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AAR’s Jefferies gives mixed bag on Washington and rails in conference kickoff

Association of American Railroads CEO expresses some frustration but also satisfaction with infrastructure bill at RailTrends

(Photo by Jim Allen/FreightWaves)

NEW YORK — Fresh off appearing with other supply chain trade association chiefs in front of a congressional committee Wednesday, the head of the Association of American Railroads expressed frustration at a key industry conference Thursday about what he found. 

AAR President and CEO Ian Jefferies, speaking before the RailTrends conference of Progessive Railroading in New York, said there were supply chain solutions offered up by him and his peers. But he wasn’t getting much in return, Jefferies said. 

Ian Jefferies (Photo courtesy of AAR)

Jefferies expressed frustration that it seemed the only people at the hearing who were talking about solutions were representatives of trade associations, a group that included Chris Spear, the president of the American Trucking Associations, and Anne Reinke, the president of the Transportation Intermediaries Association. 

“It was a bit disappointing because depending on which side of the aisle you were on, [supply chain problems were] either Joe Biden’s fault or corporate greed’s fault,” Jefferies told the RailTrends conference, meeting in person for the first time in two years.

The head of the AAR generally is one of the first speakers at the RailTrends conference each year. And in 2021, that means that Jefferies had a chance to speak soon after the passage of the $1 billion Infrastructure Investment and Jobs Act, signed into law by President Biden earlier in the week. 

The bill that was signed was a far cry from the one passed earlier by the House of Representatives.  Without spelling out the details of what was in that legislation that the AAR opposed, he said the original infrastructure bill OK’d by the House would have been “an utter disaster for our industry” in terms of concessions it made to labor unions. 

But the Senate bill was more favorable to the industry, Jefferies said, in particular singling out the work of Sen. Maria Cantwell, D-Wash., for offering rail industry support. 

The AAR earlier this week released a statement on the infrastructure bill, citing some of the key provisions it said would aid the railroad industry. Among the highlights the AAR said would benefit the rails are almost $845 million per year for highway-rail grade crossing safety and elimination projects and $5.55 billion per year in “discretionary infrastructure grant programs.”

But Jefferies expressed frustration that no steps were taken regarding the highway trust fund, with a $100 billion-plus transfer from the federal government’s general fund into the highway fund to keep it from exhausting its resources. The stance of AAR is that it pays for its rights of ways — the rails — while the rights of way of its trucking competitors increasingly are paid for by general tax revenues rather than a dedicated trust fund, because there is bipartisan opposition to raising the federal gasoline tax that funds it.

Jefferies praised Spear for leading the ATA to support an increase in the fuel tax. “At least they are willing to put their necks out there,” he said. 

The view of Jefferies and AAR is that a weight-based fuel tax is “the way to go because a gas tax isn’t going to cut it.”

Another key issue facing the rail industry in Washington is what Jefferies said is the Federal Rail Administration’s lack of interest in extending waivers that allow the use of automated track inspection (ATI) technology. ATI is a system that can be installed on existing trains that essentially takes X-rays and does other diagnostic testing of the integrity of rails as the train moves along with the track. It replaces the long-standing way of having a worker “walk the line” looking for defects.

Jefferies said extending ATI waivers should be a “no-brainer.” Allowing ATI technology permits greater fluidity and means the rails can be inspected without the shutdown of the system.

“This is not anti-union,” Jefferies said of the ATI system. “This is just doing something smarter.”

As far as the current squeeze in the supply chain, Jefferies said he saw signs of it easing. But Jefferies noted that intermodal volumes have “dropped off,” and West Coast railroads have been telling him that they have capacity to move volumes out of the California ports. He added that when he told White House officials of that fact, “you could have knocked them over with a feather.”

Jefferies said much of the backlog in the key Chicago rail yard has been “worked off.” The industry is “managing fluidity pretty good.” And for all the talk about backlogs, Jefferies said the Chicago rail yards have been at a high status for fluidity all but eight days this year.

“To me, rail has got room to run,” Jefferies said. “We have the capacity to grow and we can take more trucks off the road.”

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.