The number of carloads moved by U.S. Class One railroads has dropped dramatically over the course of the past 17 years. In 2006, the Class Ones moved 32.1 million carloads, while in 2023, they moved just 24.4 million, a 24% decline. Statistics are available through the American Association of Railroads (AAR) and Statista. Meantime, these railroads have made exorbitant profits and engaged in massive stock buybacks to boost the price of their shares, at the same time that the workforce has been decimated, customer service has suffered, Amtrak on-time performance has declined, and safety has been downgraded.
“The news today is full of information about the decline in rail safety, shipper discontent, delays to passenger trains due to freight train interference, cuts to staffing, and other problems that are besetting the rail industry,” notes Jason Doering, General Secretary for RWU. “Yet a little published fact is that all of this come against a backdrop of a massive decline in freight shipped. The problems plaguing the rail industry are not due to its infrastructure being overwhelmed with freight shipments. In fact it is the opposite. For every 4 carloads handled in 2006, the Class Ones of the U.S. now handle just 3.”
This decline in rail freight traffic comes as the growth in gross domestic product (GDP) over these same years is about 30%, while truck traffic has experienced a n increase in loads shipped. “It is a sad commentary upon the privately owned and operated rail industry that millions of loads of freight are going by truck now instead of by train because the rail industry is not satisfied with profitable loads, it wants extremely profitable loads,” according to RWU Steering Committee member Matt Weaver. “Until the staffing crunch of 2022, the industry was boasting its outrageous goal of a .50 Operating Ratio (OR). The only way to achieve such a figure is through massive cuts to safety, staffing, inspection, maintenance, and freight moved. It is no accident that the industry is moving far less freight than a generation ago. To the detriment of all except the stockholders, this was by design.“
This decline in freight traffic by rail is unfortunate because rail is the safest, most fuel efficient, and environmentally sensitive means to move goods. According to RWU Co-Chair Ross Grooters: “Given the environmental crisis we face, and given that rail is by far the safest, greenest, cleanest, most efficient means to move freight and passengers from one location to another, its is truly a travesty that our nation’s railroads move far less freight today than earlier in this century, to say nothing of the fact that its rail passenger network – largely held hostage by these same Fortune 500 corporations that own the tracks and infrastructure – has remained relatively stagnant in comparison to the rest of the world.”
The accelerated decline in recent years of carloads moved can be attributed to the operating model adopted in recent years known as “Precision Scheduled Railroading (PSR). According to Steven Ditmeyer, Senior Railway Technology Consultant at the World Bank and longtime rail industry insider, many of the rail industry’s woes are self inflicted as a result of this latest operating scheme. He notes that PSR is “… Neither precision nor scheduled. It’s rather a phrase to describe a strategy that involves reducing the asset base of the railroads, tearing up double track, closing yards, closing shops, closing intermodal terminals and so on, and reducing operating costs by running fewer, longer trains. … Railroads are losing market share vis-a-vis trucks, and there’s no growth in traffic …”
Even former railroad CEO Matt Rose, now retired, has this to say about the direction the rail industry is taking: “… The (Wall) Street — I’m talking about sell-side analysts — has been extremely aggressive with the publicly traded railroads. They’re saying that less is better. Less capital is better. Fewer market opportunities are better. Fewer unit trains are better. It’s all about lowering the operating ratio. I disagree with almost all of that. I truly believe that every industry, every business, needs growth.”
The rail industry has come under the spotlight in recent years for its anti-labor attitude, decline in safety and service, poor on-time performance and more. What the public must understand is that these issues and problems are no accident, but rather inevitable results of the business model of the Class One railroads. “It is truly a betrayal of the industry when the rail corporations themselves are responsible for the dramatic decline in carload shipped in the last 17 years or so, according to RWU Recording Secretary Nick Wurst. “If Wall Street investors are incapable of getting the job done, then it is time for the rail industry to be publicly controlled and operated as it was intended to be – as a common carrier for the common good.”