Freight Railroads Are Vital to Michigan’s Economic Recovery
Even though freight railroads have been a critical economic segment for over 150 years,
they are now more important than ever. There are numerous reasons why railroads are the
most efficient and greenest mode of transportation available. Freight railroads are fuel
efficient, reduce pollution and highway gridlock, while providing cost effective freight rates
saving their customers and ultimately consumers billions of dollars each year. They do this with
little cost to taxpayers and are an important element for attracting new manufacturing plants
to Michigan. Consider:
Freight Railroads Are Essential to Michigan’s Economic Vitality
Freight railroads account for 43 percent of the intercity freight volume, more than any
other mode of transportation and provide the most cost efficient and cost effective freight
service in the world. Whether moving auto parts and finished vehicles from southeast
Michigan (70% of finished vehicles are shipped by rail), or cherries or sand from northwest
Michigan, or chemicals and resins from Midland, or moving fertilizers in and crops out for our
vital agricultural sector, or coal to our power plants, and of course minerals and forest products
out of the Upper Peninsula, railroads are critical to accessing markets that are essential to
Michigan’s economic vitality. Railroads are partnering with the trucking industry making
intermodal the fastest segment of rail’s business.
Freight Railroads Are Fuel Efficient
In 2009, U.S. freight railroads moved a ton of freight an average of 480 miles per gallon
of fuel. On average, railroads are four times more fuel efficient than trucks, according to a
recent independent study by the Federal Railroad Administration. If just 10 percent of the long-
distance freight that moves by truck moved by rail instead, fuel savings would exceed one
billion gallons per year.
Freight Railroads Reduce Pollution
Greenhouse gas emissions are directly related to fuel consumption. That means moving
freight by rail instead of truck reduces greenhouse gas emissions by 75 percent. This is an
immediate and continuing savings.
Freight Railroads Reduce Highway Gridlock
A single freight train can carry the load of 280 or more trucks. That’s equivalent to
making room on our highways for more than 1,100 cars. Railroads also reduce the huge
economic costs of highway gridlock. According to the 2009 Urban Mobility Report published by
the Texas Transportation Institute, highway congestion in the United States costs $87 billion
just in wasted travel time and wasted fuel per year. As an example in Michigan, approximately
5000 trucks are taken off I-69 daily by virtue of trains running on the train main line through
central Michigan to Chicago.
Freight Railroads save Shippers and Ultimately Consumers Money
Average rail rates (measured by inflation-adjusted revenue per ton mile) were 55
percent lower in 2009 than in 1981. A few years ago, the American Association of State
Highway and Transportation Highway Officials (AASHTO) estimated that if all freight rail traffic
were shifted to trucks, rail shippers would have to pay an additional $69 billion per year.
Freight Railroads Invest Their Own Capital in Infrastructure
Railroads are extremely capital intensive. In Michigan they invest over $100 million in
their track structure annually. Of the railroads’ annual revenue 18% goes directly into their
track and roadbed. The average manufacturer spends about 3.8% of their revenue on their
infrastructure. These investments in their track, analogous to public investment in highways,
are fixed and accrue directly to the enhancement of Michigan’ transportation network.
Freight Railroads Save the Highways
Every ton of freight moved by a train is a ton of freight that doesn’t have to move on the
highway saving hundreds of millions of dollars in pavement damage. It is estimated that the
State of Michigan saves approximately $266 million dollars each year in pavement damage due
to freight that is moved off the highways and on to rail.
Challenges to Successfully Operating a Railroad in Michigan
It is challenging to profitably railroad in Michigan for two reasons not found in other
states. First, our peninsular geography means that for the most part any rail activity in the state
largely results from either the origination or termination of shipments. Not having the benefit
of busy through freight routes means that the cost of track maintenance in Michigan can’t be
spread over the broader traffic base seen in most states, notably Ohio, Indiana and Illinois to
our south. Those states contain transcontinental routes that have healthy traffic that can more
easily sustain rail operations.
Also, Michigan trucks have the highest allowable truck weights in the nation at 164,000
pounds. This is twice the weight permitted in most states. Many commodities such as steel
and aggregates move overwhelmingly by truck in Michigan compared to rail in other states
making it more difficult to profitably railroad in Michigan.
What the Railroads Need to Thrive
Railroads are extremely important to Michigan’s economic future. They are crucial to
ensuring the resurgence of the auto industry and commerce in general with their competitive
rate structure. The state should avoid any action that would increase costs or further limit
markets where railroads can continue to be competitive. Additionally, public road agencies
should take a greater share of responsibility for maintenance of highway/rail grade crossings
that we share.