Saturday, February 16, 2008

Railroad Renaissance: Thanks in Part to China Trade

Wall Street Journal -- For decades, railroads spent little on expansion, even tore up surplus track and shrank routes. But since 2000 they've spent $10 billion to expand tracks, build freight yards and buy locomotives, and they have $12 billion more in upgrades planned (see map above of recent upgrades).

Railroad operators are pressing for advantage over their main competitor, long-haul trucking, which has struggled with rising fuel prices, driver shortages and highway congestion. Railroads say a load can be moved by rail using about a third as much fuel as it takes to haul it by truck. And rail transport is becoming more efficient still, they say, as operators speed their lines and logistics companies build huge warehouse areas along routes.

Demand for rail service increased sharply when the U.S. economy and Asian imports surged starting in 2003. Now, increasingly, railroads are moving finished consumer goods, often made in Asia, from ports to major cities. Tight capacity on major routes enabled railroads to raise prices. The growth in freight volume has slowed along with economic growth, but shippers say they're still planning to increase their use of rail transport because of the cost.

Comment: The way Lou Dobbs and others criticize international trade, you would think that trade with countries like China is a complete drain on the U.S. economy, almost as if American consumers somehow acquired goods made in China without any additional benefits for the U.S. economy. But this story suggests otherwise - many U.S. jobs are created and supported by trade with China, including jobs in the transportation industry. Further, Chinese goods are purchased at U.S. retail outlets like Macy's, Wal-Mart and Target, creating and supporting U.S. jobs in the retail sector.


At 2/16/2008 12:00 PM, Blogger juandos said...

Hmmm, maybe Lou Dobbs and those others in the Casandra Choir should've done a little more homework before going on their public wailing campaign UNLESS there is some ulterior motive behind it...

A quick google search produced this four year old Oakland Tribune article: Railroad rolls out 1,000 new jobs

Oakland Tribune, Jan 10, 2004 by Alec Rosenberg, BUSINESS WRITER
OAKLAND -- All aboard the jobs train. Union Pacific Railroad said Friday that it is looking to hire about 1,000 new conductors around the country, including 35 in the Oakland area.

The railroad is going full steam ahead with plans to fill openings created by a high volume of retirements and increased business demands.

Salaries start at $30,000-$40,000 a year, depending on the position, Union Pacific spokesman Gene Hinkle said. Can't you hear the whistle blowing?
(there is a bit more)

At 2/16/2008 2:46 PM, Blogger David Foster said...

As the article notes, some major shippers are calling for re-regulation of railroad rates.

I picture the CEOs of several large chemical companies and agribusiness firms, all linking arms and singing old Grange songs about the iniquities of the railroads.

At 2/16/2008 8:34 PM, Anonymous Anonymous said...

Does this mean that the trucking industry will take a hit as rail takes freight away from American and Mexican truckers?


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