H OW SHORT LINES CAME TO BE & THEIR BENEFITS TO THE INDUSTRY

Excessive railroad regulation and increased competition from trucks and barges led to weakness in the railroad industry up until the 1980’s In the 70’s more than 21% of the nations railroads were bankrupt Freight activity was down from 75% in the 20’s to 35% in 1978

Railroads did not have access to the capital needed to properly maintain the infrastructure 47,000 miles of track had to be operated at reduced speeds because of unsafe conditions

Congress passed the Staggers Rail Act of 1980 Under deregulation the railroads could invest in their infrastructure and bring the industry back to prosperit y

Allowed railroads to base their rates on market demand Allowed confidential contracts Streamlined procedures for sale of rail lines to new short line railroads

Numerous mergers

Reduced competition Reduced competition Shippers unhappy

Short lines allow shippers access to more than one Class 1 Increased competition Shippers are happy

Funding put into infrastructure Preserved rail service and jobs that would have been lost with out the creation of the short lines. Quicker transit times Shippers are happy

ROI – rose from 4.4% in the 80’s to 7.0% in the 90’s to 8.0% in 2009 Rail market share is 43% of freight market, more than any other transportation mode Short lines operate approximately 45,000 miles in 49 states, and employ 19,000 workers