History of Short Line Railroads

Introduction

Our nation’s railroad system began as short line, built to serve specific purposes within the communities they served. In 1826 the first commercial U.S. railroad, the Granite Railway located near Quincy, Massachusetts, was financed and built to haul granite blocks from a quarry to the Neponset River to be shipped via barge to Boston and beyond.

Expansion and the Founding of ASLRRA

As industry and commerce developed, the local projects began to interconnect, creating longer routes and improving the economies of the areas they served. The small railroads industry became a driving force in the development of our country, moving goods from one area efficiently to another in our expanding country. By the 1860's, consolidations created regional systems that served ever widening areas. But not every railroad was to become part of a through route or a growing system.

In the early 1900's, most of the basic systems had been created and a number of the railroads not included in those systems had become the core of today's short line railroad industry. They were smaller railroads that were an important economic factor in the communities they served but not of strategic importance to the larger systems. By 1916 the national railroad system peaked at 254,000 miles and many of the small railroads banded together to form the American Short Line Railroad Association to assist and protect their interests.

Competition and Regulation

Throughout the 1920's, trucking competition increased, fueled by government built highways under the Interstate Highway System act of 1956.  Manufacturing patterns also changed, resulting in a gradual but steady decline in business available to the core group of short lines. At the same time, the larger railroads suffered in a highly regulated environment with subsidized highway competition and significant labor and management problems. Trucking became a cheaper way to transport some material previously shipped via rail.  Trucking required minimal capital outlay with the roads funded by the government, while railroads not only had to supply their own diminishing capital for growth and maintenance, but were often subject to punitive taxation on their rights-of-way. In addition, low performing sections of track could not be closed or sold without significant government approval processes.

In 1968, the New York Central and Pennsylvania railroads merged in a last ditch attempt to remain viable. Despite their best intentions they entered bankruptcy, and most of the other major eastern carriers followed. As a result of the ensuing railroading crisis, in 1976, Congress passed the 4R Act which established the United States Railroad Association to oversee the reorganization of the eastern railroads into a new entity to be known as Conrail.

One principal requirement in creating a viable Conrail was the elimination of money-losing and marginal branch lines that its predecessors had been forced to operate.  A number of marginal branch lines were turned over to newly formed, entrepreneurial short line companies in a grand and perhaps unintended economic experiment. These short lines were run by hands-on managers who lived and worked in the communities they served. They knew what their customers needed and did all they could to tailor service to those needs. They, and their customers, had a great deal of incentive to make their railroads work and they were able to secure some support from state and local governments. Despite many dire predictions of failure, the experiment worked. Marginal branch lines became viable and valuable feeder lines and demonstrated their value in improving economic opportunities at the community level.

The Staggers Act and the Rebirth of Short Lines

The Staggers Rail Act of 1980 ended most of the economic regulation on the rail industry gave railroads an exit strategy for unprofitable lines. The other major railroads quickly began to market unproductive branches to short line operators, and the small railroad industry began an unprecedented rebirth - in essence returning to the roots of railroading. Over the ensuing years thousands of miles of track have been saved from abandonment, and hundreds of communities have been able to maintain and advance their economies thanks to continued rail service. By 2002 the short line industry had grown to 545 railroad companies operating over 29% of all U.S. rail mileage and responsible for 25% of the total freight handled on the Class I Railroads. Today, short lines operate more than 50,000 miles of track, or 30% of the nation’s total railroad mileage. Today’s 603 short line railroads employ 20,000 people, serving 13,000 facilities and hauling more than 14 million carloads per year.  One carload in every four is served in original or destination by a short line railroad.