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December 2024
Compiled by Pat Foran, Editor-in-Chief
As they were wrapping up what they generally viewed as another solid or strong year, business-wise, railroad contractors were eyeing a strong-and-maybe-stronger 2025.
One reason: The recent influx — and the influx to come — from a range of federal programs that continue to wend their way from railroads to the contractor and supply communities. In particular, the Federal Railroad Administration’s (FRA) most recent round of Consolidated Rail Infrastructure and Safety Improvements (CRISI) grants and other funding programs; federal Infrastructure Investment and Jobs Act (IIJA) funding; and Federal Transit Administration (FTA) New Starts grants give contractors reasons to feel pretty good, if not bullish, about the year ahead.
And while at press time they didn’t know how much freight and passenger railroads plan to budget for contract work next year (they’ll know a lot more next month), contractors always know this: Infrastructure upkeep is part and parcel in this industry, and railroads will always set aside plenty for it. Railroads will have a lot of projects on their to-do lists to complete, many of which they’ll contract out.
Like their rail industry colleagues, contractors aren’t turning the page on 2024 without a few questions and concerns. They are contemplating what the winds of political change might mean for the rail sector, in general, and contractors’ corner of it, in particular. While they’re thrilled the federal funding stands to buoy business, they’re concerned about the speed at which it’ll take to trickle down to their aforementioned corner. They’re wondering if the rail industry can get better at attracting and retaining a qualified workforce.
What are contractors’ 2025 forecasts for their segment and respective businesses? What are their biggest concerns? What rail industry issue isn’t getting enough attention, collectively, from the industry? What are the consequences of that issue not getting addressed in the near term?
Five representatives from the North American railroad contracting segment — they’re also National Railroad Construction and Maintenance Association (NRC) board members — shared answers with us via email: Ashley Wieland, NRC president; Russell Gehl, executive vice president of business development for Holland; Kevin Riddett, president and CEO of RailWorks; Gary Kohnert, director of North American sales for Loram Maintenance of Way; and Maggie Vuono, president of TraConcepts LLC.
The railroad contracting business is concluding a strong year and we are bullish on continued growth in 2025. Contractors and suppliers started to realize the impact of IIJA funding in 2024 and we expect it to grow in the next year.
The latest round of FRA CRISI grant funding provides new opportunities for contractors and suppliers, who also are capitalizing on other opportunities resulting from record Amtrak funding, FRA Railroad Crossing Elimination program grants, FRA Federal-State Partnership grants and FTA New Starts grants.
Contractors have played an invaluable role in helping railroads and industrial shippers in the southeastern United States respond to damage from Hurricanes Helene and Milton. Some of that unexpected work will continue into 2025. We will learn details about Class I capital expenditures at the NRC 2025 Conference to be held in Marco Island, Florida, in January. Signs point to more opportunities ahead to partner with Class Is, short lines and transits.
The NRC is evaluating the implications of the November elections. We anticipate new committee leadership and changes in the composition of transportation-related committees. With that in mind, we anticipate the new congress will begin looking toward the next iteration of the transportation authorization in early 2025. With a change in the administration, we also are assessing how the election will impact agencies and the regulatory landscape.
Biggest concern about the year ahead: Workforce development — particularly the ability of our member companies to attract a qualified workforce — remains a top concern.
The NRC has taken several steps in the last year to address this issue, including developing a job search database on our website to refer potential candidates to job openings at our member companies. Our Veterans Committee initiated outreach activities to connect transitioning veterans with member companies. We also created a National Registered Apprenticeship program that our members can use to more easily establish their own apprenticeship programs and help veterans find their next mission in rail.
What rail industry issue isn’t getting enough attention, collectively, from the industry? What are the consequences of that issue not getting addressed in the near term?Sustainability is still a key topic of interest to railroad contractors, primarily driven by environmental, social and governance (ESG) goals and requirements adopted by railroad customers. The needs of our members vary greatly, from requests for help understanding sustainability fundamentals to how to respond to industry ESG requirements and implement programs to track sustainability metrics.
Another issue that can go hand in hand with sustainability is developing technology to improve safety and efficiencies, and to reduce our carbon footprint. Railroads acknowledge that they rely on contractors and suppliers for technology and processes improvement to optimize their operations. Rail is the most fuel-efficient way to move freight over land, and our members realize there is more to do. They are committed to adopting sustainable practices and to developing and embracing new technologies to be more resilient and improve efficiencies.
The market will be flat in 2025 compared to 2024 for us due to one of the largest projects in Mexico finishing up: Tren Maya [an intercity passenger-rail system in the Yucatan Peninsula]. This gives us additional capacity to lean into IJAA money and short-line and transit projects that are on the horizon. We expect rail programs to be flat or possibly decreased in 2025, but of course budgets have not yet been set for next year. The opportunity to put in higher quality welds in defect remediation is a driving factor in the offset of the capital program business.
