America’s incredible standard of living is very much dependent upon the efficiency and reliability of our shipping industries. The freight rail industry, in particular, has been able to reduce costs for American families and businesses, becoming a model for other sectors. These gains, however, could be lost because of bureaucratic red tape.
The financial performance of America’s privately owned railroads has improved significantly since the signing of the Staggers Rail Act in 1980. The federal law abandoned the failed policies of the Progressive Era and launched a renaissance for the freight rail industry. This transformation led to significant improvements in infrastructure, operations, and service, much to the benefit of customers here in Mississippi and across America.
A prosperous rail industry benefits taxpayers too. The alternative to a privately owned and managed freight system is a government-run system. Amtrak is the model for that. The quasi-public “company” has soaked up more than $46 billion in federal subsidies over the years. By contrast, freight rail operators have invested an average of $25 billion annually to maintain and modernize their networks. Instead of costing taxpayers billions, freight rail is working hard to lower costs for consumers and, also, generate profits for investors. Instead of taking public dollars from priorities like education and health care, industry profits help put more money into schools and other public goods.
These gains could be lost if an obscure federal agency doesn’t change its ways. The Surface Transportation Board, which is responsible for overseeing the financial health of the freight rail industry, is considering regulations that would limit the ability of freight rail to continue to grow and innovate. One change they are contemplating is an artificial cap on the ability of railroads to earn a profit. This limitation would have serious consequences across the entire system, likely leading to lower wages for workers and higher prices for customers.
Demand for freight shipping is expected to increase by 35% over the next two decades. To keep up, American freight operators will have to heavily invest in operations and infrastructure. This is particularly true in Mississippi, which is home to 26 rail companies and nearly 2,500 miles of freight track.
The history of freight rail in America demonstrates that more government control only increases costs and stifles progress. The Surface Transportation Board would do well to consider how to accomplish its mission without reversing these gains.