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Tasmanian Country Hour
Monday, June 2, 2008
US rail freight spend $440B and rising
Report: Catherine Clifford
While Australia struggles to make significant funding commitments to fix its ailing freight rail network, the Americans have pumped more than AUD$440 billion into theirs over the past 25 years.In the late 1970s the Americans realised they were facing a transport infrastructure crisis. So, the then US President, Jimmy Carter, signed off on the Staggers Act (named after Democrat Congressman Harley Staggers) and deregulated the railroad industry.The move saved the US rail freight system from total collapse, says Tom White from the Association of American Railroads."More than 20 per cent of the industry was in bankruptcy and the average return on investment for the remaining railroads was only about two per cent," he says.Railroads then used these new freedoms to increase volume, improve efficiency and reduce costs."Previously railroads had to get government permission before they could change prices, offer new services or decide what markets to serve," he says."After that legislation was passed railroads were treated more like other industries so they could make those decisions themselves," says Mr White.Since 1980, America's 554 private rail carriers have invested more than 40 per cent of their total operating revenues to improve tracks, modernise fleets of locomotives and wagons, upgrade signals, fix bridges and attract staff.The Association of American Railroads says the US rail freight system now moves 42 per cent of all US freight and, unlike Australia where coal and other mineral resources take precedence, the Americans move anything and everything by rail."Our largest customer is a trucking company that finds it is far more economical to put a trailer on one of our trains and move it cross-country if it is going more than 1,000 miles than it would be for it to move it over the highway," says Tom White."About half the lumber that's used for building houses is delivered by train, grain is our second largest tonnage after coal and we move substantial volumes of fertilisers as well," he says.Seventy per cent of all new vehicles off the assembly line take their first trip by train in the United States.The National Grain and Feed Association (NGFA) represents 930 US companies that move and handle about 70 per cent of the US grain crop, more than a third of which is transported by rail.In spite of the massive spending on rail freight in the US, though, the NGFA's spokesman Randy Gordon says serious rail capacity constraints are starting to emerge again and his Association is pushing Congress to do more to encourage investment."We are joining with the Association of American Railroads in supporting legislation that would provide up to a 25 per cent tax credit to companies who invest in new rail lines, new switches and new sidings," says Randy Gordon.Meanwhile, back home in Australia, agricultural businesses who want to put more of their freight on trains continue to dream about the possibility.Executive Director of Livestock with the Teys Group, Geoff Teys, says it offers a lot of benefits in the transportation of cattle."We find it efficient and very good on animal welfare and we'd certainly use much more if it was available, but it's at maximum capacity at present and we need more capacity," he says."You can buy a thousand bullocks at Cloncurry and deliver them into Brisbane in one hit on one transport mode and your cattle all leave together and all arrive together," says Mr Teys.Geoff Teys says he'd like to see greater integration of rail and road freight in Australia."The road guys could run into the rail depots and the depots could take [produce] to their destination, whether it be grain, meat, livestock, all sorts of commodities," he says."They shouldn't compete with each other, they should work together," says Geoff Teys.
In this report: Tom White, communications spokesman, Association of American Railroads (AAR), Washington, DC; Randy Gordon, vice-president of government relations and communications, National Grain and Feed Association (NGFA), Washington DC; Geoff Teys, executive director of livestock, Teys Group.
Monday, June 2, 2008
US rail freight spend $440B and rising
Report: Catherine Clifford
While Australia struggles to make significant funding commitments to fix its ailing freight rail network, the Americans have pumped more than AUD$440 billion into theirs over the past 25 years.In the late 1970s the Americans realised they were facing a transport infrastructure crisis. So, the then US President, Jimmy Carter, signed off on the Staggers Act (named after Democrat Congressman Harley Staggers) and deregulated the railroad industry.The move saved the US rail freight system from total collapse, says Tom White from the Association of American Railroads."More than 20 per cent of the industry was in bankruptcy and the average return on investment for the remaining railroads was only about two per cent," he says.Railroads then used these new freedoms to increase volume, improve efficiency and reduce costs."Previously railroads had to get government permission before they could change prices, offer new services or decide what markets to serve," he says."After that legislation was passed railroads were treated more like other industries so they could make those decisions themselves," says Mr White.Since 1980, America's 554 private rail carriers have invested more than 40 per cent of their total operating revenues to improve tracks, modernise fleets of locomotives and wagons, upgrade signals, fix bridges and attract staff.The Association of American Railroads says the US rail freight system now moves 42 per cent of all US freight and, unlike Australia where coal and other mineral resources take precedence, the Americans move anything and everything by rail."Our largest customer is a trucking company that finds it is far more economical to put a trailer on one of our trains and move it cross-country if it is going more than 1,000 miles than it would be for it to move it over the highway," says Tom White."About half the lumber that's used for building houses is delivered by train, grain is our second largest tonnage after coal and we move substantial volumes of fertilisers as well," he says.Seventy per cent of all new vehicles off the assembly line take their first trip by train in the United States.The National Grain and Feed Association (NGFA) represents 930 US companies that move and handle about 70 per cent of the US grain crop, more than a third of which is transported by rail.In spite of the massive spending on rail freight in the US, though, the NGFA's spokesman Randy Gordon says serious rail capacity constraints are starting to emerge again and his Association is pushing Congress to do more to encourage investment."We are joining with the Association of American Railroads in supporting legislation that would provide up to a 25 per cent tax credit to companies who invest in new rail lines, new switches and new sidings," says Randy Gordon.Meanwhile, back home in Australia, agricultural businesses who want to put more of their freight on trains continue to dream about the possibility.Executive Director of Livestock with the Teys Group, Geoff Teys, says it offers a lot of benefits in the transportation of cattle."We find it efficient and very good on animal welfare and we'd certainly use much more if it was available, but it's at maximum capacity at present and we need more capacity," he says."You can buy a thousand bullocks at Cloncurry and deliver them into Brisbane in one hit on one transport mode and your cattle all leave together and all arrive together," says Mr Teys.Geoff Teys says he'd like to see greater integration of rail and road freight in Australia."The road guys could run into the rail depots and the depots could take [produce] to their destination, whether it be grain, meat, livestock, all sorts of commodities," he says."They shouldn't compete with each other, they should work together," says Geoff Teys.
In this report: Tom White, communications spokesman, Association of American Railroads (AAR), Washington, DC; Randy Gordon, vice-president of government relations and communications, National Grain and Feed Association (NGFA), Washington DC; Geoff Teys, executive director of livestock, Teys Group.
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