Trains make comeback against trucks as US economy tightens competition
More trains and fewer trucks may move America in the 1980s. A historic swing in the pendulum is sweeping railroads back into favor as the trucking industry's competitive advantage diminishes, transportation experts say.
A combination of factors is restoring a bit of the luster railroads lost when construction of the Interstate Highway System ended the golden age of rail.
Railroads' share of the total freight hauled in this country eroded from more than 75 percent in 1929 to a low of 37.2 percent in 1980. But that figure rose in 1981 to 37.7 percent. Analysts at the American Association of Railroads (AAR) say 1982 statistics may show a further increase.
Before the recession bit into this year's profits, several railroads were showing remarkable gains. Conrail posted profits of $39.2 million in 1981 against a loss of $243.7 million in '80. During the same time period, Illinois Central Gulf's pretax income rose 46 percent, and Chicago & Northwestern's net income climbed 39 percent.
While conceding that the pendulum has stopped its swing toward trucking, some experts add that the pendulum is not necessarily swinging dramatically back to railroads.
''The railroads today are in a position to be more competitive,'' says Merton J. Peck, a transportation specialist at Yale University. ''But what they'll do from that position is anybody's guess. They'll certainly never return to the prosperity of the 1920s, although they might regain the volume of business they've lost since the 1960s.''
''I don't see a shift from trucks to rails in terms of the freight trucks have traditionally hauled,'' says Paul Banner, a transportation consultant with Charles River Associates in Boston. ''If the railroads experience growth it will not be at the expense of trucks.''
Nevertheless, in a number of areas railroads are gaining advantage over the trucking industry:
Deregulation. Experts say that deregulation of both industries has aided railroads by increasing efficiency, but hurt trucking by increasing competition.
Fuel prices. While both types of carriers use the same fuel, trains are more efficient than trucks by a ratio of 4 to 1, according to the AAR. At 10 cents a gallon the difference was inconsequential, but when the price of diesel fuel climbed to more than $1 a gallon and stayed there, shipping by rail became more attractive.
In addition, a recent Interstate Commerce Commission ruling is expected to further strengthen the position of the railroads in relation to the trucking industry. The ICC will allow railroads to move into the commercial trucking business, helping them in their efforts to become ''total transportation companies.''
Other factors weighing in the railroads' favor:
Coast-to-coast runs. Continuing railroad mergers are expected in the next five years to create one or several railroads with lines that stretch from coast to coast. Currently, the need to transfer shipments from one railroad to another on long hauls crimps the competitive style of railroads by adding time and expense.
Technological innovations. Increasing use of the ''Roadrailer,'' a trailer with retractable rubber wheels for road travel and retractable steel wheels for rail use; construction of new diesel locomotives with 20 percent greater fuel efficiency but no loss of horsepower.
Other considerations are less tangible. One expert says the precipitous decline of the nation's rail system in the mid-1970s ''put a real scare into'' industry executives, awakening them to the need for drastic action. One sign of their resolve is the dramatic improvement in thousands of miles of roadbed. During the last four years the railroad industry has spent an average of $3 billion a year in capital improvements, compared with $1 billion to $2 billion in the years immediately preceding them.
For years the railroads complained that the Interstate Highway System was an indirect government subsidy of the trucking industry and that the railroads enjoyed no similar benefit. Ironically, experts say, the roles are now reversed. While the railroads have scraped together the funds for major capital improvements, the trucking industry has found its hands tied by its dependence on the federal government to repair a crumbling Interstate Highway System, a task Washington doesn't seem able to do.
The new 5-cents-a-gallon gasoline tax may help highway reconstruction efforts , but trucking officials say such taxes will hurt the industry more than it will help the roads. They also say the higher relative cost of shipping by truck will further aid the efforts of railroads to compete with trucks.
Others argue that many industries in the US will come out of the current recession with the resolve to keep their inventories low as a cost-saving measure. This, in turn, would mean small and more frequent shipments, a trend that they say would favor trucks.
A record volume of ''piggyback'' traffic (trailers mounted on flatcars) in 1981 masked a tremendous surplus of boxcars. ''What we're seeing is the shift of trucks tom railroads,'' says Chris Knapton, a spokesman for the American Association of Railroads. ''The boxcar is rapidly becoming a white elephant.''