From Small Towns to Global Markets: How Freight Rail Drives Economic Growth
Nearly 150 years after the Golden Spike in Promontory Summit, Utah, completed this nation’s first transcontinental railroad, America’s freight railroad industry remains an emblem of innovation and a foundation for economic growth.
In fact, a study by Towson University’s Regional Economic Studies Institute found that U.S. freight railroads helped spur nearly $220 billion of economic activity and supported approximately 1.1 million American jobs in 2017. This included $71 billion in wages and close to $26 billion in tax revenue — more than the annual tax receipts of 30 states.
Within the United States, freight rail’s consistent and strategic spending buoys once-stagnant desert towns like Santa Teresa, New Mexico. Meanwhile, Southern Florida has become a buzzing gateway to the global economy in part because of freight rail’s unique capabilities.
An Infusion of Cash, Jobs in New Mexico
When Union Pacific Railroad decided to build a $400 million terminal in Santa Teresa, freight rail brought its first delivery: Jobs.
About 1,600 of them. Today the terminal is complete, and more than 600 newly created permanent jobs remain a windfall for this town of 4,200. Additionally, nearly a dozen new businesses have sprung up near the terminal. State officials estimate that the Santa Teresa rail terminal added more than $470 million to the New Mexico economy during the construction period alone.
“Private rail investment was a critical and vital selling point for many businesses,” says Jon Barela, the former Economic Development Secretary of New Mexico. “It signaled to the world that Santa Teresa was a strategic place to do business with the potential to be a vital part of the border and cross-border trade.”
Santa Teresa’s story is a familiar one, as freight rail investments lift towns and cities from coast to coast. But sometimes the industry’s economic imprint shows up in surprising ways — such as helping the Windy City’s commuters get to work on time.
Go Rail & Go Global
In southern Florida, PortMiami serves as a vital link between U.S. businesses, consumers and the global economy. Like its sister Port of the Everglades in Fort Lauderdale, PortMiami counts on the productivity gains that arrive by partnering with freight rail. PortMiami worked with the Florida East Coast Railway to install three 3,000-feet rail tracks directly onto the docks. This investment allows the port to handle 225,000 containers per year, up from the 45,000 container maximum capacity before the tracks were installed. Thanks to the integrated freight rail network, the goods arriving at PortMiami are able to reach nearly 70% of the U.S. population within four days. This swift delivery benefits businesses in the U.S. and abroad.
A global marketplace facilitated by freight rail also serves American consumers.
“The freight railroads’ extensive and improved network enables connectivity between buyers and sellers and facilitates trade both within the U.S. and between the United States and other countries,” says Clifford Winston, a Senior Fellow at The Brookings Institution in Washington, D.C. “Without an efficient rail network, U.S. industries would incur higher costs, and those costs would raise the prices of a large share of consumer goods.”
A global marketplace and strong domestic economy are possible, in part, because of decades of private spending by American freight rail. And as Towson University’s recent study shows, the beneficiaries are not merely shippers or businesses or the freight rail industry itself. Every American — whether taxpayer, consumer or business owner — benefits from the incredible economic ripple effect of our freight rail network