One important issue the industry will face in 2012 is the increasingly constrained capacity in domestic railroad networks as traffic volume grows. Railroads provide significant and vital logistics capacity to North America which helps drive economic growth and makes us more competitive in the global economy. The steel wheel on the steel rail is still one of the most efficient, cost-effective and environmentally-friendly ways to move goods from origin to destination.
Another ongoing industry issue is ensuring nothing is done in the regulatory arena that could undermine the industry's ability to invest the capital needed to continue to provide good customer service. Unlike other modes of transportation, railroads generally do not operate over publicly funded and maintained infrastructure. Because railroads are capital intensive, the industry must have the ability to earn adequate financial returns to maintain the network, build capacity, and reinvest in people, equipment and infrastructure.
With concern in Washington about unemployment and the economy, there appears to be little appetite for doing anything that could potentially slow capital investment or job creation. Going into an election year and with so many economic concerns, it seems unlikely Congress would pass legislation making it harder for railroads to invest and create jobs.
Other long-term industry issues include recruitment and retention of next generation employees as current employees retire, and dealing with the early costs of the government-imposed Positive Train Control implementation schedule.
Right now, we do not see weakness in our markets. In spite of warning signs, carloadings continue to be strong. In fact, three of the top five weekly volume totals in KCS history have been in the fourth quarter of 2011. Coal and intermodal should be especially strong in the year ahead.