REMARKS FOR

 

 

 

 

 

 

 

 

CLIFFORD EBY,

 

 

 

 

 

 

 

 

DEPUTY ADMINISTRATOR

 

 

 

 

 

 

 

 

FEDERAL RAILROAD ADMINISTRATION

 

 

 

 

 

 

 

 

 

 

MIDWEST ASSOCIATION OF RAIL SHIPPERS

 

 

 

 

 

 

 

 

ST. CHARLES , IL

 

JANAURY 16, 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Good morning. On behalf of U.S. Department of Transportation Secretary Mary Peters and Federal Railroad Administrator Joseph Boardman, I appreciate this opportunity to address a group that shares a common interest in the developments that make rail transportation safer and stronger.

 

The entire segment of railroad business has shown steady growth the last six years.

 

Rail-ton miles, track miles, train length, and the number of locomotives in service all continue to grow.   Yet, thanks to several safety initiatives and public-private cooperation, accidents are down, and new technologies are in the pipeline to make the railroads even safer and more efficient.

 

However, we’ve seen a slow-down in freight traffic the past six months.   And while Americans have enjoyed 52 months of uninterrupted job growth – the longest period of job creation on record – the economic indicators are increasingly mixed.

 

President Bush is focused keeping our economy sound and has asked Congress to work with him to confront major challenges such as the housing market and the rising costs of fuel.

 

While we work to keep the U.S. economy growing, we do have to keep a sharp eye out for trends that will further affect railroads and those who produce rail cars and other equipment and services for the rail industry.  

 

It’s good to put our current status in perspective.   Remember back to the in the early 1980s, when excessive regulation was strangling the railroad industry to the point of bankruptcy.

 

Once we loosened the bonds of regulation and unleashed market forces, our railroads began to prosper.   Not only did they become strong financially and capable of carrying more tonnage, orders for new equipment grew, and safety vastly improved, too.  

 

The Bush Administration is pursuing market-driven solutions to today’s transportation challenges, including those facing the rail industry.   And I hope you will also believe that a market-based approach and public/private initiatives can help solve some of your concerns, such as safety, technological innovation, and capacity.

 

Constrained capacity and its ugly cousin, congestion, both strangle demand by adding cost to the delivered product.

 

There is no question we need to continue to build new roads, runways and expand capacity on rails to mitigate congestion.   But we should not limit ourselves with narrow thinking, resorting only to the solutions that we know.

 

As Transportation Secretary Peters has said, we do not have to accept congestion as a fact of life or another cost of doing business.  Congestion is a solvable problem.

 

Our ability to do so depends on our success in adopting transportation strategies that make sense and will work.

 

That is challenging for the railroad industry as the length of the mainline track network has actually declined.

 

Despite this reduction, rail ton-miles have increased, thanks to advances in technology with greater capacity of individual rail cars, longer trains, and faster throughput. 

 

Traffic on available rail lines has reduced average train speed by 20 percent over the past decade, resulting in network congestion and deteriorating service reliability. 

 

Despite the creation of many new short-line and regional railroads, our network of light density rail lines has also shrunk, continuing a process that began early in the 20th century.

 

Excess capacity and redundancy – in effect, the "slack" in the system – are gone from America ’s rail network. 

 

From your perspective, you should see added capacity as an opportunity for growth.

 

But solutions to the capacity problem will require new models for management and operations, which is why we are pursuing public/private partnerships as one potential solution to develop rail corridors.  

 

To push this effort, the Department of Transportation initiated the National Strategy to Reduce Congestion on America’s Transportation Network .

 

It provides a blueprint for federal, state and local officials to tackle congestion by focusing DOT’s resources, funding, staff and technology to cut traffic jams, relieve freight bottlenecks and reduce flight delays.

 

 

 

 

 

 

 

 

The initiative includes Urban Partnership Agreements with communities willing to demonstrate new congestion relief strategies and encourages states to pass legislation giving the private sector a broader opportunity to invest in transportation.

 

 

 

 

 

 

 

 

The plan also creates transportation corridors, including rail corridors, that encourages states to explore innovative financing as a tool to reduce congestion on some of our most critical trade corridors, improve the flow of goods across our Nation, and enhance the quality of life for U.S. citizens.

