Rising Energy Costs May Usher in U.S. Freight Rail Revival

Rail built America in the 19th century and now it may be poised for a massive resurgence in the 21st century as high fuel prices make it competitive again

It just may be a hunger for wood pellets that drives a resurgence of freight rail in the U.S. Southeast. European demand for this greener fuel is expected to triple by 2020, driven by climate-friendly policies that encourage coal-fired utilities to burn biomass as well to cut down on carbon dioxide emissions. But Europe does not have enough wood pellets, and the shortfall between global supply and demand is expected to grow to 45 million metric tons per year. And that is where Sean Dunlap, director of Mississippi’s Wayne County Economic Development District, sees an export opportunity.

“We’re blessed with trees and we want to get them to market,” Dunlap explains. “Mississippi has two counties that are 50 to 70 percent covered in forest, but they can’t get the timber out economically without rail.”

Bulky, low-density materials like wood pulp and pellets are too expensive to ship by truck, so Dunlap, along with partners, wants to build a 90-kilometer (56-mile) freight rail link that would restore direct service from Chicago all the way to the Gulf of Mexico.

Absent such a link, regional suppliers have to ship their products far to the east or west to get the goods to Gulf ports. “That 56 miles might as well be 5,000 miles to them,” says Dunlap, calling the plan “the missing link in the economic spine of east Mississippi.”

Such economic dreams—and high diesel prices—are spawning a renaissance of freight rail in the U.S., rather than the high-speed passenger rail that gets most of the attention.

The efficiency advantage
Diesel prices are nearly four times higher today than they were in 1999, forcing shippers to seek the most fuel-efficient modes of travel. According to a 2009 study by the Federal Railroad Administration, rail fuel efficiency varies from 66 to 218 ton-kilometers per liter, whereas truck fuel efficiency ranges from 29 to 57 ton-kilometers per liter.

Moreover, the fuel efficiency of rail has been ramping up at a far faster rate than trucks. Between 1990 and 2006 rail efficiency improved by about 20 percent, or 1.1 percent annually.

Some of the gain is owed to technological and efficiency improvements: Railroads have adopted electronic controllers in locomotives, including advanced sensors and fault diagnostics; improved diesel fuel mixture and combustion as well as cooling systems that maintain optimal engine temperature; replaced binary switch DC motors with AC traction motors that respond to loadwith variable voltage/frequency output, and better control/communication systems.

Also added were lightweight, high-capacity coal cars, improved aerodynamics, lighter containers to replace truck trailers and spin/slide-protected steering wheels to maximize traction. These improvements, along with reductions in weight as well as rolling and aerodynamic resistance, and coupled with the addition of stronger (6,000-horsepower) motors, have reduced the number of locomotives needed to pull a train. Hybrid locomotives, which carry a 1,200 amp-hour battery bank and use regenerative braking, were also introduced. Operational practices like optimizing traffic at sidings, improved scheduling, reducing empty car mileage and changes in the traffic mix also helped.

Further, as rail privately invested $40 billion in new infrastructure over the past five years, the trucking industry has suffered high fuel and labor prices—the two largest costs—which have forced it to contract since 2005. Accordingly, rail has gradually taken market share away from trucks since 1999. The migration from trucks to rail is particularly evident for shipping distances longer than 800 kilometers. The longer the haul, the more of a fuel efficiency advantage rail has over trucking.