Railroads Labor Issues Wages and other labor-related expenses are the largest component of railroad operating costs. The primary source of rail traffic is still bulk commodities, including coal for generating electricity and producing steel. Coal is likely to continue to account for approximately 40 percent of rail tonnage. Railroads' prospects for attracting bulk commodities and other goods will be affected by their ability to meet competition from other modes of transport. Barges are major competitors for bulk commodities, including coal and grain, which move in large volumes on the Ohio and Mississippi River systems.
Trucking is also an important option for many shippers.
Railroads' share of intercity freight ton-miles has held fairly steady between 35 to 40 percent since the early 1970's. Rail tonnage is expected to rise an average of 1 to 1.5 percent per year. Railroad traffic volume, however, is heavily dependent on the strength of industrial production and shipments, particularly in the key industries served by rail, such as steel, chemicals, automobiles, paper, construction, and agriculture agreed to merge with Canadian NationalRailwys.