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The Rise of the Railroads

December 20, 2011
By: John Buckner, Farm Journal Executive Editor

field to port logoStanding next to an idling diesel locomotive is like encountering a big snorting bull in a pasture. You feel both shock and awe at the sheer mass of iron, the smell of diesel and the ground-shaking rumble of the 6,000-hp engine.

Because of its unique strengths as a mode of transportation, this brute icon of the Industrial Age wields a hefty influence in our rural economy to the point of creating a dependency. That dependency has led to what some shippers call unfair business practices and what the railroads view as simply making reasonable profits.

"We’re landlocked, with only 700,000 people in the state. We don’t have the consumers, so everything we produce must leave the state, and rail is the only way we can move our production effectively," explains Lisa Richardson of the South Dakota Corn Growers Association.

Lack of competition has a direct effect on farmers’ bank accounts. The freight rates and service affect the basis they receive for their grain. "Our corn basis has been up to $1 a bushel," Richardson notes. Fertilizer, electricity and fuel bills are also affected, as well as the price of consumer goods.

According to the Association of American Railroads (AAR), rail is the most economical, safe, environmentally friendly and efficient way to move this much grain overland; but as bulk commodity producers, farmers can’t pass on the shipping cost, so fair rates are of primary concern.

"We direly need efficient rail, road and waterway transport," says Bob Bowman, a DeWitt, Iowa, farmer and National Corn Growers Association board member.

He says the transportation modes need to work in tandem, which can create friendly competition and help stabilize shipping costs.

"In western Iowa, which borders the Missouri River, rail prices are higher because there isn’t river traffic like on the Mississippi," Bowman explains, referring to the unpredictable and therefore shipper-unfriendly Missouri River.

Mike Steenhoek, executive director of the Soy Transportation Coalition in Ankeny, Iowa, agrees: "There is lots of evidence that when a shipper has the option of shipping by barge or rail, the railroads drop shipping prices."

That’s why expansion of the Panama Canal is important, he says. "To stay competitive in the global market, it will require investment for our waterway infrastructure that keeps the railroads within a fair pricing system."

Railroads have been profitable during the past decade, but that has not always been the case. The industry was in dire straits in the 1970s.

Due to its importance to the U.S. economy and national defense, the Staggers Rail Act of 1980 was passed to permit deregulation.

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FEATURED IN: Farm Journal - December 2011
RELATED TOPICS: Transportation, Infrastructure

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COMMENTS (1 Comments)

PullMyFinger - Chappell, NE
I live along the main line of the Union Pacific Railroad. 80 years ago there were two pairs of tracks - today there are still only two pairs of tracks and our Interstate hiways are bumper to bumper with trucks because the railroads are not nearly pulling their fair share. They simply raise rates to make however much profit they need off of their 80 year old infrastructure. What other industry has gotten away with being so worthless for the last 80 years? Union Pacific - Bilking America.
9:43 PM Dec 20th



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