A new report from the American Road and Transportation Builders Association (ARTBA) has projected a 5.5 percent decline in transportation construction activity in 2021.
The report, released earlier this month, said the decline will be driven by unprecedented revenue shortfalls for transportation authorities at the state, city, county and local level, coupled with lower demand for travel and freight services.
ARTBA’s model estimates the amount of work overall is expected to fall from $294.2 billion in 2020 to $278.1 billion in 2021.
But the association’s five-year plan sees transportation construction climbing again starting in 2022.
“Growth is expected to resume in 2022 as economic conditions improve and travel demand in some sectors begins to return to pre-recession levels. Congressional action in 2021 on a multi-year surface transportation bill—provided it includes a sustainable and robust increase in funding—would be a key factor in helping accelerate recovery in the highway, bridge, and transit construction markets,” the report said.
Alison Premo Black, chief economist for ARTBA, said work reached record levels in 2020.
“Work has continued this year in every mode except bridges, which has really been a testament to this industry and how folks really delivered on projects throughout this year, given the concerns over worker safety and the situations everybody has been facing along with COVID,” she said in a webinar about the report.
Overall, Black said, states are trying to preserve their capital programs over the next couple of years.
Although Pennsylvania and Washington state temporarily shut down projects in the spring, transportation construction was considered an essential industry throughout the rest of the United States.
Some states decided to take advantage of lower traffic volumes to accelerate project delivery times. ARTBA projected that total transportation construction activity for 2020 is expected to increase by nearly 4 percent, with gains in highway and street construction, subway and light rail work, airport terminal and runway construction, and port and waterway spending.
However, the organization noted that bridge and tunnel construction fell 20 percent in 2020. The decline was attributed to state and local governments’ focus on smaller structures over the last two years. The average size of bridge contract awards in 2019 was down in 32 states, the association said, and fell in value from $3.8 billion in 2017 to $2.5 billion in 2019.
ARTBA’s model projected that transportation construction levels would return to 2020 levels in 2023, and grow from there in 2024 and 2025.
The next six month, Black said, are critical, as states go back in to look at their revenue forecasts and different factors hit the economy. Stimulus packages through Congress, a vaccine and other elements could impact the economy, which could, in turn, affect whether state and local governments have the funding for transportation construction projects.
ARTBA said that states are anticipating between $35 billion and $40 billion in transportation revenue shortfalls through 2024.
Also, Congress reauthorizing the Fixing America’s Surface Transportation (FAST) Act is key to keeping transportation construction up, she said. Congress approved a one-year extension of the legislation that provides long-term funding for surface transportation infrastructure planning and investment, but Congress will have to act in 2021 to ensure that the funding is reauthorized.
“Over the last three fiscal years, Congress has provided a total of $15 billion in supplemental funds for highways, bridges, transit, and airports above the programmed levels in the FAST Act and the Airport Improvement Program (AIP),” the report said. “Funds were provided to states through the formula program, as well as through Better Utilizing Investments to Leverage Development (BUILD) America discretionary grants that can be used for a variety of transportation infrastructure projects.”
Most significantly, airport terminal and runway construction projects would see the biggest drop: from $24.6 billion in projects in 2020 to $20.5 billion in projects in 2021, a drop of 16.7 percent. ARTBA also projected drops next year in private highways, bridge construction, parking lots and driveways (down 8.2 percent to $66.4 billion in projects) and public highway, street and related work (down 4 percent to $74.5 billion in projects). The only mode to see growth in 2021, ARTBA forecasted, will be ports and waterways, up 3 percent to $3.9 billion in projects.
Decreases in airport terminal and runway projects is reflected in the decline in airline passenger enplanements since the start of the COVID-19 pandemic. Airline officials said ridership on planes dropped 95 percent in April and is still at low rates currently, about 70 percent of what it was last year.