Friday, February 26, 2010

Modal Inequity

Are all transportation modes on an even playing field?

Do some modes have an advantage over other?

And does that advantage skew modal use?

Yes, on all 3 counts.

Freight Transportation

In this blog post, let’s consider the options today for freight transportation:
  • Trucks
  • Railroads
  • Air freight
  • Water transport
All four modes operate primarily using private transportation companies. So far, relatively equal.

But now consider the infrastructure for each mode. Here we see the heavy hand of taxpayer government involvement, particularly in 3 of these modes:
  • Trucks: Know of any highways or roads owned by a trucking company? The trucking industry is the beneficiary of one of the greatest highway systems in the world. Sure, they pay all sorts of taxes and fees to use the highways, but when the day is done, all they have to do is drive.
  • Air freight: Know of any airports owned by an airlines? Other than a few minor airfields for private use, the airports are all owned by government entities which are exempt from state and local taxes. And there’s the heavy hand of the Federal government in air traffic control and post 9/11 security. Sure, the airlines pay fees and taxes, but they benefit from the significant contribution of taxpayers.
  • Water transport: The waters of the United States are available to all. While some ports are privately owned/operated, most major ports are publically owned. But, when it comes to maintenance (e.g., navigation dredging) or operations (e.g., harbormasters and the Coast Guard), again we see a significant role for government.

Let’s also consider the indirect taxpayer contributions to these modes:

  • For these 3 modes, the transportation infrastructure is exempt from property taxes.
  • Policing for these modes is at taxpayer expense.
  • The infrastructure owners and managers are exempt from income taxes on their revenues.

These are indirect costs paid for by taxpayers that result in a competitive advantage to these modes.

Let’s contrast this with the privately owned and operated freight railroads:

  • Privately owned infrastructure (rail lines, yards, terminals, support facilities) subject to property taxes. Granted some rail lines near major cities are government-owned, but the majority of the route miles used by freight railroads is still privately owned.
  • Privately funded traffic control to govern rail operations.
  • Private funding for most infrastructure maintenance and improvements. Granted public funding pays for improvements like grade crossing elimination, but these are generally at the intersection of private and public infrastructure.
  • Privately owned businesses subject to income taxes.
  • Privately funded police and security to protect the infrastructure.
  • Freight railroads run on a “cash” basis, using this year’s profits to fund next year’s infrastructure improvements, while avoiding borrowing.

When I take this into consideration, I wonder where are the libertarians, conservatives and Republicans on transportation policy? Clearly, from a conservative or libertarian perspective, freight rail is the mode that aligns with their pro-business, smaller government and anti-tax views. Still, you don’t hear conservatives on talk radio or in campaign speeches railing against the taxpayer’s burden of supporting truckers, airlines and water transport at the detriment of the one mode that’s not looking for a government handout.

But, rail remains the transportation mode that most Americans simply don’t understand. Thus, politicians across the board are happy with the status quo of modal inequity.

Thus is my conclusion: freight rail remains at a competative disadvantage due to the heavy hand of government in the competing modes. What does this mean:

  • More goods travel by truck than might do so in a more equital playing field.
  • Environmenat impacts: Trucks use more fuel and create more emissions per ton mile than rail. Also trucks run on impervious pavement, which results in more rainfall runoff and related water quality issues than exist for rail, which runs on a pervious stone trackbed, allowing for infiltration of rainfall.
  • Impact to public infrastructure: Tons of freight in trucks pounds the life out of bridges and highway pavement, all of which must be maintained and repaired at public expense. Tons of freight running on the rails also takes it toll on bridges and track, but that infrastructure is maintained at no cost to the taxpayer.
  • Traffic impacts: For most commodities, it takes 4 truck to carry what can be loaded on a single railcar. For each railcar used in lieu of trucking, 4 less trucks are competing for the limited capacity of public streets and highways.

Granted, not all freight can be shipped by rail. But there should be a strong public interest in shifting the traffic to rail, to reduce traffic, to reduce taxpayer expenditures for bridge and highway work, and lower the impact on the environment of transporting the nation's goods.


As a side note, in this 1950s vintage film produced by the New York Central Railroad (NYCRR), advance to time increment 7:30 and you can hear its president putting forth the arguments similar to mine against modal inequity. Recall, at that time, Federal and state governments were building the interstate highway system and airports at taxpayer expense while the railroads were trying to compete.

(This promo film is an interesting trip back in time, with different perspectives on industry, as well as some examples which now seem like ancient technology. A link to the 2-part film "
Big Train" is at the blog of the Friends of the High Line. The High Line is a former NYCRR elevated freight line that ran donw the west side of Mahattan. Portions of it have been preerved and converted into a most unique aerial urban "rails-to-trails" liner park.)