More transportation infrastructure market details

Bridges & tunnels

After a four-year run of significant market growth — reaching a record high $28.5 billion in 2012 — the bridge and tunnel construction market will cool off in 2013, likely remaining flat at about $28.2 billion. ARTBA’s forecast shows projects in eight states — California, Florida, Illinois, New Jersey, New York, Pennsylvania, Texas and Washington — will continue to account for about half of the U.S. market activity in this sector. With a number of major bridge projects on the horizon, however, the bridge and tunnel sector should rebound smartly in 2014.

SIDEBAR: Transportation ballot results

Ports & waterways

One very bright spot will be U.S. port and waterway construction, which will jump nearly 25 percent to $2.65 billion, driven largely by increased sea trade, which is expected with completion of the Panama Canal expansion project in 2015. Increased market activity is anticipated in California, Florida, Kentucky, Maryland, Massachusetts, Mississippi, New Jersey, New Hampshire, New York, Texas, Virginia and Washington.

Airport runways & terminals

Airport runway and terminal construction is expected to show growth in 28 states, with sector growth overall of 4.5 percent, reaching $12.5 billion. Market-driving states include: Alaska, Arizona, California, Florida, Illinois, New York, Ohio, Tennessee and Texas. Funding for airport projects is anticipated to increase over the next five years, largely tracking growth in passenger enplanements.

Railroads, light rail & subways

The U.S. railroad construction market, driven largely by private investment in Class 1 freight tracks and structures, is expected to grow just under 5 percent in 2013, reaching $10.4 billion from $9.9 billion in 2012.
The uncertainty caused by the 33-month delay in passage of MAP-21 will be felt in the subway and light rail markets. Construction activity is projected to be down by 8 percent.

There will be some bright spots, however. Based on recent contract awards, these states will be moving forward on key transit projects: California, Florida, Georgia, Hawaii, Illinois, Kansas, Massachusetts, New York, Oregon, Pennsylvania, Texas and Washington.

The overall subway and light rail market should rebound in 2014 with the federal funding certainty brought with enactment of MAP-21.

Wild card

While the so-called “fiscal cliff” situation was partially addressed by the eleventh-hour passage of the American Taxpayer Relief Act of 2012, the required across-the-board spending cuts in defense and non-defense discretionary spending were delayed by two months until the end of February.

There remains substantial uncertainty as to whether and how these spending cuts will be implemented with discussions ongoing between Congress and the Obama Administration. At this stage, the federal aid highway program (which accounts for about half of the highway and bridge construction market) and the airport improvement program would not be impacted, but mass transit capital investment and a host of transportation operational programs would be subject to the roughly 8 percent reduction.

That situation, however, remains very fluid, and there is no guarantee the federal transportation investment will not take a bigger hit under an alternative plan. Furthermore, Congress must complete action on legislation to fund all federal government activities, including the transportation programs, for the second half of FY 2013 by the end of March.

The uncertainty stemming from these unresolved situations impacts state and local finances, potentially causing governments to pull back or delay transportation infrastructure projects.

Over the long run, population growth, the rebound in the housing market and the improving economy will continue to put increased demands on the U.S. transportation network. Recognizing this challenge, there are currently 20 states that are discussing some sort of proposal to increase revenues for transportation. The future of the transportation construction market — as well as the U.S. economy — will depend on the ability of politicians at the local, state and federal levels to increase investment to meet that growing demand.

Alison Premo Black is ARTBA’s Chief Economist. The forecast uses an ARTBA econometric model that takes into account a number of economic variables at the federal, state and local level. It is measuring the public and private value of construction put in place, published by the U.S. Census Bureau. The ARTBA estimate of the private driveway and parking lot construction market is based on data from the U.S. Census Bureau’s “Economic Business Census.” For more information, visit www.artba.org.