Industry Trends (May 2007)

SPENDING SPREE For the second year in a row, Class Is will spend a record amount to upgrade and add infrastructure. In 2007, the roads collectively will spend $9.4 billion, up more than 9 percent from 2006’s record $8.6 billion, according to the Association of American Railroads. During the past four years, spending has increased about 60 percent. And railroads will need to continue investing big dollars to keep pace with market demand. A recent American Association of State Highway and Transportation Officials study determined railroads would need to invest $175 billion to $195 billion in infrastructure to maintain current market share. However, railroads could only pay $142 billion of that amount from earnings and borrowed funds, the AAR said.

LIFE IN THE EXPRESS LANE Last month, the Alameda Corridor marked its fifth anniversary. The four-lane freight-rail expressway, which runs between the ports of Los Angeles and Long Beach and downtown L.A., now handles about one-third of the ports’ average daily cargo volume. More than 83,000 trains carrying more than 9.8 million containers have traveled through the corridor since its inception, according to the Alameda Corridor Transportation Authority.

BACK IN HIRING MODE As of mid-February, the U.S. Class I railroads employed 166,405 people, a 0.6 percent increase compared with mid-January’s level and a 1 percent rise from February 2006’s count, according to Surface Transportation Board data. Employment had declined 1.3 percent from mid-December to mid-January.

ON THE DECLINE The Transportation Services Index (TSI) continued its downward trend in February. The index of 109.2 decreased 0.3 percent compared with January’s level — the second-straight monthly decline — and 0.2 percent compared with February 2006, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics. The TSI has now dipped 2.6 percent below its May 2006 peak. February’s Freight TSI of 107.7 dropped 0.2 percent compared with January’s level and 1.8 percent compared with February 2006’s index. February’s Passenger TSI of 111.0 decreased 0.3 percent compared with January’s level but increased 2.1 percent compared with February 2006’s index.