Wednesday, February 01, 2017

AAR estimates freight railroads will spend $22 billion on capital programs in 2017

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AAR estimates freight railroads will spend $22 billion on capital programs in 2017 AAR

The Association of American Railroads (AAR) estimates U.S. freight railroads will spend an estimated $22 billion in 2017 on capital programs.

 

AAR says the private investment will go toward maintaining and upgrading the nation's rail network that will strengthen an essential transportation system.

"This year's private network spending, a combination of capital expenditures and maintenance, is part of a continued trend of remarkable proportions, including more than $630 billion since the industry was partially deregulated," said AAR President and CEO Edward R. Hamberger. "As the House of Representatives convenes today to discuss a '21st Century Infrastructure' and policymakers continue bipartisan discussions with the Trump administration, we hope these leaders realize how important America's private freight rail network is in moving raw and finished products, supporting the U.S. manufacturing sector, providing a foundation for commuter and passenger rail and lessening deterioration of this country's public infrastructure."

AAR says the projected $22 billion in spending in 2017 equates to approximately $60 million a day and covers upgraded track and locomotives, as well as technological advancements needed to meet demand and make a safe network even safer. One example is Union Pacific, which achieved its best annual employee-safety rate in 2016, improving on the record set in 2015 and making 2016 the safest year in the Class 1's 154-year history.

AAR says freight railroads spend six times more of revenues on capital expenditures than the average U.S. manufacturer. In 2017, BNSF plans to spend $3.4 billion, Union Pacific $3.1 billion, CSX $2.2 billion and KCS between $550-$560 million on their networks.

AAR points to the most recent statistics available that show freight railroads created nearly $274 billion in economic activity, generated nearly $33 billion in state and federal tax revenues and supported nearly 1.5 million jobs nationally in 2014 alone.

"We pay so taxpayers do not, an undeniable benefit to the U.S. economy," Hamberger said. "Our role in moving the country's freight is critical and we look to be a productive part of a bipartisan infrastructure debate."

AAR recognizes that while comparatively less than 2016 spending, the investment figures are still quite significant as the industry continues to retool around a changing customer market and shifting traffic patterns - most notably the massive decline of coal production. AAR says the freight rail industry attributes much of its ability to spend towards the smart regulatory framework enacted nearly 40 years ago allowing greater autonomy for business operations.

"Unlike most other transportation modes, we do not have a hard 'ask' of policymakers other than to remain free to do what we do best: safely, affordably and efficiently move goods and earn the revenues needed to continue this massive investment," Hamberger concluded.

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