According to a forecast released this week by American Road & Transportation Builders Association (ARTBA) chief economist Dr. Alison Premo Black, the U.S. transportation construction market will grow 3.1% from $185.9 billion in 2014 to $191.7 billion in 2015. This is slightly above anticipated growth in the overall U.S. economy, whose gross domestic product is expected to grow between approximately 3%, according to the Federal Reserve.
The ARTBA forecast for the largest segment of this market—highway, street and related work—is tempered by two key factors: uncertainty over long-term federal funding, which represents 52% of state department of transportation (DOT) capital outlays, and as-yet recovering state and local budgets.
Beyond construction, state and local governments are expected to spend an additional $38.5 billion for maintenance work; $13.2 billion for in-house and consultant planning and design services; and $7 billion for right-of-way purchases as part of their highway and bridge programs.
Forecast highlights, sourced directly from Dr. Black’s report, include:
Highways, Private Driveways & Parking Lot Construction/Pavement
The construction market for highways, streets and related work, private driveways and commercial parking lots will grow to $64.9 billion, up 2.1% from $63.5 billion in 2014.
· This includes 1.2% growth in highway, street and related work, from $51.8 billion in 2014 to $52.4 billion in 2015. To put this market in perspective, the amount of work completed in 2009 was $67.3 billion.
· The market is expected to be uneven across the country, with highway investment up in 24 states, down in 19 states and Washington D.C., and within a 5% +/- in seven states.
· Approval of more than $17 billion for transportation investment through legislative and ballot measures in 2014 will help support the market in the coming years. State legislatures approved 14 measures in 2014 to increase investment, while voters approved 79% of the ballot measures.
· Public private partnerships (P3s) will also support new growth in 2015, with four states awarding their first P3 projects (Colo., N.C., Ohio, and Pa.) earlier this year.
· Contractors will have an additional $30-$40 billion in business opportunities from private highway and bridge work that is completed as part of housing developments and larger commercial structures, separate from parking lots and driveways
Bridges & Tunnels
Record growth is expected to continue in the bridge and tunnel construction market, increasing from $30.8 billion in 2014 to $31.3 billion in 2015.
· The national market is being driven by activity in 10 states, which account for more than 57% of the market: N.Y., Calif., Texas, Pa., N.J., Wash., Ill., Ohio, Mass. and Va.
· Bridge construction has grown from 19.6% of all highway and bridge work in 2000 to 37.3% in 2014. ARTBA suggests the share of bridge work will continue growing in the next five years.
Light Rail, Subways & Railroads
ARTBA is forecasting that light rail, subway and railroad construction will increase from $18.3 billion in 2014 to $20.9 billion in 2015.
· Subway and light rail work will increase from $7.1 billion to $8.3 billion.
· Heavy rail investment, largely by Class 1 freight railroads, will increase from $11.2 billion in 2014 to $12.6 billion in 2015.
· The increase in demand for freight transportation and multimodal connections will help spur investment in heavy railroads—which is being driven, in significant regard, by the expansion of the Panama Canal and increased shipments of energy-related goods.
· Based on recent contract awards, states with upcoming projects include: Calif., Colo., Fla., Ill., N.Y., and Wash.
Airport runway/terminal and port/waterway information can be gleaned from the report available on the ARTBA website. For more on the state of the industry, you can read editorial director Bill Wilson’s take here.
