INTERSTATES OF STEEL

Paper Prepared and Delivered By

GILBERT E. CARMICHAEL

Senior Chairman, Intermodal Transportation Institute

University of Denver

United States Federal Railroad Administrator, 1989-1993

TEXAS RAIL ADVOCATES

THE SOUTH CENTRAL HIGH SPEED RAIL CORRIDOR

Dallas, Texas
Speech to the South Central High-Speed
Rail Corridor Conference
Dallas, Texas
January 28, 2005

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Any realistic discussion of the potential for North American railroads in the 21st Century requires an understanding of the dramatic changes that have occurred in freight transportation during the past quarter-century. A revolution has taken place. The general public is unaware of it. Far too many transportation professionals fail to understand its scope and significance. Since 1980 a global intermodal freight network has evolved and it is today the world-wide standard for moving freight.

This global intermodal system is sharply focused on speed, safety, reliable scheduling, and economic efficiency. It builds on the strengths of each modeˇXwho have become partners in offering service. It also makes use of the versatility of the cargo container. Cargo ships and airplanes span the oceans. The freight railroad is the high-speed, long-distance transportation artery on the land. The truck provides local feeder service at origins and destinations. Cargo airplanes deliver high-value, specialized freight. This system worksˇXbut it urgently needs improvements to its land components in order to handle growing volumes of containers delivered by ship and airplane.

Modern, high-efficiency, high-capacity intermodal terminals are key to the system, providing almost seamless interchange. Secondary rail and highway routes support the intermodal system and connect cities, rural regions, and individual freight customers to the mainline corridors.

Today, a doublestack train leaving a coastal port can replace 280 trucks, run at speeds up to 90 miles an hour on the western railroads, and afford as much as nine times the fuel efficiency of container transport by highway. Overall, the operational and economic efficiency of freight' s intermodal network conserves fuel, reduces other environmental impacts, and is significantly safer. It represents the most economically and environmentally "sustainable" approach to transportation.

Meanwhile, this new intermodal science is redrawing the railroad map of North America, linking the populations and economies of the United States, Canada, and Mexico in a true North American Rail System. Our continental network serves 90 states and provinces with 240,000 miles of routesˇXand almost 400 million people. Private sector investment to upgrade this rail infrastructure since 1980 now exceeds $70 billion.

This system is by no means ideal. Bottlenecks remain. They include inadequate terminals and transfer facilities. In many cases, the quality of highway and railroad access to major coastal and inland ports is unacceptable. A number of mainline freight railroad routes suffer from serious capacity constraints, and a more aggressive approach to double-tracking is required. The efficiency and safety of nearly all of the

U.S. rail system is degraded by the proliferation of highway-rail grade crossings.

The freight industry is striving to eliminate these problems. However, a number of costly capital improvements simply won't happen without public financial support. Most senior executives in the freight railroad industry comprehend this fact, and they are endeavoring to come up with solutions that improve the capacity and efficiency of the freight intermodal system while also providing public benefits. This is a tricky proposition, because few federal, state or local public officials know anything about freight transportation. They may believe that their financial involvement gives them the right to dictate how this freight infrastructure is to be operated, and the results easily could be counterproductive.

By now you may be asking: "Why is this guy spending so much time talking about freight?" There are several reasons.

The principles which have been applied to building and operating the freight intermodal network apply equally to passenger service. The concept of a nearly-seamless flow of containers between carriers, among modes, and through terminals may be even more important as we think about how to design transportation systems for people to use. With a few exceptions, the notion of seamless service for passengers in the United States is a joke. Airports are designed and operated on the assumption that all passengers will arrive or depart by private automobile, taxi, or the shuttle vans operated by hotels and care rental companies. Airport authorities generally are hostile to intercity bus service and refuse to provide space for bus company operations on their property. Yet, as aviation has retreated from serving smaller feeder airports, the intercity bus is a logical replacement. Even when public officials try to do the right thing, they sometimes end up getting it wrong. I recall a Florida official' s pride in describing the development of a commuter rail line that could serve a local airport. But the rail terminal was nearly a mile away from the airport terminal. They didn' t solve a problem. They simply erected yet another obstacle to public acceptance of traveling to the airport by an alternative mode.

