Rail-Enabled Rural Economic Development: A New Approach to Rural Prosperity
Rail-Enabled Rural Economic Development: A New Approach to Rural Prosperity
By Michael Sussman, CEO, Strategic Rail Finance, with J. Vann Cunningham, former Assistant VP, BNSF Railway
Moving Toward a Rural Economic Renaissance
Rural communities across North America face significant challenges in economic development. The prevailing approach often centers on attracting large industrial players to metropolitan areas—a strategy that frequently leaves smaller, rural communities behind. However, there’s another path forward: strategically designed rail corridors that serve small to mid-sized businesses, creating interconnected commerce across entire regions.
This approach has shown promise in Mississippi, where Strategic Rail Finance recently evaluated the feasibility of rebuilding the Great River Railroad (GTR) to serve the Port of Rosedale. Our recommendations offer more than just local solutions; they provide a nationwide blueprint for revitalizing rural economies.
The Rural Rail Paradox
While America’s population has more than doubled since 1920, rail route mileage has nearly halved. This contraction has disproportionately affected rural communities, limiting their ability to attract businesses and forcing an overreliance on trucking. The economic and infrastructure consequences have been severe: damaged roads, increased maintenance costs, air quality issues, lost economic development opportunities, and a diminished quality of life.
The contrast becomes evident when examining success stories like Columbus, Mississippi—a thriving industrial hub positioned at the strategic intersection of highways, waterways, and multiple rail arteries. Similarly, Grenada, Mississippi, demonstrates the transformative power of rail restoration, having attracted significant new manufacturing investment following the revitalization of the Grenada Railroad. These examples aren’t outliers—they’re proof that robust rail infrastructure serves as the backbone of sustainable rural prosperity.
Rail-Enabled Rural Economic Development: A Different Approach
Success in less populated rural areas requires a development approach that differs from what serves larger urban centers. Key features of this approach include:
- Attract smaller businesses than are targeted by typical economic development plans
- Focus on existing businesses and their growth opportunities, not just new prospects
- Aggregate needs across businesses to create viable service plans and infrastructure investments
- Emphasize regional opportunities for developing natural resources
- Address gaps in transportation services
- Develop plans for entire corridors, regions, industrial systems, and supply chains
- Optimize infrastructure by repurposing existing facilities and brownfield properties
- Connect businesses as customers and suppliers in synergistic commerce
- Bridge coordination gaps between transportation modes
- Ensure community involvement in planning to align development with local values and needs
The Value of Collaborative Infrastructure Development
Traditional infrastructure planning suffers from siloed thinking. Projects often serve the fewest stakeholder groups, and systems thinking is nearly absent. The Mississippi rail assessment employed what we call “Collaborative Infrastructure Development”—an approach that bridges gaps in understanding and coordination among businesses, governing jurisdictions, and public/private sectors.
This collaborative method yielded valuable discoveries. For example, Steel Dynamics in Columbus is building a biomass-fueled power generator while planning to source feedstock from out of state. Yet, in-state wood products industries struggle with an oversupply of biomass. Connecting these parties benefits multiple sectors and Mississippi’s overall economy.
Similarly, while assessing another rail line across the state, we discovered a rail tie recycler that could process the approximately 90,000 scrap ties created by the GTR rebuild. These synergistic connections showcase the power of systems thinking in infrastructure development.
Beneficiaries of Rail Renewal
The benefits of renewed rail service in Mississippi will extend across numerous sectors, including:
- Forest products industry, including new energy and alternative products
- Agricultural and soil enhancement producers
- Steel and aluminum industries
- New industrial development opportunities in counties and towns along rail corridors
- Existing businesses seeking improved logistics
- Supply chains for new energy and waste/scrap material streams
- Companies seeking improved environmental footprints in their supply chains
Keys to Success
Successful implementation of rail-enabled rural economic development requires:
- Informed understanding of rail operations and value engineering
- Detailed planning for materials procurement and construction
- Practical engagement with existing and potential shippers
- Assisting potential shippers in navigating logistics challenges
- Study of rail and truck freight data to identify service opportunities
- Involvement of all economic development entities in advancing rail-enabled growth
- Mapping of natural resources and related stakeholders across commodity sectors
- Understanding current logistics patterns of freight shippers
- Development of new strategies that leverage rail-port connections
- Management by experienced entities with track records in logistics assistance
The State’s Vital Role
Freight rail service is too essential to a state’s economic vitality to leave planning solely to railroads. Class I railroads operate under business models emphasizing long trains and long-distance hauls to major terminals and large shippers—a rational response to competing with long-haul trucking, which benefits from publicly funded infrastructure.
State leadership can facilitate growth by marshaling economic development professionals into statewide initiatives that feature rail-enabled economic development. This approach offers railroads an attractive business growth opportunity.
The Environmental and Financial Case
Rail transportation offers unmatched social, economic, and environmental benefits. With growing market demand for sustainable transportation options, particularly from companies seeking to reduce their ecological footprint across products and supply chains, freight railroads are increasingly important. Their efficiency supports environmental goals and reduces dependency on public funding for infrastructure maintenance and development.
Unlike road transport, which increases the financial burden on state budgets, railroads privately finance infrastructure construction and maintenance, easing pressure on taxpayers. For example, each truckload of freight causes road damage equivalent to 9,500 passenger vehicles. In contrast, an 80-car freight train eliminates the need for a 27-mile convoy of trucks, significantly reducing road wear, maintenance costs, and air pollution.
As states like Mississippi grapple with infrastructure funding shortfalls, rail transport offers a cost-effective and sustainable solution that supports economic growth.
Conclusion
Rail-enabled rural economic development offers rural communities a path to sustainable prosperity. Rural communities can foster sustainable economic growth by prioritizing collaborative infrastructure development, engaging smaller businesses, and utilizing existing rail rights-of-way. Through collaboration between state leadership, economic development professionals, shippers, and transportation providers, rural communities can achieve economically vibrant futures with reduced environmental footprints.
Michael Sussman is CEO of Strategic Rail Finance and has overseen the recapitalization and growth of rural shortline railroads across America for 30 years. For more information, contact: [email protected] or visit www.strategicrail.com.
J. Vann Cunningham is a retired Assistant Vice President of Economic Development for BNSF Railway Co. and a Fellow Member of the International Economic Development Council, with more than 40 years of domestic and international economic development experience.