Facing a doubling of domestic freight over the next 20 years, both the rail and the trucking industries share common concerns about capacity, capital investment and manpower, according to the speakers at the AASHTO Washington Briefing last week.
Ed Hamberger, president and CEO of the Association of American Railroads, said that the two freight rivals had essentially signed a truce based upon the fact that intermodal traffic is now the largest revenue generator for the railroads. He noted that the Freight Stakeholders Coalition had worked together in the reauthorization, and that the publication by AASHTO of the Freight Bottom Line report signaled recognition that rail can be a part of solving the nation’s congestion problems.
Hamberger identified several strategies to deal with the coming freight explosion, noting that increased capital expenditure is necessary to increase rail capacity, through double and triple tracking, signalizing and other improvements. The investment will have to come from inside freight rail, which will translate into higher prices for shippers. He noted that in 2006, the industry will spend close to $10 billion on capital, an average of $2 million per mile of track.
Addressing how states can help the rail industry meet the coming demands, Hamberger suggested that they avoid regulatory processes that restrict rail rates of return. He noted that the industry’s rate of return on equity is half that of most industries. He also urged that when states consider the use of commuter rail to ease congestion, they bear in mind that if rail freight has to be diverted to highways because of rail impacts, congestion will not be eased. He also encouraged participation in public practice partnerships to address rail improvements, saying: “This is not a subsidy, it’s paying for a public benefit.”
Tim Lynch, senior vice president of strategic planning for the American Trucking Associations, said that the influx of freight traffic has been forecast for a decade, and that both rail and trucking face similar challenges in the fact that the areas that are most congested often the areas where improvements are the most difficult. He said that increasing terminal capacity in metropolitan areas is often not welcomed by communities, but sitting facilities far from metro areas results in more mileage.
Lynch said that manpower shortages are a problem for the freight industry, and that training is a pressing need, as well as environmental and community stewardship. Lynch identified a number of objectives for the industry including:
Recognition of the essential role of freight to the nation’s economy;
Better use of existing capacity; and
Additional revenue to support improvements to the system.
Lynch said that it has been estimated that an increase of 20 cents per gallon in diesel fuel taxes would be necessary just to maintain the current average speed of trucks. He also raised concerns about the potential negative impacts on the industry from increased tolling, and urged that states closely examine the long-term impacts of the sale of lease of toll facilities to private entities.