Freight' s intermodal network offers us another object lesson. The system works because it is customer-driven. It' s fair to say that the intermodal network exists because a number of large freight users and ocean shipping companies demanded that it be put in place. One of the qualities freight customers demand in their transportation service is that of choices among modes and routings. By contrast, passenger transportation in the U. S. is not customer-driven. Passengers take what the modes have to offer, shuffle between terminals, wait at the curb for the hourly bus downtown, or head for the airport parking garage or car-rental agency. Unlike the freight user, America' s passengers have few choices among modes. Other than at hub airports and the Northeast Corridor, intercity travelers via the commercial modes have few choices with respect to departure times.

I also like to remind audiences that, for every passenger moving on the nation' s transportation system, a ton of freight is moving. Any planning we undertake for the future transportation needs of this nationˇXand of states like TexasˇXmust begin with an appreciation for the profound importance of freight transportation and the reality that the primary justification for the majority of intercity rail corridors will be based upon the benefits they offer to freight service.

Our success in freight intermodal transportation points the way to what I believe is the most promising strategy for transportation improvements in the coming years. I call it ˇ§Interstate IIˇ¨. It is a vision of truly high-speed intercity travel that is based upon steel, not pavement. The concept is not radical. It combines the proven efficiency of rail transportation with the strengths of the intermodal system. Interstate II can take advantage of rights-of-way that already existˇXboth rail and highway. The existing network of mainline railroad rights-of-way for the most part was designed for multiple-track operations, but as business declined during the three decades after World War II much duplicate trackage was removed. However, the land is still there. On many routes the capacity can be doubled or tripled using the existing rights-of-way.

In the early years of this century, I believe that we must build or upgrade about 20,000 miles of corridors capable of running trains at speeds in excess of 90 miles an hour. That network will be augmented by as much as another 10,000 miles of high-quality conventional rail routings. These high-speed corridors and their supporting network of high-quality conventional track are the basis for Interstate II, a high-efficiency network of steel stretching from coast to coast and from Mexico City to Montreal.

I contend that we must build and upgrade this mileage to Interstate II standards for several reasons. For one thing, current growth trends in freight intermodal traffic are forcing us toward this approach. Without it, the railroads won' t be able to handle the business. We also need Interstate II because freight moving in or out of our largest cities by highway is plagued by gridlock on the urban road systems. Congestion is turning into strangulation. Finally, Interstate II offers the potential for improved and more frequent passenger service in selected markets.

An important element of Interstate II is the requirement to eliminate at-grade highway-rail crossings. Many can simply be closed because they are unnecessary. Others will require separation. The remainder can be fitted with high-tech crossing devices. We cannot have efficient rail corridors if trains encounter grade crossings every mile the in the country and every block in town. Some people shy away from the crossing-closure issue because they fear controversy. Think back to the 1950s. We closed tens of thousands of road intersections when the Interstate highways were built.

Is this affordable? Let me put things in perspective. For the equivalent of two cents on the motor fuel tax this country could have, within 20 years time, a network of rail corridors that approaches the scale of the Interstate highway system. Note that I have used the terminology ˇ§for the equivalent of two cents on the motor fuel tax.ˇ¨ I am not saying raise the motor fuel tax by two cents, or divert two cents of the existing amount. What I am saying is that for the same amount of money generated by one cent of the federal fuel tax and one cent of each state' s fuel tax we can build Interstate II. Determining the specific funding approaches is a matter for the public officials involved. And they should keep in mind that the financing mix can include the potential for private investment and tax-exempt issuances by state governments.

To be honest with you, I think it is reasonable to reallocate existing trust fund money to this purpose. For one thing, current highway construction projects are not solving the gridlock problem. Gridlock is getting worse each year. Massive urban highway projects mainly have the effect of relocating traffic jams to new locationsˇXwhich then gives rise to future mega-projects that only perpetuate this dismal process.

