This commentary appeared in the print edition of the Jan. 6, 2020, Journal of Commerce Annual Review and Outlook.
Despite underlying softness and uncertainty in the market, caused in no small part by trade tensions, freight railroads continue to meet the challenges of today and tomorrow. This is true across multiple commodities, including intermodal, where the picture amounts to more than meets the eye.
After a record 2018, intermodal volumes today may appear confounding, yet they are very similar to what the industry saw in 2017, before a new wave of tariffs. While intermodal traffic in 2019 was short of 2018’s record-setting volumes, this segment still performed strongly in line with recent years. Undoubtedly, increased trade certainty would provide a shot in the arm to the economy.
In the meantime, carriers are doing what they always have done: keeping a long-term view and adapting to market changes. We are not chasing the short term.
Instead, we continue to increase our focus on the consumer economy and truck-competitive business opportunities via intermodal offerings. Railroads are undergoing a transformation, deploying innovative solutions and redesigning service offerings to improve customer visibility, efficiency, reliability, and on-time delivery.
The industry is bullish on a future in which freight demand, driven partly by e-commerce, will increase some 35 percent. We are particularly optimistic knowing that we control at least part of our own destiny through sustained private investments. Our track record is strong.
In recent years, freight railroads have averaged $25 billion in annual investments to maintain and upgrade infrastructure and equipment. To put that into perspective, that is more than $480 million per week, or $68 million a day. 2019 was no different.
Comparatively, our network is the healthiest in its history compared to our ailing highways that trucks rely upon. Sensible policy from Congress and the US Surface Transportation Board that promotes and enables further investment is essential.