Milken Institute Review 2Q10 Page 74

The Milken Institute Review

infrastructure in the area, with the goal of re-
ducing bottlenecks and improving air quality.

Capacity expansion.

Long-haul corridors

are the backbone of cost-effective intermodal
transportation, and in many cases their ca-
pacity could be expanded considerably with-
out creating new rights of way. The invest-
ments needed: the aforementioned bridge
and tunnel clearances for double-stack trains

(along with locomotives capable of hauling

them), and information technology for sig-
naling and coordination that would decrease
the space between trains that is needed for
safety.

One such corridor in the making is the

Norfolk Southern's $150 million Heartland
Corridor. It will link the giant port at Norfolk,

Va, to the Midwest, making double-stacking

possible on the route as well as cutting 200
miles (and $500 per container in shipping
costs) on the run to Chicago. The even more
ambitious National Gateway improvements,
a public-private partnership led by the CSX
railroad, is investing $700 million to open
three corridors (Wilmington NC, to Char-
lotte NC; North Carolina to Baltimore; Wash-
ington DC to northwest Ohio via Pittsburgh)
to double-stack trains.

Information technology, in the form of

positive train control (PTC), offers another
opportunity to improve capacity on the inter-
modal network. PTC uses global positioning
satellites to track trains with sufficient accu-
racy to safely reduce spacing between them
especially where freight shares congested cor-
ridors with passenger trains. The 2008 crash
between a commuter train and freight train
in suburban Los Angeles that killed 25 should
be a reminder of what's at stake here.

the bottom line
Most Americans are rightly skeptical when

business asks for help from the government.

Too often, it's easier to compete in the "mar-

ket" for government aid than in the market for
goods and services. And transportation, we
would note, has a long, unhappy relationship
with government: a century of straitjacket
economic regulation (which ended only in

1980) virtually destroyed America's private

railroads, and in the process left the country
dependent on trucks for far too much of its
shipping needs.

But the sorts of problems facing the trans-

portation industries today aren't likely to be
solved by markets alone. Road congestion has
reached crisis levels in many parts of the
country and will only get worse as the econ-
omy resumes growth. Moreover, excessive use
of the roads adds unnecessarily to the coun-
try's greenhouse gas emissions and will make
it that much harder to contain climate change.

The least expensive way (arguably, the only

way) to increase shipping traffic without in-
viting highway gridlock or increasing carbon
emissions is to expand intermodal transpor-
tation so that most of the traffic growth is ac-
commodated by rail. That will take plenty of
money, business flexibility and innovation
from the transportation industry. But it will

also take the best efforts of government to
ease the way.

century of straitjacket

economic regulation virtually
destroyed America's private
railroads, and in the process

left the country dependent on
trucks for far too much of its

shipping needs.

r a i l r o a d s a n d g r i d l o c k