Productivity Improvements in the U.S. Rail Freight Industry, 1980-2010

Between 1980 and 2008, extensive productivity improvements and changes in traffic mix allowed railroads to become more profitable despite declining prices and stronger competition from motor carriers. These productivity improvements enabled the Class I railroads to halve their real costs per ton-mile, even though costs for fuel and other resources rose faster than inflation. Productivity improvements were greatest for bulk traffic moving in unit trains, containers moving in doublestack trains, and high-volume shipments moving long-distances in specialized equipment. While the rail industry indeed achieved tremendous improvements in productivity following passage of the Staggers Act in 1980, it is incorrect to point to deregulation as the primary reason for these gains. Other factors that were even more critical to productivity growth included technological advances, new labor agreements, improved management, and public policy responses to the Northeast Rail Crisis.