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Rail Issues and Solutions: The Challenges of Getting More Freight on Rail and Away from the Road

March 21, 2007 Talking Freight

Operator:
At the conclusion of this session press star one to ask a question. At this time I will turn the call over to Ms. Jennifer Symoun, you may now begin.

Jennifer Symoun:
Good afternoon or good morning to those of you to the West. Welcome to the Talking Freight Seminar Series. My name is Jennifer Symoun and I will moderate today's seminar. Today's topic is Rail Issues and Solutions: The Challenges of Getting More Freight on Rail and Away from the Road. Please be advised that today's seminar is being recorded.

Today we'll have three presenters. The first presentation will be given jointly by Joe Bryan of Global Insight and Glen Weisbrod of the Economic Development Research Group. The second presentation will be given by Bill Schafer of Norfolk Southern Corporation.

Joseph G.B. Bryan is the Managing Director of the Global Trade & Transportation group at Global Insight. Mr. Bryan was the Managing Principal of Reebie Associates prior to its merger with Global Insight, and possesses broad practical experience in freight carrier management in multiple modes. He has held senior positions both for carrier Marketing and Operations, and has been associated with truckload, LTL, air and rail freight companies. He assists government and carrier clientele in strategy development, policy and operations analysis and market assessment. Mr. Bryan provided strategic direction for two freight corridor studies: a market study examining highway to rail diversion along I-81 for the Commonwealth of Virginia; and as a subcontractor for the I-10 National Freight Corridor study, where he directed the Reebie analysis of the private sector aspects of the project and contributed to the team's report. For four railroad merger applications, he has led the analysis of potential highway diversion to an expanded intermodal network and prepared verified statements for submission to the Surface Transportation Board (STB). He is an author of the Freight Rail Bottom Line Report, prepared for the American Association of State Highway and Transportation Officials (AASHTO), and is the co-principal investigator of a National Cooperative Highway Research Project (NCHRP) to examine and recommend rail freight solutions to highway congestion. He was the lead Reebie Associates member working with a team of consultants on the Federal Highway Administration's (FHWA) Multi-Modal Freight Analysis Framework (FAF) Study. For the project Reebie identified, described and assessed major international and national trends in the freight industry that affect Federal policies, programs and initiatives. Mr. Bryan has aided metropolitan planning organizations in Tennessee, Florida and Georgia to characterize the patterns, distribution systems, operating requirements, and future needs of goods and services movement in their regions, and to develop responsive strategies. Mr. Bryan is Chairman of the Committee on Urban Freight Transportation at the Transportation Research Board, National Academy of Sciences, and serves also on the Freight Transportation Planning and Logistics committee. He earned his M.B.A. from the Amos Tuck School of Business Administration, Dartmouth College, and his B.A. from Princeton University.

Glen Weisbrod is President of Economic Development Research Group and Chair of the TRB Committee on Transportation and Economic Development. He was co-principal investigator of the NCHRP study with Joe Bryan on integrating rail freight options to reduce highway congestion and highway planning to improve freight transportation options. He also co-authored the NCHRP report on Methods for Assessing Economic Development Impacts of Transportation, the NCHRP study on Economic Costs of Congestion, and the recent USDOT Guide to Measuring Benefits of Multimodal Freight Projects.

Mr. Weisbrod has worked on a series of studies of rail, highway and intermodal freight investment needs to support economic development for the Vancouver, BC region, the Portland, OR region, Toronto, ON and the Chicago region. He is currently directing the Can-Am connections study which is examining rail and highway needs to support freight movement across a region of 4 states and 5 Canadian provinces. He also evaluated business shipping needs and associated economic benefits and costs associated with transportation corridors for Montana, Louisiana, Kentucky, Scotland, Wisconsin, Indiana, Massachusetts, Maryland and NY State. Mr. Weisbrod has a BA in Economics from Brandeis University and an MCP in Planning and an MS in Civil Engineering (Transportation) from the Massachusetts Institute of Technology.

Bill Schafer is a Maryland native whose railroad career began in 1967 with the Baltimore & Ohio Railroad. After graduating from Davidson College in 1970, he joined Southern Railway's management training program, and has since progressed through positions in Operations, Accounting, Purchasing and Strategic Planning.

Following the 1982 Norfolk Southern merger, he joined NS's Strategic Planning group to manage and coordinate activities related to mergers, acquisitions, line rationalization, and asset utilization. He also worked for many years with state departments of transportation, transit authorities and Amtrak on rail transportation issues, particularly those involving passenger services. Since 2006, Bill has helped to manage Norfolk Southern's public-private partnerships, focusing on rail's potential to ease highway congestion by absorbing freight growth. He lives in Paoli, Pennsylvania, with his bride, Linda.

