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2010 and Beyond A Vision of America


2010 and Beyond A Vision of America s Transportation Future 21st Century Freight Mobility ICF Consulting in association with DELCAN AASHTO Annual Meeting – PowerPoint PPT presentation

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Title: 2010 and Beyond A Vision of America

2010 and Beyond A Vision of Americas
Transportation Future 21st Century Freight
Mobility ICF Consulting in association with
  • AASHTO Annual Meeting
  • September 20, 2004

  • Changing economic structure
  • Trade and globalization
  • From a manufacturing to a service economy
  • Technology
  • Enabled significant decreases in marginal
    logistics costs
  • Could serve as the catalyst to major changes in
    freight systems
  • Intermodal freight systems
  • Policy context is broadening
  • Networks are being reshaped

Freight System Performance
  • Growing congestion on critical highway segments
  • Increased transport costs due to delay
  • Unreliable travel times that affect logistics and
    level of service
  • High last-mile costs due to congestion in urban
  • Congestion at terminals and border crossings
  • Effects of security requirements
  • Inability to quickly increase system capacity
  • By 2020 freight volume may nearly double in some
    sectors (FHWA)
  • Potential long-run rail capacity problems
  • Rail infrastructure downsizing, service
    disturbances, and insufficient on-dock or
    near-dock rail capacity

Concern about the future performance of the
freight system
Freight Transport Externalities
  • Air quality
  • Diesel exhaust is a primary source of PM and air
    toxic contaminants, which are deemed as major
    health threats especially to children
  • Diesel exhaust is a primary source of NOx
    emissions, a precursor to ozone
  • Community livability and environmental justice
  • Location of many freight facilities may lead to a
    disproportionate impact on minority and
    economically disadvantaged communities
  • Transportation safety
  • In 2002, 434,000 large trucks were involved in
    traffic crashes in the U.S., of which 4,542 were
    involved in fatal crashes
  • Homeland security
  • The vulnerability of the freight system,
    especially given globalization, is a major cause
    for concern when it comes to terrorism

Transportation and the Economy
Efficient Transportation Infrastructure Investment
Increased Transportation Capacity, Efficiency,
Reliability, and Level of Service
Transportation Cost Savings
Transit Time Savings, Reliability Improvements
Business Expansion,Relocation, and Restructuring
Increased Productivity
Increased Competitiveness
Higher Standard of Living
How do firms react?
Improvements in Network Connectivity and Density
Industry Investment in Advanced Logistics
Industrial Reorganization and Enhanced
  • Firms reduce stocking points, increase JIT
    processes, and increase shipping distances
  • Firms react to reduced late-shipping-delays,
    valued highly by shippers, by investing more in
  • Inter-industry trading patterns are affected

U.S. Domestic Freight Movement (2000)
Source AASHTO, Freight-Rail Bottom Line Report
Historic Growth Rates by Mode (Ton-Miles)
A Plausible Annual Growth Scenario (2000 to 2020
in Ton-Miles)
What do these forecasts mean? (Billions of
More than double
Primary Freight Demand Drivers
  • Growth in economic output
  • U.S. production of goods for domestic and
    international markets
  • Imports of goods for domestic consumption
  • Trade
  • Globalization Pacific Rim, Europe, South
  • NAFTA and FTAA (maybe)
  • Advanced logistics
  • Enabled by technology
  • Carrier productivity
  • Affected by regulation

Economic Output
This is the number that matters most.
Presidents budget estimates 3.5 average annual
growth in GDP from 2004 to 2009.
Trade U.S. Port Container Traffic
Wal-Mart estimates it spent 15 billion on
Chinese-made products in 2003.
Source American Association of Port
Authorities www.aapa-ports.org
Advanced Logistics
  • As the cost of transportation falls, firms
    substitute more transportation for other inputs
  • This is what economists refer to as the factor
    substitution effect
  • The producer can now generate more output at the
    same level of cost
  • This is what economists refer to as the output
    effect (productivity gain)
  • End results
  • An increase in the demand for transportation from
    the initial drop in transport cost
  • A change in the long-term structure of that
    demand from the reorganization effect

Transportation as an input to production
Advanced Logistics Systems
enable the substitution of other logistics
components for transportation.
Source Cass State of Logistics Report, 2002
Carrier Productivity
  • Trucking productivity has leveled off since 1995
  • Steady increases in rail productivity, but not
    enough to make up for revenue losses due to

