The American Road & Transportation Builders Association (ARTBA) forecasts a 5.5-percent decline in transportation construction in 2021. The forecast is included in the organization’s annual forecast. The value of construction is expected to drop from $294.2 billion to $278.1 billion.
The major drop-off in transportation user fees caused by Covid-19 stay-at-home orders initiated last spring, high national unemployment, and the decline in public transit use and demand for air travel are the key factors affecting the outlook, ARTBA says.
“Not surprisingly, the 2021 market reflects the broader Covid-19 economic contraction that began in February 2020,” said chief economist Dr. Alison Premo Black in a prepared statement. “Congress and the president could help mitigate the economic downturn and put the nation on the road to a stronger recovery by approving a long-term, robustly funded transportation infrastructure investment package early in 2021.”
The expected market contraction follows a record year for most transportation sectors in 2020. Although Pennsylvania and Washington state temporarily shut down projects in the spring, the rest of the country classified transportation construction as an essential industry.
Transportation improvements continued with enhanced safety protocols in place, according to the association. As a result, total transportation construction activity—after project costs and inflation—is expected to increase by nearly 4 percent in 2020, with significant gains in highway and street construction (+8.3 percent), subway and light rail work (+8.8 percent), airport terminal and runway construction (+7.2 percent), and port and waterway spending (+12 percent). Bridge and tunnel construction was the exception, with activity falling 20 percent in 2020, reflecting several broader market trends including a focus on smaller structures.
Black said market growth could resume in 2022, provided that economic conditions improve and travel demand in some sectors begins to return to pre-recession levels. Black cautions that overall transportation construction activity will vary across the country as states deploy different strategies to balance their budgets and manage debt.
States are expecting shortfalls in transportation revenues of anywhere from $35 billion to $40 billion through 2024, ARTBA says.
The real value of public highway, street and related work by state DOTs and local governments—the largest market sector—is expected to decline $3.1 billion, or 4 percent, to $74.5 billion in 2021.
ARTBA estimates work on private highways, bridges, parking lots and driveways will decrease from $72.3 billion in 2020 to $66.4 billion in 2021.
Based on recent contract award data, the market should experience growth in half of the states.
The pace of bridge and tunnel work is expected to decline 2 percent in 2021 after steep declines in 2020. The total value of work fell from $27.5 billion in 2019 to $22 billion in 2020, or 20 percent. The market is forecast to be $21.7 billion in 2021 and work is expected to be up in about half the states.
Public transit and rail construction will decline one percent from $24.5 billion in 2020 to $24.2 billion in 2021. The activity reflects ongoing work for several major projects across the country.
Investment by private Class 1 freight railroads is expected to remain flat at $13.3 billion. Subway and light rail investment is forecast to decline slightly from $11.2 billion in 2020 to $10.9 billion in 2021.
The value of airport construction, including terminals, runways, and related work, is expected to decline from $24.6 million in 2020 to $20.5 billion in 2021, or 17 percent, before resuming growth in 2023 and beyond.
After growing 4 percent in 2020, airport terminal and related work, including structures like parking garages, hangars, air freight terminals and traffic towers, is expected to decrease from $18.9 billion to $15.8 billion.
Runway work is forecast to decline from $5.7 billion in 2020 to $4.8 billion in 2021.
The value of port and waterway investment is expected to increase slightly to $3.9 billion in 2020. Construction activity in 2020 was $3.8 billion, up from $3.4 billion in 2019.
Source: ARTBA