I'd now like to go over a few logistical details prior to starting the seminar. Today's seminar will last 90 minutes, with 60 minutes allocated for the speakers, and the final 30 minutes for audience Question and Answer. If during the presentations you think of a question, you can type it into the smaller text box underneath the chat area on the lower right side of your screen. Please make sure you are typing in the thin text box and not the large white area. Please also make sure you send your question to "Everyone" and indicate which presenter your question is for. Presenters will be unable to answer your questions during their presentations, but I will start off the question and answer session with the questions typed into the chat box. Once we get through all of the questions that have been typed in, the Operator will give you instructions on how to ask a question over the phone. If you think of a question after the seminar, you can send it to the presenters directly, or I encourage you to use the Freight Planning LISTSERV. The LISTSERV is an email list and is a great forum for the distribution of information and a place where you can post questions to find out what other subscribers have learned in the area of Freight Planning. If you have not already joined the LISTSERV, the web address at which you can register is provided on the slide on your screen.

Finally, I would like to remind you that this session is being recorded. A file containing the audio and the visual portion of this seminar will be posted to the Talking Freight Web site within the next week. We encourage you to direct others in your office that may have not been able to attend this seminar to access the recorded seminar.

The PowerPoint presentations used during the seminar will also be available within the next week. I will notify all attendees of the availability of the PowerPoints, the recording, and a transcript of this seminar.

We're now going to go ahead and get started. Today's topic, for those of you who just joined us, is Rail Issues and Solutions: The Challenges of Getting More Freight on Rail and Away from the Road. Our first presentation will be given jointly by Joe Bryan of Global Insight and Glen Weisbrod of the Economic Development Research Group. As a reminder, if you have questions for Joe or Glen please type them into the chat box and they will be answered in the last 30 minutes of the seminar.

Joe Bryan:
Thank you. You should all realize you will be tested later on identifying speakers by the sounds of their voices, so pay careful attention! This presentation will look at the recently released NCHRP 8-42 study "Rail Freight Solutions to Roadway Congestion". I am going to start us off, then I will hand off to Glen Weisbrod of EDR Group. In addition to our two firms, this research was done by Carl Martland of MIT, and various current and former members of Wilbur Smith Associates.

What's the study about? Its purpose is road congestion relief, although the surrounding issues are inevitably broader, as you will hear from Glen in a little bit. There are three objectives. The first is to expand the scope of the public planning process so that it takes into account rail freight. The second is to improve methods to identify and assess solutions, and the third is to cultivate cooperation - between the public and the private sector, but also between various members of the public sector such as adjacent states. The study has two primary products: a Guidebook and a Final Report. Both of these are available online; there are references at the end of the presentation for how to get them in .pdf format.

Here are the three major points from the research. The first is that rail relief of roads is viable. It's the road planners that need to know this; any of you who are rail planners have already come to this conclusion. The second major point is there are clear ways to judge projects and to proceed with them. The study products of the 8-42 work show how. The third point is that the biggest barriers are not market barriers. In the right conditions, rail competes very well with other modes. The biggest barriers in fact are institutional and capital priorities.

Why are we looking at this subject? There are converging interests between the public and the private sector. On the public side what we found is the alternatives for providing capacity are diminishing. What we really need to do is to supply capacity in any way that is going to be effective, which is causing us to look hard at multi-modal options. And among the multi-modal options, rail is going to be the most promising alternative, not only because it can carry the most but because it provides a whole range of public benefits. On the private side, what we're finding is the railroad industry has been constrained in its ability to finance capital improvements. Even with the relatively high capital expenditures railroads have been making lately, most of that money is going to maintaining capacity and not to expanding it.

So what's needed to get rail options into play? Public agencies typically have paid scant attention to rail freight. The result is they have a narrow experiential base and a limited scope for action. If you're not using something, you don't really know how to tackle it. For railroads, the situation has been analogous: they aren't used to interacting with the public sector. So, both parties need to forge new partnerships. They are going to be aided by systematic approaches as to how to tackle the problems, which is what this research provides.

What kinds of projects are we talking about here? There are four major types: intercity corridors, urban corridors, metropolitan citywide projects, and facility projects. These things range from very large to quite small. There are examples of several of them here which have been elucidated in the research - you can go look this sort of thing up. Glen is going to return to this slide later, and he is going to show you another angle on it. To get you oriented, this is the sort of thing we mean when we talk about rail options.

What affects the practical feasibility of rail projects? The first point is there are pretty different perspectives on freight between public sector planning and private sector planning. In order to overcome that issue and begin to see eye to eye, we need tools for tackling the problem and better methods for tackling the problem. We need public investment planning processes that are able to approach multi-modal planning. We need methods for assessing the issues and solutions - which is where the 8-42 research comes in - and we need public-private cooperation, which is the subject we are going to look at next.

