When it comes to shipping, rail is generally safer and more cost-effective than trucks. Freight cars don’t contribute to highway congestion, and their consistency is a huge benefit to businesses that depend on them.
While some may assume that rail is generally used for long-distance shipping, short-line railroads are actually a critical link in the supply chain. Terminals that understand this make great efforts to support diverse transportation options, benefitting suppliers and manufacturers who need a reliable shipping option that complements the use of trucks when appropriate.
What are Short-Line Railroads?
As the name suggests, short-line railroads are just smaller rail lines that connect shorter distances. “Short” can be a relative term since they collectively operate more than 50,000 miles of track throughout the United States (more than 40% of the total network).
They are distinct from their more well-known counterparts because they usually operate regionally, often in a single state.
Railroad Classification
In the United States, railroads are classified based on their annual revenue. There are three classes:
- Class I railroads are those carriers earning an annual revenue of more than $1.05 billion as of 2024 (figure adjusted annually).
- Class II railroads earn between $47.3 million and $1.05b annually.
- Class III railroads earn less than $47.3m.
Short-line railroads are usually class II or III railroads. Examples include the Arkansas-Oklahoma Railroad, the Twin Cities and Western Railroad, and the San Pedro Valley Railroad. While many class II and III railroads operate independently, others are owned by larger companies that also operate class I railroads.
In Europe, where railroads rely on a diverse set of technological standards, rail freight is less common, making up only about 18% of cargo movements. Still, certain countries, like Lithuania, move over 70% of their domestic cargo by train–an important consideration for ports operating on the continent.
How Short-Line Railroads Benefit the Supply Chain
Over the past several decades, short-line railroads have experienced a huge spike in usage, especially in the United States. Their energy efficiency is a big reason, but their accessibility makes them even more important for small-town manufacturers who would otherwise have no access to the national network.
Some of the benefits of short-line railroads include:
- Accessibility: Short-line railroads provide vital connections for businesses located in areas not served by Class I railroads. By linking these locations to the national rail network, they help manufacturers, distributors, and farmers access larger markets without relying solely on truck transport.
- Cost-Effectiveness: For shippers, short-line railroads often offer competitive pricing compared to long-haul trucking, particularly for heavy, bulky, or high-volume freight. This cost efficiency can be passed down the supply chain, lowering overall logistics expenses.
- Customizable Service: Short-line railroads often provide personalized, flexible services tailored to the needs of their customers. This includes more frequent service, smaller shipment sizes, and faster response times, which is particularly advantageous for industries with variable demand.
- First- and Last-Mile Solutions: Short-line railroads are instrumental in bridging the gap between local industries and the larger rail network. They handle the first-mile and last-mile logistics, ensuring smooth transitions and continuity in the supply chain.
Short-line railroads also confer economic and social benefits to their local communities. By facilitating the movement of goods to and from smaller markets, short-line railroads support local economic development, creating jobs and stimulating investment in areas that might otherwise be underserved by major transportation networks.
As the U.S. strives to reshore its manufacturing, short-line railroads are filling important gaps and receiving government support. For example, in 2024, the Biden administration authorized $2.5 billion in funding for a wide-range of rail projects that will benefit short-line development.
All of this means being proactive in your adoption of rail-friendly strategies will be a key strategy for growth in 2025.
5 Ways Terminals Can Get the Most out of Short-Line Railroads
Terminal operators can capitalize on the growth of short-line railroads to improve efficiency, expand market reach, and create a more resilient supply chain. Here are 5 projects you can consider to take advantage of the short-line railroad resurgence:
1. Build or Strengthen On-Dock Rail Facilities
Start by ensuring your terminal is equipped with direct rail access. Terminals with on-dock rail infrastructure can seamlessly transfer cargo from ships to railcars, minimizing drayage costs and transit times.
Tailor your on-dock rail infrastructure to accommodate short-line operations, such as smaller rail yards or specialized loading/unloading equipment for regional freight.
2. Partner with Short-Line Operators
Collaboration is the key to growth.
Develop partnerships with short-line railroads to provide integrated logistics services, including bundled pricing for rail and maritime transport. Work with short-line operators to offer regular, dedicated services connecting terminals to key regional markets.
3. Develop Inland Port Connections
One of the main benefits of short-line railroads is their accessibility. Using short-line railroads to establish efficient links between the marine terminal and inland ports will help distribute cargo to inland regions without congesting highways. Aim to contribute to a network where short-line railroads feed into larger rail hubs, improving regional distribution.
4. Diversify Cargo Handling Services
Developing specialized cargo solutions is one of the best ways for any terminal to grow. Adapting your terminal’s operations to accommodate additional cargo types will align you with short-line railroads that often specialize in these themselves.
Target regional industries often served by short-line railroads and tailor your services to their cargo needs. Industries like agriculture, mining, or manufacturing are perfect options.
5. Invest in Technology to Better Integrate with Short-Line Railroads
Invest in digital platforms that facilitate real-time cargo tracking and scheduling between your terminal and short-line railroads. Here’s what to look for:
- Reporting Capabilities: Look for a platform that enables versatile reporting tools. This will give you access to the information you need to make smart decisions that benefit your terminal and short-line rail partners.
- Real-Time Planning: You’ll want technology that allows you to view and easily manage container information for quick adjustments.
- Smooth Integration: Make sure your chosen technology solution will easily integrate with your existing technology and infrastructure, and allow for future growth.
- Productivity Enhancing Tools: The right technology platform will boost your staff’s productivity with useful tools like graphical interfaces, adaptable user privileges, and flexible yard planning tools.
The short-line rail industry is quickly becoming one of the strongest links in the global supply chain. By investing in your technology and infrastructure today, you’ll be in the perfect position to benefit from its growth in the coming years.
Optimize Your Short-Line Railroad Partnerships with Tideworks Technology
Short-line railroads play a critical role in bridging regional supply chains, offering cost-effective, customizable, and sustainable solutions for cargo movement. From building on-dock rail facilities to investing in advanced technologies, there are numerous ways terminals can leverage these smaller rail lines to enhance their operations and grow their market reach to remain competitive.
If you’re ready to maximize the benefits of short-line railroads, Tideworks Technology is here to help.
With proven expertise in terminal operations and a deep understanding of rail logistics, we offer integrated solutions designed to optimize your capacity, improve efficiency, and position your terminal for long-term success.
Partner with Tideworks to unlock new opportunities today.