We expect to continue to see a challenging economic environment going into 2017. Economic cycles are occurring with greater volatility and unpredictable duration, which makes it harder to forecast accurately. Despite these challenges, the rail industry will keep playing a key role in North America’s freight transportation needs by being nimble and doing everything we can to adapt to change.
By keeping supply chains efficient with sufficient capacity, we keep cost low relative to the rest of the world, which makes US products more competitive in global markets.
The interdependency of the freight rail industry with the ultimate success of our overall economy has us paying close attention to freight rail economic regulation that is moving forward at the Surface Transportation Board. The board has opened multiple and overlapping rulemakings, proposing to change almost every element of the current economic regulations of the industry. Current regulations are based on sound economic principles and have allowed railroads to respond to markets, improve revenue, and reinvest. The regulator must take the current economic climate and the cumulative impact of the rulemakings into consideration or the consequences to our industry could be sizable.
If we are going to remain competitive as a supply chain, we also need public and government support for permitting new infrastructure development in the US. Yet, more and more we are facing opposition with the permitting process being used as a weapon to stall or stop new projects. Permitting is not bad; it serves a good purpose. But it is a problem when it is used by people who are opposed to a project or a particular commodity to slow down or even stop a project. The inability to build new infrastructure becomes everyone’s problem because it drives up the cost of doing business and ultimately hurts competitiveness for all the supply chain.