Public Private Partnerships
Public Private Partnerships
The U.S. Department of Transportation (DOT) has predicted that U.S. freight railroad demand will rise by 88 percent by 2035. A recent study commissioned by the Association of American Railroads, “The National Freight Rail Capacity and Investment Study,” estimates that an investment of $148 billion (in 2007 dollars) for infrastructure expansion over the next 28 years is required to keep pace with this forecasted demand. The Class I railroads anticipate that they will be able to generate approximately $96 billion of their $135 billion share (short line and regional freight railroads’ share is projected to be $13 billion) through increased earnings from revenue growth, higher volumes, and productivity improvements, while continuing to renew existing infrastructure and equipment. However, this would leave a balance for the Class I freight railroads of $39 billion or about $1.4 billion per year.
Without this much needed investment, 30 percent of the rail miles in the primary corridors will be operating above capacity by 2035, causing severe congestion that will affect every region of the country and potentially shift freight to an already heavily congested highway system.
Policymakers can help address the $39 billion rail capacity funding gap though things such as rail infrastructure incentives and public private partnerships. Public-private partnerships are joint financing arrangements between public and the private entities for rail infrastructure improvements that have both public and private benefits. Public-private partnerships reflect the fact that cooperation is more likely to result in timely, meaningful solutions to transportation problems than a go-it-alone approach. These projects provide major public benefits such as reduced highway congestions, cleaner air, improved safety, and enhanced mobility. The Alameda Corridor, a 20-mile-long rail cargo expressway linking the ports of Long Beach and Los Angeles to the transcontinental rail network near downtown Los Angeles, is just one example of how successful these joint ventures can be. The $2.4 billion Alameda Corridor was funded through a unique blend of public and private sources. The project, completed in 2002, is a series of bridges, underpasses, overpasses and street improvements that separate freight trains from street traffic and passenger trains, facilitating a more efficient transportation network. For more information on the Alameda Corridor please visit http://www.acta.org
Read an Journal of Commerce (September 1, 2008) article about Public-Private Partnerships:
"Intermodal rail: the long-term solution" www.nationalgateway.org/content/resources/updates.cfm#art22 For more information on Public Private Partnerships in action, review the links on the left.