We need to begin with having a basis for working together. Where you don't have relationships, it is good to establish them before you wade into projects. There are three things you can do: you can organize advisory meetings in which you look for common goals. You can make use of high-level contacts - and a number of states have done that quite successfully. And you can make use of Freight Advisory Councils, which I think a lot of people on this call probably already have in place. The second step you can take is to look at the distribution of roles between the public and private sector. For example, the public sector may be much better at dealing with the local media whereas the railroads are going to be much better at understanding what rail capacity looks like. A third point is that people frequently report conflicts between public planners and railroad interests. The point we want to make in this slide is that there are well-defined methods for untangling this in the field of Collaborative Dispute Resolution. These methods of dispute resolution are actually available in many states outside of the transportation department. So, you are able to find out about them, many of you have them available to you, and they actually lead to better decision making as well as ways to get yourself out of entanglements.

Now, how are we going to draw support to a public application of rail options? On the private side the important recent issue is that when capacity and capital get scarce, good traffic is giving way to better. You can have profitable traffic that does well for the railroads but where there are new opportunities that actually do better, and one is going to give way to another. This has been driven primarily by the explosive growth of import containers which have been increasingly taking up the capacity of the rail system. There's a rational process when railroads go about doing this but they are not bringing public benefits into the private calculation. If we want public benefits to be brought into this and if we want public benefits to be part of how the prioritization is put together, what we really need to do is put public capital on the table. If you don't bring the money to the table you probably are not going to change the private side of the prioritization. If you do bring the money to the table, it changes the comparison between projects, it moves the project that has important public benefits up on the scale, and it improves the return on investment to the railroads so that they are going to make the project work.

How about on the public side, how are we going to bring support and elevate the priority of rail projects? An important challenge is that public priority setting is often based on roadway level of service. Because that is mainly a passenger issue it can be hard for freight projects to compete. There are three ways you can tackle it. The first is to reformulate projects in freight terms. This isn't just a rail argument. The point is that freight is a good in itself. It's how we get fed, for example. Projects that benefit freight contain their own justifications quite apart from whatever their passenger effects might be. As freight planning expands as a discipline around the country, this argument is going to get easier to make, and it aids rail. The second point to make is that rail is not going to remove congestion as something that we are all facing. It's worsening, rail is not going to eliminate it, but rail can contain it - and that kind of expectation is something that's important to see, and is important in terms of how the nation responds to the congestion challenge. The third point is to make use of broader criteria that in fact appeal to the citizenry. Economic development you'll hear about from Glen Weisbrod here in a second. Safety is also something that has broad public appeal. When the citizenry have an interest for example in truck-only lanes, the reason they are interested in them is because they separate the truck from the flow of the cars and that makes people feel safer just because they are split apart. Rail also removes the freight, and moves it in fact to an entirely different right-of-way.

The last point I am going to cover is, how do we go about putting together money? The point of this slide is that we aren't just limited to the railroads and to the public agencies. The capital requirements of rail, which are very substantial, in fact show up in many categories beyond track. For example, they show up in equipment, or in terminals, or in the fixed costs of train starts (which is putting a train on to operate). There are other private operators who have an intrinsic interest in rail services, and who can bring money to the table. This past year we saw the first instance of a major motor carrier buying a train. We saw Schneider National putting on a train service between Columbus, OH and Kansas City, MO. Schneider brought in equipment, they made a standing commitment to the railroad to operate the train every day regardless of what the volume is, and they had another private partner who is providing the terminals. The original projection for that service was that it would carry about 60,000 truckloads a year. That's already just within the first year of operation being elevated to 90,000. So, it's a very effective system.

Now, how are we going to analyze these projects? Glen's going to take over from here to look at that subject.

Glen Weisbrod:
Thank you, Joe. I'm going to talk about some of the steps that are laid out in the guidebook that we developed. The guide focuses on evaluating the alternative and identifying how they make sense. The first element is of the process to identify there is six applicable situations which rail freight solutions can make sense. We will walk through a couple of examples. The first example is the case where you have a highway corridor that seems to require extensive capacity investment and adding lanes might not be feasible. An example of that would be the I-5 corridor where there was a short haul container train service that is helping to reduce the highway congestion there. The second is the case where over-reliance on trucks leads to congestion. An example is the congestion in the New York New Jersey port area and the efforts of the Port Authority to implement programs to supporting rail alternatives. Many of these efforts are part of the Port Inland Distribution Network program. The third situation is where the rail network structure restricts the use of rail. The Chicago rail study and Chicago CREATE are part of an initiative proposed to address some of the problems of use of rail yards focusing on interconnections, and particularly the interconnection between the Western and Eastern railroads which make put more trucks on the road than would normally need to be necessary. The fourth case is when rail lines are restricting the role of highways. The Kansas City Flyover project was as a project that not only addressed issues of rail to rail intersections, but also the problem that a major industrial area was hemmed in by railroad tracks. The fifth case occurs when the freight users are too small or scattered for efficient use of rail. An example would be in Maine where efforts were made to develop a transload facility to help serve a broader region with rail freight service. The last case is where regional economical development is threatened by lack of goods movement. The Vancouver Gateway Study was an effort initiated by airport and marine port interests to look at the problems of road and rail congestion and limitations that create for international freight capacity. The idea behind these cases is that we can identify six applicable situations that will help us identify the types of solutions that make sense in each case.

