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Rail News: Rail Industry Trends

Study: Intermodal might be U.S. roads' top revenue producer by 2004

U.S. intermodal moves grew 8 percent during the past three months — a sign that the traffic segment is poised to overtake coal by the end of 2003 as railroads' top revenue source, according to results of an Association of American Railroads-commissioned study released Sept. 19 by intermodal-industry expert Thomas Brown and independent rail industry analyst Tony Hatch.

Brown and Hatch project that intermodal traffic will reach an annual growth rate of 5 percent during the next several years, which would be the industry's highest rate in five years and exceed the U.S. Gross Domestic Product's expected 3.3 percent growth rate during the same period.

In 1999 and 2000, railroads invested more than $14 billion (or one-fifth of their revenue) in intermodal by upgrading information systems, building terminals, and purchasing locomotives and intermodal cars.

Brown and Hatch believe that spending led to an increase in service performance and capacity, which in turn has spurred intermodal usage.

"Intermodal's service and economic advantages have prompted many shippers to rely more heavily on intermodal," said Hatch in a prepared statement.

For example, railroads last year diverted more than 9 million long-haul trucks from highways.

"Greater intermodal use would generate enormous societal and environmental benefits, including reduced highway congestion, a reduced need to build more highways, enhanced highway safety, lower harmful emissions and reduced fuel use," said Brown.

Hatch and Brown believe intermodal traffic will further grow if railroads add capacity in certain lanes and governments create incentives to prompt intermodal investment.

Such incentives would include passing the bill to eliminate the federal 4.3-cent fuel tax imposed on railroads, forming new tax incentives and tax-exempt financing for companies making intermodal investments, and creating public/private partnerships to finance railroad infrastructure-improvement projects.

Contact Progressive Railroading editorial staff.

More News from 9/19/2002