Passenger Trains make money, but Railroads need Freight to be Profitable. August 5th, 2009
Editorial By Noel T. Braymer
From the beginning freight has always been the main business of American Railroads. Passenger Trains generally are profitable, but not as much as freight.
In many cases passenger service was mostly used to develop land owned by the railroads. The railroads up until the 1940’s had enough freight business to justify high capacity rail lines to handle large numbers of passenger and freight trains. As the freeways were built the railroads quickly lost much of its time sensitive, high value freight to trucks. New factories were not built near railheads. Not only did factories not need rail for shipping, but with natural gas and oil pipelines serving factories, factories no longer needed the railroad for coal deliveries. By the 1950’s the railroads were fighting to stay in business. The railroads had to cut costs. Railroad employment dropped from a million and a half in the 1940’s to just over 200,000 today. Thousand of miles of unprofitable branch and secondary lines were abandoned.
The easiest way the railroads had of cutting costs was cutting back on its infrastructure. This meant in many cases deferred maintenance, pulling out tracks, switches, sidings, signaling, buildings or anything else they felt they could live without. The major obstacle to doing this was the Passenger Train for many railroads. There was often public opposition to passenger service cutbacks. Freight trains often are not on a tight schedule and long trains didn’t have to be run frequently. Good passenger service on the other hand requires a well maintained railroad which is expensive. This is particularly true of commuter and corridor rail service which often are in areas without much freight business. Three of the most passenger hostile railroads in the 1960’s were the New York Central, Pennsylvania and Southern Pacific. These railroads had commuter trains they badly wanted to get rid of. For the Southern Pacific downgrading infrastructure became an obsession.
Many of the other railroads had only long distance trains running mostly on their mainline which are kept in the best of shape by the railroads. By the early 1970’s things for the railroads hit bottom with the bankruptcy of the PennCentral. With this came the formation of Amtrak. Even then railroads with long distance passenger trains refused to join Amtrak or joined reluctantly. Their reluctance wasn’t because they loved their passenger trains, but they questioned whether Amtrak would be greater evil than running their own passenger trains. The point is railroads were not going out of business at this time because of passenger trains, but for lack of profitable freight to pay for the railroad infrastructure.
The freeways which were brand new 50 years are now literally falling apart. Not only that they are often jammed with traffic, but it isn’t practical to build more freeways in densely populated areas. Also there isn’t enough money now to keep up with the repairs for the freeways we have let alone to build new ones. A double tracked railroad can carry more passengers and freight than a typical 10 lane urban freeway. Many railroads have rights of way wide enough for up to 4 tracks. Upgrading and grade separating existing railroads is vastly more productive than trying to build more freeways. In California we have seen the start of government paying to upgrade the railroads to improve passenger service. This has also improved freight service for the railroads. This process is accelerating with more Federal Funds now available for improvements for railroads. A faster railroad is a better railroad. This improves the productivity of the railroad by increasing capacity. Railroads will be able to run more time sensitive, high value freight at passenger trains speeds. This will open new markets for the railroads. There is plenty of land available for redevelopment near the railroad which can supply new passengers and freight business
Infrastructure is a major cost for society. The railroads in America are unique because they have been expected to pay for their entire infrastructure. Trucks, Airlines, Ships and Barges don’t own and maintain roads, airports, harbors or canals. The prospect that passenger trains can make enough money to pay for all their infrastructure costs alone is not good. Freight and passenger trains can operate together on a well maintained railroad; particularly when there is government support.