A report was recently issued in the US which highlights the need for an investment of $135 billion in order to augment the largest existing freight railroads over the coming three decades. The study â which was undertaken on behalf of the American Association of Railroads â added that 25 per cent (or more) of this would have to be provided by the US government.
The American Association of Railroads (AAR) supports a legislation, on which basis tax incentives would emanate from investing in freight railroad infrastructures, resulting in an increased capacity to transport cargo by rail. In the absence of such investment, it highlights the danger of this cargo having to be transported by road instead. According to Edward R. Hamberger – the associationâs President: âThis stuff will move â it will just move by truck.â?
The study was carried out by Cambridge Systematics Inc. Its basis is the level of rail demand currently predicted at a federal level. Specifically, according to the Department of Transportation, on a weight basis, rail cargo demand will be 88 per cent higher in 2035 than at present.
Consequently, said Cambridge, by that time, $148 billion in funding will be required. Within this figure, $13 billion would be directed at regional rail freight, with the balance reserved for the so-called Class 1 railroads â the seven largest. Combined, these Class 1s are confident of being able to cover $96 billion, âthrough increased earnings from revenue growth, higher volumes, and productivity improvements.â?
The remainder is therefore $39 billion â which would need to be generated by external sources â tax incentives being one example. According to Mr Hamberger, investment tax credit would assist with this, but he expressed some uncertainty as to whether it could solely be used here.
Freight International will continue to provide the most up to date coverage of the rail freight industry industry in America.
Source â Freight Internationalâs US Correspondent
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