Furthermore, those who argue that highway trust fund money is somehow ˇ§sacred' and should not be used for non-highway purposes are ignoring a fundamental reality. Today' s transportation now inflicts upon our economy and society.

One can argue that the evolution of Interstate II began with the congressional designation of five high-speed corridors nearly 15 years ago, augmented by additional routes in the TEA-21 act. But progress toward actually completing those corridors has been painfully slow. While most people are inclined to await action by the federal government, I believe that Interstate II will be the result of initiatives on the part of several states, whose commitments eventually will compel the federal government to get off the dime.

At first glance, this may seem an odd way to go about it. Consider the evolution of the Interstate highway program. Most people tend to trace the modern highway era to the 1956 law sponsored by the Eisenhower administration which created the program. It' s easy to lose sight of the fact that states had taken the lead years earlier. Granted, the Pennsylvania Turnpike, which opened in 1940, received its impetus as a New Deal public works project. But toll highways built through the sale of tax-exempt revenue bonds were begun in the late 1940s and early 1950s in New York, New Jersey, Ohio, Indiana, Illinois, Kansas and Oklahoma. By the time the 1956 interstate highway bill became law, it was already possible for a motorist to drive from Chicago to the Atlantic seacoast entirely by way of modern interstate-class tollways. These state-sponsored routes represented the first installment of what emerged as the Interstate highway network.

I believe that the momentum for Interstate II will come from the states because none of the institutions one might expect to exert leadership have shown any willingness to do so.

Congress talks intermodal, but when congress members vote, they vote for highway projects. The mindset on Capitol Hill hasn' t really changed during my adult lifetime. I wonder how many members of Congress are even aware of the scale and impact of the freight intermodal revolution of the past quarter-century.

I have great respect for the U. S. Department of Transportation. I have many friends there. DOT sat on the sidelines during the intermodal revolution. It is still organized along modal lines. Even worse, DOT's leadership is not influential in Washington.

Amtrak might seem a logical entity to take the lead in the passenger-related aspects of Interstate II. Amtrak has too many internal problems. Its structure is deeply flawed. Its management is deaf to suggestions for reforms that reflect today' s realities. We continue to hear its tired old refrain: ˇ§Give us more money and we will keep running a few trains.ˇ¨ I do not believe Amtrak will be shut down. It will be kept on life support. Its management vision and priorities won' t change. As each year passes, it becomes even less relevant to what is occurring in the intercity travel marketplace.

Where does this leave us? Absent leadership at the national level, the states will have to provide the initiative. I believe that this is the best outcome. For one thing, it is

probably true that only a half-dozen corridors in the United State offer potential for immediate upgrading to high-speed passenger service that will attract sufficient ridership to justify the expense. The others will require a gradual build-up through quality conventional rail service. I believe that the states can be positioned to do a better job of analyzing the opportunities and selecting the strongest projects.

It' s also better left to the states because these projects are intended to be intermodal. They will involve related highway improvements and transit upgrades. They will involve partnerships with private developers, freight railroads, freight customers, the intercity bus companies, airport managers, and so on. Where states are taking the initiative, I like what I see. In California and the Pacific Northwest, rail corridor development projects are underway, and they are being designed and implemented on a realistic basis. How does Texas go about joining them?

First, state government must be organized to plan and carry out these projects. Is Texas DOT structured intermodally and does it actually have intermodal expertise at the senior executive level? In many states the railroad staff is buried four or five management layers below the chief executive officer. In Texas much of the rail authority rests in an entirely different agency. The Texas DOT must think and act intermodally, not only because of the potential for rail corridor development, but also because intermodal issues prevail in other areas: port development and access, transit services, airport improvements, and the like. The railroad policy and planning function must have visibility and influence within the specific structure you eventually devise.

Second, I believe that Texas would be wise to consider public financial assistance to help private-sector railroads develop mainline corridors. I believe that the future potential for the Lone Star State' s economy will be influenced profoundly by the quality of rail freight service.

Finally, I believe that Texas would be wise to consider the concept of Interstate II. It is the opportunity for you to join what today amounts to a handful of states who are exerting the type of leadership that already is bringing tangible benefits to their economies and their people.