The railroad industry is at a pivotal juncture. For decades, it has steadily ceded freight market share to trucks, an erosion that—if left unchecked—will continue to diminish rail’s relevance in the broader transportation landscape. However, this decline is not inevitable. As someone who has spent a career on both sides of the industry—first working within the rail sector, then transitioning to a major shipper—I’ve seen firsthand both the challenges and opportunities that exist. By taking a hard look at service reliability, embracing technological innovations, and adopting customer-centric pricing strategies, railroads can reclaim lost ground and position themselves as indispensable players in freight logistics.
A Personal Look at Market Share Erosion
My passion for the rail industry started early. Growing up in an automotive family—my father’s family worked mostly for General Motors and many on my mother’s side worked for Chrysler—I remember heated discussions at family gatherings about shifting market share. These spirited discussions were prompted when local Detroit news media would cover Big Three domestic market segment announcements about which pickup truck was the best-selling in North America. Yet while the Big Three battled for dominance over each other, foreign automakers steadily chipped away at their total share.
This same trend is happening in the rail industry today. Too often, I hear railroaders from competing Class I carriers celebrating victories when existing market share is taken, but that misses the bigger picture. General merchandise traffic continues to decline. The total pie is shrinking, and while railroads fight over the scraps, trucks keep gaining ground.
As someone who has spent measurable time on both sides of this industry, I want to provide an honest dialogue on what shippers truly perceive about the rail industry. When I returned to a major shipper after years as a senior executive on the short line side of the railroad industry, I saw the challenges from a different lens. Trucks are a necessary piece of the logistics puzzle, but their piece keeps growing. Why? Because the rail industry isn’t consistently delivering on what shippers need most.
Key Challenges Facing Railroads
From a shipper’s standpoint, the core issues boil down to four primary factors:
- On-Time Performance – I’ve had shipments delayed for days with little to no explanation. That level of uncertainty is unacceptable in today’s logistics environment.
- Pricing Structure – Competitive pricing is important, but it’s not the primary driver of decision-making. Value, not just cost, is key. A slightly higher-priced option that is reliable is always preferable.
- Shipment Visibility – In my time as a shipper, I’ve often felt blind to where my freight was at any given moment. Trucks provide real-time tracking; why can’t rail?
- Equipment Availability – Delays in obtaining the right equipment at the right time create bottlenecks that make trucks a more attractive alternative.
The Path to Reclaiming Market Share
To effectively compete with trucks, railroads must adjust their strategy. This requires an industry-wide shift in mindset—focusing not just on infrastructure improvements but also on operational excellence, service innovation, and customer experience.
1. Excellence in Service Reliability
One of my uncles was a junior high basketball coach, and he had a mantra he’d drill into his players: “The next play is the most important.” That philosophy stuck with me. In rail, each customer interaction—whether it’s returning phone calls, responding to emails, or ensuring timely deliveries—matters. A few Class I’s, and even some short lines, have lost car volume opportunities with us simply because they didn’t return a call. That should never happen.
Additionally, railroads must revisit freight routing protocols. Too often, I’ve seen routing inefficiencies lead to excessive out-of-route miles, discouraging shippers from relying on rail. This happens when individual Class I railroads keep traffic on their own network rather than focusing on industry network fluidity by using gateway connections to other partners, particularly for carload freight. A deep analysis of closed versus open interchange locations could uncover opportunities to streamline movement and improve overall service.
2. First-Mile/Last-Mile Innovation
When I travel for business, I think about how airlines handle delays. The first-mile/last-mile challenge is like airport delays: one late flight can disrupt an entire trip. The same applies to freight. Railroads should view first-mile/last-mile service with the same urgency that airlines treat delays.
We’ve had shipments arrive in a rail yard, only to sit for days due to crew imbalances, rigid service schedules, or poor coordination with interchange partners. This isn’t just an inconvenience—it’s costly. The industry must improve these transitions and leverage technology to do so. Imagine geofencing around yards that push real-time notifications to shippers, keeping them informed at every step. It’s possible; we just need to implement it.
3. Leveraging Technology and AI
At Ozinga, our CEO challenged us to implement bold AI-driven goals by 2025. Railroads should do the same. The industry is behind in technology adoption. AI and GPS tracking should be standard, providing real-time shipment visibility.
I once worked on a project exploring whether GPS-equipped railcars could provide dynamic tracking updates. The results were clear: shippers want this level of transparency. A bold move would be equipping all system railcars with GPS and sharing that data openly with customers. Is there a rail carrier—Class I, regional, or short line—willing to do this?
4. Customer-Centric Pricing Strategies
Dynamic pricing models could be a game-changer. If railroads are willing to tie pricing to performance, shippers would be more inclined to commit additional volume. If I know a railroad will refund or credit us for delays, I’m far more likely to take the risk of shifting freight from truck to rail.
Airlines and parcel companies already do this—why not rail? Many premium package delivery services provide refunds to shippers if delivery commitments aren’t met. Similarly, certain airlines provide vouchers to compensate passengers for inconveniences under specific instances where flight delays are the result of airline-controlled variables.
5. Shipper Insights: The Opportunity for Growth
In my recent career as a senior rail executive, I’ve spoken with dozens of rail shippers— primarily individuals who make freight logistics strategy decisions. One of my go-to questions is: How much of your total freight volume do you move by rail? The answer is usually around 30%.
Then I ask: How much more would you move if visibility, cycle times, and reliability improved? The answer: an additional 10–15%. I intentionally exclude price when I ask this question, and none of the shippers I’ve spoken with add a caveat that freight pricing is also a condition for increasing volumes by rail.
This is a significant opportunity. Even a 5% increase nationwide would return the general merchandise freight sector to historical levels within half the time it took to decline. The demand is there—railroads just need to step up and deliver.
A Call to Action
The railroad industry stands at a crossroads. The status quo is not sustainable. To regain market share, railroads must evolve beyond traditional infrastructure improvements and prioritize service excellence, innovation, and customer-focused strategies.
I want to leave you with this: My grandfather gave me a framed copy of the poem It’s All in the State of Mind by Walter D. Wintle for my 8th grade graduation. That poem has sat on my nightstand for years, through every home and every career move. It’s a constant reminder that success starts with mindset.
Railroads have an opportunity to win back business. The next play is the most important. The question is, are we ready to make it count?
Ozinga provides concrete, bulk materials, and energy solutions while offering transportation services through an extensive network of truck, rail, barge, and ship terminals. Perhaps best recognized for its red-and-white-striped concrete mixer trucks, Ozinga is proud to be an American-owned, fourth-generation family business. Ozinga’s goal is to make a positive impact on individuals, their families, and the community for generations.
