The rail industry is a major part of the problem
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Illustration: Peter and Maria Hoey
 
Dear reader,
In the midst of a supply chain crunch during the pandemic, the nation’s biggest rail companies have been shutting down services and laying off workers. You would think that higher demand to move goods would lead to expanded service. But the rail industry is actually profiting handsomely from creating bottlenecks.

And they’re being directed to do this by Wall Street. As Matthew Jinoo Buck writes in an intricate breakdown of the rail industry, “Wall Street judges railroads’ success based in part on spending less money running the railroad and more on stock buybacks or dividends.”

In 1980, there were 40 Class I railroads in America. After deregulation, there are now seven, and really four majors split the country in half, with two covering the East and two the West. This monopolization and focus on “precision scheduled railroading” (which means skimping on service, resilience, and safety) has made rail a key hindrance to a more functional supply chain.

You can read Matthew Buck’s vital story here.  
The story is part of our special issue, How We Broke the Supply Chain, that explains how bad policies created the disaster that is causing shortages and raising costs.
You can read all of the stories at
prospect.org/supplychain
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The American Prospect
 
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