This is a flow chart of the decision making process that state or metropolitan transportation planners have to consider if they are considering rail freight as an option for reducing road congestion. The first step, indicated by the oval here, is to identify which of those six situations seems to apply in this case. The second is to evaluate it from two viewpoints: the viewpoint of public planners concerned about highway congestion and the viewpoint of decision makers and players that includes only government but also the railroads and trucking companies. From that step, we can have a basis for excluding the alternatives that wouldn't seem to make sense. That screening process can get to a limited number of alternatives. The next step is to evaluate those alternatives by conducting an actual evaluation of the cost and the number of people benefiting from those alternatives. This considers three viewpoints: First, what is the effectiveness of rail and the railroads? Second, how does this affect the people who are shipping? They may be shipping by rail or by a truck but either way, an alternative may be saving them money or costing them money. Third, what are the external benefits that affect everybody on the road because reducing congestion for affects all drivers on the road. Having evaluated those three viewpoints, one can determine with the cases where benefits exceed the cost. Knowing that, we can can then examine incidence of impact -- who is bearing the benefits, who is bearing the cost, and what kind of arrangements which makes sense for implementing.

There are a number of policy mechanisms that can be put in place to implement these projects. The first is public financing of capacity expansion on the rail side. The second is public ownership of the right of way. Both are applicable in the Alameda corridor serving the Los Angeles - Long Beach port, where the corridor was developed to support expansion of rail alternatives to truck. The third is redevelopment of rail facilities that are part of what is being proposed in the Chicago area is to rationalize rail yards and rail connections. The idea there is to make the system work better and free up unused rail yards that can be redeveloped for apartments or commercial development, providing money that can be used by the railroads to help pay for some of the other improvements. The fourth and fifth are various financial proposals that can involve taxation relief or incentives. There are also planned grants and land swaps to promote capacity expansion along dense lines. The interesting point is these seven are all in addition to the alternative of diverting highway money to fund more rail capacity. That too can be logical, but in fact the DOTs don't have enough money for the existing highway project to consider reducing that money for more creative policy mechanisms.

Now, a critical aspect is this idea of a three phase analysis process for zooming in on appropriate solutions. Basically, there are reasons why people are not doing more evaluation of rail freight as a solution to the highway congestion. They are scared off. It's difficult to get all the cost and service information. The idea of a three phased approach is let's start off with a quick and simple step. Does the rail solution even make sense? In this case you can rely on commodity flow data and national information about which commodity you can go by. Where are the commodities? What is the free flow pattern and what kind of intermodal shares are occurring? National data sources can be used to do this first level screening and only if it passes the first level screening would one go to a more detailed analysis involving additional collection of specific information for your area and running various cost tools to assess operating costs and capacity associated with the rail freight alternative. If a project is passed by this more detailed benefit cost analysis, then we can move to the third which is a decision making process saying this is the best use of money. That is the three-phase approach. And in all three phases there is effectively a consideration of the factors indicated on this flow chart.

The idea here is that once you have some forecast of the kind of freight flows expected to occur in an area along a corridor, then you can analyze them by considering the two columns here. The right column represents analysis from a public planners point of view, looking at what is the current and future highway delay pattern, where congestion is going to occur, what air pollution levels are going to occur, and how would they change between scenarios with and without the change in highway expansion? That is the public planner side. On the left column are three boxes that represent special consideration for truck and rail movements from the point of view of the private shippers: What are the problems they face? How much freight can be diverted? By asking both lines of questions, we can identify economically feasible and efficient spending. So in summary, to get past the initial screening, we have to look at the different benefit categories listed on the left column, the different parties involved and the different analysis tools available for examining them. I might call your attention first is the public's point of view. Many of these factors, cost, maintenance and economic aspects are factors affecting the public view point. And the point of view of the shippers, railroads and trucking companies are additional considerations that have to do with the congestion and scheduling and reliability. All of those factors have to be considered.

Having looked at those various elements of benefit and cost, we can roll them up by looking from a multi-modal benefit cost viewpoint. We can organize the analysis as follows. First, we have categories of benefit and cost that basically come down from the point of view of the transportation system, cost expense and time. From the point of view of the users, there are additional logistics and processing costs. From the point of view of the general population, there are other social and environmental benefits, personal travel time benefits, quality benefits and so on. We cannot look at those various user costs and transportation provider costs from the truck side and the rail side for each of our alternate scenarios. We can then roll it all up to look at these cost and benefit streams with the present value, which takes into account the fact that some of the cost comes up front and some come later on. Most importantly, we can organize the presentation of benefit from different perspectives. From the point of view of the transportation system efficiency, there is the savings in time and cost of that flow. From the point of view of the freight users, we consider just in time processing, drayage, loading dock, travel time variability and other related factors. To derive a total benefit, we also include the other social aspects I talked about.

