Washington Report

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Washington Report

• Jennifer Macdonald
• Association of American Railroads
• August 18, 2008
• SCORT Meeting Milwaukee

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Key Freight Rail Issues

• Rail Safety
• Rail Capacity
• Reregulation
• Rail Security
• Amtrak
• Energy and Environment

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(No Transcript)
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Outlook for Rail Safety Bill?

• S. 1889 / HR 2095
• Areas of Concern
• Hours of Service
• Positive Train Control mandates
• Switching mandates
• Unreasonable track performance standard

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Railroads are Safe and Getting Safer (Index
1980100)
Grade crossing collisions
Employee injuries illnesses
Train accidents
Source FRA
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Railroads Have Outstanding Safety Record
RR Safety Trends 1980-2007
The railroads have an outstanding record in
moving all goods safely. -FRA official to
Congress, Feb. 2007
through 2006
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Cases With Days Away From Work, Job Transfer, or
Restriction Per 100 Full-Time Workers - 2006
RRs Are Safer Than Other Industries
Air Transp.
Grocery Stores
All Private Industry
Inland Water
Constr.
Source U.S. Bureau of Labor Statistics
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95 of Rail-Related Fatalities Involve
Trespassers or Grade Crossing Collisions
Trespassers 472
Others 20
Passengers 5
Highway-Rail 337
Employees on Duty 17
Data are for 2007. Source FRA
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The Rate of Grade Crossing Collisions Has Fallen
Every Year Since 1980
Grade Crossing Collisions Per Million Train-Miles
Source AAR
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Freight Railroad Investment Challenge

• Rail investment must grow sharply over the next
  20 years just to maintain the current rail share
  of freight traffic.
• AASHTO, the Transportation Research Board, and
  others report that freight railroads are unlikely
  to be able to make the necessary investments on
  their own.

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One Result of Traffic Growth Tight Capacity on
Parts of the Rail Network
Millions of Class I Ton-Miles Per Mile of Road
Owned
Source AAR
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Record Capital Spending
Class I RR Capital Spending ( Billions)
9.2
Source AAR
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2006 Class I RR Investment on Infrastructure and
Equipment
Cap. exp. - equipment 1.5 bil. (8)
Maintenance expenses infrastructure 3.6 bil.
(19)
Cap. exp. - infrastructure 7.0 bil. (36)
Maintenance expenses equipment 7.2 bil. (38)
Of which 1.5 billion for expansion
Less depreciation Source AAR
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Railroads Spend More Than Most State Highway
Agencies
Class I Railroad Spending on Way Structures
vs. State Highway Agency Spending - 2006 (
billions)
Data include capital outlays and maintenance
expenses. Sources FHWA Highway Statistics
Table SF-12, AAR
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National Rail Freight Infrastructure Capacity and
Investment Study

• Prepared for the National Surface Transportation
  Policy and Revenue Study Commission.
• First effort of its kind involving the freight
  railroads.
• Objective estimate cost to expand rail
  infrastructure to handle traffic forecast by DOT
  for 2035

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Future Rail Traffic Will Rise Substantially,
Creating Severe Capacity Issues
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39 Billion Gap Between What RRs Can Afford and
the Capacity Needed
135 billion in infrastructure expansion by 2035
for Class I railroads
Source Cambridge Systematics
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Tax Incentives For Freight Rail Infrastructure
Expansion

• 25 tax credit for projects that expand rail
  capacity
• Expense other infrastructure capital expenditures
• Leverage private investment
• Short line investment credit renewal

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Moving More Freight by Rail Would Yield Huge
Public Benefits

• ? Reduced highway gridlock and need for costly
  new highways
• Less pollution
• Higher fuel efficiency, lower greenhouse gas
  emissions
• ? Safety

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Reauthorization

• Support railroad infrastructure tax credit
• Support grade crossing funding (sec. 130)
• Support funding for intermodal connectors
• Support CREATE project funding
• Oppose increases in truck size and weight

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Highway-Rail Grade Crossings Are a Major Safety
Concern

• ? Highway safety issue
• ? States establish priorities
• ? 238,000 crossings nationwide (42,000 fewer
  than 1990)
• Section 130, Operation Lifesaver
• Railroads spend 250 million annually on
  crossings.

