The Power of Privately Funded Freight Rail

When it comes to the quality of America’s infrastructure, railroads have moved to the top of the class. In a newly released infrastructure report card from the American Society of Civil Engineers (ASCE), America’s rail network received the highest grade awarded this year, a B.

The high marks for America’s privately funded freight rail system stands in stark contrast to taxpayer funded transportation infrastructure. Bridges, ports and roads, for example, continue to age and suffer from overuse. Reflecting their poor condition, ASCE respectively gave these systems grades of “C+” “C+” and “D.”

By spending billions of dollars to sustain, modernize and grow the freight rail network, U.S. freight railroads are easing the burden on these transportation systems—and the taxpayers who support them. In fact, since 1980, freight railroads—not taxpayers—have spent more than $630 billion to build the safe and cost-effective network that exists today. The industry is on track to spend more than $22 billion this year too.

These investments have resulted in innovative breakthroughs, including new ultrasound technology and acoustic listening devices that can identify track flaws before an accident occurs. It has also enabled the industry to increase capacity by upgrading existing and laying new track, expanding siding extensions and increasing rail yard capacity.

Perhaps most importantly, freight rail spent billions of dollars to accommodate double-stacked containers used to ship consumer goods. In doing so, the industry built the backbone of America’s intermodal freight network, which carries the goods and commodities of a globalized economy to businesses and consumers across the country and around the world.

Thanks to freight rail’s private spending, the industry now returns $10 to the U.S. economy for every $1 spent. In fact, in 2014, U.S. freight railroads helped spur nearly $274 billion of economic activity and supported almost 1.5 million American jobs. This included $88 billion in wages and close to $33 billion in tax revenue—more than the annual tax receipts of 30 states. Meanwhile, average rail rates paid by shippers have fallen 45 percent since 1980. And building upon decades of safety improvements, rail accident rates have reached an all-time low.

This incredible record of success is only possible in an environment of smart and balanced regulation. Through the choices made today, Washington can help write another chapter in freight rail’s story of success—or close the book on an era of incredible infrastructure investment and widespread economic growth. 

Misguided Proposals Undercut Important Public Policy Goals

Right now, a powerful few freight rail customers are lobbying the U.S. Surface Transportation Board (STB) to change the rules and require freight railroads to carry competing railroads’ cargo. This proposal, known as forced access, not only inserts government into a private industry that is the most cost-effective of its type in the world, but also punishes other rail customers and the economy by slowing rail shipments nationwide.

At the same time, a second group of special interests is asking Congress to raise the federal weight limit on trucks from 80,000 pounds to 91,000 pounds per truck. Doing so would double down on years of uncompensated highway damage caused by trucks and further increase the burden on taxpayers to cover the cost of crumbling public roads.

In fact, both of these proposals, if approved, would incentivize more freight shipments to move from freight rail’s privately funded, world-class network onto underfunded and overused roads. A 2010 study showed that a similar proposal to increase truck weights to 97,000 pounds could reduce overall rail traffic by 19 percent, while adding as many as 8 million more trucks on our nation’s roads and bridges—a 56 percent increase from 2010 traffic levels.

By rejecting these two misguided proposals, Congress and the STB can avoid overburdening aging public infrastructure and further exacerbating funding needs.

Together with tax reform that makes business more competitive, trade policies that both protect American workers and the benefits reaped by trade, and a regulatory environment that empowers private industry to find innovative solutions to shared goals, Washington can ensure that freight railroads have the resources to continue investing in a world-class rail network, and can keep America’s economy moving swiftly, affordably and safely for years to come.

The Big Cost of Heavier Trucks

For years, trucks have failed to pay enough tax revenue to fully compensate for the damage they inflict on America’s roads – a costly blemish on the nation’s otherwise efficient and cost-effective freight transportation network.

Now, some want to double down on the heavy toll trucks inflict by raising the federal weight limit from 80,000 pounds to 91,000 pounds per truck. Doing so would further increase the wear and tear on America’s roadways and harm the transportation partners who work with trucks to keep America’s economy humming.

An Integrated Network

America’s integrated network of barges, trains and trucks helps move 54 tons of freight for every American each year. This finely tuned network makes modern life possible by swiftly and safely carrying everything we rely upon – from the food we eat, to the clothes we wear and the computers, phones and tablets we use.

Freight railroads are at the heart of this integrated network. America’s privately funded freight railroads are unique in their ability to affordably and reliably move freight long distances before handing off to trucks, who are better suited for short-distance travel to and from U.S. manufacturers and markets. Without freight railroads, shippers could not send goods and commodities across the country as quickly and affordably as they do today.

Increasing truck weight limit would disrupt this network by moving freight from trains to trucks and encouraging more trucks to take to America’s overcrowded and underfunded roads.

A 2010 study showed that a similar proposal to increase truck weights to 97,000 pounds could reduce overall rail traffic by 19 percent as heavier trucks took to the roads. The same study found that trucks would not only be heavier, they would be more common too. Increasing truck weight, the report said, would result in 8 million more trucks on roads and bridges – a 56 percent increase from 2010 traffic levels.

More Crowded Highways and a Bigger Tax Bill

Already, America’s taxpayer-supported roads are overcrowded and underfunded. According to the 2017 American Society of Civil Engineers’ (ASCE) Infrastructure Report Card,  more than 40 percent of urban interstates are already congested. And traffic delays and lost productivity costs the American economy $160 billion a year in wasted time and fuel, according to ASCE.

