Why are railroads so hard to do business with?

It is one of the billion-dollar question facing the North American freight rail industry—and it’s not going to go away anytime soon.

At the sold out RailTrends summit in New York, G&W CEO Michael Miller pointed out that despite rail’s well-known economic and environmental advantages, we continue to cede market share to the trucking sector. It was a theme highlighted earlier by Adriene Bailey, Partner in leading management consulting firm Oliver Wyman during her opening keynote address. Discussing her company’s new shipper survey and outlook for industry growth, she noted that while there had been a post-pandemic shift towards trucking—50 per cent of shippers say they would like to do more with rail.

Rail versus truck: cost, speed, convenience

In his presentation, Mr. Miller showed a video emphasizing how easy it was for shippers to get their needs met at the click of a button with the Uber Freight app—with the peace-of-mind of being able to see where their goods are at every stage of the journey. But while trucking is embracing the concept of an Uber customer experience—railroads continue to operate more like taxis—requiring a level of transactional friction that customers shy away from.

Mr. Miller shared a comparison of rail versus truck from a new customer’s perspective. If they opted for trucking, their order would take five days to deliver at a cost of about $317,000. The same order by rail would cost significantly less – about $270,000 – but would take 30 days to arrive. While cost is always a factor—trucking wins every time when convenience and speed are paramount.

Rail versus truck: customer example

Source: G&W CEO Michael Miller, Presentation, RailTrends 2025.

So, to the second billion-dollar question: how do railroads make it easier to do business with them?

While there was plenty of discussion on this topic at RailTrends, if there had been an easy answer, all freight railroads would have adopted it by now. The rail intelligence summit did point the way towards two elements of the solution, though: encouraging Class I railroads to adopt the more agile, innovative mindset being embraced by short line operators, and for all classes of freight rail to leverage new technology to eliminate friction in processes and operations.

The First Mile, Last Mile initiative is a step in the right direction which shows Class I railroads are embracing partnerships with short lines to win back market share on shorter routes. Building more effective win-win partnerships between the two freight classes was a key consideration during a panel discussion with short line industry leaders at RailTrends, moderated by Stefan Loeb, Norfolk Southern Vice President of Business Development and First and Final Mile Markets. During the discussion, Justin Broyles, the President & CEO of RJ Corman, described the relationship as being between short lines as the “micro” to Class I’s “macro”. 

Short line technology leaders

Secondly, but just as importantly, short lines are powering ahead in the adoption of digital and AI technology solutions. Digital Track Authorities are making it possible to streamline the whole process of authorities, bulletins and warrants, eliminating friction and delays. This type of software can be a real game-changer for freight rail operators. 

And while it is in its early testing stages in the North American market, autonomous or semi-autonomous rail could be an extremely powerful tool in the battle to win back market share. G&W’s Michael Miller, whose company is working with Parallel Systems and Tracsis to test autonomous, battery-electric rail cars on short lines in Georgia, said the technology had the potential to create jobs by forging new corridors within intermodal space of 100 miles or less.

As expected, there was a lot to digest in two full days of in-depth insights into the biggest challenges facing the freight rail sector right now, delivered by a who’s who of industry leaders.

I’ll leave the last word to Jim Vena, CEO of Union Pacific Railroad and 2025 Railroad Innovator of the Year, who neatly surmised how standing still was not an option: “We need to move ahead or we’re going to get left behind.”

Tracsis, a proud sponsor of RailTrends 2025, is the leading provider of software-based rail automation solutions. Discover our innovative technology for freight railroads today.