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Truck Size and Weight

• Increased truck size and weight
• means
• ? Diversion from rail to truck.
• Higher highway and bridge
• congestion, damage, and maintenance costs.
• ? Increased pollution, and higher truck
  subsidies.
• ? Lower rail revenue and investment remaining
  rail shippers face higher rates and reduced
  service.

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Freight Fund?
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Reregulation--S. 953 /H.R. 2125
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Average Rail Rates Have Plunged (Avg. Revenue Per
Ton-Mile, All Commodities)
Inflation-Adjusted - Down 54 Since 1980
Not Inflation-Adjusted - Down 6 Since 1980
Source AAR
26
Average U.S. Freight Rail Rates Are the Lowest
in the World
Index U.S. 100
Adjusted for purchasing power parity. Data are
2005. Source World Bank
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Railroads Help Keep Chemicals Competitive
Prices for chemicals and major chemical
feedstocks have increased sharply since 1990,
while average railroad chemical rate increases
have been moderate.
Chemical Producer Prices vs. Avg. RR Chemical
Rates (Index 1990100)
PPI chemical feedstocks
PPI natural gas
PPI all chemicals
Average RR rates for chemicals
Source BLS AAR
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Railroads Help Keep Coal-Based Electricity
Affordable
From 1981-2006
U.S. avg. revenue per kwh, all sectors
Revenue per ton-mile for coal Not adjusted
for inflation. Source EIA, AAR
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Railroads Help Keep Agriculture Competitive
Changes in Prices Paid by Farmers for Various
Farm Inputs Used For Production 1990-2006
Source USDA, AAR
Revenue per ton-mile
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Rail Rates Are Down For Most Commodities
? 39
? 37
? 28
? 49
? 61
Inflation-adjusted revenue per ton-mile,
1981-2006 Source STB Carload Waybill Sample
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Rail Rates Are A Bargain Compared to Other
Networked Industries
(Average Prices, Current Dollars, 1985100)
Cable TV (218)
Natural Gas (108)
Local Telephone (84)
Electricity (42)
Railroads (-2)
RRs Class I avg. revenue per ton-mile Cable
TV CPI cable satellite television, U.S. city
avg. Electricity U.S. avg. revenue per kwh, all
sectors Telephone CPI telephone service -
local charges Natural gas CPI piped gas
service, U.S. city average Sources AAR,
BLS, EIA
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Whats Wrong With Legislation to Reregulate
Railroads?

• ? Focus on rail-to-rail competition ignores other
  competitive forces.
• ? Lowers rail rates (and therefore rail revenue)
  by government fiat, not market.
• Would make it impossible for railroads to fund
  needed investments in their systems.

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Railroads and Antitrust

• ? Railroads ARE subject to most antitrust laws.
• ? The few narrow antitrust exemptions for
  railroads cover areas subject to STB
  jurisdiction.
• ? In other words, there IS comprehensive
  government oversight of railroads the oversight
  is simply divided among different government
  agencies.

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• Freight rail works. Re-regulation doesnt. We
  could not agree more.
• Secretary Mary Peters
• October 5, 2007

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Security Remains Paramount
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Transporting Highly-Hazardous Materials is a Bet
the Company Gamble

• Common carrier obligation means RRs cant say no
• Accidents can happen even when RRs do everything
  right
• TIH of most concern
• TIH revenue doesnt come close to covering
  potential liability

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Railroad Risks Must Be Reduced

• Common carrier
• obligation / liability
• Product substitution
• Bans and notification
• Car standards
• Routing optimization/
• swaps
• Technology
• Training
• Operating practices

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Amtrak Reauthorization

• Pre-conference underway with staffs
• A few remaining differences
• Outlook

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Sharing the Track With Passenger Trains
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(No Transcript)
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Freight Rail Saves Fuel

• ? On average, a train moves a ton of freight 436
  miles per gallon of fuel.
• Trains are three or more times more fuel
  efficient than trucks.
• That means lower greenhouse gas emissions.

Railroad Fuel Efficiency (Ton-Miles Per Gallon
Consumed)
Source AAR
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U.S. Greenhouse Gas Emissions by Source 2006
Freight RRs Account for lt1 of Greenhouse Gas
Emissions
Trucking5.7
Non-transportation 72.4
Freight RRs - 0.7
Other freight transport 1.2
Passenger transport 20.0
On-road vehicles, aircraft, recreational boats,
passenger rail
Source EPA
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Freight Rail Means Less Pollution
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Railroad Day on Capitol HillSave the Date
February 26, 2009