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Will the Railroads Rise Again?

For more than a century after 1860, the railroad industry was perhaps the largest private business in the United States. The vast plains of North America had little navigable water, so railroading had a near monopoly on inland transportation. The Interstate Commerce Act, adopted in the 1880s, was a consumerist legislation designed to control alleged pricing abuses by railroad management.

By the last half of the 20th century, railroading went into decline. The development of the interstate highway system made motor freight a more attractive way to move cargo, and expansion of airline service replaced most of the passenger trains. Rail remained primarily as a means of moving bulk commodities.

Today, the signs of a railroad renaissance are obvious. Legendary investor Warren Buffett made his largest single commitment to a railroad company. Fuel costs, highway congestion and deteriorated infrastructure have made motor transportation increasingly costly and difficult. Recruiting drivers is hard, and retaining them is even harder.

In much of the last century, railroading and warehousing were two industries virtually joined at the hip. Warehousing companies had terms such as depot or terminal in their corporate names. It was unthinkable to construct a major warehouse without a rail siding and as railroading declined, the majority of warehouse buildings were built without any real connection.

Because the majority of merchandise traffic moving by rail is in trailers on flat cars (a.k.a. TOFC), warehouses without connecting tracks can still use rail service. In Europe and Asia, high-speed rail offers a competitive option to passenger airline service. All of these are signs the coming decades will see continued growth of rail transportation.

 

K. B. Ackerman Company
2041 Riverside Drive
Suite 204
Columbus, Ohio 43221
Phone 614-488-3165
Fax 614-488-9243

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