Feds threaten success of Ga.'s bet on freight rail

“[Georgia Port Authority’s] Mid-American Arc will focus on the growth of intermodal rail, extending the Port of Savannah's reach to capture new markets across the Southeast and Midwestern U.S.,” reports indicate.

The $128 million project will upgrade what is already the busiest intermodal facility in the Southeast U.S. and allow businesses to move goods in and out of Georgia faster than ever.

“The Ports Authority is now thinking even bigger with their rail partners – and with their potential customer base” says Georgia political commentator Charlie Harper. “Expanded and more efficient rail is key to making this happen. Trains of the length anticipated reduce per unit shipping costs significantly.”

The net effect could be powerful, as the port and expanded rail operations will provide more quality jobs, Georgia businesses will be more competitive globally as they can get goods to market quicker than competitors and the Peach State will differentiate itself from other hubs like Memphis or Los Angeles. Yet the foundation on which Georgia Port Authority is moving forward with this initiative – freight rail – remains under threat by federal regulators.

To ensure the immense progress in Georgia is not stalled and companies can continue to move goods efficiently between transportation modes, we must ensure decision makers in Washington, D.C. preserve the structure enacted by Congress and Georgia’s Jimmy Carter that allows the private market to dictate rates and private companies to manage their business and property as they see fit.

Privately owned and maintained freight railroads are an indispensable part of the economy, helping move the items we all depend on daily. Research from Maryland's Towson University finds that major U.S. rail carriers supported 1.5 million jobs, generated $33 billion in local, state and federal taxes and produced $274 billion in economic activity in 2014 alone.

Railroads' ability to move large goods long distances, as well as their private funding, differentiates the industry and serves a purpose unmatched by other transportation services that operate on publicly funded roads and bridges.

Yet none of this is guaranteed. Many readers likely remember that U.S. railroads nearly died, and that before the government removed itself from day-to-day business decisions, 20 percent of the nation's railroad miles were operated by bankrupt entities. The investment we see today – more than $600 billion since the landmark change in policy and $30 billion in 2015 alone – was not possible in a time when government set prices and dictated rail routes. The industry did not earn the revenues it needed to invest for the future.

Today, railroads are as safe, efficient and reliable as ever, a direct result of being treated the same as other private businesses. Efforts by the Surface Transportation Board (STB) to advance rules that would undermine railroads’ ability to earn needed revenues is especially troubling.

The STB most recently proposed a rule that would require railroads to open up their lines to competitors, introducing a radical approach that would force carriers to turn over their tracks to other railroads without showing competitive abuse. It is anti-free market to suggest the government can dictate property usage of a private owner.

The STB is also proposing to re-regulate certain commodities that the agency has previously determined are subject to competition, including from trucks. The STB proposed this rule without any evidence that market conditions have changed adversely.

All the while, the STB wants to cap rates that railroads charge shippers based on their overall level of revenue, a step that would amount to nothing less than government price control.

Combined, these proposals threaten the network and amount to reregulation.

Congress has maintained a key role in overseeing the sector over time. Georgia Senators David Perdue and Johnny Isakson are widely seen as sensible statesman that understand the private sector. In that Congress did not order the STB to introduce such drastic measures, continued oversight by Sens. Perdue, Isakson and the rest of Congress is especially paramount. To sustain the freight railroad industry’s role as a crucial piece of the national economy, as well as regional economies, public policies that reflect today’s modern economy and do not prevent the industry from succeeding must remain in place.

Ian Jefferies is senior vice president of Government Affairs at the Association of American Railroads.

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