Here is the interesting part... I talked about the benefits and cost to users and to the broader public and the highway users. The interesting element is if we take these same list of projects that was introduced by Joe at the beginning, and the examples I have been giving, and we then look at what the public's motivation was, we see that economic development or competitiveness is mentioned far more often than other motivation. Even the Alameda Corridor which received public funding in parts as a safety project, was also promoted to the public as a way of improving the region's competitiveness for Pacific trade. This is interesting because it's as safety and economic development that sells many of these projects to the public.

However, rail freight solutions are being done and they're worth considering for many more reasons. Rail freight can be a viable solution. Second, the concept of promoting rail freight is not necessarily a fight between the truckers and the railroads. Many railroad people see that these solutions can enlarge the market for both truck and rail movement, so the motor carriers are increasingly becoming allies of the railroads. The trucking companies are facing labor charges, contract delays, and many of the trucking companies are seeing rail freight as a positive option. So public planners shouldn't feel they are getting themselves in the middle of a fight. That's not the case at all.

People should feel comfortable that none of this is implying that we should ever subsidize a bad idea. The final issue is that you have to talk consider when talking about in coordinating highway and railroad investment is the role of private ownership, these these ideas are spanning public and private sector facilities and services. Public, private partnerships are very realistic, and they are . being done more and more. The institutional barriers are proven to be surmountable. And to put all together, the considerations within the guidebook can pave the way for more and more highway plans to consider the opportunity to expand rail and freight analysis. In closing, I've given the e-mail addresses for the authors involved in this study and the Internet web links for downloading the report and guidebook. The guidebook is the primary document and the backup report provides additional information supporting it. You can also the report from the TRB web site. Thank you.

J. Symoun:
Thank you. I want to encourage everybody in the audience if you do think of questions please put them in the chat area. We'll now move onto our next presentation, given by Bill Schafer of Norfolk Southern Corporation. You can go ahead and get started.

Bill Schafer:
Thank you, Jennifer and thank you for giving us an opportunity to talk today. I really don't mind following Joe and Glen because the presentation they gave is very important. And I agree with just about everything that is in it. This is about the third for fourth time I've seen it so I've had a chance to absorb most of it even though in the early stages it started to make my teeth hurt. I'm hoping my presentation will be complementary to their presentation by just giving an idea of how we look at some of the issues they raised.

Norfolk Southern is a shareholder-owned private sector freight transportation company. There are a couple of things we are doing to test the hypothesis of whether or not rail can reduce highway congestion by attracting an increasing number of trucks from the highway to the railway mode. This is a fairly old picture, but it's one of our double stacked trains going through pretty scenery in eastern Tennessee or western Virginia with steamship containers on it. I think Joe made the point that one of the reasons there's been a huge surge in rail intermodal is because of increased Asian imports transported overland in trains of steamship containers such as this one. The discussion points, highlights I would like to hit on are these very briefly. I am assuming there is a level of knowledge among those listening. There's an awful lot of public representatives on the attendance list who know about rail intermodalism. I'd like to give an overview of how of rail intermodal works today, where it works or doesn't work, how we are testing the hypothesis, and some conclusions.

Norfolk Southern is a major transportation company. We own and operate over 21,000 miles of track largely east of the Mississippi River. Our trains serve virtually all of the markets east of the Mississippi River, particularly if you include intermodal boxes that can be transported on the highway. There are also an increasing number of selected and growing markets we are beginning to serve west of the Mississippi. If this is clear enough on your screen, take a look at the dotted lines that appear on the map -- they indicate rail partners of ours who actually transport our freight for us to markets beyond where our rails go. We have been successful in attracting freight in the New England area. Also down in the Florida area. Probably, the brightest area with some of the best potential is west of our system in Texas and into Mexico. In our ability or effort to haul freight to these markets we have spent on our own money by putting Norfolk Southern intermodal terminals off of our line. We have some in Florida and in Albany, New York, Massachusetts and west of our territory here. Typically, our intermodal business is -- the boxes that we haul on our trains are traveling over 500 miles from the terminal where they are put on the train to the terminal where they're at taken off the train. Typically our trains link any two intermodal terminals once a day and the average speed is -this varies from lane to lane and route to route but in general -it is something on the order of 25 miles per hour. Reliability is somewhere in the neighborhood of 60 or 70 percent. Even if this doesn't sound particularly impressive, we still have been growing intermodal business since 2002. On average somewhere around 10% a year. It didn't do quite that rate of growth in 2006 but there was a softening of the economy at the end of the year.

Other characteristics of our intermodal business were touched on by Joe and Glen. It is customer-focused, we run our trains and offer our services and price for our services to give customers what they want while we can still make money at the same time. All the growth that I mentioned has been organic; growth that has been generated solely inside the company with our own marketing efforts and I guess as a companion to that we've funded the new terminals with our own internally generated funds. This benefits our stakeholders -basically our customers, our employees and our owners. The marketplace drives what we do. We have in and of itself no incentive to reduce highway congestion. We do have an incentive to make money.. Better freight replaces good freight. There is freight out there we are making money on today. When additional freight comes along where we can make more money, and our railroad can only handle so many trains, the better freight is going to replace the good freight. We generally make capital improvements that enhance shareholder value. As Joe and Glen mentioned, there is not a public benefit component.

