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1. Freight Railroad Update AASHTO Spring Meeting Natchez, Mississippi May 20, 2010
2. RRs Face the Recession
6. But, RR Investment Spending Remaining High
7. A better alternative to overzealous
regulation and harmful legislation:
Balanced regulation
Infrastructure tax incentives
Public-private partnerships
Passenger and freight rail growing together
Responsible climate change policies
8. Don’t Fix What Isn’t Broken The gains freight railroads have made since Staggers have been substantial:
? Since 1980, rail productivity growth has been among the highest of all industries. The vast majority of rail productivity gains were passed through to rail customers as lower rates.
Big safety gains too. The train accident rate is down 73% from 1980 to 2008, and the rate of employee casualties is down 82%. 2007 and 2008 were the safest years for railroads in history.
RRs have been at the forefront of developing and implementing new technology that is integral to every facet of rail operations.
? Since Staggers, short line RRs have come to play a vital role, preserving rail service and rail jobs that otherwise might have been lost.
? Improved financial results over the past couple of years are tenuous first steps toward financial sustainability that will allow railroads to cover costs, provide for stockholder returns, attract capital, and address future demand.The gains freight railroads have made since Staggers have been substantial:
? Since 1980, rail productivity growth has been among the highest of all industries. The vast majority of rail productivity gains were passed through to rail customers as lower rates.
Big safety gains too. The train accident rate is down 73% from 1980 to 2008, and the rate of employee casualties is down 82%. 2007 and 2008 were the safest years for railroads in history.
RRs have been at the forefront of developing and implementing new technology that is integral to every facet of rail operations.
? Since Staggers, short line RRs have come to play a vital role, preserving rail service and rail jobs that otherwise might have been lost.
? Improved financial results over the past couple of years are tenuous first steps toward financial sustainability that will allow railroads to cover costs, provide for stockholder returns, attract capital, and address future demand.
9. New Challenges Ahead: Positive Train Control ? Must be in place by 2015.
? >$5 billion to install, ~$700 million per year to maintain.
? Total costs: >$10 billion over 20 years
? Implementing regulations made it even worse.
? $20 in costs for every $1 in benefits.
? Means less $ for other projects, including capacity and service improvements.
10. PTC Implications ? Will absorb most growth capital for next 6 years.
? First generation systems will reduce capacity of rail network.
? Ongoing operating expense will reduce net operating income equal to 40% of growth capital.
? Thus, PTC may represent a long-term threat to rail capacity enhancement. Will absorb most growth capital for next 6 years.
? First generation systems will reduce capacity of rail network.
? Ongoing operating expense will reduce net operating income equal to 40% of growth capital.
? Thus, PTC may represent a long-term threat to rail capacity enhancement.
Will absorb most growth capital for next 6 years.
? First generation systems will reduce capacity of rail network.
? Ongoing operating expense will reduce net operating income equal to 40% of growth capital.
? Thus, PTC may represent a long-term threat to rail capacity enhancement.
11. ? 25% tax credit for projects by RRs and other businesses that expand rail capacity and for PTC.
? $1 in investment yields $3 in economic benefits!
? Project selection bases on market need, not politics.
? Cost effective and timely with clear public benefits that far exceed costs.
12. TIGER grants demonstrated high public benefits of rail projects
PPPs can leverage private resources to meet public needs & reduce future maintenance costs
? Give states option to use new revenues outside existing HTF user payments for passenger and freight rail infrastructure projects
13. Freight Mobility A Big TIGER Winner
Total Amount Percentage
Freight Mobility $494 million 33%
Highway/Bridge $397 million 26.6%
Transit/
Passenger Rail $522 million 34.9%
14. AAR Principles for New Passenger Rail Partnerships ? Safety - Mitigate risks of increased speed
? Capacity - Protect customers
? Compensation - Need to recoup costs for infrastructure and maintenance
? Liability - Protect against increased risks associated with passenger traffic
15. Some Significant Issues for Mixed Use of Freight Facilities Capacity for operation and maintenance.
Dispatch priorities; flow management.
Safety – track separation
Compensation for capacity improvements and losses as well as ongoing maintenance and operation.
? Cost allocation.
Liability protection.
Controlling people access.
17. New Challenges Ahead: Climate Change Policy ? Some climate change proposals would require drastic cuts in coal use.
? Coal accounts for 1 in 5 railroad jobs and 1 in 4 railroad revenue dollars.
? Without coal, the rail network as we know it ceases to exist.
