Freight-Rail Bottom Line Report
AASHTO

Objective

Evaluate the capacity of the nation’s freight-rail transportation system to keep pace with the economic growth projected for 2020.

Project Challenge

By 2020, projected increases in truck volumes of 62 percent and rail freight volumes of 44 percent will strain the U.S. freight transportation system. Shippers favor trucks for speed and reliability, but increasing truck traffic will aggravate highway congestion and create significant social, economic, and environmental problems. Railroads provide shippers with cost-effective freight transportation, especially for long-distance trips and heavy and bulky commodities. The railroad industry is now competitive and productive, but railroads are very capital-intensive industries. Railroads are not attracting enough long-term investment, and the freight-rail system may not expand apace with the economy if current trends continue.

The American Association of State Highway and Transportation Officials (AASHTO) was concerned that the railroads will shed freight to trucks on an already overburdened highway system. AASHTO commissioned the Freight-Rail Bottom Line Report to explore the issues, costs, public benefits, and policy options for investing in the railroad system to ensure that it grows with the economy and helps relieve truck pressure on the nation’s highways.

Our Approach

AASHTO awarded this first-of-a-kind study to Cambridge Systematics. We organized the study into three key areas:

• Analyzing the freight-rail industry’s benefits to the United States
• Estimating the industry’s investment needs and its capacity to meet them
• Quantifying the consequences of not investing in the freight-rail system, including impacts on highways and shippers

Project Results

The Freight-Rail Bottom Line Report describes the freight-rail industry, its importance to the national economy, the need for investment, and the risks of not taking action now. The significant findings were:

• Relatively small public investments in the rail system can be leveraged into relatively large public benefits for highways, highway users, and freight shippers. In particular, we found that:
• An investment of $175 to $195 billion over the next 20 years would be needed to maintain rail’s share of projected total freight movement. Given the constraints on the rail industry’s ability to generate revenue and raise capital, an estimated $53 billion of the total — about $2.6 to $4.0 billion annually — must come from other sources, including the public sector
• Investment in the freight-rail system would yield an estimated $410 billion in benefits over a 20 year period — $10 billion in reduced highway needs, $238 billion in reduced highway user costs, and $162 billion in reduced shipper costs
• Public rail investment historically has been at the local level — in grade crossings, branch lines, and commuter rail services. The present need is at the national level — in corridors of important national interest, intermodal terminals, and connectors and urban rail interchanges
• The public and private sectors must advance public policy options with the reauthorization of the Transportation Equity Act for the 21^st Century (TEA-21) that improve the capacity, productivity, and security of the freight-rail system as an integral part of the national freight system.

In summary, unless there is coordinated public and private action, congestion and capacity constraints on the nation’s freight-rail system will weaken the freight industry, the economy, communities, and the environment.