WASHINGTON — About $148 billion must be invested to expand the nation’s freight rail infrastructure over the next three decades to make sure that adequate rail capacity exists to meet future demand, according to the results of a first-of-its-kind study to measure rail capacity needs.
Released Sept. 20, the National Rail Freight Infrastructure Capacity and Investment Study explores the long-term capacity expansion needs of the continental U.S. freight railroads.
“These investments will help the freight rail industry ease highway congestion, reduce stress on highways and bridges, significantly lower transportation-related energy consumption and emissions, and maintain existing capacity for Amtrak and local commuter rail,” said Association of American Railroads (AAR) President and CEO Edward R. Hamberger. “If these investments aren’t made, everyone in the country will feel the impact.”
The study, conducted by Cambridge Systematics, paints a dire picture if freight rail capacity isn’t increased, officials said.
“Without this investment, 30 percent of the rail miles in the primary corridors will be operating above capacity by 2035, causing severe congestion that will affect every region of the country and potentially shift freight to an already heavily congested highway system,” the study determined.
The study highlights needed investment in new tracks, signals, bridges, tunnels, terminals and service facilities that railroads need to keep pace with demand for rail freight transportation, which is expected to almost double over the next 30 years.
The study found that most of that investment — $135 billion — will be needed on the rail networks operated by the nation’s major freight railroads. The study notes that under current conditions, the railroads anticipate that the marketplace will allow them to raise most of the needed investment — $96 billion. However, it states that a gap would remain of about $1.4 billion per year, an amount to be funded through railroad infrastructure tax incentives, public-private partnerships and other sources.
Hamberger said the study underscores how important it is to ensure a stable regulatory environment which promotes rail investment.
“Since the railroad industry’s partial deregulation in 1980, railroads have been able to invest over $400 billion back into their operations, creating a national freight rail system that is second to none,” said Hamberger. “The primary message from this report is that railroads need to materially increase their investments to expand capacity. Railroad earnings and productivity are the key to making these investments.”
“The study also shows how important it is for legislators to approve the bipartisan infrastructure tax credit currently pending in Congress,” he said. “Its passage would significantly reduce the $1.4 billion gap that exists between what the railroad industry needs to spend each year to meet future demand and what it can raise on its own.
“This legislation would provide a 25 percent tax credit to any company — not just railroads — that invests in projects to increase the rail network’s capacity,” Hamberger stated. “Passage would be a strong move in the right direction.”
Hamberger said, “The study’s findings point clearly to the need for more investment in rail freight infrastructure and a national strategy that supports rail capacity expansion and investment.”
The study has been submitted to the National Surface Transportation Policy and Revenue Study Commission, established by Congress to report on the nation’s future transportation needs and how to finance them. The study was conducted by Cambridge Systematics and commissioned by the AAR. It is the first report to benchmark the existing national rail network freight capacity and size of needed investment to meet projected demand.