Railroad/Intermodal shipping: NS CEO calls for increased railroad infrastructure investment

Even with the high level of infrastructure spending railroads have made towards their networks in past years, more is needed to meet the future projected demand in capacity when the economy rebounds, according to Wick Moorman, CEO of Class I railroad carrier Norfolk Southern.

Testifying before the House Ways and Means Subcommittee on Select Revenue Measures on behalf of the Association of American Railroads (AAR) last week, Moorman explained that freight railroad infrastructure tax incentives make sense for the country, because rail is the safest, most affordable, and cleanest way to ship freight.

“America needs more transportation capacity and needs it now,” said Moorman. “Railroads are the most affordable and environmentally responsible way to meet this [expected increase in railroad freight] demand, and that is why tax incentives for rail capacity would be good public policy.”

In recent years, the case for expanded rail capacity—and its anticipated funding shortfall—has been well-documented in various studies and data points, including:

* a 2007 report from the AAR and Cambridge Systematics that determined approximately $148 billion needs to be invested in the nation’s freight railroad infrastructure by 2037 to ensure that adequate rail capacity is in placed to meet the expected demand, with railroads anticipating under current conditions that the marketplace will allow them to raise $96 billion towards infrastructure expansion during that timeframe;

* a report from the American Association of State Highway and Transportation officials (AASHTO) that predicts by 2020 the U.S. rail system will carry an additional 888 million tons, an increase of more than 40 percent from current levels; and

* a Department of Transportation analysis predicting an 88 percent increase in railroad freight tonnage by 2035.

While these statistics portend a significant future economic rebound, it is likely that the current recession will push back the DOT’s trajectory by a few years, according to William J. Rennicke, director of Oliver Wyman, a Boston-based management consultancy.

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