Now, in 2002 most of you are probably familiar that AASHTO released its Rail Bottom Line Report. In fact, AASHTO is now in the midst of creating a freight bottom line report that will cover all of the modes. There's this interesting graph that I have excerpted from the 2002 report. The point of the graph is that rail has the share of intercity freight indicated today by the lighter gray wedge in the inner circle. In 2020 all freight is expected to grow as much as the blue ring. For rail to hold onto the same share of freight in 2020 that it had in 2002 will require rail absorbing the level of freight indicated by the purple part in the blue circle. The conclusion of the report is that freight railroads by themselves cannot finance the capacity improvements needed to absorb all the freight represented by that purple part.

Going forward rail will continue to replace good freight with better freight because a lot of the investments that will be necessary to absorb the quantum increase in volume are just beyond rail's ability to finance them. The AASHTO graph leads to a key question and that is: can rail reduce truck congestion?. How much and what is needed? How much will it cost and where is the money going to come from? As you have already heard it is happening in some places today. One of the lanes that probably gets the most publicity is Chicago to California. That is the poster child for the robust intermodal route, 2,000 miles long. Depending which source you look at, it may have as much as 80 percent of the truck business on some portions of the lanes between Chicago and California. Thousands of containers a day are being handled on dozens of trains on both Burlington Northern Santa Fe and Union Pacific. In fact the BNSF is betting the farm that the growth they are experiencing today is going to increase into the future. Their route between Chicago and Southern California is the premier route -it's pretty much the shortest and fastest. Part of that route is single track. They are now in the process of closing the gaps and within a year or so they will have an all double-track route between Chicago and Southern California. Their business is growing so much there are portions that are now getting triple track to handle the business. Between New York and Chicago that is a much shorter lane, but even so, there is about a 30% penetration of the truck business by the two railroads that link New York and Chicago. I know from Norfolk Southern's standpoint, we handle about 5,000 trailers or containers a day in that corridor that otherwise would be on the highway, on about 35 trains. CSX operates about the same number of trains. The key to making intemodal work between California-Chicago and New York-Chicago are the long hauls and the high volumes of freight to be had in those lanes

In shorter hauls -those less than 750 miles and also where origin-destination flows are fragmented -rail intermodal is not working. A exception as Glen mentioned is the short haul intermodal service being operated over 170 miles that has succeeded in absorbing some of the highway traffic in that short lane. Would have to have been a high concentration, not a fragmented flow. And from a Norfolk Southern standpoint we have lanes similar to that ourselves, say, Charleston, South Carolina to Greer, South Carolina. The reason is there is a major automobile manufacturing plant upstate and many of the parts come over the port of Charleston and we operate an intermodal train to link the two. That's another example of freight density justifying operating a train. And there's a lot of places where it could happen.

There are areas where there are 500 to 1500-mile hauls where neither rail nor truck has a clear advantage. For example, this is where we are testing the hypothesis ourselves. This is not the official name; it's something we're calling internally the Intermodal Expressway project. We are in the midst of one-year study to ascertain what is necessary to offer a service that will attract a large number of trucks to our trains that are now on the highway. It is a network of intermodal services between the Northeast and Texas. Our target market is pretty much dry van freight which we handle a lot of today. Major truckers are interested -- they are partnering with us in the study we're getting very good information on what it will take in order to operate a service that they will utilize more greatly than they do today. There is a byproduct effect of the study. That is the effect of this service we are designing on congestion on Interstate 81. The Virginia Department of Transportation and of Rail and Public Transportation are partnering on an ancillary study to the Intermodal Expressway study and it is also one that involves Joe Bryant and Global Insight and his folks as well. This is what we call the catchment area for the intermodal Expressway projects. Essentially Northeast to Southwest to handle a lot of freight presently in the highway. There are a number of goals to the service we would propose to offer -the first one of course is better service that would be delivered by faster speeds, higher frequency -more than one train per day. Our trucking partners are insistent on this before they give us more business than they have given us today.

An additional goal is to ascertain what additional assets we will need in order to operate this type of train service. Assets include track and structures with terminals. What equipment will we need and what additional personnel will we need to man the trains? Another goal is to determine additional benefits that will figure into the equation -what will the public see from a highway user's standpoint? With improvement and from private standpoint what benefits would we get out of this project as well as our partners in the trucking industry? It leads inevitably to a public-private partnership because we have concluded for a service to be offered with the scope that I have just described is going to be beyond the ability to go it alone as far as funding is concerned. We are going to be out there very soon forging partnerships in the public sector in order to help with the funding.

