Although 2011 was a year of progress for freight railroads, challenges remain in the year ahead. A few of the plot lines affecting the national story will be resolved in 2012, hopefully in a way that positions the industry for growth.
Rail traffic was steady in 2011, with year-over-year growth in virtually every commodity segment as well as in intermodal traffic. In fact, when all the numbers come in, total rail intermodal volume in 2011 may approach 2006 levels, the best rail traffic year in history. Though traffic volumes grew, they grew slowly and provided a less-than-clear picture of how firm our national economic recovery is. As demand returns, and railroads win market share, 2012 will hopefully see steady growth at a quicker pace.
In Washington, the Obama administration undertook a noble effort in reviewing existing regulations that are “obsolete, unnecessary, excessively burdensome or counterproductive” and thus stymie private sector investments and job creation. The administration held up one of these regulations — the Federal Railroad Administration’s rule on the implementation of positive train control —as a prime example of regulatory overreach and began the process of revision. Though the rulemaking begins to address the industry’s concerns, it remains to be seen how the most expensive single federal mandate in railroad history will be altered.
Despite this less-than-clear roadmap, freight railroads this year again will look to invest significant amounts of private capital in the national rail network, and hire to meet the growing demand for freight rail. Railroads last year invested more than $12 billion in capacity-enhancing capital projects on top of the day-to-day cost of running the national rail network that serves freight and passenger rail customers. In addition, railroads hired more than 15,000 people to address the large number of retiring rail workers as well as to fill new positions.
The ability to sustain investments and hiring depends greatly on how these lingering issues are resolved this year. As these issues are addressed, and clarity hopefully comes into view, railroads can meet the unforeseen demands of the coming year.