Congress Should Let Markets Drive Transportation Innovation

Today, the Senate Committee on Commerce, Science, & Transportation will hold a hearing entitled “The Need for Speed: How Technological Advances are Driving Transportation Innovation.” The hearing arrives at a time when the U.S. transportation sector faces mounting pressure to move people and products more efficiently at a global scale. U.S. citizens’ usage of public transit continues to decline at an alarming rate while government-operated transportation systems, like Amtrak, fall deeper into the red year over year. Competition creates strong incentives to improve efficiency and lower costs to which government-operated organizations are largely unexposed.

Transportation firms that fail to innovate risk losing customers, market share, and investment. But those industries which compete and exist in favorable regulatory environments have repeatedly driven major advances across rail, freight, aviation, and logistics. And lawmakers should recognize that the most important transportation breakthroughs have not been a result of central planning, but of market competition, technological innovation, and private investment.

The rail transportation industry provides a clear example. Automatic train control systems have developed through decades of competition between rail operators and equipment manufactures alike. These technologies improve train scheduling precision, reduce signal-related delays, and minimize human operational error across high-density corridors. The Federal Railroad Administration and U.S. Department of Transportation found that automated signaling technologies “reduced preventable rail collision risks by more than 40% on digitally monitored rail routes.” Rail transportation shows great opportunity for widespread innovation and the highest ceiling for future growth and productivity, providing the benefits of higher fuel efficiency, public infrastructure savings through private investment, and the ability to drive $2.50 in total economic activity for every $1 invested into better train transportation and infrastructure.

Vertical takeoff and landing (VTOL) aircraft offer another example of market-driven innovation, with lower operating costs made possible through simpler maintenance requirements. Firms are competing aggressively to develop next-generation mobility technologies that could reduce congestion, expand transportation access, and create entirely new transportation networks. Competition is currently facilitating and accelerating these advances and placing America as the global frontrunner in these new technologies.

Innovation is especially important as transportation needs constantly evolve. The U.S. transportation system moves about 55 million tons of freight valued over $51 billion per day, and annually over $18 trillion in value fuel the U.S. economy through the transportation network. Supporting this volume requires transportation systems that continuously improve reliability and efficiency. Modern logistics systems, automation technologies, and advanced infrastructure investments have all emerged because firms faced incentives to move goods faster and at lower cost. For instance, companies like Amazon, UPS, and FedEx have invested heavily in logistics infrastructure for the sake of remaining competitive.

Present day transportation challenges also highlight the importance of incentives. Public transportation systems like Amtrak face little competition, giving them no incentive to remain competitive and lower prices for consumers with cost effective and scalable business. The government must create a more business-friendly environment that allows consumers’ power of preference to incentivize efficiency in transport industries.

The most transformative leaps in American transportation emerged from markets solving problems as a response to pressure both domestically and from foreign advancement. Examples include containerized shipping, officially commercialized by private entrepreneur Malcolm McLean, and overnight air freight, created by Fred Smith of FedEx. These entrepreneurs were emboldened by a system that rewards original ideas and a competitive spirit. If policymakers want transportation systems that are faster, safer, and more efficient, they should focus less on preserving outdated structures and more on creating an environment where firms can compete, invest, and innovate.