We have already done this. This was done last year with the Heartland Corridor which many of you may have heard about. If you are not familiar I think a search engine search on the Internet will point you to where you can find more information. In the case of the Heartland Corridor it is a partnership between federal, state and local governments and Norfolk Southern. Without going into too much detail this next map will show you essentially where the Heartland Corridor is. This is a map of our railroad and it is driven by a major port expansion in the Port of Hampton Roads that the influx of business coming over the Port of Hampton Roads needs to get in the West somehow but our most direct route is through the coal fields of western Virginia and West Virginia and was not capable of handling double stack containers. Between our partners in the government, our regional partners in Columbus, Ohio, where there is a major multimodal facility being constructed and partners in Virginia where port expansion is underway, we are in the midst of a project to improve clearance in the tunnels between those two points and that should be finished by the end of 2009 or the beginning of 2010. We think there is every indication that it can work on our Intermodal Expressway project as well.

Our next step is to complete our study. We'll identify additional assets needed to make the project work. We will identify sources of funding and begin our outreach to federal state and local partners and assuming we succeed there, we will move on with the project. My next slide is one you have seen before. I have plagiarized everything in this slide from the previous presentation. This is toward the end of Glen's part of the presentation were he said this is a three-phase analysis approach on how you determine whether there is any benefit to rail attracting freight off the highway. Here are the steps you would go through. We are already in the midst of steps one and two.

In conclusion we believe rail can help with highway congestion. We are pursuing that belief. Present studies are underway and we believe benefits will be perceived by shippers, by our shareholders and by people who use the highways. Jennifer, that is it.

J. Symoun:
Thank you, Bill. I hope that everybody enjoyed these presentations. Someone asked the question if this information will be presented at the Surface Transportation Board capacity hearing on April 11th? I have members of the Surface Transportation Board in the room with me and will now turn it over to Scott Zimmerman who will make a few remarks.

Scott Zimmerman:
My name is Scott Zimmerman and I am the Attorney Adviser for the STB. I just wanted to say a couple of things. Thank you very much to the Federal Highway Administration for sponsoring and hosting today's event. Thank you up to the presenters for your very informative presentations. I just wanted to put in a brief public service announcement and plug for an upcoming hearing that may be of great interest to the listening audience here today and which will dovetail nicely with the discussion today. On Wednesday, April 11th the STB will hold a hearing on the issue of rail traffic forecast capacity and infrastructure requirements. The hearing will be simulcast on the Board's website. That address is www.stb.dot.gov. On the homepage there will be a link for live web cast. If you just click on that link at 9:00 a.m. on April 11th, you should be able to view our hearing at that time. There is no registration and I would encourage everyone out there who is interested in this very important topic to join us via the Internet on April 11th. I want to think the Federal Highway Administration for giving me the opportunity to make that plug and for hosting today's event.

J. Symoun
Before we get to the other questions I have a slide showing information about the Freight Peer to Peer Program. I encourage you to visit the Peer to Peer web site to learn more about the program. The first question I have is for Glen. Is there any consideration of using congestion fees to capture the public benefits?

G. Weisbrod:
That is something that could be done. I am not aware of anyone doing that yet.

J. Symoun:
The next question I believe this is really for all presenters. Is it safe to assume that intermodal freight via rail is incapable of supporting the shipments of merchandise that is part of just in time delivery systems?

B. Schafer:
The typical characteristics that I listed in my slides are probably average or typical but they're not necessarily typical of everything we do. There is a generally higher level of reliability for the nature of the freight you just mentioned. When we talk about intermodal freight don't be deceived by the below average speed. It's reliability that is more important than the average speed. The answer is there is a fair amount of just in time freight that we handle, intermodally and in carload freight, that we pay close attention to and tailor our operations around.

J. Bryan:
The long and short of this is if the service is designed right, rail can handle just in time and does.

J. Symoun:
The next question is for all presenters. The question is trucks waiting at the US-Mexico and US-Canada borders is a problem and worsening. Do the speakers agree that moving freight to rail will relieve this congestion at the borders? Can the speakers comment on any activities underway to address this for freight crossing these two borders?

J. Bryan:
Rail certainly can reduce some of that congestion particularly if the transfers at the border crossing are taking place off rail [now]. Some of the intermodal operations have actually been split at the border, so if you're doing that you don't really reduce the road congestion. One of the things (Bill you know more about this) but one of the things I have heard are attempts to pre-clear for Customs purposes goods moving by train, so they can cross the border cleanly and move inland to something like -move under bond, basically, and be cleared elsewhere. But I've also understood there were obstacles to getting that put into place. Bill, are you from there was any of that?

B. Schafer:
Just pretty much you have said and what I have read in the media.

J. Symoun:
The next question I will put this out to all the speakers and the question is What should public decision makers use to evaluate the needs, conditions and capacity of the railroads? It is often tempting to look at "empty" track and think that capacity is available but that does not take into account the lead time and mix of traffic on the track.

Response:
That is entirely true. Glen, do want to say a little bit about that, and we can probably all contribute to that a little bit.

