For 2015, America’s freight rail industry’s most pressing issue in Washington is to maintain the current economic regulatory structure. Upsetting that balance would result in less money for rail companies to invest in the nation’s freight rail network — at a time when demand is increasing for expanded capacity to accommodate the recovering economy.
For decades, railroads have invested record amounts to meet the need of U.S. companies seeking cost-effective, efficient transportation of their products. The industry spent about $26 billion in 2014 alone, with a total of $525 billion since 1980, to improve and expand the nation’s 140,000-mile rail system.
The current regulatory structure works. It ensures that railroads can earn adequate revenue to reinvest in the network. In this way, rail companies — rather than U.S. taxpayers — foot the bill for the maintenance and growth of coast-to-coast rail lines that industries rely upon. This is in stark contrast to other modes of transportation, which are bankrolled by public funds.
At issue is the federal government’s consideration of changes that could have the effect of imposing price controls. It would harm the railroads’ ability to move what the economy demands and deliver the service shippers expect. Fundamentally, it would mean the rail industry would not be able to reinvest record amounts of private capital into the freight rail system.
On the one hand, everyone wants to see rail capacity grow and traffic flow unimpeded, and on the other hand, there are those who want to undercut the rail industry’s very ability to get the capital necessary to invest. This is a perfect example of you simply can’t have it both ways.
The best way to improve rail service is to stick with the tried and true market-based solutions that are working so well. A healthy freight rail industry is vital to the nation’s economic recovery, and protecting today’s balanced economic regulations is essential for a robust freight rail network.
Edward R. Hamberger, President and CEO, Association of American Railroads