WASHINGTON – If a nation’s preeminence is measured by the size of its maritime shipping industry, then the United States is in decline. Consider: Since 1991, America’s merchant fleet has dropped to 260 ships from 536, according to the American Maritime Congress, the industry group representing ocean carriers. Just 4% of U.S. trade is carried on U.S.-flagged vessels.

For Charles G. Raymond, chief executive of Charlotte, N.C.-based ocean shipper Horizon Lines, that’s evidence that the government needs to do more for the industry. “Clearly, there’s a need for a government focus on this,” he says, adding that “there should be a high-level, blue ribbon committee that looks into what can be done and the key drivers to make it happen in a socially and fiscally responsible way.”

And in a way, of course, that helps Raymond’s company. Horizon Lines, which CSX sold in February to Washington buyout firm The Carlyle Group for $300 million, is one of America’s biggest ocean haulers, moving freight on 17 ships between the continental U.S. and Alaska, Guam, Hawaii and Puerto Rico.

But Raymond and others in maritime transportation insist the matter goes well beyond their own self interest. On its Web site, the American Maritime Congress points out that 95% of military cargo must travel by sea during wartime. Raymond, who started his career as a deck officer for Sea-Land in 1965, recalls scrambling to retrofit two Sea-Land ships to haul ammunition when Japanese and Danish sailors suddenly refused to carry America’s military supplies during the first Gulf War.

“When you have to sustain the surge of material going into a war zone,” he says, “you find guys have gotten hurt, or they’ve been out at sea for 75 days and they’ve got family issues and need to be replaced. That’s where we run into trouble as a nation, coming up with enough mariners to keep those vessels manned on a sustained basis.”

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WASHINGTON – It’s not buggy whip time yet, but America’s railroad supply industry has sure seen better days. Thomas D. Simpson, executive director of the Railway Supply Institute’s Washington office, reports that only 17,700 freight railcars were ordered last year, down from 70,000 to 80,000 in the late 1990s. Meanwhile, locomotive sales have dropped to just 400 per year from 1,200. “It’s been a tough slog,” he sighs.

But happily for rail suppliers, Congress still loves trains. Several proposals for revamping the nation’s rail infrastructure are now chugging around the House and Senate. And RSI, whose members range from industrial giants like General Electric and ITT Industries to smaller rail equipment manufacturers such as Greenbrier and Wabtec, is trying to make sure one of those proposals becomes law.

“There’s some hard work in front of us,” says Simpson, “but we can get something, and getting something is key.”

Atop the RSI’s legislative wish list is to have Congress establish a “Rail Finance and Development Corporation,” modeled on government-sponsored enterprises such as Fannie Mae and Freddie Mac. With a chief executive and a presidentially appointed board of directors, the entity would be authorized to issue $50 billion in federal tax credit bonds to states and private/public partnerships to finance rail projects. (Holders of these bonds get a tax credit, which provides an indirect federal subsidy for rail.)

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WASHINGTON, D.C. – In mid-May, Transportation Secretary Norman Y. Mineta pulled the wraps off the Bush Administration’s proposal for a six-year, $247 billion highway and transportation bill. The reaction from the road building lobby? Disappointment. But the freight and shipping industry had few complaints.

“We’re pretty happy about it,” says Joanne Casey, president of the Intermodal Association of North America, a group representing railroads, water carriers, ports, truckers and other freight outfits. “It’s a good starting point.”

The administration’s proposal is called the Safe, Accountable, Flexible and Efficient Transportation Equity Act of 2003, or SAFETEA. It addresses the reauthorization of the current law, known as the Transportation Equity Act for the 21st Century (TEA-21), set to expire at the end of September.

So why does the cargo crowd like SAFETEA? Several provisions in the bill zero in on the issue of intermodal shipping, or the seamless movement of containers from boats to trains to trucks. Most important, SAFETEA establishes dedicated funding to build out the so-called intermodal connectors, or roads that link the ports, airports and rail and truck terminals to inland interstates and highways. It also would make tax-exempt bonds available for freight projects and free up credit for private rail infrastructure investment under the Transportation Infrastructure Finance and Innovation Act, or TIFIA.

The freight lobby has been pushing for such provisions for years. Its primary argument: America faces a freight capacity crisis. That may be a hard one to believe these days, what with the nation’s manufacturing capacity at 20-year lows.

Full story at Forbes.com

WASHINGTON – The road and transportation industry is already rolling its heavy equipment into town to lobby for the reauthorization of the Transportation Equity Act for the 21st Century, which is set to expire this September.

The law authorizes the U.S. federal government’s 45% share–now $38.8 billion a year–of all capital spending on highways and mass transit. But the industry wants more.

Some background: When the transportation act, known as TEA-21, was enacted in 1998, it tied spending levels to revenue collected by the government from highway user fees (various taxes on fuels, tires and so on) and credited to the highway account of the Highway Trust Fund. At the time, this was considered a victory for the highway lobby, since Congress had been allowing unspent money to accumulate in the Trust Fund to make the federal budget deficit look smaller. After TEA-21, the federal government spent what it collected.

