Opinion: Freight rail plays important role in Michigan economy

Dan Papineau

Central to all Michigan residents is the sorry state of our roadway infrastructure. It’s not easy to forget for drivers who pay roughly $645 a year in additional costs due to roads in need of repair. The Michigan Chamber has long been a champion for increased investment because we know the condition of our roads, bridges and rail — good or bad — can propel or hold back our economy.

Fortunately, there’s one infrastructure bright spot that is seamlessly connecting our state, supporting lifeblood industries, and delivering for consumers. Michigan’s freight rail network, including 28 railroads and over 3,600 track miles, is often overlooked in infrastructure conversations but it is critical to our economy. What’s more, freight railroads largely pay for their own infrastructure at little cost to taxpayers, standing in contrast to our publicly funded roads.

Rail has long played an outside role in moving Michigan’s auto industry, from the early 1900s and Henry Ford’s Highland Park assembly plant to today. Freight trains today move 75% of the over 17 million new cars and light trucks purchased in the U.S. More than this, they’re involved in every stage of auto manufacturing, from hauling the raw iron ore and coke for steel to delivering finished auto parts. This amounted to 1.8 million rail carloads of vehicles and parts in 2018.

Freight rail brings numerous other benefits to the region many people may not see or realize.

From moving Michigan autos to mining to agriculture, freight rail is an economic workhorse, supporting 1.1 million jobs across the country. Each of the nearly 3,400 direct freight rail jobs in Michigan supports 6.5 more jobs across the state. A study looking at 2017 data found that investments by the largest Class I railroads — about $25 billion annually over recent years — contributed $219 billion to U.S. economic output in a single year.

Federal and state policymakers in DC and Lansing should oppose any new policies that would uproot rail’s ability to continue investing at record levels. This year marks the 40th anniversary of the landmark Stagger Rail Act, signed by President Carter, which brought balanced economic regulation to freight rail. In short, it allowed railroads to run their businesses like other companies, setting rates and schedules without government overreach.

Staggers’ smart policy has led to record safety, productivity and investment, plus shipper rates that are 44% lower than they were in 1980. While Congress isn’t currently considering legislation to change the regulatory balance, the U.S. Surface Transportation Board, rail’s economic regulator, is considering a return to rate caps and other regulations that could constrain private rail spending. This return to overregulation would be a mistake that undermines the rail network on which our economy relies.

As Michigan navigates an ever-changing economy, infrastructure will continue to be the critical foundation on which our industries stand. I’m proud to share the positive freight rail story and hope that our policymakers at every level do what they can to preserve good regulatory policy and keep the rail network firing on all cylinders.

Dan Papineau is the director of Tax Policy & Regulatory Affairs at the Michigan Chamber of Commerce.