1. AASHTO Spring Meeting Portland, Maine May 2017 Jennifer W
AASHTO Spring Meeting Portland, Maine May Jennifer W. Macdonald AVP Government Affairs

2. State of the Railroad Industry
Safety Trends
Economic Outlook/Traffic
Regulatory Environment
Legislative Outlook
ASSOCIATION OF AMERICAN RAILROADS

3. ASSOCIATION OF AMERICAN RAILROADS
Freight Rail:
Safe & Getting Safer
RR Safety Trends:
 63%
Hazmat accident rate*
 39%
Grade crossing collision rate
 47%
Employee injury rate
 43%
Train accident rate
*through Source: FRA, AAR
ASSOCIATION OF AMERICAN RAILROADS

4. ASSOCIATION OF AMERICAN RAILROADS
Safe and Getting Safer
ASSOCIATION OF AMERICAN RAILROADS

5. PTC Implementation: On Track
Freight railroads spending $100 million/month on PTC
All equipment will be installed by end of 2018
Fully operational by end of 2020
ASSOCIATION OF AMERICAN RAILROADS

6. (% change over previous year)
Strong Correlation Between Growth in Rail Traffic and Goods-Related GDP
(% change over previous year)
GDP sectors that generate freight were essentially in recession in 2016
*Imports, exports, and personal consumption of goods; fixed residential investment; business investment in equipment & structures; government gross investment; and change in inventories. **U.S. carloads excluding coal and grain, plus intermodal units. Rail traffic is originations and does not include the U.S. operations of Canadian railroads Source: BEA, AAR
ASSOCIATION OF AMERICAN RAILROADS

7. (6-week moving average originations)
Total U.S. Rail Carloads
(6-week moving average originations)
2006 (peak year)
Week #
Data do not include intermodal and do not include the U.S. operations of CN and CP. Source: AAR
ASSOCIATION OF AMERICAN RAILROADS

8. Total U.S. Rail Carloads:
YTD Through April
(millions)
Data are originations and do not include the U.S. operations of CN and CP.
Source: AAR Rail Time Indicators
ASSOCIATION OF AMERICAN RAILROADS

9. ASSOCIATION OF AMERICAN RAILROADS
Sharp Decline
in Rail Coal Carloads
(millions)
Data are originated carloads for Class I railroads. Source: AAR (Freight Commodity Statistics)
ASSOCIATION OF AMERICAN RAILROADS

10. U.S. Electricity Generation (% share of total generation, 2007-2016)
by Type of Fuel
(% share of total generation, )
Source: Energy Information Administration
ASSOCIATION OF AMERICAN RAILROADS

11. U.S. Rail Intermodal Traffic:
YTD Through April
(millions)
Data are originations and do not include the U.S. operations of CN and CP.
Source: AAR Rail Time Indicators
ASSOCIATION OF AMERICAN RAILROADS

12. U.S. Rail Intermodal Traffic (average weekly originations)
Data are average weekly originations for each month, are not seasonally adjusted, and do not include the U.S. operations of CN and CP. Source: AAR Weekly Railroad Traffic
ASSOCIATION OF AMERICAN RAILROADS

13. Rapid Intermodal Growth
(millions)
Containers
Trailers
Source: AAR Weekly Railroad Traffic
ASSOCIATION OF AMERICAN RAILROADS

14. Containers vs. Trailers as % of U.S. Rail Intermodal Traffic
Source: AAR (Weekly Railroad Traffic)
ASSOCIATION OF AMERICAN RAILROADS

15. Characteristics of the Intermodal Network
 Must accommodate both domestic and international business
 Focused on high volume origin-destination pairs
 Best when operated as single origin to single destination trains
 Cost control and service reliability are critical
SLIDE 15
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16. Characteristics of Strong Intermodal Corridors
 Sufficient capacity to keep trains moving
 Long enough to compete with trucks
 Sufficient volume to keep unit costs competitive
 Strong highway feeder system at each end and at intermediate terminals
ASSOCIATION OF AMERICAN RAILROADS

17. Characteristics of the Newest Intermodal Terminals
 Usually outside urban areas
 Easy highway access
 Designed to accommodate adjacent distribution / production centers
 Land for future growth
 Minimize “on terminal” truck movements
ASSOCIATION OF AMERICAN RAILROADS

18. ASSOCIATION OF AMERICAN RAILROADS
U.S. Rail Carloads +
Intermodal Traffic:
(millions)
Data are originations and do not include the U.S. operations of CN and CP.
Source: AAR Weekly Railroad Traffic
ASSOCIATION OF AMERICAN RAILROADS

19. Total U.S. Rail Carloads + Intermodal Traffic
(6-week moving average originations)
2006 (peak year)
Week #
Data do not include the U.S. operations of CN and CP. Source: AAR Rail Time Indicators
ASSOCIATION OF AMERICAN RAILROADS

20. Railroads and International Trade
ASSOCIATION OF AMERICAN RAILROADS

21. RRs and International Trade: Summary Statistics
~50,000 rail jobs — worth over $5.5 billion in annual wages and benefits — depend directly on international trade
ASSOCIATION OF AMERICAN RAILROADS

22. U.S. Rail Revenue From International Trade
Rail movements associated with international trade include virtually every type of commodity railroads carry and involve every region of the country.
ASSOCIATION OF AMERICAN RAILROADS

23. Railroads Help Keep Coal-Based Electricity
ASSOCIATION OF AMERICAN RAILROADS

24. Railroads Help Keep Coal-Based Electricity
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25. ASSOCIATION OF AMERICAN RAILROADS
Legislative Agenda
Regulatory Reform
Tax Reform
Infrastructure Package
Trade
ASSOCIATION OF AMERICAN RAILROADS

26. ASSOCIATION OF AMERICAN RAILROADS
Regulatory Reform
Regulations
Executive Orders
Safety Advisories
Guidance
ASSOCIATION OF AMERICAN RAILROADS

27. ASSOCIATION OF AMERICAN RAILROADS
Corporate Tax Reform
Class 1 railroads pay on average 33% federal tax rate.
When you add state and local taxes, the effective tax rate is 37%.
U.S. corporate tax rate is the highest in the industrialized world
ASSOCIATION OF AMERICAN RAILROADS

28. Infrastructure Initiative
Freight railroads are spending an average of $60 million/day on infrastructure and equipment
State-freight rail partnerships leverage federal investment
ASSOCIATION OF AMERICAN RAILROADS

29. Truck Size and Weight Redux
Effort underway to increase truck weights on interstates to 91,000 lbs.
15-year pilot for 10 states.
SHIP Coalition (Safer Hauling & Infrastructure Protection)
House floor vote on this same issue in 2015 –defeated
ASSOCIATION OF AMERICAN RAILROADS

30. www.aar.org www.freightrailworks.org (202) 639-2100
Association of American Railroads
11/10/2018