Abstract: Between 1960 and 2010, extensive productivity improvements and changes in traffic mix allowed the US and Canadian railroads to become more profitable despite declining prices and stronger competition from motor carriers. Productivity improvements enabled the Class I railroads to halve their real costs per ton-mile, even though fuel and other resource costs rose faster than inflation. Improvements were greatest in the areas most suitable to rail freight: bulk traffic moving in heavy haul unit trains, long-haul movement of containers in double-stack trains, and high-volume shipments moving long-distances in specialized equipment.
While the rail industry indeed achieved tremendous improvements in productivity following passage of the Staggers Act in 1980, it is incorrect to point to deregulation as the primary reason for these gains. Productivity growth was achieved in part through network rationalization, a restructuring process than was perhaps assisted by Staggers, but a process that was actually begun in the 19th century. Other factors that were even more critical to productivity growth included technological advances, new labor agreements, improved management, and public policy responses to the Northeast Rail Crisis.