Railroad Capacity Expansion
Helping American Agriculture Compete
The success of American agriculture is linked to the successful operation of US railroads. Producers depend on an efficient and economic transportation system to deliver their crops to domestic and world consumers. The economic reality is that our railroads are at or near capacity. To keep American agriculture competitive, the railroads must have the ability to invest and to attract investment in infrastructure capacity expansion.
The Staggers Act Has Brought About Significant Improvements
Transportation costs, as they relate to agriculture, have remained close to the prices charged in 1980, with increases in rates seen only in the last few years. When you factor in inflation, this represents significant savings, and the greatest beneficiaries have been the American farmer and consumers worldwide. These economies are the direct result of gains in efficiencies due to investment in transportation and handling infrastructure by both railroads and handlers of agricultural products.
Demand For Railroad Services Expected To Continue To Rise
Between 2000 and 2020, the Department of Transportation expects rail freight volume to increase by 55 percent. To meet this demand, the railroad industry will need to dramatically increase its investment over the next 15 years. The American Association of State Highway Transportation Officials estimates that the railroad industry will have to make additional investments of $2.6 to $4.0 billion annually to create adequate capacity.
Reregulation Will Discourage Infrastructure Investment
To meet this demand, the railroad industry will need access to capital for further investment in infrastructure maintenance and expansion. By forcing inefficient operational or pricing practices, proposed reregulation legislation (S.919/HR2047) could restrict earnings which would severely limit the railroad industry’s ability to invest in infrastructure. If this investment is curtailed, it is likely that US rail carriers will not be able to keep up with demand and our agricultural producers will lose their competitive place in the global market.
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