The nation’s economy is wrestling with indicators suggesting a tempered outlook for the first part of 2016, highlighting that freight railroads might do well in good times, but assume huge risk when the economic tables turn.
One year ago, freight rail was transporting record levels of nearly all commodities. Now that is trailing downward as some shipments have fallen off. When the economy wanes, railroads leave hundreds of millions of dollars in stranded assets no longer in demand by rail customers and take the hit for infrastructure no longer in use — not the taxpayer. That’s because unlike most all other transportation infrastructure, rail infrastructure is funded by private railroad companies, not the public purse.
By building and maintaining the nation’s freight rail network, considered the best in the world, freight railroads ensure that the U.S. economy functions efficiently and effectively and that millions of commuters have reliable transportation when commuter trains access our rail lines.
But the nation’s current economic state — underscored by the stranded railroad assets — provides a sobering reminder for federal regulators keen on ensuring a robust freight rail network in 2016 and beyond: If regulators want railroads to continue to take financial risk and invest in rail infrastructure, then our railroads need balanced regulations that do not impede their ability to generate sufficient revenue.
Railroads make huge investments in their network, on average about $25 billion annually over the last several years for a total of $600 billion since 1980. That level of commitment is because rail companies can earn enough to do it.