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Issue 6 2019 - FBJNA From the Editor


CONTACTS 2019 SALES


MATT WEIDNER Tel: + 1 610 486 6525 matt.weidner@fj-online.com


JOHN SAUNDERS - PUBLISHER Tel: +44 (0)151 427 6800 Mobile: +44 (0)7932 102026 john.saunders@fj-online.com


EDITORIAL


KAREN THUERMER-EDITOR karen.thuermer@fbj-online.com CONTRIBUTING EDITORS: PETER BUXBAUM MARK CALDWELL HANK DONNELLY JOHN JETER AMANDA LOUDIN


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By Karen E. Thuermer


No one needs to be reminded of just how polarized our world has become today. There’s no shortage of topics that can spark a heated debate. One not often discussed is the conflict within the rail industry between freight and passenger rail service. The National Association of Manufacturers (NAM), a powerful trade


association in Washington, DC, has taken a stand on the topic. Growing numbers of its members are transporting goods throughout the year via rail. According to NAM’s “Building to Win” infrastructure plan, private investments averaging $27 billion annually over the past five years would allow the sector to maintain and upgrade its track and equipment. NAM points how rail traffic density has increased by about 200% over the


past four decades while the size of the rail network has remained relatively the same. “For freight rail investment and growth to continue, a balance between competing rail interests must be implemented to keep the freight moving on time,” NAM reports in a recent press report. “Like people, freight can be on a time constraint because the customer is always waiting.” A historic note, Congress passed the Congressional Rail Passenger Service


Act to revitalize US passenger rail and create Amtrak in 1971. Two years later, Congress granted “preference” to passenger rail systems, meaning tenant passenger trains are dispatched first and given special privileges on the privately-owned track. In turn, Amtrak is required to pay “incremental costs” and on time “incentive payments.” Amtrak is also entitled to financial penalty provisions for delays. NAM points out that a majority of passenger routes utilize private freight


track that most frequently consists of a single track with sidings. But while passenger trains have eminent domain on freight track, they operate differently than freight trains. They travel at higher speeds and require more headway clearance. These differences complicate the national network, exacerbating congestion to the detriment of just-in-time manufacturers moving growing levels of freight. “The economic conditions 50 years ago, a time known for unemployment,


high inflation, high interest rates and high oil prices, provide a stark contract to today’s economic growth, framed by lower taxes, low unemployment, low interest rates and competitive energy costs,” said NAM Director of Infrastructure, Innovation and Human Resources Catie Kawchak. “Freight railroads have invested heavily in their networks and infrastructure as a result of increasing demand from manufacturers, retailers and other shippers. However, today’s network is constrained by passenger rail’s priority access.” NAM points out how modern freight rail systems are planning for even


more demand from manufacturers and retailers to move freight on the nation’s rail network. The Federal Highway Administration predicts that total US overall freight shipments will increase 37% between now and 2040. But as NAM notes: “There’s one area where freight is constrained, and the future is stuck in a dated rail statute that provides priority access to freight rail’s longtime tenant, Amtrak.” “The strength of a freight network – trucking, rail and air cargo – supports


our competitiveness and provides a needed capability for manufacturers to expand their reach,” said NAM Vice President of Infrastructure, Innovation and Human Resources Robyn Boerstling. “It’s a little-known fact that Amtrak trains have priority access to infrastructure owned and operated by private freight railroads. Striking the right balance between passenger and freight


operations is critical.” More immediate is the balance needed in trade negotiations


regarding trade and tariffs, a topic on everyone’s minds. The American Association of Port Authorities (AAPA) recently pointed out that the latest threat to increase tariffs on imports from China includes critical port equipment. AAPA President and CEO Kurt Nagle testified before the US Congress in June about the significant consequences of expanded tariffs on ship-to-shore cranes. Nagle participated as part of a panel organized by the Office of the U.S. Trade Representative (USTR). Nagel stated that at a cost of up to $14 million per crane, an additional


25% tariff would significantly increase the cost of each crane and reduce the ability of ports to make other needed infrastructure investments to improve the supply chain. AAPA’s testimony also expressed concerns about tariffs overall. Public port leaders for the Virginia Port Authority, Port Everglades and


the Port of New Orleans also testified about the economic harm these recent proposed Section 301 tariffs will bring to their state’s employers, workers, and communities. A national campaign supported by AAPA, Tariffs Hurt the Heartland,


shows Americans have paid nearly $22 billion in additional tariffs since the trade war began. In a move to expedite fairer trade and pass the United States-Mexico-


Canada Trade Agreement (USMCA), the House Ways and Means Committee held a hearing titled “The 2019 Trade Policy Agenda: Negotiations with China, Japan, the EU, and UK; New NAFTA/USMCA; US Participation in the WTO; and Other Matters.” USTR Ambassador Robert Lighthizer urged Congress to pass the new agreement, noting America’s economic prosperity is at risk each day USMCA is not implemented.


Striking the balance


///NEWS


Freight Business Journal North America - FBJNA reaches out to the decision makers and influencers involved in international freight transport and logistics. FBJNA boasts the most informative and authoritative source of information with unrivalled in depth knowledge of the rapidly changing freight business environment. Our complimentary website www.fbjna. com provides the most up to date news and analysis from within the international shipping industry.


If you have any stories or letters which should be of interest or any feedback on FBJNA, please contact our editor Karen Thuermer - karen.thuermer@fbj-online.com


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