The transportation sector is on the verge of the biggest transformation many of us will see in our lifetimes.

To ensure continued U.S. global competitiveness, a policy framework that encourages the development and deployment of technology to further enhance safety and productivity is required. This paradigm shift was the focus of a panel discussion — “Governing Technology in Transportation” — comprised of leading transportation policy experts at the Association of American Railroads’ RailxTech event on Capitol Hill.

Moderated by Greg Rogers and Pete Gould, hosts of the Mobility Podcast, the discussion explored the challenges facing freight railroads including changes to distribution patterns, increased use of intermodal transportation and length of haul. While government has been quick to embrace innovation for other freight modes such as trucks, panelists noted, rail has largely been left out of the discussion, threatening the industry’s ability to modernize.

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“The freight rail industry right now is really at a pivot point,” said Patrick Lortie, Partner and Global Rail Leader at Oliver Wyman. James Ray, a former Senior Advisor for Infrastructure at U.S. Department of Transportation, added “the way our goods move is about to change in dramatic fashion.”

Overcoming ‘Techno-Panic’

Change and disruption are inevitable, and rather than try to avoid these phenomena, adapting to them requires policies that anticipate those adjustments. The experts discussed how current policies lend themselves to keeping a foot in the past rather than looking forward.

“We’re in a period right now of what I would call ‘techno-panic,’” said Robert D. Atkinson, President of the Information Technology & Innovation Foundation. “The only way we’re going to grow as a country and deal with our fiscal problems, retiree problems, and deal with the challenge of raising wages for average working people is by raising productivity, and the major way to do that is going to be through automation.”

Regulations from decades, if not centuries, ago unevenly hinder the growth and competitiveness of railroads. Compared to other modes of transportation — like passenger vehicles and commercial trucking — where policy encourages greater automation, requirements to maintain a minimum of two crew members to operate a train stand in stark contrast. The consequences of this inequity aren’t only inefficiency, but potentially higher costs as well. Atkinson and the panelists acknowledged that disruptions in the sector have ramifications that impact the current workforce, and saw it as another area where adaptive mentality towards policy can “really focus on how do we do a better job with workers who are going to be negatively affected by that.”

Foreign Innovation & Implications

Lortie warned that American companies need to be preparing for their international counterparts “coming and challenging incumbents on their home turf.” According to an Oliver Wyman study, $12 billion were invested into startups in the logistics space last year, with 50% of that figure occurring in China and two-thirds in Asia as a whole. The U.S. has the capacity to compete with anyone, but that becomes a challenge when current regulations hamper innovation.

“We need to give an environment where these technologies and disruptions can happen here, and they can benefit our society and our industry at least in line with, if not ahead of, other societies,” said Ray.

Bureaucracy & Breakthroughs

Given rapid developments, policymakers must find processes to accommodate these technological advances in a timely manner. “We are seeing some states look at their regulatory codes and at those old regulations and determine, ‘Are we preventing innovation in certain ways?’” said Jennifer Huddleston, a Mercatus Center Research Fellow.

Another way federal and state governments can lessen regulations while still providing guidelines is through “soft laws,” according to Huddleston. These are not as concretely defined as regulations but give a sense of what is permissible. She said that federal agencies and state governments can introduce parameters in the form of guidance documents that “give some degree of certainty on these new innovative technologies so they won’t be declared illegal tomorrow,” especially as the life-saving potential, environmental sustainability, and other positive aspects of new innovations across transportation becomes more apparent.

“These allow regulatory flexibility and regulatory humility on the part of the agency to admit that we don’t know where innovation is going to be in five years and what that form of governance may need to look like,” Huddleston added.

Ultimately, in order for the rail industry to continue to adapt and transform to meet the needs of today — and tomorrow — policy and regulations must do the same. Under the status quo, the freight rail industry has pushed the boundaries, as showcased through the many groundbreaking innovations on display at RailxTech, including machine-learning maintenance, ultrasonic detection and drone technology. As the transportation sector ushers in a new era, it is necessary that rail gets the same self-determinative freedom as others given its important role in the transportation ecosystem. Previous decades have demonstrated steps in the right direction but, with the right policies in place, it can go even further.