Freight Rail Flourishes Due To Innovations

In a time of plummeting oil prices, one might think rail would lose business to trucks, but the freight business is more detailed. In this interview with Burlington Northern Santa Fe CEO Mathew Rose, one gains an insight into freight rail's future.
November 11, 2008, 12pm PST | Irvin Dawid
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"The railroad revival and prospects for continued success turn on oil prices. As those prices rose over the past several years, locomotives pulling long trains became a cheaper alternative than trucks pulling trailers. Inexpensive oil had inhibited rail expansion for a long period.

Trucks are thirstier for fuel than are locomotives, and near big cities trucks must negotiate increasingly congested roads. Oil has fallen from a high of $145 in July to less than $75. 'As long as it stays above $25, railroads should retain an edge,' Rose says.

Rose is also playing the environmental card. For the last several years, Burlington has supplied customers with data on how carbon-friendly their hauls will be if they use trains instead of trucks. A train carrying 100 tons for 1,000 miles produces 45% fewer greenhouse-gas emissions that contribute to climate change than long-haul trucks bearing the same load, according to Burlington."

"'I refer to it as a three-legged stool,' says Rose. 'Fuel, congestion on highways, and carbon. We like the long-term proposition of the railroad very much.'"

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Published on Thursday, October 23, 2008 in Business Week
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