Norbridge consultant Dean Wise made an important observation about the future of freight transportation in a conference call with investors earlier this month. His basic point, one with long-term implications for U.S. freight movement, is that the cost of moving goods will become increasingly cheaper for railroads while, for truckers, it will only become more expensive.

"The basic gap between rail and truck in cost per ton-mile is going to continue to widen over the next 20 years," Wise said. The reason is a fundamental reality in freight transport today: The list of productivity improvements available to railroads is "a mile long," he said, while the options available to truckers are highly limited, not only making long-term gains for their industry difficult to envision, but preventing them from beating back several forces currently conspiring to worsen their cost-competiveness.

Truckers face higher costs to attract drivers, long-term increases in fuel prices, higher tolls, more toll roads, higher costs for new generation equipment, and, adding insult to injury, declining fuel efficiency as engines become more environmentally friendly. The clearest path to improved productivity would be to increase truck size and weight, but damage to roads and public safety opposition make this an unrealistic option.

U.S. railroads are in a different situation. They are riding a wave of continuous productivity improvement that began decades ago -- they moved a ton of freight 436 miles on a gallon of gas in 2007 versus 235 miles in 1980, according to the Association of American Railroads, while train crews have come down from five to two as more freight is moved on fewer miles of track compared to 30 years ago.

"The story isn't over," Wise said. Technology to control train movements via satellite will allow more trains to move safely along existing track; fewer maintenance workers will be needed because of improved mobile electronic devices; and maintenance costs on rolling stock and locomotives are heading lower due to earlier and more accurate identification of wear and tear.

"Over the next 20 years, the story for the railroads is going to be one of continuous self-directed productivity gains, whereas in trucking, you don't have the same opportunities," Wise said,

A major implication, Wise said, will be a growing ability by railroads to profitably expand into shorter-haul intermodal markets. Profitability in railroading has a lot to do with achieving density -- moving as many long trains for as long a distance as possible along a given stretch of track. Transcontinental moves tend to fit these criteria, whereas trains sent over shorter distances of 700 miles or less have traditionally lost their economical edge.

"As (railroads) are able to make the cost advantage even bigger, it allows them to be more competitive in shorter-haul markets, which is where the volume really is," Wise said.

This point plays into the critical issue of rail intermodal at East Coast ports. A big question hovering over East Coast ports has been whether they will be able to handle the growing Asian volumes being diverted from the West Coast. Some predict huge shifts in market share; Netherlands-based Dynamar said this month that by 2020, just a few years after the Panama Canal is expanded in 2014, as much as 25 percent of Asia container cargo now moving through West Coast ports will shift to the East Coast, requiring 40 strings of 10,000-TEU ships.

Putting aside the question of whether the ports themselves can handle such ships (few today could), such volumes could never be sustained logistically or environmentally without a robust intermodal rail system connecting ports to inland markets akin to the long-dominant system on the West Coast. The difference is that rail intermodal off the West Coast has made sense for railroads given the length of hauls to the Midwest and East Coast, whereas intermodal from the East Coast would be dominated by traditionally unprofitable short-haul moves.

But with shorter-haul economics becoming more viable through productivity enhancement, it is unlikely that rail will be an obstacle as this shift plays itself out. Nor does the productivity trend necessarily work to the disadvantage of West Coast intermodal, Wise said.

"The same relentless gains in rail productivity will benefit the long-haul western corridors even more than the short-haul rail lanes, keeping the Midwest, Ohio Valley and Southern Piedmont markets in play for West Coast routings," he said. "We'll see some very interesting dynamics in port and rail competition in the years to come."

Peter Tirschwell is senior adviser of The Journal of Commerce. He can be contacted at 973-848-7158, or at