Freight Capacity Issues
Freight Capacity Issues, cont.
Why is capacity such an issue?
  • Demand across all modes is expected to increase
  • Shippers and carriers optimize logistics and
    supply-chain management around transportation
    system performance
  • Congestion could force costly redesigns of
    logistics systems leading to decreases in
  • The freight system is evolving to be truly
  • Capacity shortfalls in one mode strain
    performance of other modes
  • Shippers are mode neutral demanding efficient,
    reliable, and inexpensive service

Case in point
  • If investments in our rail system are not made,
    the effect on our roadway system will be

Shift Relative to Base Case Scenario, 2000-2020
Equivalent Truck VMT
No-Growth Scenario 31 billion
Constrained Investment Scenario 15 billion
Base Case Scenario --
Aggressive Rail Investment Scenario -25 billion
Source AASHTO Freight-Rail Bottom Line Report
Another case in point
  • West Coast docks dispute
  • Led to 10-day lockout and the 23-day recovery
  • Prevented 6.28 billion in goods from being
    shipped through the ports of Long Beach and Los
  • Shippers were affected
  • Hewlett-Packard made selected use of airfreight
    to meet commitments to customers
  • Mattel worked around the problem by having its
    containers placed where they would be unloaded
    first from ships
  • Effects of West Coast docks dispute could have
    been far worse had the shutdown lasted longer

What does this tell us about port security?
Top West Coast Ports by TEUs (000s), 2002
Los Angeles (CA) 6,105
Long Beach (CA) 4,524
Oakland (CA) 1,707
Tacoma (WA) 1,470
Vancouver (BC) 1,458
Seattle (WA) 1,438
Manzanillo (COL) 634
Anchorage (AK) 463
Portland (OR) 256
Fraser River (BC) 101
Ensenada (BCAL) 53
Source AAPA
What could be on the horizon?
  • Widening of the Panama Canal (likely)
  • Effects on U.S. port dredging needs, port
  • Continued explosive economic growth in China
  • Effects on US/Mexico trade POEs, West Coast ports
  • Second wave of the IT/internet revolution
  • Effects on logistics systems, freight networks
  • Major system disruptions (possibly)
  • Effects on system performance, U.S. and local

Where do we want to be 10 or 20 years from now?
  • An efficient, reliable, and integrated freight
    system, enabled by technology, that
  • Optimizes generalized logistics costs
  • Helps to maximize manufacturing productivity
  • Helps to minimize the prices of imports
  • Enhances efforts to make our homeland more secure
  • Enhances our ability to deal with congestion in
    urban areas
  • Is energy and environmentally efficient
  • Limits effects on community livability and
  • Minimizes the probability of accidents and
    associated fatalities and injuries

Policy Themes
  • We need a national vision for our freight system
    that is the basis for Federal policy
  • We need regional/local freight transport
    decisions that are consistent with national
    goals, objectives, and strategies
  • We need strong, well-coordinated leadership to
    forge effective policy

Addressing National System Bottlenecks
  • Develop and implement a National Strategic
    Freight Transportation Investment Program
  • Grant program, not administered by a modal
    agency, to select and fund freight projects of
    national significance
  • Designed to address major capacity bottlenecks
    and to accelerate the development of projects
    that enhance the performance of the nations
    freight system
  • Craft detailed and strict guidelines for project
    selection, monitoring, and evaluation, including
    an Annual Report to the President

Addressing the Need for Meaningful Freight
  • Develop and implement an Innovations Program for
    State and Local Freight Transportation
  • Grant program to select and fund innovative
    multimodal freight planning and programming at
    the State and local levels
  • Designed to address issues related to
  • Collaborative institutional arrangements
  • Public/private partnerships
  • Freight-passenger interferences
  • Regional freight networks (e.g., freight
    villages, city logistics)
  • Land use needs
  • Freight analysis data and tools
  • Operations

Addressing Ports Needs Stemming From Changing
Trade Patterns
  • Develop and Implement a National Harbor
    Improvement Program
  • A program to select and fund channel dredging
    projects and ensure rational investment decisions
    for ports
  • Designed to address current lack of national
    and/or regional focus for port planning, as well
    as needs related increasing/changing trade
    patterns and to post-Panamax vessels
  • Include an efficient user fee that adheres to
    trade treaties, and chose projects according to
    the national interest

Other Mode-Specific Policy Ideas
  • Develop a National Freight-Rail Investment
  • Develop a National Dedicated Truck-Lane Highway
  • Create opportunities for efficient coastal
  • Repeal the Jones Act
  • Adopt the Open Skies initiative
  • Change Truck Size Weight regulations
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