Fuel prices have retreated a little, but they’re still high, and railroads are looking more appealing as a means of transportation and exchange traded funds (ETFs) could be the beneficiaries.
Shippers are more likely to deal with longer transport times and more inconsistent service of rail lines as costs for truck transportation have increased drastically with these fuel prices.
As the staff of SupplyChainDigest explains, the end result of this is expected steady growth in rail volume for years to come. Despite a slowdown as of late, economists feel that there will be strong growth in imports continuing over time.
Railway transportation will also provide environmental advantages as many companies look to reduce their carbon footprints. Politicians may even take action to favor rail movement because even though rail movement is impacted by fuel costs, it is much less than trucking. Today, locomotives get nearly 80% more mileage from a gallon of diesel than they did 30 years ago. They are capable of hauling a ton of freight nearly 400 miles on a gallon of fuel, which is three times farther than the capabilities of a truck.