Freight railroads moving Tennessee’s economy

• Tennessee’s economy and railroads have grown in tandem.
• Today, some 25 freight railroads operate in Tennessee, including CSX and Norfolk Southern.
• More than 220 million tons of freight originate in, terminate in, or pass through Tennessee by rail.

Wood S. Caldwell, managing principal of Southeast Venture, recently argued in The Tennessean that Nashville’s ‘it’ status is nearly four decades in the making.

The idea that the area near the “railroad switching yard, aka The Gulch, would someday be home to some of the most valuable real estate in town would have been outlandish, had anyone been crazy enough to suggest this," he wrote.

Yet the close relationship between Tennessee and freight railroads, including the Tennessee economy, goes back more than 160 years.  The Nashville and Chattanooga Railroad was the first railroad completed in Tennessee, reaching Chattanooga by 1854, according to the Tennessee Encyclopedia of History and Culture, followed soon thereafter by the East Tennessee and Georgia Railroad.

Over the years, Tennessee’s economy and railroads have grown in tandem. Today, some 25 freight railroads operate in Tennessee, including six of the seven large “Class I” railroads, including CSX and Norfolk Southern.

Numerous smaller railroads, including the Nashville and Eastern Railroad and the Tennessee Southern Railroad, combine with the large railroads to form a rail network in Tennessee spanning more than 2,600 miles.

These miles are part of a nationwide network of nearly 140,000 miles that serves nearly every industrial, wholesale, retail and resource-based sector of our economy.

In a typical year, more than 220 million tons of freight originate in, terminate in, or pass through Tennessee by rail, including millions of tons of motor vehicles, food, chemicals and other products made or grown in Tennessee itself.  The Tennessee Valley Authority, the Nissan assembly plant in Smyrna and hundreds of other facilities in Tennessee use rail to make their operations more productive and competitive.

Railroads don’t exist in a vacuum, of course, but instead are part of an integrated system involving railroads, trucks, barges and pipelines.  All of them provide what economists call “time and place utility.”  That’s a fancy way of saying that transportation is all about getting the products people want to where they’re wanted when they’re wanted.  Our integrated system of transportation providers moves 54 tons of freight per American each year.

Railroads have a clear advantage, though: their scale.  One railcar of corn, for example, is enough to supply the lifetime feed requirements of around 37,000 broiler chickens; one railcar of coal is enough to provide electricity for 21 homes for a year; and one train can carry 750 automobiles.

Railroads’ scale enables large firms to operate and to compete and ultimately enables the lower prices to consumers these large firms typically bring.

Railroads also make options available to rail customers in Tennessee and elsewhere that might not otherwise exist.  For example, if only trucks are used to supply coal, a power plant can probably only use coal mined nearby.  But railroads can usually deliver coal from geographically dispersed suppliers that provide additional – and often lower cost – options to power plants.

Moreover, because one train can carry as much freight as several hundred trucks, railroads are cost effective and produce key public benefits including reduced highway congestion – particularly on major thoroughfares like I-40 – lower emissions and reduced need for costly highway repair and maintenance.

Which brings up a final key point. Unlike trucks, barges and airlines, America’s privately-owned freight railroads operate almost exclusively on infrastructure that they own, build, maintain and pay for themselves.

From 1980 to 2015, freight railroads spent more than $600 billion of their own funds – not taxpayer dollars — on capital expenditures and maintenance expenses related to their infrastructure and equipment.  That’s more than 40 cents out of every revenue dollar, put back into a rail network that keeps our economy moving.

Looking ahead, as the economy of Tennessee and the nation grows, the need to move more freight will grow too.  The U.S. Department of Transportation recently forecast that total U.S. freight movements will rise by more than 40 percent by 2045.

By reinvesting massive amounts of private funds back into their networks, by advocating for sensible regulatory policies and by continuing to work cooperatively with their employees, their customers and government entities, railroads are getting ready today to meet tomorrow’s transportation needs.

Nashville and the rest of Tennessee will benefit.  So will America.

John T. Gray is Senior Vice President for Policy and Economics at theAssociation of American Railroads.