Lack of Rail Improvements Could Stifle Texas’ Gains from Panama Canal Expansion

Jan. 28, 2009 - PRLog -- AUSTIN, Texas—As former NAFTA supporter and Dallas Mayor Ron Kirk prepares to become President Obama’s U.S. trade representative, business leaders await Kirk’s expected push for congressional approval of a free-trade agreement between the United States and Panama. However, Texas could squander economic benefits from the free-trade pact and the expansion of the Panama Canal unless the state’s freight rail infrastructure is significantly improved.

The $5.25 billion expansion of the Panama Canal, set for completion in 2014, promises to bring many more cargo ships to Texas ports, Bruce Todd, executive director of the Texas Rail Relocation and Improvement Association, said Jan. 28. But movement of that extra cargo could be paralyzed if the freight rail lines serving those ports—and the rest of the state—aren’t upgraded, Todd said.

Under the proposed free-trade agreement with Panama, nearly 90 percent of U.S. consumer and industrial products and more than half of current U.S. farm exports would enter Panama duty-free. The agreement would let U.S. exporters capitalize even more on the Panama Canal expansion.

Putting money into the still-unfinanced Texas Rail Relocation and Improvement Fund would help ensure that Texas takes full advantage of the Panama trade agreement and the Panama Canal expansion, Todd said. A 2006 study commissioned by the Texas Department of Transportation said that capitalizing the Texas Rail Relocation and Improvement Fund would allow improvement of rail infrastructure related to the canal project, paving the way to accommodate even more international cargo.

“Often the weakest link in the logistics chain to ports is the ‘last mile’ leading to the terminal, where congested roadways and inadequate rail connections result in delays and increased transportation costs,” according to the Texas Ports Association. “To move cargo quickly between ports and inland origins and destinations, trucks and railroads need clear and uncongested access.”

Texas boasts 28 seaports, which employ more than 1 million Texans and generate more than $180 billion in annual revenue. Each year, more than 500 million tons of cargo move through Texas seaports. Five Texas ports—Houston, Beaumont, Corpus Christi, Texas City and Freeport—rank among the top 25 U.S. ports for tonnage handled.

Voters approved the Texas Rail Relocation and Improvement Fund in 2005. However, lawmakers have not allocated any money for the fund since then. During the 2009 legislative session, the Texas Rail Relocation and Improvement Association is urging lawmakers to designate money for the fund. That money could be leveraged to produce billions of dollars in bonding authority for rail relocation and improvement projects throughout the state, including tracks serving Gulf Coast ports.

“Texas is in jeopardy of letting millions of dollars worth of economic opportunity simply sail away if rail infrastructure improvements aren’t made to ensure that goods can move efficiently to and from our ports,” Todd said.

“That’s one of the reasons why state legislators must authorize money for the Texas Rail Relocation and Improvement Fund. Above all, Texas cannot tackle its transportation challenges without rail being a key part of the equation.”

Nowhere is the need for rail improvements more apparent than the Port of Houston. The port handles more than three-fourths of the cargo container traffic entering Texas. It ranks first in the United States for foreign tonnage and sixth among the world’s largest ports.

“The benefits of a canal expansion to the Port of Houston are many. It would allow for Houston to compete with East Coast ports, handling the same larger and wider vessels. And it would help continue the port’s economic growth,” Thomas Kornegay, executive director of the Port of Houston Authority, said in a news release.

A study by economic consulting firm Martin Associates showed the port created more than 785,000 jobs in Texas. According to the study, marine cargo activity at public and private marine terminals at the Port of Houston and along the Houston Ship Channel generated $117.6 billion in economic activity across Texas in 2006.

“Outdated rail yards and inadequate infrastructure, together with the demands of the petrochemical industry and growing volumes of containers, are clogging Houston’s rail system, potentially diminishing the competitive position of this region,” Mark Ellis, board chairman of the Gulf Coast Freight Rail District, told the Texas 2030 Committee last year.

Without improvements to the Houston area’s rail network, cargo could be shipped to competing ports or be shipped by even more trucks on already choked roads, Ellis said. (Already, NAFTA trade among the United States, Mexico and Canada totals about $900 billion a year; nearly half of that trade originates in or is destined for Texas. Each $1 billion in trade equals 35,000 to 40,000 U.S. jobs.)

About 2,200 trains travel through the Houston region each week. Since one freight train can haul the same amount of freight as about 280 trucks, the Houston area’s rail network is keeping an estimated 616,000 big rigs off the region’s roads each week. Freight tonnage moved by rail is expected to triple in the Houston region by 2025.

The Houston region’s rail infrastructure includes more than 800 miles of tracks and more than 20 miles of bridges. The region has about 1,200 roadway-railway crossings with a daily volume of nearly 5 million vehicles.

The Houston Freight Rail Study, issued in 2007 by the Texas Department of Transportation, identifies numerous freight rail improvements needed in the eight-county Houston region: Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery and Waller. Those improvements include new bridges to separate rail lines from streets; closure of certain roadway-railway crossings; upgrades of capacity and connectivity on existing rail lines; and new rail corridors.

Any state funding for rail relocation and improvement projects in the Houston area and elsewhere in Texas would be balanced with private investments from the railroads. Todd pointed out that railroads alone cannot tackle the immense, expensive job of upgrading the state’s rail system—a system that’s crucial to the economy of Texas.

“The public and private sectors must work together to make sure that railway and roadway traffic congestion does not obstruct Texas’ opportunities to profit from the rapid growth in international trade,” Todd said.

About the Texas Rail Relocation and Improvement Association

The Texas Rail Relocation and Improvement Association is a statewide coalition of municipal, county and state elected officials, as well as groups and concerned Texans, who are interested in improving transportation throughout the state. Rail Relo NOW! is an initiative of the association aimed at obtaining state funding for relocation and improvement of freight rail lines around Texas.

For more information, visit www.railrelo.org.

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The Texas Rail Relocation and Improvement Association is a statewide coalition of municipal, county and state elected officials, as well as groups and concerned Texans, who are interested in improving transportation throughout the state. Rail Relo NOW! is an initiative of the association aimed at obtaining state funding for relocation and improvement of freight rail lines around Texas.