Heavier trucks will only exacerbate this troubling trend. In fact, a 2016 U.S. Department of Transportation (DOT) study looked at the impact of allowing similarly heavy 97,000-pound trucks and found that increasing weight limits would result in trucks only paying for 50 percent of the damage they cause. The remaining balance would be covered by taxpayers. In particular danger are the nearly 1,500 bridges on America’s Interstate System. U.S. DOT estimates that repairing the damage done by 91,000-pound trucks would cost taxpayers at least $1.1 billion.

Finally, Federal Highway Administration data shows that increasing truck size limits has historically resulted in a steady increase in registered trucks and miles traveled by them. The data is clear: putting more, heavier trucks on our roads is a bad deal for shippers, commuters and taxpayers.

Bigger Trucks Undermine Important Public Policy Goals

Allowing heavier trucks also runs counter to the goal of leveraging private investment in our nation’s infrastructure. Over the last decade, freight rail has invested billions of dollars at the nation’s ports to to quickly transfer thousands of intermodal containers to and from the decks of massive cargo ships. Because intermodal rail decks are not designed to double-stack 91,000-pound containers on freight trains, lawmakers would negate the benefits of billions of dollars of private freight rail investment that has occurred in recent decades.

Moving more freight by rail also helps our nation achieve important environmental policy goals such as reduced fuel consumption and greenhouse gas emissions. Trains, on average, are four times more fuel efficient than trucks. That means that moving freight by rail instead of trucks reduces greenhouse gas emissions by an average of 75 percent.

An Unpopular Approach

Adding heavier trucks to our highways is not only a bad policy; it’s an unpopular one too. A May 2013 public opinion poll by Lake Research Partners found that 68 percent of Americans oppose heavier trucks and 88 percent of Americans do not want to pay higher taxes for the damage caused by heavier trucks.

Congress echoed their constituents’ near-uniform opposition to heavier trucks, when the House of Representatives overwhelmingly rejected a 2015 proposal to increase truck weights to 97,000 pounds. At the time, Pennsylvania Representative Lou Barletta criticized the proposal, saying, “This is bad policy because our local communities cannot afford to spend billions in new damages to our local roads and bridges.”

In the time since, America’s highways and bridges have only become more crowded, highway funding has only become scarcer and the threat from heavier trucks has only become clearer. At a time when America’s integrated transportation network carries freight more efficiently and cost effectively than ever before, Congress should continue to oppose heavier trucks on America’s roads and support trucks, cargo ships and freight railroads as they work together to keep America’s economy moving.

Freight Rail Sets the Standard for Modern American Infrastructure

When it comes to the quality of America’s infrastructure, railroads have moved to the top of the class. In a newly released infrastructure report card from the American Society of Civil Engineers, America’s rail network received the highest grade awarded this year, a B.

At a time when America’s bridges, airports and highways have struggled to keep up with daily wear and tear, freight rail’s high marks provide a valuable lesson to policymakers: sustained investments matter.

Congress enacted a balanced regulatory framework in 1980, and since then America’s freight railroads have been instrumental in delivering for our customers, while generating sufficient capital for record reinvestment.

Since 1980, the industry has spent more than $630 billion to build a safe and cost-effective network and is on track to spend more than $22 billion this year. The results speak for themselves: average rail rates paid by shippers have fallen 45 percent since 1980, and building upon decades of safety improvements, rail accident rates have reached an all-time low.

When it comes to the future of rail, we’ll be striving to raise our high grade even higher.

Washington can help. Through a pro-growth agenda, including tax reform that makes business more competitive and a regulatory environment that enables continued private investment and spurs innovation, America’s railroads will have the resources to make the world’s best freight rail network even better.

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Freight Rail Proves Private Industry Can Deliver Prosperity

Market-based solutions, not overly burdensome regulations, can make America a more prosperous nation.

This belief is a valued principle for the thousands of delegates who are gathering in Cleveland for the Republican National Convention.

Looking at the American economy today, freight railroads are living proof of this idea. Today, America’s freight railroads are the best in the world. The average rail shipper can move nearly twice as much freight for the same price paid 35 years ago.

This story of success didn’t always ring true. That’s because, in the years leading up to 1980, the American rail industry was crumbling – sometimes literally – under overly burdensome regulations. During the 1970s, more than 21 percent of the nation’s rail mileage was accounted for by bankrupt railroads. The consequences were not just economic. By 1976, stationary railcars often fell off poorly maintained track.

In 1980, Congress passed the Staggers Rail Act and ushered in an era of balanced regulation. For the first time in decades, freight railroads no longer had to answer to the whims of regulators. Instead they could focus on serving their customers.

American railroads responded with one of the greatest economic turnarounds in modern history. Since the passage of the Staggers Act, average rail rates, not adjusted for inflation, are up just 24 percent sine 1981, far less than the increase in prices for most consumer goods. In addition, train accident rates are down 78 percent, rail traffic has roughly doubled, and railroads have poured more than $630 billion of their own funds – not taxpayer dollars – back into the network.

The private marketplace delivered. And the benefits aren’t limited to freight rail customers. In 2014 alone, freight rail:

  • Supported nearly 1.5 million jobs across the country;
  • Generated almost $33 billion in federal, state and local taxes;
  • Contributed nearly $274 billion to the U.S. economy, doing its part to help our nation thrive.

Impressive as these results are, private freight railroads achieve them with little to no taxpayer funding. That sets freight railroads apart from other modes of freight transportation like trucks, barges and airlines. Railroads spend billions of dollars every year – an estimated $26 billion in 2016 – to maintain and grow the nation’s freight rail network.

The Federal Railroad Administration estimates a 35 percent increase in the volume of U.S. freight shipped between 2010 and 2050.  Will U.S. taxpayers be asked to foot the bill for moving this freight? With a strong private rail industry, the answer can be “no.”