Why Railroads Are Scrapping Locomotives That Still Work

Added: 2026-06-02

[00:00:00]In late 2024, a CSX locomotive sat half dismantled at a scrapyard in Lordstown, Ohio. Its number was 9037.

[00:00:11]The diesel engine could still turn over, and the traction motors could still pull tonnage, but someone had already started cutting it apart for scrap metal. Across that same facility, acres of working locomotives sat in silent rows, waiting for the same fate. Why are North American railroads destroying machines that still have life left in them? The answer involves a dead chief executive officer, federal emissions regulations, and the cold math of what a locomotive is worth when nobody needs it.

[00:00:45]It was the early 1970s and a factory in Lrangee, Illinois, was building what would become the most successful diesel locomotive in history. The electrootive division of General Motors introduced the SD42 in January of 1972, a six axle, 3000 horsepower machine that railroad enthusiasts would later call the Chevy Silverado of diesel locomotives. It was not the highest horsepower engine on the market, and the electrootive division's own SD452 could outmuscle it on paper, but the SD42 offered something that mattered more in daily service than raw output.

[00:01:23]It was reliable, economical on fuel, and simple enough that a shop crew could keep one running with standard parts and common sense. Railroads noticed immediately. Burlington Northern eventually owned nearly 900 of them.

[00:01:37]Union Pacific, Canadian Pacific, Conrail, and Southern Pacific ordered them by the hundreds. By the time production ended, more than 4,000 SD42s had rolled off the assembly line. They hauled coal through the Powder River basin, grain across the prairies, and intermodal freight along the spine of the continent.

[00:01:59]Some of those original units are still running today, more than 50 years after they were built on class one railroads, on short lines, on lease rosters scattered across North America. That kind of longevity is almost unheard of in heavy industry. So, what changed? Why would anyone scrap a machine with that kind of track record? The short answer starts with a man named Eh Hunter Harrison.

[00:02:27]In the late 1960s, Harrison was working in a tower at Frisco's Tennessee yard in Memphis when the railroads operations chief, Bill Thompson, stopped by.

[00:02:38]Thompson pointed at the yard tracks packed with freight cars and asked Harrison what he saw. Harrison said he saw a lot of business. Thompson shook his head. He said he saw delayed traffic with all those cars just sitting there.

[00:02:52]Harrison never forgot that lesson. A parked freight car, in Thompson's view, was not an asset. It was a failure.

[00:03:01]And over the next five decades, Harrison built that idea into a philosophy that would transform North American railroading from the ground up. He called it precision scheduled railroading. What did that mean in practice? Instead of holding trains until they filled up, railroads should dispatch them on a fixed schedule, moving individual shipments from origin to destination as quickly as possible.

[00:03:24]Fewer trains running heavier and faster on a tighter schedule. The result, Harrison argued, was that railroads could move the same freight with far fewer locomotives, fewer rail cars, fewer switching yards, and fewer workers.

[00:03:43]He proved it at Illinois Central where he dropped the operating ratio from 98% to 60%. He proved it again at Canadian National where the railroad moved more traffic in 2003 with 40% fewer locomotives than it had in 1998. What Harrison was doing seemed almost contradictory and the old guard of the railroad industry said it could not work on dense American networks. But the numbers kept proving them wrong. When hedge fund manager Bill Aman recruited Harrison to take over Canadian Pacific in 2012, Harrison cut Canadian Pacific's locomotive fleet by more than 40%.

[00:04:20]removing 700 units from service.

[00:04:23]Canadian Pacific's locomotive productivity still climbed by 40% compared to 2012. Fewer engines somehow pulling more freight than the old fleet ever managed. Wall Street responded with enthusiasm as Canadian Pacific shares more than tripled during Harrison's tenure. His gospel of precision scheduled railroading spread to every corner of the industry. But Harrison was not finished. And what he did next would have consequences that no one, including Harrison himself, could fully predict.

[00:04:55]By the time he took control of CSX in 2017, dragging an oxygen tank behind him due to a serious illness, every major class one railroad in North America had either adopted precision scheduled railroading or was exploring it. The lone hold out was Warren Buffett's BNSF.

[00:05:13]Harrison died in December of 2017, 5 days after going on medical leave from CSX. But his philosophy outlived him by years and the men he trained carried it forward with the same relentless focus.

[00:05:26]His proteges fanned out across the industry, taking senior operations roles at nearly every major railroad in North America. Canadian National, Canadian Pacific, CSX, Norol Southern, Union Pacific, and Kansas City. Southern all implemented some version of precision scheduled railroading, and the consequences for locomotive fleets were immediate.

