Transcript Future of Freight Rail, Francis Mulvey

Future of Freight Rail
National Association of Counties
2011 Rail Conference
Commissioner Francis P. Mulvey
April 28, 2011
STB Basics
• Independent economic regulatory agency
for the railroad industry
• Jurisdiction over
Railroad rate and service disputes
Railroad mergers and acquisitions
Rail line abandonments and construction
Freight/passenger rail relationships
Limited jurisdiction over other modes
Board Structure
• Comprised of 3 Board members
• Ann Begeman confirmed on April 14,
replacing Chip Nottingham
• All members have rail transportation
backgrounds
– Elliott: United Transportation Union
– Mulvey: House T&I staff; DOT IG for
rail; GAO transportation group
– Begeman: Senate Commerce staff
STB STAFF
• Highly educated professional staff - lawyers,
economists, financial analysts, environmental
and railroad operational specialists
• Named #1 small agency - annual federal
employee survey for past 2 years
• “One of the most obscure corners of the
federal government . . . . train geeks and
experts” Washington Post
Future of Freight Rail Hard
to Predict
• Positive state of rail industry today not
predicted 10 years ago
• 5 years post-Staggers, industry was still
struggling
• Many variables in 25-year outlook
• Past is not necessarily prologue
Recent increase in rail
volume
• 14 straight months of traffic gains
• Nearly all commodities up from the
same period 1 year ago
• Grain, Coal, Chemical, Motor
Vehicles up
 BNSF, UP, NS carload volume increases
greater than 5% (vs. same week 1 year ago)
 CSX, KCS, and CN all in positive territory
 CP decline due to recent service issues
Intermodal at near-record
highs
• CSX, NS, BNSF, KCS and CN post
gains of 8-10% (vs. same week 1 year
ago)
• UP gains smaller (2.5%)
• More commodity types moving via
intermodal (e.g., some forest products
migration from boxcar to intermodal)
Future Traffic Growth
• Rate of continued traffic growth
unknown
• Capacity may become issue
 1930 – 250,000 Class I route miles
2009 – 90,000 Class I route miles
 1940 – 1.6 million Class I employees
2011 – 161,000 Class I employees
Future Traffic Growth
• Railroads continue to increase infrastructure
investments
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1995 –$6 billion Class I capital expenditures
2009 – nearly $10 billion capital expenditures
2011 - $12 billion planned capital expenditures
Most capital expenditures for replacement, not
expansion
• Rail market share growth; barge/pipeline
decline
• Not clear whether rail could handle
substantial traffic shift from trucks
Energy Policy
• Significant percentage of rail revenue
derived from coal transport
• Changes in coal/energy policy could impact
– Traffic volume
– Destination (export vs. domestic usage)
• Push for renewable energy could change
traffic makeup
• Ethanol policy
Trade Issues
• Impact export volumes
• Will a growing percentage of U.S. coal
go to Asia?
• Will there be larger overseas sales for
U.S. automotive manufacturers?
• Will worldwide grain shortages send
more U.S. grain overseas?
Changes in Transportation
Policy
• PTC implementation and experience
• Changes in safety regulations
• Changes in legislative/regulatory
economic regulation
• Budget cuts/increases in federal
programs that support rail industry
investment
Changes in Rail Industry
Innovation
• Likely future productivity and
efficiency improvements
• Last 25 years have produced
– Increased train speeds
– Longer trains; more emphasis on unit trains
– Changes in employee functions/crew size
• Productivity gains were passed on to
shippers via lower rates; this has
changed in past few years
Growth of Passenger Rail
• High speed rail investment
– Will it happen on a large scale?
– Will it impact freight rail capacity in the
short or long term?
– Funding?
• Growth in transit ridership and
potential impact on freight rail capacity
Local Gov’t Influence on
Rail Industry
• Participation in STB proceedings
– CN/EJE merger proceeding - hundreds of local
comments on safety, environment, oversight
– Local officials/citizens comment in many proceedings
• STB’s Rail Customer & Public
Assistance Program
• Community/state purchase of rail lines
– Maine recent purchase of 200+ mile line
– 3 Indiana communities bought line being abandoned;
trail use now and possibility of rail use in future
Thank you
Any Questions?