Lautenberg Introduces National Rail Freight Policy Bill

July 25, 2010 at 3:19 PM Leave a comment

Calling it “long overdue,” last week NJ’s U.S. Senator Frank Lautenberg introduced a bill to Congress, with Sens. Maria Cantwell and Patty Murray, that would modernize, well—actually, they said “create a national rail freight policy” for America. The bill directs the federal Dept. of Transportation to enhance travel-time reliability, cut carbon dioxide emissions by 40% by 2030, and reduce delays in shipping goods that enter the country via container ships and are then transferred to rail cars.

Whither Railroad Policy?

Anything we can do to get more goods moving more efficiently by rail, rather than diesel-fueled, polluting trucks, which cause so much wear and tear on our interstate highways and local roads, sounds terrific!  Sen. Lautenberg is the chair of the Senate Commerce subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety and Security.

On the same day, an insightful article appeared in the internationally-read The Economist that said, “America’s freight railways are one of the unsung transport successes of the past 30 years. They are universally recognised in the industry as the best in the world.” (July 22, 2010, http://www.economist.com/node/16636101). The article described the current rail freight policy (deregulation by the Interstate Commerce Commission at the end of the Carter administration, and modernization under the Staggers Rail Act of 1980) as fostering the current level of investment, efficiency and profit.  Statistics don’t lie: “Since 1981 productivity has risen by 172%, after years of stagnation. Adjusted for inflation, rates are down by 55% since 1981 []. Rail’s share of the freight market, measured in ton-miles, has risen steadily to 43%—about the highest in any rich country. The $34 billion purchase last year by Warren Buffett’s Berkshire Hathaway of Burlington Northern Santa Fe (BNSF), one of the seven main freight railways (see chart 2), opened many Americans’ eyes to the industry’s significance. That America’s shrewdest investor should place his biggest bet on BNSF focused attention on how the country’s railways have been quietly boosting the economy by sucking costs out of many supply chains.” Id.  The era of transport industry regulation was an abysmal failure, for all modes, and caused many RRs, including the giant Penn Central, to go bust.

The Economist article appeared in the context of Amtrak’s coming $8B expansion of high-speed corridors along many freight RR right-of-ways, which is, obviously, a very good thing despite the subsidy of fares. However, it’s also obvious that use of the freight RR lines for passenger capacity could ultimately result in their re-regulation. Expensive train-control technology for passenger trains that freight RRs don’t need, and can’t afford, must be installed. A reduction in the capacity (time windows) available to freight RRs to run will clearly result. Combined with social good requirements (carbon reduction), freight rates will rise. Rising rates will result in calls of “market power” or even monopolization. Yet freight RRs are only making an 8% return now, having taken two decades to achieve the efficiencies envisioned in 1980.

Anyway, investment in infrastructure will benefit NJ, where ship-to-rail transfer facilities link container terminals in Newark, Elizabeth and Staten Island to CSX and Norfolk Southern freight lines through New Jersey, which are mostly not shared by NJTransit, the passenger RR. Of the $146 billion in cargo handled by the port last year, 11.6 percent, or $16.9 billion worth, involved ship-to-rail transfers, according to the Port Authority of NY and NJ.

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