From global pandemics to port congestion, extreme weather and rising transportation costs—our nation’s supply chains have been put to a severe test. New analysis from the Association of American Railroads (AAR) shows that some freight networks are inherently more stable during these disruptions. The new report underscores that freight rail is one of America’s most under-appreciated economic stabilizers, bringing reliability, cost stability, and resilience to the movement of goods across our economy.

This modeling shows freight rail is a structural buffer against volatility—a built-in shock absorber that keeps raw materials moving to factories, finished goods flowing to markets, and costs in check for American businesses and consumers alike. 

The AAR report documents three decades of data showing freight rail’s distinct advantages. Rail’s cost structure is stable and its inflation passthrough significantly lower. Studies cited in the report find that a 10 percent rise in trucking costs is associated with roughly a 2.3 percent increase in goods inflation, while a similar increase in rail costs translates to just a 0.7 percent rise. 

In an era where supply chain stress can rapidly feed into consumer price tags, rail helps moderate inflationary pressures and protects American households from the full brunt of logistics cost shocks. By design, rail’s long-haul focus, contract structures, and integrated network more effectively manages risk over extended distances.

During the early years of the COVID-19 pandemic and subsequent periods of port congestion, railroads demonstrated remarkable operational resilience. On critical corridors—such as the Los Angeles–Chicago intermodal route—railroads quickly restored fluidity, reducing terminal dwell times and stabilizing transit times even amid severe disruptions. This adaptability limited the need for costly emergency trucking and helped prevent localized issues from cascading into nationwide price spikes. 

While the report highlights rail’s stabilizing role, it also implicitly signals a broader policy challenge: our current regulatory framework and competitive landscape need modernization. 

Freight rail in the U.S. operates under rules adopted decades ago, long before today’s intermodal dynamics and global supply chains took shape. Class I railroads provide much of the long-distance backbone, but short lines and regional railroads, as well as competition from trucking and shipping are vital pieces of the logistics puzzle. 

Competition, open markets, and expanded choice are catalysts for efficiency and resilience. When transportation markets are more competitive, industries of all stripes have stronger incentives to innovate, improve reliability, and offer pricing that reflects true market dynamics. For American businesses, this means more predictable logistics costs, shorter lead times, and greater ability to respond to global market shifts. For consumers, it means lower prices and more reliable availability of goods in the face of future disruptions.

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For businesses, this translates to lower logistics costs and stronger supply chain predictability. Manufacturers that depend on intermediate goods—such as chemicals, metals, or agricultural inputs—can plan more effectively when they have access to a rail network that is both dependable and competitively priced. And when freight moves more efficiently, those cost savings are more likely to flow through the supply chain, being shared with wholesalers, retailers, and ultimately consumers.

Transportation and infrastructure policy must remain a priority if the U.S. wants to lower prices for families, expand opportunities for American businesses, improve supply chains, and meet environmental targets. Policy reforms should modernize antiquated and bureaucratic regulations, fix permitting delays, and empower the private sector to drive more technological innovation.

In many respects resilience now hinges on whether companies are redesigning their supply chains for a world where disruption is the baseline, not the exception. With better data and enhanced risk modeling, the transportation industry has more capabilities than ever to manage supply chain risk.  Even so, some events will be unpredictable and challenge transportation services. The companies that internalize resilience — through efficiency, diversification, and hardened infrastructure – will be the ones be the ones with the ability to deliver reliable, cost-effective service. Public policy must make it easier for the private sector to make those investments. 

The views and opinions expressed are those of the author’s and do not necessarily reflect the official policy or position of C3.