When BNSF Railway decides how to invest its money in infrastructure expansion, it looks to the marketplace for guidance. Federal policymakers should do the same in formulating a national transportation policy, Chairman and CEO Matthew K. Rose said.
“The marketplace says, integrate rail and truck and invest on that basis,” Rose told the annual World Trade Week breakfast sponsored by the Los Angeles Area Chamber of Commerce on Friday.
The U.S. international supply chain is the most efficient in the world, which lowers the cost of transportation as a percentage of gross domestic product, Rose said. But the freight transportation infrastructure could be overwhelmed when trade volumes return to pre-recession levels because investments aren’t made on a total supply chain basis.
“The individual parts of the supply chain do not cooperate well,” he said.
U.S. trade growth will be tied to Asia, just as it has been over the past decade. Trans-Pacific trade is projected to increase 70 percent in the coming decade, Rose said.
Much of the cargo will be carried on huge ships capable of carrying 8,000 20-foot equivalent container units or more serving West Coast ports, and the freight will move inland via intermodal rail. Los Angeles-Long Beach already accounts for approximately 40 percent of U.S. containerized imports and 25 percent of exports, he noted.
West Coast ports learned earlier in the decade that the international transportation system can become congested when the rail and highway networks and intermodal connectors don’t keep pace with the growth in freight. With trans-Pacific trade projected to return to the 2007 peak in another year or two, highway capacity must grow, and rail networks, near-dock and on-dock rail lift capacity must be expanded, Rose said.
The railroads are investing their own money to accommodate this growth. They spent $10.7 billion last year on systemwide capital expansion projects and will spend $12.6 billion this year, he noted.
The rail projects must be integrated with highway investments as part of a national freight policy that takes its guidance from the marketplace.
“Freight will go on its preferred route,” Rose said. Federal transportation funding, from sources such as the Harbor Maintenance Tax and the Highway Trust Fund, can help to relieve transportation bottlenecks and improve the efficiency of freight transportation if the money is spent under a national policy that responds to the demands of the marketplace, he said.
Contact Bill Mongelluzzo at email@example.com. Follow him on Twitter @billmongelluzzo.