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Leah Pepper

How the FAST Act Will Change the Transportation Industry

by Leah Pepper | Dun & Bradstreet Editor

July 6, 2016 | No Comments »

At last, Congress has moved to alleviate the pains of trains and automobiles. In December 2015 President Obama ended a decade-long lull in long-term surface transportation funding by signing the Fixing America’s Surface Transportation Act, or the “FAST Act.” Allocating $305 billion to road and rail projects over the next five years, this bill is designed to aid in building the infrastructure necessary to strengthen and speed up America’s surface transportation as well as make travel safer.

The FAST Act also streamlines the approval process for new transportation projects, safety tools, and the establishment of new programs to advance freight projects, among other federal transportation programs. The Department of Transportation calls it “a down payment for building a 21st-century transportation system.”

In terms of public transportation, the funds will primarily be dedicated to fixing interstate highways, with a focus on freight projects, implementing safer technology and general safety standards, and updating and replacing the 40% of buses and 25% of US rail transit assets that are considered to be in marginal or poor condition.

With a focus on the state of good repair for bus, transit, and highway infrastructure, many companies in the construction industry will likely flourish in the coming years. According to Dun & Bradstreet’s First Research profiles, demand for highway, street, and bridge construction contractors is “largely driven by availability of road building funds, population growth, and the need to replace or repair aging infrastructure.”

Since implementation of the FAST Act in early 2016, the value of US nonresidential construction rose 10.2% year-to-date in March 2016 compared with the same period in 2015.

Leaders in this industry include AECOM, Bechtel, Kiewit, and Granite Construction. While signed FAST Act contracts have not yet been made public, these construction companies have historical federal and state relationships. Previous projects between these industry leaders and government entities have included the Bay Area Rapid Transit (BART), Houston Metro, and multimillion- and billion-dollar interstate, highway, and rail projects.

Smaller construction contractors, which bid on smaller reconstruction and maintenance projects or work as subcontractors for large corporations, will benefit from the bill as well. The FAST Act grants significant project-decision power to state governments, which allows regional contractors accessibility to the bill-driven construction deals.

As the foundation of the construction industry, the aggregate industry can also expect to prosper in duration of the FAST Act. Aggregates — which include stone, sand, and gravel — make up 90% of asphalt content and are used in nearly all street and highway development. US leaders in the construction-focused aggregate industry include Martin Marietta Materials, Lafarge North America, and Vulcan Materials.

While there is a heavy focus on repair and infrastructure construction, there is a supplementary opportunity in emerging technology concerning autonomous vehicles. The FAST Act allocates incentives for innovations such as self-driving and collision technologies. Although the current government funding for these programs is unclear, the leading participants in the autonomous vehicle market include companies such as Google, Intel, and GM. As of early 2016, Google approached Congress to push the Department of Transportation to allow public use of its self-driving car, but the company still needed to improve the car’s software before safely hitting the road.

For all the potential that the FAST Act has to improve infrastructure, it falls short in one key area. The bill, which proclaims modern-day updates to surface transportation, budgets only $100 million of the $305 billion to transit research, and it does not account for the rising desire for immediate and convenient transportation.

According to a 2014 report from the University of California at Berkeley, people who used ride-hailing technologies most often used them in place of public transportation even when in close proximity to a bus stop or rail station. With ride-hailing technologies booming in urban areas, people are replacing short-distance public transit with personal, prompt transportation. This is something the government should consider alongside its infrastructure plans in order to fully relieve the pain of surface transportation.

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Leah Pepper is a Global Content Intern based out of Austin, TX. Leah is a senior at the University of Texas at Austin, pursuing her bachelor degrees in economics and public relations.

Photo by Antonio Cinotti, used under a Creative Commons license.

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