The U.S. transportation construction infra-structure market will show modest growth in 2013, according to the American Road and Transportation Builders Association’s (ARTBA) forecast model.
The U.S. transportation construction infra-structure market will show modest growth in 2013, increasing three percent from $126.5 billion to $130.3 billion, according to the American Road and Transportation Builders Association’s (ARTBA) forecast model. Growth is expected in highway and street pavements, private work for driveways and parking lots, airport terminal and runway work, railroads and port and waterway construction. The bridge market, which has shown substantial growth over the last 10 years, is expected to remain flat.
The federal surface transportation program, combined with state and local government transportation investments, are the most significant drivers of the transportation infrastructure construction market. However, there are some significant developments that may lead to additional construction market activity in the sector in the short term and strengthen the market in 2013 and 2014.
Assuming the U.S. economy continues to re- cover, increasing demand for passenger and freight services in all transport modes will help support growth over the next five years.
Forecast highlights include:
Expect sluggish growth in the U.S. pavements market during 2013, with market activity growing overall by three percent to $58.4 billion. This includes $47.7 billion in public and private investment in highways, roads and streets, and $10.7 billion in largely private investments in parking lots, driveways and related structures.
With status-quo federal funding, still recovering state and local tax collections and growing strength in new housing starts, the pavements market will be uneven across the nation. Pavement work is anticipated to be down slightly in 25 states. Growth in the five to nine percent range is expected in 19 states. Major markets California and Texas will be down slightly from 2012, but will actually be returning to a normal baseline level after some major project awards over the past several years.
There are at least two developments related to the Moving Ahead for Progress in the 21st Century (MAP-21) Act that could lead to additional construction market activity in the sector in the short term and strengthen the market in 2013 and 2014.
First, the law’s restructuring of the federal highway program offers state transportation departments more flexibility in their use of federal funds. This could result in slightly increased investment in highway, bridge and pavement work above the forecast in some states.
Second, MAP-21’s expanded federal Trans- portation Infrastructure Finance & Innovation Act (TIFIA) loan program could also boost construction activity in some states.
While the economic costs of Hurricane Sandy are still being calculated, it’s fair to say that major reconstruction work along the East Coast in affected states will also be a market factor in 2013 across all modes. Additional federal, state and local emergency funds for rebuilding this infrastructure will be a boost as projects get underway.
Bridges & Tunnels
After a four-year run of significant market growth—reaching a record high $28.5 billion in 2012—the U.S. bridge and tunnel construction market will cool off in 2013, likely remaining flat at about $28.2 billion. 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 U.S. bridge and tunnel sector should rebound nicely in 2014.
Railroads, Subways, Light & Higher Speed Rail
The U.S. railroad construction market, driven largely by private investment in Class 1 freight tracks and structures, is expected to grow just under five percent in 2012, reach- ing $10.4 billion from $9.9 billion in 2012.
Uncertainty caused by the 33-month delay in passage of MAP-21 will be felt in the 2013 U.S. subway and light rail markets. Construction activity in this sector is expected to be down, overall, 8.1 percent.
However, 2013 market growth is antici- pated in 12 states, based on recent contract awards—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.
Work on higher speed inter-city passenger rail projects is concentrated on six corridors with $2.7 billion in construction work ongo- ing as we enter 2013. An additional $43.3 million in planning studies for such projects is also underway.
Airport Runways & Terminals
U.S. 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 in 2013. 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.
Ports & Waterways
Driven by expanded sea trade expected with completion of the Panama Canal expansion project in 2015, construction activity to improve U.S. ports and waterways is expected to jump 23.6 percent in 2013 to $2.65 billion. Increased market activity is anticipated in 12 states—California, Florida, Kentucky, Maryland, Massachusetts, Mississippi, New Jersey, New Hampshire, New York, Texas, Virginia and Washington.
A major wild card in this forecast: the so-called “fiscal cliff ”—the dire financial situation set to occur at the beginning of 2013 if Congress and the President can’t agree on tax and spending reforms. Although the “fiscal cliff ” would not directly impact federal highway investment to the states, it could affect state and local finances, and thereby cause governments to pull back or delay projects. Such action in turn would have negative consequences on the highway construction market. Individual businesses may also delay capital and hiring decisions amid the uncertainty. It remains to be seen whether the two sides can agree on a compromise.