How Amtrak Is Derailing The Freight Industry

The following is a guest post by Alan Amrich who keeps a watchful eye on the waste and abuse orchestrated by our friends in Washington.

In 2011, the Association of American Railroads filed suit against various elements of the United States federal government. The action of the AAR, a trade group that represents a cross-section of rail-borne freight carriers throughout North America, alleges that Washington is overstepping its authority in ramping up enforcement of a law, which was enacted back in 2008.

That law—the Passenger Rail Investment and Improvement Act—was passed to enable the Federal Railroad Administration to increase the operational effectiveness of the perpetually-inept Amtrak. And in order to ensure that Amtrak can meet on-time standards enacted by PRIAA, the Feds are asserting that freight carriers face fines and other forms of punishment for hindering that mission.  In plain English, the freight companies’ lawsuit claims that the U.S. government is unfairly favoring another private company (Amtrak) at their expense. A closer look at the details of the situation reveals that the AAR has a substantial beef.

amtrak To wit, most of the rail network and the infrastructure in this country is owned by the freight carriers. Amtrak dominates the densely-populated Northeast, but when Amtrak operates outside that region, it is receiving a right-of-way from a freight carrier. If a railway’s own freight company—operating on its own rails—causes an Amtrak passenger train to be late for its destination, PRIAA holds that the freight company can be ordered to pay Amtrak damages for the delay.  Huh?

The significance of the rail-borne freight industry could understandably be lost on the average American nowadays, in which case a brief history lesson would be in order. Before the 1950s and the advent of the interstate highway system, railroads shouldered the bulk of America’s freight transportation needs. Regardless of the origin of freight, railroads served as the overland deliverer of freight to and from every corner of the U.S.  By around 1970, the interstate highway system was largely in place. Railroads had largely declined to a role of near-insignificance in the industry, as the transportation industry focused more and more upon road-borne systems. This trend remained dominant throughout the rest of the twentieth century, as the price of vehicle fuel remained low.

Anyone living in the U.S. in recent years, however, knows all too well that costs at the pump are pinching trucking companies something fierce. During the Bush administration, railroad companies began to pick up much of the slack in the freight industry. The railroad industry—having never completely left the national scene—has thus constituted a fall-back method of transport during a time of severe economic hardship. It has turned out that the railroad network in this country is one infrastructure from America’s golden age of heavy industry that has not been completely dismantled, and its presence has paid dividends.

Sadly, Washington’s efforts to prop up an ever-failing Amtrak is putting the bite on domestic rail freight carriers, and if the FRA persists in harassing these companies, then it’s not unreasonable to assume that it merely benefits transport businesses outside of the U.S. Foreign sea vessels, transporting foreign shipping containers, will simply increase in presence at American ports-of-call closer to inland destinations. For instance, rail freight carriers picking up at the docks in Long Beach are less likely to transport East Asian goods to the eastern United States. Instead, more and more foreign shipping containers will arrive via sea in the Gulf of Mexico and the Atlantic.

The railroad industry is one of the last remaining vestiges of a more prosperous time in this country. Does the federal government really need to be stunting the growth of an American-grown and American-manned industry—one that is capably meeting the logistical challenges of the Great Recession?

Save More Money in 2018

Coins 1523383 1920

Subscribe and join the worldwide 52-week money challenge! Get the tools you need right to your inbox.

We won't send you spam. Unsubscribe at any time. Powered by ConvertKit

Share this post:

Recent Posts

One Comment

  1. David says:

    In the UK the train operators pay a fee for the use of the nationalised track. If this & signals etc doesn’t work, then Railtrack (owners) pay a penalty. I imagine Amtrak having hired the track should expect it to work – so it’s not unreasonable to have a penalty when you don’t provide this service.

    I get the fee and if I fail to deliver, I shrug my shoulders ? Tough. Passenger trains need to be built – in the States, maintenance and so on, track improvements ?

Leave a Comment

*

What’s the Best Free Recipe App?

The Apple Store and Google Play together offer more digital cookbooks than you probably have room for on your mobile device. So which... more →
New tax law might slow down housing market.

What Will the New Tax Law Do to the Housing Market?

The new tax law will have a profound impact on the housing market, although in ways that go beyond the deductibility of mortgage interest... more →

4 in 5 Households Will Get a Tax Cut in 2018

Four out of five U.S. households will get a tax cut as a result of the legislation that President Donald Trump signed into law today. more →
Will bitcoin reach $100,000?

When Will Bitcoin Reach $100,000?

Bitcoin has accelerated its pace of appreciation in recent months, and if the current levels between $15,000 and $19,000 make you itch... more →
The Dow Jones topped 24,000 -- now what?

The Dow Jones Crossed the 24,000 Threshold. Now What?

Stocks appear to be increasing in volatility, yet the markets closed on Monday, December 4 with the Dow Jones Industrial Average is... more →
Peer mortgage

Should You Get a Peer-to-Peer Mortgage?

If you can’t get approved for a home loan from a bank, you might want to look into applying for a peer-to-peer mortgage. more →
Investment gifting is awesome.

4 Things To Know Before You Donate an Investment

While donations of any kind are appreciated, gifting investments benefits both the giver and the receiver. Here are four key things... more →
Are you wondering: What's the Relationship Between the Stock Market and Federal Debt?

What’s the Relationship Between the Stock Market and Federal Debt?

Wouldn’t it be wonderful if gains in the stock market could actually reduce U.S. government indebtedness? If that were true,... more →
1999 Repeal of Glass-Steagall

How The 1999 Repeal of Glass-Steagall May Lead To Our Demise

Is it possible that the 1999 repeal of Glass-Steagall may lead to our demise? Do you ever get a sense that the economy is spinning... more →