Railroads are back from brink and chugging along

November 6, 2011 at 12:00a.m.

McClatchy Newspapers

HARRISBURG, Pa.

It’s a Sunday afternoon, and there’s a massive traffic jam on a bridge that crosses the wide Susquehanna River, with truck trailers and containers on both sides waiting to get to their final destinations in the densely populated Northeast.

But this gridlock isn’t occurring on a highway.

Rather, it’s on the century-old, stone-arch bridge that now carries the trains of Norfolk Southern Railway to far-flung destinations such as Chicago, New York, New England, Baltimore and Atlanta. Half a century ago, most of those trains would have carried coal, ore and manufactured goods stuffed into old-fashioned boxcars. Many still do, actually.

But what’s causing the traffic jam is something else: The “boxcars” belong to trucking and shipping companies, such as UPS, J.B. Hunt and Schneider International, filled with consumer products bound for the shelves of big-box stores such as Walmart, Target and Home Depot.

If you buy stuff at any of these stores — and most of us do — it got there by train.

More than three decades after the federal government deregulated freight railroads, the industry is enjoying “a new golden age,” said Frank Wilner, the author of several books on railroad economics.

After being left for dead in the 1970s, railroads reinvested nearly $10 billion in themselves last year alone, according to industry figures, and they haven’t received taxpayer bailouts. Need a job? They’re hiring, and if you’re a veteran, they want you. They can’t send jobs overseas because their business is literally bolted to the ground.

“They are more efficient than trucks are at moving quantities of freight,” Wilner said.

The Interstate Highway System eroded railroads’ freight business starting in the 1950s. Railroads tried to win back some of the business by putting truck trailers and containers on flatcars — intermodal service, it’s called, because the merchandise can move by road, rail and water — but with a tradition of moving heavy freight at slow speeds, they weren’t very good at it.

“When I started, railroads were the laughingstock of intermodal service,” said Mark B. Solomon, senior editor at industry magazine DC Velocity and a transportation author and expert who has covered the industry for 30 years and formerly handled public relations for UPS.

Not only is trucking freight rail’s biggest competitor, it’s also its biggest customer. In 2003, intermodal service overtook coal as the leading source of revenue for the freight-rail industry.

Solomon and other transportation experts said that truckers are losing their edge because of highway congestion, higher fuel costs, driver shortages and pending safety regulations. Meantime, railroads have made a huge bet on intermodal service, spending hundreds of millions of dollars on new facilities and upgraded tracks to handle the increasing traffic volume.

“The trucking industry has a problem,” said Larry Kaufman, a former transportation journalist, industry analyst and communications chief, and author of “Leaders Count,” a book about the Burlington Northern and Santa Fe railway.

“Smarter truckers and smarter railroads are seeing this as a synergy,” he said.

Now, Solomon said, the advantage goes to freight railroads. The low pay and difficult, on-the-road lifestyle makes it hard for trucking to attract drivers.

“When the economy picks up, you’re going to have the worst driver shortage in history,” he said.

J.B. Hunt made its first rail shipment more than two decades ago, after its founder rode a Santa Fe Railway intermodal train from Chicago to Kansas City with Santa Fe’s president. Recently, the Lowell, Ark., trucking company reported that intermodal operations generated 59 percent of this year’s third-quarter revenues.

Railroads also are doing something else they used to be not very good at: marketing.

Viewers of the PBS show “NewsHour” see a spot featuring the orange and black locomotives of BNSF Railway. CSX, which might not sound like a freight railroad at first blush, touts its blue and yellow shipping containers in national television ads as “how tomorrow moves.”

Matt Rose, BNSF’s chief executive, said this isn’t your grandfather’s railroad business.

“The railroad of today is not the railroad of yesterday,” Rose told McClatchy Newspapers. “We’re a great kaleidoscope of the U.S. economy.”