Key facts
- Railroads are more efficient and cost less per ton to move products across the US.
- High fuel costs are also increasing expenses for railroads, though fuel surcharges have offset some pressure.
- Shrinking trucking capacity, due to smaller carriers exiting the market and high operating costs, is also moving freight to rail.
Record fuel prices are benefiting US railroads by shifting freight from highways to trains, leading to higher revenues and profits for companies like Union Pacific, Norfolk Southern, and CSX. Railroads are more cost-efficient for long-haul transport, making them an attractive option for shippers as diesel prices reached a record $6.53 per gallon in September. This trend is particularly evident in intermodal shipments, where rail handles the long-haul portion. The trucking industry is also facing reduced capacity due to smaller carriers exiting the market and high operating costs, further contributing to the shift towards rail. However, railroads are also experiencing increased costs due to higher fuel prices, which have offset some of their profit gains, although fuel surcharges have provided some relief.