 

 

 

 

 

 

 

 

We accomplish this by working with coalitions that may include one or several of our states – as well as the railroads – to identify alternative funding sources for corridors of national and regional significance in need of investment for the purpose of reducing congestion.

 

 

 

 

 

 

 

 

A prime example of such efforts is the Heartland Corridor, which will increase rail capacity to handle freight between East Coast ports in Virginia and the Midwest .

 

This $150 million project – built with federal, state and Norfolk Southern funds -- is increasing the height of tunnels and removing other overhead obstacles to give double-stack intermodal trains a much shorter and more direct route from Hampton Roads to Columbus and than on to Chicago .

 

This direct route will shave more than 200 miles from the current routing through Harrisburg , PA or Knoxville , TN.

 

And in Chicago -- the nation’s rail hub and the only city where all six Class-One railroads converge and exchange freight -- the $1.5 billion CREATE program is providing critically needed improvements to ease the flow of rail traffic from coast to coast much faster and more efficiently.

 

The initial set of projects cost $330 million and are to be funded by $100 million from several private railroads, $100 million each from the federal government and the State of Illinois , and $30 million from the City of Chicago .  

 

 

 

 

 

 

 

 

Ultimately, the major railroads will contribute more than $210 million to the plan and Metra $20 million. The rest of the funds will have to come from public sources.

 

 

 

 

 

 

 

 

It is estimated that the project will create more than 1,000 jobs with an annual payroll of $50 million. In addition, the project will generate about $140 million annually in purchases of goods and services from area businesses. In all, the project is expected to produce almost $500 million in annual public benefits.

 

 

 

 

 

 

 

 

DOT is a strong supporter of the CREATE Program. We consider the Chicago Plan a significant landmark in private/public cooperation that could be used as a model elsewhere in the nation.

 

 

 

 

 

 

 

 

Another public/private success story is the Alameda Corridor that serves the Southern California ports of Los Angeles and Long Beach . 

 

By better separating trains from highway traffic, the Alameda Corridor has eased traffic on one of our country’s most crowded highways as well as congestion at the ports and is facilitating faster intermodal service between the West coast and markets in the Midwest and on the East coast.  

 

The $2.4 billion Alameda Corridor was built using funding from a multitude of government sources – federal, state, and local – as well as private investments from the railroads and revenue from bond purchasers.   The federal government provided a $400 million loan that private investors paid off early because the project has been such a tremendous success.

 

To further the goals of the Alameda and other corridor projects in California, the state recently announced $300 million for additional improvements, which caused some politicians there to say this is a really a subsidy for the Midwest.  

 

It’s true that two-thirds of the rail traffic from the California corridors is destined for the Midwest , but I think they’re missing the point on the goals of a corridor.   We have a national, intermodal transportation system that serves a global economy.   They may be shipping goods to the Midwest, but in return, the West Coast is receiving the Midwest ’s manufacturing and agricultural products.  

 

Everyone benefits from this model.  

 

I also find it interesting to hear the term “subsidy” when referring to corridor improvements. Why is it that whenever highway or airport improvements are made it’s called infrastructure development.   But when it comes to spending on railroads, it always seems to be referred to as a subsidy.

 

From FRA’s perspective, every dollar spent on rail is an investment in America ’s infrastructure.   Just imagine the benefits to your business and to society if we can increase tonnage and track miles through additional infrastructure improvements and new technologies.

 

The effort goes beyond these public/private partnerships to the railroads themselves, which are expanding their yards, double- and triple-tracking rights of way and working out operational agreements that increase capacity---and they are doing it without federal money.

 

For example, both the BNSF Railway and the Union Pacific Railroad are double-tracking their major routes from Los Angeles to Chicago .   And, both are triple-tracking their joint line from Wyoming ’s Powder River Basin to improve the movement of low sulfur coal to the nation’s utilities.

 

CSX is adding capacity on its rail lines between Chicago and Florida , and between Albany , New York , and New York City by adding or extending sidetracks.   And, Norfolk Southern recently announced plans to develop capacity improvements on its line between New Orleans and Newark , New Jersey .

