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Rail News Home Rail Industry Trends

June 2008

Rail News: Rail Industry Trends

Online readers sound off

What are our online readers concerned about as they look ahead? Pretty much what most North American freight-rail execs, observers and pundits are worried about — namely, rail network capacity.

In an informal poll conducted from March 17 to April 7, we asked subscribers to our “Daily News” email blast and visitors to “What’s the biggest issue the freight- or passenger-rail industry will face in the next 50 years — and why?”

In all, the survey netted 157 responses; participants were permitted to cite more than one event or issue. Fifty-seven of the respondents who selected a freight issue singled out capacity constraints and/or financing for same as the most significant issue to come. As they put it:

  • “If you will forgive the paraphrase, ‘It’s the capacity issue, stupid.’”
  • “Capital expansion and finding the means to fund it.”
  • “Demonstrating the freight railroads’ vital role in our transportation future and turning that into federal/state capacity investment or incentives.”

Next on their list? Oil prices and the cost of energy, cited by 16 respondents (“As the cost to produce fuel rises and the raw materials to create the fuel become less available, the flow-down will be felt throughout the economy”); and “re-regulation,” cited by 15. (“The biggest issue will be continuing efforts by politically powerful shippers to re-regulate the industry so that they can push their shipping cost off on the general public. The industry must learn to stand up for itself in the political and public arenas.”)

Other freight issues online readers are fretting over include how much-needed advances in motive power technology (particularly in the area of energy efficiency) will be funded; whether the various stakeholders in the transportation chain will ever be able to develop a comprehensive national transportation policy; and how/if railroads will find enough qualified (and “willing,” as one respondent put it) workers during the next several years.

To others, the key issues were a bit more evolutionary, if not downright esoteric, in nature. Some believe it’s crucial for freight railroads to step it up on the productivity/efficiency fronts, a stepping up that (if they do it right) would lead to the next, and final, consolidation phase.

“There are too many roads operating to be totally efficient,” wrote one survey taker. “This may cause problems with pricing and the shippers, but in the long run, more economies of scale will be achieved.”

Others cited the need for additional culture change: “Reaping the benefits of the tremendous opportunities facing the industry in a manner unlike the past, where good ole’ boy management prevailed,” is going to be critical, wrote one respondent. “It’s time for the industry to realize it is a business.”

Or, perhaps, to stop apologizing for it because it is. To one respondent, the top issue is, simply, “Surviving success.”

— Pat Foran


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