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In many cases, the end of the year gives you time to step back and take stock of the last 12 months. This is when many of us take a hard look at what worked and what did not, complete performance reviews, and formulate plans for the coming year. For me, it is all of those things plus a time when I u...
2013 Transportation Construction Market Forecast: Modest Growth

Bridge Market Will Be Flat; Port & Waterway Construction A Bright Spot

WASHINGTON, Nov. 30, 2012 /PRNewswire-USNewswire/ -- The U.S. transportation construction infrastructure market is expected to 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) annual forecast.  The association's chief economist, Dr. Alison Premo Black, released her findings during a November 30 webinar for Wall Street analysts and construction industry executives.

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.  ARTBA predicts the bridge market, which has shown substantial growth over the last 10 years, to remain flat next year. 

The federal surface transportation program, combined with state and local government transportation investments, are the most significant drivers of the national transportation infrastructure construction market. 

According to Black, the pavements market will be sluggish in 2013, growing 2.8 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 no new real federal money in the 2012 MAP-21 surface transportation law, still recovering state and local tax collections and modest new housing starts, the pavements market will be uneven across the nation.  Pavement work is anticipated to be down in 25 states.  Growth above a five percent range is expected in 19 states. 

However, there are at least two developments related to MAP-21 that could lead to additional market activity in the short term and strengthen the market in 2013 and 2014, Black says. 

First, the law's restructuring of the federal highway program offers state transportation departments more flexibility in their use of federal funds.  This could lead to slightly increased investment in highway, bridge and pavement work above the forecast in some states.   Second, MAP-21's expanded federal Transportation Infrastructure Finance & Innovation Act (TIFIA) loan program should also increase construction activity in some states. 

Black also notes that major reconstruction work along the East Coast in states that were affected by Hurricane Sandy could also be a market factor in 2013 across all modes.   Additional federal, state and local emergency funds for rebuilding this infrastructure could be a boost as projects get underway.

A major wild card in the forecast, Black says, is 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.        

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.  The ARTBA 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.

ARTBA's 2013 forecast for other transportation modes:

Ports & Waterways

Driven by expanded sea trade expected with completion of the Panama Canal expansion project in 2015, U.S. ports and waterway construction is expected to skyrocket nearly 25 percent to $2.65 billion.  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.

Light Rail & Subways

The uncertainty caused by the 33-month long delay in passage of MAP-21 will be felt in the subway and light rail markets.  Construction activity is projected to be down by eight percent overall.  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 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."

Established 110 years ago, ARTBA represents the U.S. transportation design and construction industry in the Nation's Capital.

SOURCE American Road & Transportation Builders Association

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