[00:05:51]What does it look like when a railroad decides it has too many engines? Norfolk Southern announced it was disposing of 703 excess locomotives after adopting precision scheduled railroading, cutting its fleet by 22% in roughly a year. The company took a $385 million non-cash charge to cover the write downs. CSX shed roughly half its locomotive fleet and reduced its workforce by 12%. At CSX under Harrison, yards were closed, schedules were rewritten, and workers who had spent entire careers running those locomotives were told their positions no longer existed. His message to customers who objected was blunt. He told them they could adapt, find another railroad, or use the highway. Across the industry, the Surface Transportation Board estimated that large freight carriers employed 30% fewer workers in 2022 compared to 2018. Hump yards that had sorted freight for decades were converted to flat switching operations or shut down entirely.

[00:06:56]The locomotives did not vanish overnight. Accounting rules and best practices allow railroads to store engines for up to 2 years after pulling them from active service before selling them for scrap or other uses. During that window, they sit on dead lines, sometimes at the railroads own facilities, sometimes at yards run by companies like LTE X in Lordstown, Ohio.

[00:07:21]Lordstown became something like a purgatory for diesel power. Rows of locomotives sat in silence, some still wearing the livery of railroads that had already merged out of existence, their cab windows staring at nothing. Norfick Southern maintained its own sizable storage tracks behind the Juniata shops in Altuna, Pennsylvania, where some units waited for repairs and others waited for the scrap dealers call. What determined which engines lived and which ones died came down to cold arithmetic.

[00:07:51]If traffic rebounds, stored engines might get reactivated.

[00:07:56]CSX did exactly that with some of its -8 locomotives when freight volume ticked upward. But that kind of reprieve is getting rarer. And here is why. Once a locomotive sits long enough to be fully written off the books, the economics shift in a way that rarely reverses. A 40-year-old engine with a tired prime mover and outdated electronics is expensive to maintain. Its lease may have expired, and the cost of refinancing can exceed the locomotive's remaining useful value. The cost of rebuilding it to modern standards can approach or exceed the scrap value of its steel. Sometimes the final nail in the coffin is something almost absurdly small.

[00:08:40]In July of 2023, the Portland and Western Railroad retired the last SD7 in revenue service, unit number 501, because of a simple water leak. A water leak on a locomotive that had been hauling freight since the Eisenhower administration. And here is the detail that connects all of this to something bigger than any single railroads accounting department. The pressure on older locomotives is not coming only from corporate balance sheets. It is also coming from Washington. And the collision of precision scheduled railroading's appetite for fewer engines with federal emissions regulations is creating a squeeze that older locomotives cannot survive.

[00:09:23]The Environmental Protection Agency began regulating locomotive emissions with tier 0 through tier 2 standards adopted in 1997.

[00:09:31]Those standards applied to engines manufactured from 1973 onward. The rules tightened with tier 3 in 2011 and tier 4 in 2015, requiring newly built locomotives to meet dramatically stricter limits on nitrogen oxides and particulate matter. Tier 4 engines deliver roughly a 90% reduction in particulate emissions and an 80% reduction in nitrogen oxides compared to older Tier 2 power plants. The problem is that less than 10% of the North American locomotive fleet currently meets Tier 4 standards. Roughly half of all locomotive engines in the country are more than 23 years old with little or no emission controls. What happens to all those older engines when the regulations tighten further? These aging machines are expected to remain in the national fleet for another decade or more unless regulatory or economic pressure forces them out sooner. But that timeline may be optimistic because the pressure is building from multiple directions at once. California has been pushing aggressively toward zero emission rail operations and what happens in California does not stay in California. The state is requiring railroads to begin phasing out the oldest engines operating within its borders. What California mandates today often becomes the national standard within a decade. And every railroad running freight through the ports of Long Beach and Oakland knows it. When a locomotive is remanufactured, it triggers upgraded emission requirements under the Environmental Protection Agency framework. That means a railroad cannot simply rebuild an old tier zero engine to its original specifications.

[00:11:15]The rebuild must bring the engine closer to current standards, adding cost and complexity to what was once a routine mechanical overhaul.

[00:11:25]For some older models, the math simply stops working. It becomes cheaper to scrap the engine and replace it with a modern unit than to rebuild it to meet the new emission floor. So, what does the industry do with a fleet that is half obsolete by regulation, but still mechanically capable of pulling trains?

[00:11:44]If you've been enjoying this, consider subscribing. We cover railroad history and the forces reshaping the industry every week. This is where the industry's future gets interesting. WABTE, the Pittsburgh-based rail technology company, reached a milestone when it completed its 1,000th locomotive modernization.

[00:12:04]The program reuses the existing steel frame and cab of an older locomotive, but replaces or remanufactures the electronics, engine components, and control systems to produce a machine with up to 25% better fuel efficiency, a 40% improvement in reliability, and a 20% reduction in maintenance costs.

