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Short-Line Railroads Help Keep Economic Growth On Track

Increased fuel costs and congested highways have made rail shipping economically more attractive compared to shipping by truck. As a result, companies are forming to re-open stretches of once-abandoned rail lines.

John K. Borchardt (Fall 2012)
The Lycoming Valley Railroad is a short line that operates 38 miles of track in Lycoming and Clinton counties in Pennsylvania.
The Lycoming Valley Railroad is a short line that operates 38 miles of track in Lycoming and Clinton counties in Pennsylvania.
Short-line railroads are more than a nostalgic slice of Americana; they are a significant part of the national economy. Increased fuel costs and congested highways have made rail shipping economically more attractive compared to shipping by truck. As a result, companies are forming to re-open stretches of once-abandoned rail lines.

In the past 30 years, the number of short-line railroads has grown from about 70 to about 550, according to David Whorton, a spokesman for the American Short Line and Regional Railroad Association. These railroads operate in 49 states and employ about 18,000 people. Usually they have annual revenues of less than $28 million. Short lines typically serve two to six industrial customers, usually connecting with a major freight railroad such as CSX or the Norfolk Southern Railway. Their growth was stimulated when Congress passed the Staggers Act of 1980. It allowed major railroads to dispose of their unprofitable routes. Short-line railroads formed and acquired some of these routes.

Recent Growth
The energy efficiency and other advantages of rail transport are resulting in the extension of existing short-line railroads and the formation of new ones. For example, the newly formed Saratoga & North Creek Railway is refurbishing and reopening 30 miles of abandoned, rusty, overgrown tracks to access millions of tons of waste rock containing garnet at an abandoned iron and titanium mine in the Adirondacks. It will bring an economic boost to towns along its route by providing a new shipping option for products such as minerals, lumber, and paper. The railway is owned by Chicago-based Iowa Pacific Holdings, which also owns two short-line railroads in Texas. Traffic on these short-lines is also flourishing as a result of the booming petroleum industry. Gas drilling in the Marcellus Shale region has benefited the 34-mile Lycoming Valley Railroad in Pennsylvania, which hauls commodities related to the industry. The railroad went from 1,230 carloads in 2009 to 6,880 in 2011.

Port Expansion
Port expansion projects on both the West and East coasts are also resulting in the construction of new short-line railroads and expansion of existing lines. For example, the Pacific Harbor Line (PHL) serves the ports of Los Angeles and Long Beach. PHL operates 80 trains a day hauling 40,000 carloads of freight plus intermodal traffic annually over its 18 route miles and 59 total miles of track.

PHL breaks down trains as they arrive and sends their cargo containers to the nine terminals at the ports, where containers are transferred to ships. The railway also assembles trains that haul freight to much of the nation out of the ports through its connection to the Union Pacific and BNSF transcontinental rail lines. Additionally, expansion projects involving short-line railroad construction are in progress or planned in Houston, Savannah, Hampton Roads, and at other ports.

Industry Organization

Some short-line railroads are amalgamating. For instance, Genesee & Wyoming is acquiring RailAmerica, which owns and operates 45 short-line and regional railroads in North America with approximately 7,500 miles of track in 28 U.S. states and three Canadian provinces. Genesee & Wyoming, Inc. is a short-line railroad holding company with interests in 63 railroads in the United States, Mexico, Canada, and overseas. It operates 7,400 miles of track. The deal combines the two largest short-line and regional rail operators in North America.
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