But in 1999, just a year after TEA-21 went into effect, the American Road and Transportation Builders Association (ARTBA) began preparing for their next offensive. Those preparations have gotten intense. Last week, ARTBA, along with the Associated General Contractors of America, held a legislative “fly-in”: 500 people signed up, representing 28 construction and building associations and union groups.

Fanning out on Capitol Hill, those groups carried the standard of one of ARTBA’s primary goals: to move TEA-21 from a receipts-driven, “revenue in/spending out” setup toward more of a needs-driven approach. What that means is the road builders want spending determined by various assessments from the Department of Transportation and others of what’s needed to maintain and improve the transportation infrastructure in the U.S. If receipts coming into the Highway Trust Fund fall short of those needs, the lobby argues Congress should close the gap.

Highway and transit builders have a strong reason to want to focus on needs rather than receipts. Starting in 2002, receipts from user fees began to drop significantly, thanks largely to the impact of a slower economy and increased sales of gasahol, an Ethanol-based fuel that isn’t taxed for the Highway Trust Fund and is heavily subsidized–thanks to the farm lobby and the efforts of Archer Daniels Midland.

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Ever taken the train from Atlanta to Birmingham? It’s a pokey affair. The train, part of Amtrak’s New York to New Orleans run, makes the Atlanta-Birmingham trip in a leisurely three hours. Driving the 150 miles between the two cities takes half an hour less.

In the U.S., such a situation is typical when it comes to traveling by rail. But the era of the slow train could be nearing its end. Spurred on by frustrated business leaders, state governments around the country are developing big-ticket plans for high-speed rail, and Congress looks likely to play ball.

Take the Southeast, for example. The chambers of commerce from no less than 14 Southern cities have banded together in a coalition known as the Southeastern Economic Alliance (SEA). The group, whose leaders include top executives from the likes of Bowater and Bank of America, has proposed a plan to upgrade freight lines and build new tracks to form a network of reasonably fast passenger trains (ones that would travel at 85 mph). With the improvements, that ride from Atlanta to Birmingham would shrink from three hours to under two.

Why such interest in rail? For one, Southerners drive more miles than anyone else in the U.S., and traffic congestion in Southeastern cities is expected to increase 400% from now until 2020. Air travel, too, has its share of problems. Last year, a quarter of all flights in the Southeast were delayed.

“Our population growth continues to be very strong,” says Charles T. Hill, a co-chair of the SEA and a Richmond, Va.-based executive vice president of Atlanta’s SunTrust Bank. “We’ll end up with a bottleneck if we’re not careful.”

In its literature, SEA underscores a new “business approach” to developing rail travel. For example, the alliance advocates getting rid of the long-haul rides that Amtrak now loses so much money on. Instead, the SEA plan would connect cities within 300 miles of each other, an idea that squares with expert thinking on the subject.

“Rail can play a role as a short- and medium-distance carrier,” says Hank Dittmar, co-director of Reconnecting America, a transportation policy think tank.

Full story at Forbes.com

WASHINGTON, D.C. – Despite a punk economy, things don’t look so bad for the railroads these days. Though down for the past 12 months, rail stocks in the S&P 500 have beaten the broader index’s performance by 16%. Look back two years, and that spread widens to 59%.

So what’s to like? For one, industrywide financials seem fairly steady. Value Line estimates that revenue will increase 3% by the end of 2003, while net margins, or net income as a percentage of sales, will increase to 9.5%. That’s up an impressive two and a half points since 1998.

Another plus is this: Big rail has an unusually powerful position in Washington. Vice President Dick Cheney sat on the board of directors at Union Pacific until he took office. New Treasury Secretary John W. Snow was the chief executive at CSX. Nor does the industry simply rely on the Administration’s railroad men. In November, for example, the Association of American Railroads (AAR) tapped Republican Bud Shuster, the former chairman of the House Transportation and Infrastructure Committee and a 28-year congressman from Pennsylvania, to lobby for it on transportation and tax issues.

Big rail has shown little hesitation to open its wallet, mostly to Republicans. By the Center for Responsive Politics’ tally, rail companies ponied up $4.3 million during the 2002 election cycle. Union Pacific topped the list of contributors with $1.7 million, 84% of which went to Republicans.

The big carriers’ lobbying machine exists, among other reasons, to protect the regulatory status quo. Visit Union Pacific’s Web site, for example, and you’ll find a position paper from the company on the Staggers Rail Act and the deregulation it brought to the railroads in 1981. After trotting out a raft of statistics on improving safety and productivity, the paper then warns that “these gains are threatened by legislation sought by some special interest groups that would impose new regulatory burdens on railroads.”

So who are these special interests? Primarily disgruntled customers in the energy, commodities and chemical industries. Banded together in groups such as Alliance for Rail Competition (ARC) and Consumers United for Rail Equity, they pull out their own statistics to argue that freight carriers have effectively acquired monopoly control, leaving many customers “captive” to a single railroad. By their figuring, $11 billion worth of freight each year is shipped by such captive customers.

Full story at Forbes.com