Although the economic picture in the United States is mixed according to many economists, there are positive signs of strengthening industrial rail activity that may signal the setting of a new foundation on which to build some growth, according to Brian Gorton, President and Chief Operating Officer of Conrail Corporation, the nation’s largest rail terminal and switching service provider. Gorton says, “I believe it is time to remove the words “recovery from the pandemic” from our vocabulary and switch to more proactive strategies that anticipate a stronger future.”
1) Rising demand for transportation of bulk freight by rail.
As the economy emerges beyond the pandemic, total carloads transported are moving forward generating positive numbers in several key commodity groups. Although automotive products and parts shipped are still down, overall carloads transported are up and continuing to grow, led by chemicals and farm products.
2) The effects of “near-shoring”: a changing global industrial paradigm
In 2023, Mexico surpassed China as the top importer to the U.S. This new manufacturing paradigm moves more manufacturing from China to Mexico in North America, in order to bring manufacturing closer to markets. As Mexican manufacturing grows, U.S. rail will be utilized more to transport goods and materials within the United States.
3) Technology continues to improve service, efficiency and reliability.
Although the rail industry has traditionally been slow to adapt to technology such as AI and robotics, adoption is growing. Technological advances are being implemented and are having a positive effect creating efficiencies in helping railroads manage loading, switching, maintaining and planning operations.
4) Sustainability continues to be a top goal of business.
Railroading is the most energy efficient mode of freight transportation. As companies prioritize sustainability, there will be a growing reliance on rail transportation to help them improve their sustainability levels and goals.
5) Continuing industry prioritization of safety.
This continuing industry prioritization of safety is producing results. Recent statistics from the Federal Railroad Administration (FRA) shows that accidents are down 6% from 2022 and 22% down from the year 2000.
6) The opening up of resource access to make rail more efficient.
As competitive as railroading may be, there is a trend towards more collaboration in opening track access and other resources to other rail companies, ultimately making shipping more efficient. The rail industry has also stepped up efforts to work with governments for greater access to ports, interchanges and other public facilities.
Gorton notes, “As with anything, the rail industry is cyclical. During recent challenging years, those companies that continued to reinvest in themselves by improving track structures, facilities, vehicles, track machinery, restocked materials and investing in people will be best prepared to accommodate growth demands.”