[00:12:26]More than half of a locomotive's critical components can be reused, rebuilt, or remanufactured at least three times over the machine's useful life. And then there is the electric frontier. Union Pacific committed more than $100 million to purchase 20 battery electric locomotives from WABTE and Progress Rail for yard service, the largest such investment by a class 1 railroad. These machines run on battery power alone, reducing noise by up to 70%. And eliminating tailpipe emissions entirely in the switching yard. They are not replacing mainline diesels yet, but they represent the first serious investment in a postcombustion future for American freight rail. So, the old engines are being scrapped, modernized, or replaced with battery power.

[00:13:15]But there is one more chapter in the story and it plays out on tracks that rarely make the evening news. Not every locomotive that leaves a class one railroad meets the torch. The cascade system has been part of railroading for generations and it reveals something about the nature of these machines that spread sheets do not always capture.

[00:13:36]A locomotive starts its career in high priority mainline service, pulling unit trains of coal or stacks of intermoal containers at speed across the Great Plains. As it ages and newer units arrive, it gets bumped down to secondary duty, then to local and switching service on branch lines and industrial leads. Eventually, the class 1 sells it off and the locomotive begins a second career on a regional or shortline railroad where the demands are lighter and the pace is slower. When Norfolk Southern sold SD4022 number 3215 to Progress Rail in 2021, the engine eventually ended up on the Ashland Railway, an Ohio-based short line that otherwise ran a fleet of aging GP series locomotives. For the Ashland, a surplus SD40 Tor2 was not a relic. It was a serious upgrade to their motive power roster. Across the continent, this pattern repeats itself. Engines that are surplus to a class 1's requirements become essential power for the small railroads that serve grain elevators, paper mills, and chemical plants along branch lines that the big railroads no longer want to operate themselves. Even the oldest survivors find niches.

[00:14:56]Alco diesels built by a company that closed its American operations in 1969 still run on a handful of short lines more than six decades later. How do they keep them alive? Through creativity and stubbornness, sometimes maintaining entire donor locomotives just for spare parts, cannibalizing one engine and to keep another running. The Western New York and Pennsylvania Railroad operated a pair of Alco C430s until selling them to the Aderondac Railroad in 2025 for excursion service. The machines still work. They just need someone willing to put in the effort to keep them that way.

[00:15:37]But the overall trajectory points in one direction. At the end of 2025, the total North American locomotive fleet stood at 37,593 active units, a decline of 85 from the year before. New locomotives remain rare, and that fact alone says something about where the industry's priorities lie. Most additions to the fleet are rebuilt units, not fresh from the factory machines. DC diesel locomotives still make up 59% of the fleet, but AC traction units dominate new additions, and high horsepower 6 axle engines rated above 4,000 horsepower, now comprise 56% of all active power. The fleet is getting newer, cleaner, and smaller. The older machines, the ones that built the modern freight network, are gradually being written off, cut apart, or sold down the line to whoever still needs a 30,000 horsepower engine that knows how to pull. But the efficiency story that Wall Street loves has another side to it, and the consequences are still playing out. The real question hanging over all of this is not whether scrapping working locomotives makes financial sense. For the railroads and their shareholders, scrapping surplus power clearly makes financial sense.

[00:16:57]Precision scheduled railroading known as PB PSR delivered the efficiency gains that Harrison promised, pushing operating ratios down and stock prices up across the board. But what kind of railroad network do you end up with when the priority is asset utilization over all else? Shippers have complained about reduced service and unpredictable schedules. The Government Accountability Office has documented concerns about longer trains, fewer workers, and less capacity for surges in demand. When a pandemic scrambled supply chains in 2020 and 2021, railroads that had stripped their fleets to the bone struggled to ramp back up. The extra locomotives that might have bridged the gap were already sitting on deadlines or had already been cut apart. And there is something else that balance sheets do not capture.

[00:17:47]Every locomotive sent to the Breakers Yard carries a history that disappears with it. The SD42 that hauled coal for Burlington Northern in 1975, then ran grain for a short line in Saskatchewan, then sat on a deadline in Ohio before someone cut through the frame with an acetylene torch. That machine was part of the infrastructure that kept the country fed and fueled for half a century. When it becomes scrap steel, the story ends. And nobody writes down what it did. before the torch came.

[00:18:19]Whether that matters depends on what you believe a railroad is for. Is it a financial instrument optimized for shareholder returns where scrapping surplus locomotives is rational housekeeping? Or is it something older and more fundamental? A system built to move the physical goods that a country depends on where every engine on the deadline represents the question of how thin you can stretch the margin before something breaks. As of early 2026, the fleet keeps shrinking while the rebuilds and battery electric prototypes keep coming. And somewhere in Ohio, another row of locomotives sits in the winter mud, waiting to find out whether anyone still needs what they were built to do.