Lip service from Washington

Lip service from Washington

Here are two statements of fact: One, the Department of Transportation was created in 1966 with a mandate to develop a national transportation policy that would guide public investment in infrastructure. Two, the DOT says it supports public-private partnerships as a way of leveraging public and private capital investments to provide more and better infrastructure.

As the DOT approaches its 40th anniversary, there still is no national transportation policy. And despite lip-service support for public-private partnerships from the administration and Congress, the number that have actually been funded can be counted on the fingers of one hand.

Until recently, this was not a huge problem. It may have been poor public policy, but it wasn't really a problem for transportation providers or users. There was sufficient capacity in the rail and highway systems that shippers could focus on driving freight rates ever lower while pressing for improved service.

No longer. Highways are aging, and not enough capacity is being added to keep up with the needs of the economy. Meanwhile, increasing amounts of traffic are being driven to the railroads.

Intermodal and coal are driving rail growth. Intermodal represents the future of the railroad industry with so many weekly records being set that each new one goes virtually unnoticed. Rapidly rising prices for oil and natural gas are driving utilities to burn more coal. Intermodal has put the railroads back into the consumer goods business that they lost to motor carriers in the post-World War II years - only now they carry the truck trailers that formerly competed with them.

Matt Rose, chairman, president and chief executive of BNSF Railway, recently announced a BNSF scholarship at the Intermodal Transportation Institute named in honor of William Greenwood, a retired BNSF executive. (Disclosure: The writer is a member of the ITI board of directors.) Greenwood deserves to be honored for one thing in particular. It was he who came up with the idea of the intermodal hub center.

By aggregating traffic to a relatively small number of highly efficient terminals managed by people with trucking rather than rail experience, the former BN was able to close a couple of hundred intermodal ramps. Service improved as BN proved that a container or trailer could be efficiently and economically drayed as much as 250 miles, while eliminating the stops and handling at the closed ramps. Critical mass was achieved, and intermodal got its own trains, which further improved service.

Rose cited a forecast increase in U.S. consumption of more than $1 trillion, from $8 trillion to just over $9 trillion in the next five years, and noted that this increase is being largely satisfied by imports, mainly from China. "Increased intermodal demand is also being driven by the desire of our domestic truckload industry to use the nation's rail network to help offset their escalating operating expenses due to volatile fuel prices, rising insurance and labor costs, and driver shortages," Rose said.

In his remarks, Rose expressed frustration with the direction of public policy. Rail intermodal has benefited from the lack of proper funding for highways. The highway network is pretty much where it was at the end of construction of the interstate system. For the first time in more than 50 years, railroads and truckers no longer are fighting over funding. They recognize the need for more infrastructure for both modes.

Meanwhile, railroads must provide their own capital for their infrastructure. Public-private partnerships are seen as a way of identifying those costs that benefit the public and funding them with public money, while railroads fund those elements of infrastructure that benefit them and their stockholders.

What did Congress and the administration do about that? They diddled and quibbled for two years before passing a pork-larded $286 billion surface transportation program. The two most prominent public-private partnerships were effectively stiffed. While the Alameda Corridor East and Chicago CREATE projects received minimal funding authorization, there is some $24 billion going to a $250 million bridge to serve 50 families in Alaska, bike trails in the lower 48, historical museums and other projects that may keep members of Congress in office.

If there had been a transportation policy, it might have been easier to reject the special pleading for purely political purposes. With the exception of the original Alameda Corridor in Southern California and a few mainline clearance projects, intermodal has developed with minimal government involvement. Supply-chain participants have a symbiotic relationship, as each works to maximize return on capital. It appears they will have to continue to do so.

Larry Kaufman, former intermodal editor of The Journal of Commerce, has worked in and written about railroads for nearly 40 years. He can be contacted at