Congressional Vote on Railroad Re-regulation will have impact on Massachusetts Freight Transportation System

By: Frank S. DeMasi

Because national and regional freight traffic is expected to double in Massachusetts over the next 20 years, the annual net benefits (including logistics and social benefits) of freight transported by rail will increase proportionately only if railroads maintain their market share. The actual growth in rail transportation depends on investment in the national rail system and ability of railroads to grow in a competitive transportation market. For this reason it is important for the Massachusetts congressional delegation to support legislation coming before the congress to enhance rail investment to meet this needed future growth.

A bill proposed in Congress (S not yet assigned/HR 1806) would provide an investment tax incentive for railroads and other businesses to put their own dollars to work expanding the system. Infrastructure tax incentives are needed to modernize and expand the rail network, preparing railroads and businesses to meet the nation’s needs, including new tracks, tunnels, bridges, and intermodal facilities. Every $1 invested would generate $3 of economic output. It is estimated that the total $1 billion of economic output from this incentive would create 20,000 jobs. I urge you to support this bill. The balanced regulatory framework established in 1981 that created the Surface Transportation Board has enabled our freight railroads to invest approximately 30% of every revenue dollar back into their own systems. We need the congress to support continued balanced regulation over this vital industry so railroads can continue to invest in their expansion and provide us with freight movement choices that keep our shipping costs low and make the most efficient use possible of our fuel reserves while protecting our environment.

Twelve privately owned railroads operate in Massachusetts including (2) Class I, (2) regional, (8) short lines, AMTRAK and the MBTA. Railroads also bring employment to our state, not only in terms of the residents they employ but also businesses they attract and retain. These railroads operate over 1,175 route miles in Massachusetts, transporting approximately 38 million commuters, 2 million intercity passengers, and 500,000 rail carloads carrying about 20 million tons of freight. Yet trucks dominate the modal balance carrying over 94% by tons of all freight in the Commonwealth. While rail carries a relatively small portion of freight traffic in Massachusetts, rail is an important component of a balanced, competitive transportation network. The benefits of freight rail are: (1) reduced logistics costs in the range of $250 million per year for businesses and municipalities that use rail; and, (2) reduced social costs in the range of $60 million per year for Massachusetts citizens and taxpayers. These social benefits accrue to the public because rail transportation reduces the number of trucks on Massachusetts highways, reflecting avoided costs for pavement maintenance, congestion, air quality, and safety.

Over 40 % of rail ROW in Massachusetts is owned by the state and much of this network is shared with freight, MBTA commuter, and AMTRAK passenger trains. The state’s acquisition of CSX ROW in Eastern Massachusetts and its current extensive ownership of former B&M/Pan AM Railway ROW will not only offer opportunities for improvement and expansion of commuter rail but may also open the door to modernizing and expanding the use of Freight Short lines over state owned ROW. Third party Short Line operators can provide terminal and switching services over these lines far more economically than class I railroads, making local distribution of rail freight a viable alternative to long truck drays from large Class I rail Terminals far outside metropolitan areas of highest consumption. Short Line railroads operating in Massachusetts handled 123,000 railcars, removing an estimated 353,000 trucks off our most congested and stressed roads and bridges, avoiding an estimated $15,000,000 in pavement damage. In 2007 these private rail companies also paid $538,000 in local and state taxes, and employed 293 persons in Massachusetts. In 2004 (most recent year of short line data) Massachusetts short line railroads in total spent $16,883,238 on Capital and Maintenance expenditures to provide reliable service to over 100 in-state customers. Short line railroad marketing efforts in Massachusetts in 2004 resulted in bringing on line 11 new facilities and creating 268 new jobs in the Commonwealth. Short lines operate over 65% (822 miles) of state owned rail mileage, providing cost efficient movement of freight necessary to retain and further develop our industrial base and goods distribution network. Their safety record is one of the best in the nation.

Together, Class I and Short Line benefits to Massachusetts businesses, municipalities, residents and taxpayers amount to approximately $310 million each year. Freight rail also enhances economic development on a local basis, brings competition to the shipping market, provides options and redundancy within the freight system and enhances Massachusetts' overall competitiveness with regard to international trade. Green businesses such as wind and solar, require large, heavy and often unwieldy products to be shipped such as wind turbine blades that can be moved efficiently on rail. A modern Multimodal Transportation System including a viable freight rail element is necessary to attract alternative energy businesses, providing employment opportunities to position our state well for the business model of the future.



About: Frank S. DeMasi

Frank DeMasi is a retired (2002) Defense Contracts Management Agency (DoD) Logistics and Acquisition Specialist. He is a Wellesley Town Meeting Member, formerly an elected Wellesley Planning Board Member (3 yrs) and now represents Wellesley at the MBTA Advisory Board, Boston MPO - Regional Transportation Advisory Council, and Metropolitan Area Planning Council. He strongly believes that in addition to highway and transit we must expand our freight options in order to help our state’s economy rebound from the current recession. DeMasi has been invited by Go21 members to meet with the Massachusetts congressional delegation in Washington on 25 February to bring Massachusetts delegates up to date on railroad issues and transportation legislation.

(Go21 - “Growth Options for the 21st Century” is a national organization chartered to “Unite citizens support of a stronger economy, effective solutions to highway congestion, cleaner environment, improved quality of life, advocating increased rail freight transportation alternatives to reliance on an overcrowded highway system.”)

The statistics presented are found at the FHWA Web Site and a Massachusetts EOT internal report titled Massachusetts Rail Trends and Opportunities, July 2007.