The efficiency and effectiveness of the United States’ privately funded freight transportation system is one of the underappreciated competitive advantages of the American Economy. It may sound like a cliché, but every finished or intermediate good used by any person in this (or any) country has been transported as part of a freight transportation system. It is no exaggeration to state that the United States’ freight transportation system is the envy of the world. And much of that system has developed through private investment, successful management, and effective long-term government deregulatory policies.

As we enter the latter half of the 2020s, America’s freight system is strained.  Overall capacity is tight, the demanding work environments can make attracting and retaining freight transportation workers challenging, and despite the essential nature of freight transportation, the needs of freight are often in conflict with the quality-of-life concerns of communities that abut freight facilities. While legacy deregulatory policies have been highly effective, in recent years at the federal level, freight policies have been focused on two areas: subsidizing investment in infrastructure that could be used by freight, and alleviating community concerns.  At the state and local governmental levels, when freight concerns are addressed, they are often in the context of community concerns over congestion, noise, and emissions. In recent years at all levels of government, particularly in coastal receiving states, much attention has been focused on the so-called “decarbonizing” of freight by electrifying trucks and railroads and improving the environmental footprint of goods movements and remedying environmental justice concerns.

While improving the environmental and social footprint of freight movements are laudable goals, the principle focus of federal freight policy should be facilitating the growth of private investment in the freight system to grow capacity and improve efficiency. Any government policies must be effective in the context of private, for-profit freight companies. Federal policy in the reauthorization can help achieve these goals by focusing on regulatory reforms which will help private freight companies invest and provide efficient service and can best do so by focusing on creating a stable and nimble regulatory backdrop to allow private industry to flourish. Policymakers often are interested in understanding which policies can help achieve these goals, and a few key policy goals are outlined below:

– Focus on Incentivizing Private Investment. Private companies will make capital investments in assets on which those companies can earn a sufficient return on their investments. This fundamental need means that those companies must have assurance that those investments will be utilized for their full useful lives and not be subject to changing regulatory requirements. In recent years, certain government entities and environmental advocates have championed policies which require private freight companies to upgrade operating equipment to the best available emissions technology. Such requirements conflict with the ability of private companies to earn a return on investments in such equipment and while well intentioned, ultimately are a disincentive, not incentive to private investment in better technology. Government policy must assure that new investment in equipment will not be rendered obsolete by subsequent regulatory changes. In short, don’t let the pursuit of the perfect be the enemy of the outstanding.

– Create a Rational Infrastructure Permitting Process. As part of any surface transportation reauthorization the permitting process for privately funded freight infrastructure projects must be reformed. Private companies that are evaluating capital investments currently see permitting uncertainty and risk as significant, if not fatal deterrents to making investments. A private company must be able to understand the timeline and probability of a facility being approved. Remediation must be limited to the immediate adjacent location and not remedying historic, national, or international issues.

– Restrict or Prohibit Technology-Forcing Regulations. Certain government entities have looked to adopt so-called technology forcing regulations, in which the federal or a state government will adopt a regulation that forces private companies to develop and adopt new technologies by a date certain, particularly for heavy freight operating equipment. At the time of the regulation’s adoption, the technology to be required does not yet exist. While well meaning, in practice widespread adoption of technology-forcing regulations can be, counter-intuitively, an impediment to the adoption of better technologies.

Why? Freight transportation requires reliable equipment operating on a 24x7x365 basis. Equipment must be able to operate in brutal conditions that range from well over 120 degrees in the desert southwest to temperatures below zero in the northern tier. Equipment failures and service outages have significant real-world consequences and in network industries have effects well beyond the actual incident. Brand new technologies that might work in limited test situations often fail when deployed in these environments. Unreliable equipment becomes an impediment to, not an incentive to investment in updated equipment.

– Create a Level Playing Field for Automation Across Modes. Few technologies have the potential to improve the safety and reliability of freight transportation more than automated operating and equipment inspection technologies. The emergence of these new technologies can improve safety by making assessments beyond what humans are able to, particularly when applied to freight equipment diagnostics to prevent failures. For people, a fundamental way to improve safety of freight transportation workers is to reduce their exposure to risk. But the Department of Transportation’s uneven support for automation across modes may be creating risk rather than reducing risk.

Technology is steadily improving to automate equipment operation as well, particularly autonomous trucks or trains. Obviously automating operations is a complex and difficult question which is dependent on the reliability and effectiveness of the technology. Federal policy should create a level playing field between modes and evaluate automation holistically to be sure that political considerations do not favor deploying autonomy in one mode versus another. Safety and reliability should be the principal concerns.

Translating these general principles into specific legislative proposals is a longer and more complex exercise, but it is important to note that adopting these measures to improve freight transportation identified above does not require spending any taxpayer funds. What is needed is impartial, holistic and science-based regulation which recognizes that improvements in the freight system are evolutionary, not revolutionary. Federal policy must support improvements even if they are incremental, because over time those steady improvements mean real progress. The key is creating the regulatory climate that allows private investments to thrive.