse some impacts of globalization,” added Hamberger.

(Source: AAR)