A slow, gradual economic recovery is under way, and transportation companies are gearing up for progressively heavier demand. The Institute for Supply Management PMI manufacturing index has shown several consecutive months of expansion in the manufacturing sector. ISM data also show inventories remain below target levels. North American railroads are poised to leverage their environmental efficiencies to replenish inventories and drive economic recovery and growth.
That means there will be even more intensity toward building rail capacity to meet long-term demand while maintaining core networks for maximum safety and reliability. The underlying factors behind an increased dependence on rail remain firmly in place – environmental efficiencies, overcrowded highways and long-term growth in imports. The U.S. Department of Transportation and the industry’s own projections confirm railroads must continue to invest significantly to build networks capable of handling freight for an expanding population.
Another important change is the focus on developing, testing and installing Positive Train Control by the federally mandated deadline of 2015 at a cost to the industry of more than $10 billion.
Finally, there is a growing realization among policymakers that less regulation – not more – encourages the innovation that has transformed the railroad industry since the partial deregulation in 1980. Since then, rail rates have dropped on average more than 55 percent, volumes have nearly doubled, and railroads have invested more than $460 billion in their networks.
No one can say for sure what the future holds in terms of the regulatory debate, but this point is compelling: railroads offer solutions to America’s most pressing concerns.