18. MAY 20, 2010 ASSOCIATION OF AMERICAN RAILROADS SLIDE 18 Huge Reinvestments = World’s Best Freight Rail Network Expensive to run a railroad
? From 1980 through 2008, U.S. freight railroads invested some $440 billion to maintain and improve their infrastructure and equipment.
? RR investment in itself – that is, capital spending on infrastructure and equipment as well as maintenance spending on infrastructure and equipment – is now about $18 billion-$20 billion per year, or more than 40 cents out of every revenue dollar.
? Spending on a per-mile basis has been trending upward, a reflection of the diligence with which railroads address capacity and service issues.Expensive to run a railroad
? From 1980 through 2008, U.S. freight railroads invested some $440 billion to maintain and improve their infrastructure and equipment.
? RR investment in itself – that is, capital spending on infrastructure and equipment as well as maintenance spending on infrastructure and equipment – is now about $18 billion-$20 billion per year, or more than 40 cents out of every revenue dollar.
? Spending on a per-mile basis has been trending upward, a reflection of the diligence with which railroads address capacity and service issues.
20. An Economic Engine Powering American Jobs
? Directly and indirectly supports 1.2 million jobs.
? Every freight rail job supports another 4.5 additional jobs.
Powering the American Economy
? Generated $265 billion in total annual economic activity in 2008.
? Pays billions in taxes, including $625 million in property taxes in 2008 alone. May 20, 2010 ASSOCIATION OF AMERICAN RAILROADS SLIDE 20 This information is based on U.S. Department of Commerce data, freight railroads:
Jobs:
Roughly 80 % of rr workers are union employees.
In 2008 -- earned average wages of $68,200, fringe benefits of $27,100, for total compensation of $95,300.
By contrast, the average wage per full-time employee in the U.S. in 2008 was $50,900 and average total compensation was $62,600.
RR workers made 36% more that average US worker.
RRs also pay billions of dollars per year in taxes and purchase billions of dollars in supplies and materials to help support local and state economies.
This information is based on U.S. Department of Commerce data, freight railroads:
Jobs:
Roughly 80 % of rr workers are union employees.
In 2008 -- earned average wages of $68,200, fringe benefits of $27,100, for total compensation of $95,300.
By contrast, the average wage per full-time employee in the U.S. in 2008 was $50,900 and average total compensation was $62,600.
RR workers made 36% more that average US worker.
RRs also pay billions of dollars per year in taxes and purchase billions of dollars in supplies and materials to help support local and state economies.
21. May 20, 2010 ASSOCIATION OF AMERICAN RAILROADS SLIDE 21 Environmental Steward ? In 2009, U.S. freight railroads moved each ton of freight an average of 480 miles per gallon of fuel.
? Since 1980, railroads have nearly doubled how much freight they move - while using virtually the same amount of fuel! What other industry has doubled its output without using more fuel?
According to the FRA, railroads are 1.9 to 5.5 times more fuel-efficient than trucks, depending on the commodity carried and distance traveled.
Greenhouse gas emissions are directly related to fuel consumption. Because railroads are so fuel efficient, they reduce the carbon footprint associated with freight transportation. In fact, depending on the commodity and distance traveled, moving freight by truck can emitup to 5 times more carbon dioxidethan moving the same freight by rail.
If just 10% of the long-distance freight currently moving by truck moved by rail instead, fuel savings would exceed a billion gallons per year.
This is exactly the kind of solution to energy problems that America is looking for.? In 2009, U.S. freight railroads moved each ton of freight an average of 480 miles per gallon of fuel.
? Since 1980, railroads have nearly doubled how much freight they move - while using virtually the same amount of fuel! What other industry has doubled its output without using more fuel?
According to the FRA, railroads are 1.9 to 5.5 times more fuel-efficient than trucks, depending on the commodity carried and distance traveled.
Greenhouse gas emissions are directly related to fuel consumption. Because railroads are so fuel efficient, they reduce the carbon footprint associated with freight transportation. In fact, depending on the commodity and distance traveled, moving freight by truck can emitup to 5 times more carbon dioxidethan moving the same freight by rail.
If just 10% of the long-distance freight currently moving by truck moved by rail instead, fuel savings would exceed a billion gallons per year.
This is exactly the kind of solution to energy problems that America is looking for.
22. Blue Green Alliance
7,800 green jobs for every $1 billion of freight rail capital investment
High public benefits
23. Conclusion “It is the inherent efficiency of rail transportation that enables freight railroads to do something that is expected of no other form of transportation: maintain their infrastructure, add capacity, host passenger operations, and pay local property taxes on their real estate.”
- FRA National Rail Plan, Oct. 2009
