Rethinking U.S. Freight Policy: Balancing Costs and Environmental Impact

The Facts -

U.S. Freight System: A Study in Economic Disparities

Every year, the United States transports goods valued at approximately $18 trillion, with trucks and railroads sharing the bulk of the freight task. However, a closer look at federal policies reveals an economic imbalance that not only burdens taxpayers with billions in costs but also exacerbates road congestion and environmental issues.

The disparity begins with the infrastructure funding models. Railroads own and maintain their extensive 140,000-mile network, investing over $23 billion annually to ensure its upkeep. This makes rail an exceptionally capital-intensive industry. In contrast, trucks operate on 4 million miles of public highways, where the economic landscape becomes more complicated.

Initially, the gas and diesel tax was designed to cover the damage trucks inflict on public roads. However, the tax rate has stagnated at 22 cents per gallon since 1993, and there's strong political resistance to increasing it. This inadequacy means federal, state, and local governments collectively spend $250 billion annually on road maintenance, with 40% of these costs attributed to truck freight.

Diesel and gasoline taxes cover only 80% of roadway expenses, resulting in over $40 billion annually being transferred from the general fund to sustain the Highway Trust Fund, with $10 billion of this effectively acting as a subsidy to the trucking industry.

While taxpayers support the trucking sector, they also absorb significant societal costs. Trucks are implicated in 13% of the 40,000 highway fatalities in 2023, and fatal accidents involving trucks have risen by 20% over the past decade. Meanwhile, rail accidents have decreased by 43% since 2005, with a significantly lower fatality rate per ton-mile.

Trucks not only affect safety but also road congestion. Despite accounting for only 7% of road miles, trucks cause 28% of traffic congestion. The average driver spends more than 63 hours annually in traffic, with trucks being a primary culprit.

Environmental impacts further complicate the equation. Trucking contributes significantly to the 30% of greenhouse gas emissions caused by highway transportation, whereas rail is four times more fuel-efficient and emits 75% less greenhouse gas per ton-mile. The Congressional Budget Office notes that the societal cost of trucking is five times higher than that of rail.

These disparities arise from different infrastructure ownership models. Trucking firms use public roads without directly contributing to infrastructure maintenance, enjoying unrestricted access nationwide thanks to government subsidies. Conversely, rail relies on market forces to justify any expansion or maintenance of its network, resulting in the world's most cost-effective and safe freight rail system.

Resolving these issues demands new strategies. Introducing a Vehicle Miles Traveled fee for trucks could ensure they cover the actual costs of their societal impact. Additionally, reconsidering rail regulations, such as two-man crew mandates and the Railway Safety Act, could balance the transportation landscape, promoting competition based on genuine costs.

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