 

While we’re slowly heading in the right direction in terms of capacity and congestion, there are short term problems that need to be addressed.

 

In Wisconsin , for example, some customers, including the state's largest utility, are being hurt by tight capacity and declining service.

 

Wisconsin Electric Power has been forced to burn more-expensive natural gas because it can't get enough train-delivered coal.

 

Grain handlers, meanwhile, face railroads that pick and choose which agricultural shipments they want to carry, along with waits of as long as five days before a train comes to haul away a load.

 

The Wisconsin Agriculture Transportation Coalition thinks that more inland "ports," where railroads could pick up large volumes of farm products rather than gathering a carload here and a carload there, would help.

 

They’re right, and I’d like to encourage the greater use of partnership to develop such inland ports because I’ve found that one of the best ways to introduce fresh and innovative approaches into the way that we build and maintain transportation projects is through public/private cooperation.

 

Through such partnerships we are also developing new technologies that will lead to even greater safety and efficiency on the rails, such as wayside detectors, track inspection vehicles, and innovative crash energy management systems.

 

Just this past October, t he first train fully equipped with electronically controlled pneumatic, or ECP, brake technology began hauling coal.   It was a Norfolk Southern train, operating from a Pennsylvania coal mine to a generating plant outside Pittsburgh .   Two 115-car train sets are currently in service on this route.   NS anticipates that the second corridor in Virginia utilizing ECP brakes will begin service in March 2008.

 

And later this month, BNSF and the Southern Company will begin running its first EPC train in revenue service from the Powder River Basin in Wyoming to Southern Company’s power plant of Birmingham, Alabama.   The trip is slightly over 1,500 miles one-way.  

 

Both NS and BNSF are using ECP as a direct result of a call from FRA to the industry to begin developing and utilizing this safety technology.

 

In the area of hazardous materials safety, we collaborated with the railroad industry on an accelerated research program into tank car structural integrity to make them less susceptible to damage during a crash.

 

In January 2007, FRA signed a Memorandum of Cooperation with Dow Chemical Company, Union Pacific Railroad and the Union Tank Car Company to collaborate in their Next Generation Rail Tank Car Project.

 

The goal is to achieve significant advances in the design and construction of tank cars, particularly those that carry toxic inhalation hazard materials and other high-risk commodities.

 

The project seeks to apply the latest research and advanced technology to increased safety for rail shipments posing the greatest safety risk, such as chlorine and anhydrous ammonia, which make up 80% of the hazmat moved by rail in the U.S.

 

This is a vital project for us, and we intend to propose new federal design standards for hazmat tank cars in the early part of this year.

 

Lastly in the area of technology, we have advocated – and worked with the industry on – the deployment of advanced signal and train control technology to improve the safety, security, and efficiency of freight, intercity passenger, and commuter rail service.

 

Through the implementation of Positive Train Control, or PTC, we can prevent train collisions, overspeed derailments, runaways, and casualties to roadway workers.

 

Currently, there are nine ongoing PTC projects in the U.S. involving eight railroads in 15 states, and are being tested on 2,600 track miles.

 

And it was just a year ago FRA approved the first system, at BNSF, capable of automatically controlling train speed and movements to prevent certain accidents, including collisions.

 

PTC should be put into use as soon as possible, but I understand the concerns about cost, which would be about $2.3 billion.   To asses costs, FRA commissioned a Congressional study in 2006 on the cost and benefits of PTC.  

 

The report concluded that while the railroads would receive some collateral benefits from PTC, such as improved railroad operational and safety efficiencies, the majority of the benefits would accrue primarily to the shippers and general public.

 

From the estimated total net societal benefit ranging from a low of $3.3 billion to a high of $7.1 billion per year, it was estimated that railroads would receive between $82 million and $825 million in operating benefits.

 

It’s very important to note, however, that the railroads’ ability to recover costs through higher rates due to operational efficiencies will continually improve as PTC becomes the industry standard.

 

There are still some major technological challenges to overcome with PTC.   Most vital is the interoperability between different PTC designs chosen by railroads operating over each other’s territory, which is an important consideration here in the Chicago area.  

 

I’m confident such technical issues will be worked out and we will see PTC fully deployed in the near future.