Why Railroads Abandoned Thousands Of Freight Cars

Added: 2026-05-13

[00:00:00]There is a sighting in North Dakota right now where grain cars have been sitting so long that weeds are growing through the tracks and rust is eating through the paint on their sides. 300 m south of that sighting, a farmer is staring at cattle he might have to get rid of because the railroad told him there are no cars available to bring feed to his property. If you could somehow see both of these situations at the same time, you would understand everything that has gone wrong with American freight railroading in the last 10 years.

[00:00:37]400,000 freight cars are sitting in idle storage across North America at any given moment, which works out to roughly one out of every four rail cars in existence just parked somewhere doing absolutely nothing. While shippers from coast to coast are screaming that they cannot get equipment to move their products. That number comes from Greenbryer, one of the largest rail car manufacturers in the country. And when they published it in 2019, they were already warning that something strange was happening with the way the industry managed its equipment. The Surface Transportation Board held emergency hearings in 2022 because the situation had gotten so catastrophic that farmers were genuinely considering whether they would have to call their herds and flocks because grain shipments were running weeks behind schedule and nobody at the railroad seemed to have any idea when things might actually improve. The storage yards are everywhere if you know where to look for them. tucked away on branch lines, old industrial spurs, and anywhere else the railroads can park equipment without it getting in the way of their mainline operations.

[00:01:49]Shortline railroads have turned car storage into a genuine business model, advertising how many thousands of feet of track they have available for owners who need somewhere to stick their idle equipment. There are even railroad museums that have gotten into the game because they figured out that renting track space to store freight cars is more profitable than actually running trains for tourists.

[00:02:15]The number that really tells the story is what happened in 2021 when steel prices went through the roof and suddenly every railc car owner in the country started doing the math on whether it made more sense to keep their equipment in storage or send it straight to the scrapyard. Steel had been trading around $400 per ton for years. And then in the span of just a few months, it shot up to nearly $1,900 per ton, which meant that a 40tonon tank car that used to be worth maybe $12,000 in scrap metal was suddenly worth $20,000 or more if you cut it up and sold it for metal. The scrapping numbers from that period are almost hard to believe. Around 47,000 freight cars got sent to the torch in 2020, which was already a significant number. And by September 2021, the industry had already matched that total with months still left to go in the year. Greenbryer, one of the major railc car manufacturers with a broad view of the industry, estimated that somewhere between 60 and 65,000 cars would be scrapped by the time 2021 was finished.

[00:03:38]These were mostly older cars, coal hoppers and gondelas, and covered hoppers and tank cars sitting in storage for years because traffic patterns shifted and nobody needed them anymore.

[00:03:51]Many of those cars could have been rebuilt and put back into service if anyone had been willing to make that investment. A covered hopper that needs new bearings and some body work is still a covered hopper. Shortline railroads and regional carriers across the country would have paid good money for equipment like that if the class one railroads had been willing to sell instead of scrapping them. The decision to send them to the torch was purely financial.

[00:04:22]Steel prices were high, storage costs money, and the railroads had spent the previous several years telling Wall Street they would run leaner operations with fewer assets. There was no room in that business model for maintaining equipment that might only get used during traffic surges.

[00:04:42]The coal situation is where you can really see how this whole thing unfolded and why it was probably inevitable given the way these companies have been managed. Coal car loads across the American railroad network have dropped from about 7 12 million per year to about 3 12 million. Which means the industry has essentially lost half of its coal traffic over the past 15 years as power plants have switched to natural gas and renewable energy sources. CSX alone has seen its coal transport volume decline by 55% since 2010. And when you lose that much traffic in a single commodity, you end up with thousands of gondilas and hoppers that used to run loaded to power plants every single week. Now just sitting on sightings with nowhere to go and no loads to haul.

[00:05:39]The rational response would have been to gradually retire this equipment as it aged out of service and to keep some cars in reserve for potential traffic recoveries. But that is not what happened. The railroads discovered they could make money on the scrap value of these cars while also reducing the asset base they had to report to shareholders.

[00:06:01]So, the cars went to the torch by the thousands even though some still had years of useful life remaining.

[00:06:08]Meanwhile, the railroad workforce was cut by 30% between 2018 and 2022, according to surface transportation board data. Car repair shops were closed and the whole system was squeezed tighter and tighter in pursuit of what executives like to call operating efficiency. But what everyone else recognized as simply doing less with less and hoping nothing went wrong.

[00:06:35]And then something went wrong. Traffic picked up faster than anyone expected in late 2021 and early 2022 as the economy recovered from the pandemic. And suddenly the railroads did not have enough cars or crews or shop capacity to handle the demand. Shippers told the surface transportation board that transit times had doubled from normal levels. that what used to take a week was now taking 2 weeks or more and that they had no idea when their shipments would actually arrive because the railroads had stopped providing reliable estimates. Chemical manufacturers said they had to curtail production because they could not get empty cars spotted at their facilities.

[00:07:24]Grain dealers in the Midwest said they were having to shut down elevators because shipments were running so far behind that they had run out of storage space and had nowhere to put the harvest that was coming in from the fields. The head of the American Chemistry Council showed up at those hearings and told the board that if his members had a solution, they would have brought it.

[00:07:48]But they did not have one because the problems were so deep and so structural that there was nothing any individual shipper could do to fix them. The transportation secretary showed up at the hearings and acknowledged that there was not much anyone could do in the short term because the problems were rooted in crew shortages and equipment shortages that would take months or years to fix. The shippers said they would have brought solutions if they had any. The railroads said they were working on it and that metrics were starting to improve.

[00:08:26]Somewhere out on those storage sightings scattered across the continent, hundreds of thousands of freight cars continued to sit idle while the system struggled to function and shippers wondered how things had gotten this bad. The really maddening part is that the people running these railroads knew exactly what they were doing when they made these decisions. They knew that cutting too deep would eventually cause problems. They knew that scrapping equipment during a temporary traffic downturn might leave them short when traffic recovered. They knew that laying off experienced workers would make it harder to ramp back up when demand returned. They did it anyway because the financial incentives pointed towards short-term cost reduction and nobody was going to hold them accountable for service failures that might not show up for another 2 or 3 years. There are rail cars sitting on tracks in Montana, Texas, Alabama, and a dozen other states that could be hauling freight right now if someone had made different decisions 5 years ago. Instead, they are rusting in place while shippers scramble to find alternatives. Farmers stare at livestock they might not be able to feed. And the executives who made those decisions collect their bonuses and move on to the next quarterly earnings call.