Keeping the Rail Industry Vibrant
By Peter Touesnard, Chief Commercial Officer of OmniTRAX, Inc.
One hundred years ago, railroads were among the largest industries in America. While that’s no longer true, economic activity related to railroading is still about $300 billion per year and growing. Direct revenue last year was more than $70 billion, and railroad employment rose to approximately 180,000, according the Association of American Railroads (AAR). And more than 10 percent of each of those figures is attributable to short lines.
Railroads haul the most freight of any form of transport in terms of ton-miles, a measure of cargo volume that considers weight and distance carried. Railroads now haul 40 percent of total U.S. freight, up from 27 percent in 1980, according to U.S. Bureau of Transportation data.
This is the picture of a vibrant industry.
There are, however, as recently as 10 years ago, traditional cargoes of steel and other metals, energy-related commodities, building and construction products, agriculture, chemicals and automobiles and parts made up more than 90% of the traffic on the country’s rail network. The coal part of the energy equation has shrunk dramatically, but frac sand and other cheaper and cleaner sources of fuel (natural gas, solar, wind) are picking up a lot of the slack. And, of course, intermodal container traffic, with everything from consumer electronics to canned goods, is growing rapidly.
The question now becomes how to make sure the industry remains vibrant?
Business development at most Class 1 rail companies is focused on the intermodal sector and short-lines like OmniTRAX need to work to be relevant in that space. Container shipments continue to grow, even with the potential of a trade war, there is huge potential for cargoes like the refrigerated and frozen foods that consumers are demanding in ever increasing volumes. Railways have an advantage today given the shortage of truck drivers and the ever increasing cost of fuel. We must work to diligently to leverage that advantage while the opportunity exists.
Another area of growth being pursued by rail companies is in managing shipments throughout the supply chain. We can no longer be myopic. We must understand the value of every segment in the entire supply chain and be prepared to provide our customers with “First Mile”, “Last Mile” and “Whole Mile” solutions that stretch far beyond the rail services we provide today.
The commercial, research and supply chain teams at OmniTRAX are focused on these challenges and we are working to take advantage of shifting demands from shippers in the North American market. We want you along for the ride.
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In the next blog post, OmniTrax Energy Solutions President Pierre Luc Mathieu will share his thoughts on Energy and Transportation
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