The US transportation construction market is expected to shrink 5.5% in 2021, driven primarily by the severe economic recession caused by the coronavirus pandemic. This according to the annual forecast released by the American Road & Transportation Builders Association (ARTBA).
Overall, the value of work is expected to drop from US$294.2 billion in 2020 to $278.1 billion in 2021, according to ARTBA chief economist Dr Alison Premo Black’s analysis.
The expected market contraction follows a record year for most transportation sectors in 2020. While 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. As a result, total transportation construction activity—after project costs and inflation—is expected to increase by nearly 4% in 2020. Bridge and tunnel construction was the exception, with activity falling 20% in 2020, reflecting several broader market trends including a focus on smaller structures.
“Not surprisingly, the 2021 market reflects the broader COVID-19 economic contraction that began in February 2020,” Black said. “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.”
Black adds market growth could resume in 2022, provided that economic conditions improve and travel demand in some sectors begins to return to pre-recession levels.
In her forecast, 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.
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%, 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.
The pace of bridge and tunnel work is expected to decline 2% 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%. The market is forecast to be $21.7 billion in 2021 and work is expected to be up in about half the states.
ARTBA’s forecast is based on a series of proprietary econometric models for each mode and analysis of federal, state and local data and market intelligence.