It will be interesting to see how the FRA proposed rule around track geometry measurement systems (TGMS) testing plays out. As it stands, it may drive demand for our heavy contract testing fleet. We want to ensure that there’s an understanding that portable inspection solutions like ours and others empower those engaging in visual inspection in standard hi-rail vehicles that railroads already have. These aren’t heavy tests but would increase TGMS inspection frequency and remediation speed as a complement to less frequent heavy testing.
Biggest concern about the year ahead: My concerns are the railroads’ concerns. When they move more volume, they make more money, which drives the rail renewal programs and more maintenance because of the increased traffic. Railroads and their partners must understand their rail programs and needs and communicate them better than ever because the labor pool is becoming more expensive and harder to attract and retain.
The speed at which CRISI programs get to the construction phase [is also a concern]. Project kickoffs for work funded in 2021 are still in the works.
The speed at which government and the railroads adopt new technologies and the speed at which projects are funded have a negative impact on the growth of our business and industry. We exist to help railroads increase modal share by allowing them to move things more safely and efficiently, but we can’t capture that share if technology adoption and project phases don’t move faster. It’s slow for standard work, and when we look at new tech coming into play, it’s slower still.
What rail industry issue isn’t getting enough attention, collectively, from the industry? What are the consequences of that issue not getting addressed in the near term? It’s not my role to make the call, but I see a need for an increasing focus on extending the life of assets. So, what technologies, from purchase and installation through improved maintenance and testing techniques, can drive conversations and make a difference in the life of assets.
Railroads are looking at alternative products, testing and maintenance practices. This has allowed us to capitalize on the Argus system (locomotive platform) and HAMR diamond and turnout rehabilitation.
Greenwood: For 2025, the railroad contracting segment, and RailWorks in particular, is positioned for strong growth. We see significant potential from large-scale projects like California’s high-speed rail project and ongoing signaling upgrades, which will be critical to modernizing rail infrastructure.
The influx of funding from the federal IIJA presents a unique opportunity, although the speed at which this money reaches the market is a key factor to watch. While RailWorks continues to benefit from a healthy backlog and consistent project pipeline, we are particularly focused on the large transit and freight projects that will emerge as IIJA funding flows more rapidly. Adoption of new technologies, such as advanced signaling systems and automation, will also drive growth for our business, further enhancing the rail industry’s efficiency and safety.
Biggest concern about the year ahead: Our biggest concern for 2025 is the pace at which IIJA funding is disbursed and the adoption of new technologies within the rail sector. While there is a tremendous opportunity for growth, the slow rollout of projects tied to IIJA funding could delay some planned initiatives. RailWorks is preparing by staying closely aligned in markets where our leading geographic footprint provides continued growth opportunities. We have introduced innovative technology solutions like ZoneGuard, which is an electronic roadway worker protection system that will satisfy the requirements for a redundant form of protection in accordance with the new FTA’s final rule for “Rail Transit Roadway Worker Protection” (49 CFR Part 671). Additionally, we offer Automated Intelligent Video Review, which is advanced smart rail maintenance camera systems that enable users from many rail disciplines to monitor tracks remotely and safely.
What rail industry issue isn’t getting enough attention, collectively, from the industry? What are the consequences of that issue not getting addressed in the near term? An issue that requires more focus in the rail industry is the speed at which new technologies are adopted. While there is significant momentum toward modernizing rail infrastructure, the adoption of new technologies is happening slower than expected. It’s important to quickly standardize technologies like communications-based train control to international standards to lower costs and assure faster adoption of fail-safe systems. As the industry faces increasing pressure to improve efficiency and meet environmental standards, accelerating the adoption of technologies like advanced signaling, automated systems and electrification will be critical. If this issue is not addressed, the rail sector could fall behind in terms of safety, efficiency and environmental sustainability, while also risking regulatory challenges and increased operational costs.
The North America freight-rail industry continues to investigate and integrate operating efficiencies, ultimately aiding in the delivery of more consistent results to all parties within the industry. Loram forecasts 2025 will be comparable to 2024 with optimism that the railway industry’s focus on efficiencies will drive growth in 2025 for all stakeholders.
Loram’s foremost focus is to ensure our full alignment with meeting the highest standards of our customers while providing a premier service centered around a safety-first culture with a foundation on technological advancements that drive productivity, quality, and service reliability.
No matter how you support the railway industry, we each have the same collective goal of ensuring that we are always at our best in supporting this wonderful industry and the shipment of critical goods for the North America economy.
Despite some uncertainty and potential headwinds, I anticipate a modest improvement in 2025 over 2024, with more grants awarded and funded, and projects put out for bid. Government support under the new administration will play a crucial role in this growth.
My primary concern [about the year ahead] is ensuring that funding for projects remains strong and that government support continues. I’m focused on securing multi-year contracts to build a stable backlog for greater long-term stability.
The labor shortage remains a major concern for our industry. Recruiting and retaining skilled workers is crucial to maintaining operational stability.
Email questions or comments to pat.foran@tradepress.com.
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