World Trade - January 2009 - (Page 35)

are still expected to double within a generation. Among the railroads, optimism remains As a result, states a September report by the nonproﬁt On top of all these issues, the nation’s railroads enter the Rand Corporation, entitled The State of U.S. Railroads, new year still dealing with the lingering effects of hura commensurate increase in the reliance on rail is a way ricanes Gustav and Ike, which knocked out service to to minimize congestion on the nation’s interstate high- New Orleans for ﬁve weeks and led to interchange trafﬁc being rerouted through other gateways, including St. way system The problem said the study, which was supported by Louis, Memphis and Birmingham. These re-routes, coupled with heavy rains and ﬂoodthe UPS Foundation and conducted under the auspices of the RAND Supply Chain Policy Center, is that the ing in the Midwest, caused congestion in some terminals nation’s rail system has contracted dramatically over the and impacted freight ﬂow by increasing dwell times for past several decades, resulting in additional concerns some cargo. Those events also gave something of a boost to the about congestion and the system’s being incapable of trucking industry, which during the period could aptly handling the additional volume. White said current estimates suggest the cost of that promote itself not only as the only way to go for the last additional capacity could loom as high as $135 billion, mile of a delivery, but also as a much faster way to go. Trucking advocates have been actively promoting the while the nation’s Class 1 railroads would likely only be introduction of a provision to the federal highway reauable to generate about $96 billion of the cost. “If you do the math, it’s critical that we get started thorization bill, which would increase the size and trailer building capacity today, because it takes a lot of time and length of cargo-hauling trucks. Yet in their conference calls with analysts last October, money to do that,” Damman said. rail executives sounded little To accommodate the foreconcerned about the competicasted growth in freight demand, “Where we have tive threat from trucking. “In the Jazfa’s Eames insists a strategic, future, the transportation outplanned and appropriate investment in freight infrastructure is competition, we’re happy. look favors rail not only because we offer the most efﬁcient way a necessity. The problem, he But where we don’t, to move products, but also said, is that while “everyone is because rails take trafﬁc off the talking about rail,” they’re doing that’s another story.” highways, reduce fuel consumpso without really understanding tion and help the environment,” the reality of rail in the U.S. —Bob Szabo, Executive Director, Michael Ward said. In addition, he said, the rhetConsumers United Meanwhile, Union Pacific oric surrounding the debate, for Rail Equity Corp. CEO James Young pre“Is still very monopolistic and dicted that, despite the weak anti-central planning due to the economy, there would be “low double-digit” earnings special interests of the rail companies.” growth for 2009. Mandates As for Norfolk Southern, CEO Wick Moorman said The need to create this new capacity can’t be addressed the railroad’s strong third quarter revenue performance in a governmental policy vacuum. But, railroad leaders demonstrated, “the strength of our diversified traffic ﬁnd the prospects of federal direction unappealing, to base.” However, Moorman also suggested that if the say the least. economy continues to deteriorate, Norfolk Southern is Michael Ward, CSX’s chairman, president and chief prepared to begin to cut spending. executive ofﬁcer, raises the specter of re-re-regulation. “If the economy changes, we’ll go in and cut expenses “If anything, I think the biggest risk to sustaining capi- where we can, and there are places we can do that,” he tal expenditures….would be if there were some sort of said. Until then, “We believe the most appropriate way to regulatory change, like a re-regulation, that might choke run the company is to maintain a steady state of expenses the expansion…because we would obviously have to in terms of our maintenance, our properties, our infrareevaluate our investment criteria at that point.” Instead, structure, our assets and investments.” Ward calls for supporting rail investment through tax “While we are all concerned about the current ﬁnancial credits and public/private partnerships. and economic situation,” said Mathew Rose, chairman, Eames dismisses such reservations as self-serving. president and chief executive ofﬁcer of the Burlington “The choice of investment in infrastructure is like any Northern Santa Fe Corporation, seemingly speaking for other investment decision we make,” he said. “Do we all his rail brethren, “we continue to be optimistic about invest for the short-term or long term beneﬁt of coming the future of our diverse franchise and we remain conﬁgenerations? A piecemeal, disjointed approach to a freight dent about our long-tem prospects.” WT transport system today adds to our burdens tomorrow.” “At some point, someone will have to stand up to Dan McCue is a longtime journalist and business writer living in the cause of properly equipping our nation for par- Charleston, South Carolina ticipation in global economy. Given the capacity and For reprints of this article, please contact Cindy Williams constraints that loom on the horizon, the time is now,” at williamsc@bnpmedia.com or 610-436-4220 ext. 8516. Eames said. WWW.WORLDTRADEMAG.COM 35 http://WWW.WORLDTRADEMAG.COM

Table of Contents Feed for the Digital Edition of World Trade - January 2009

World Trade - January 2009 Contents Supply Chain Finance Conference: The Right Stuff at the Right Time! Is the Dollar's 'Exorbitant Privelege' as the Global Standard at Risk? Supply Chain Watch Tradewinds The Rise of the 4PL An Evolving Tech Backbone Makes 4PL Service More Effective The Changing Landscape of U.S. Railroads Intermodal Grows Up Port of Hamburg Grows as Distribution Point to Eastern Europe Outsourcing Without Fear Measuring the Carbon Footprint

World Trade - January 2009

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