G. Weisbrod:
One of the things we looked at in our guide was what is the capacity of track - it has to do with its nature, is it single track or double track, and the kinds of services that are operating on it. It could be (I think Bill may be able to say more on that) - but clearly this is part of technical analysis. The evaluation process is, do you have track, and question two, do you have flows going on the highway in the same direction as that track. Number three, if so is there room for more capacity on that track - which has to do with the nature of the track itself and the services on it. So, I think it is a multi step process and there are a number of analysis techniques that have to do with things like track scheduling which make a big effect on that, too, because in some areas you have trains passing through that don't have the ability to stop everywhere as well.

J Bryan:
There are network models used in conjunction with the Waybill data, which states all have access to, that gives you a first cut as to what kind of traffic is moving and what the service requirements might be like. Most of the states also have done inventories where you have an idea as to the track rating - what is single, what is double track, also what the track speeds are like. That gives you a decent idea as to what the track is capable of doing. When it comes to capacity analysis directly the single best thing to do is to talk to the railroads to start with. I appreciate there may be a desire to have a more neutral view of that, but frankly for that kind of analysis railroads are the first and best place to be able to understand it.

B. Schafer:
There are certain routes - we have lines where is not much density and quite a bit of capacity. Increasingly that is becoming less and less typical. One of the things we are doing in our study that we are undertaking is that there will be some train simulations over the most critical part of the new service network that we are proposing. We have got the routes, but what we won't know until the train simulations have been completed, is whether or not we have the capacity to handle the proposed increase in traffic for these routes. Part of the study would be to identify what it would take in order to make the routes suitable for the higher levels.

J. Bryan:
I will make a final point because, looking at the text of the question, one of the things you are looking for when you do the kind of analysis we're talking about, is to look at the mix of traffic and that mix will say - will imply things about the service requirements, and from there imply how much capacity they are using. For example, if a line is carrying a lot of intermodal freight, the trains are faster and the head rooms between trains are going to be greater, so then the amount of capacity an individual train is using is greater.

J. Symoun:
The next question is for Bill. What are the relative (profit) margins on intermodal in comparison to other business lines such as bulk (coal/grain/etc.). NS is a big mover of bulk commodities, particularly coal, and typically in the past, bulk commodities have had better returns than intermodal. Certainly rate increases for intermodal will somewhat address this disparity but aren't the bulk commodity shipments the "Better freight" that will displace "the good freight"(intermodal)?

B. Schafer:
That's about 10,000 questions instead of one. I will try to address two or three of them if possible. For bulk freight to substitute highway transportation. We do this all the time with what we call transload facilities where the long haul is in the freight car and when it gets to the transload facility the product is transferred into trucks to finish the trip to the ultimate user of that material. This is a service which has its place but doesn't have the flexibility or growth potential that intermodal business does. Can you please repeat the first part of the question?

J. Symoun:
What are the relative profit margins on intermodal in comparison to other business lines such as bulk?

B. Schafer:
One of the things that has happened in the last five to seven years is that while it was true maybe ten years ago, maybe intermodal was a low-yielding commodity for us, with the increased congestion on the highways and the scarcity of rail freight capacity we have been replacing good business with better business. We've been increasing our profit margin on intermodal to where now in the Norfolk Southern panoply of services intermodal yields a respectable level of profitability.

You will find in the 08-42 research is reference to a study Conrail did during the 90's which they recalibrate it the capital allocations to intermodal courses and other types of services and stripped out some of the requirements like classification.

J. Bryan:
You will find in the 8-42 research reference to a study Conrail did during the 90's in which they recalibrated the capital allocations to intermodal versus other types of services, and stripped out some of the requirements like classification yards in many cases. (Schafer: That's a good point.)

Once they made that change to the calculation of allocated costs, what they found was that the intermodal business was very attractive and very profitable.

B. Schafer:
That's the principal reason intermodal terminals have been getting a lot of money on Norfolk Southern, and conventional freight classification yards have not.

J. Symoun:
The next question is for all speakers. Due to geology and geography some secondary lines are the only link. Is there a potential for them to be upgraded?

B. Schafer:
There is always a potential if there is enough money. One of the problems we encounter in a situation like that is a lot of the alignments that were chosen for the rail routes today were chosen before the days of heavy earth moving equipment and sophisticated construction methods. To bring them to interstate highway standards as far as alignment, grade and speed are concerned would be very expensive. Otherwise you see a number of compromises being made. I think it is true for the industry.

J. Bryan:
One of the perspectives that we have heard is that the industry for years has focused on trying to concentrate its traffic on the core system. It retained a large amount of secondary routes which were there for particular purposes. As the capacity gets chewed up and you start looking at the secondary routes, what you are looking at - as Bill was describing - are geometries based on 19th century capabilities. And you've got to do a lot of track straightening to turn that into a high capacity line. Is there potential? Yes, but it's not cheap.

J. Symoun:
The next question is for Bill. Can you comment on the Norfolk Southern Triple Crown service?

B. Schafer:
Triple Crown service is one of our intermodal offerings in our portfolio of intermodal services. Is a wholly-owned subsidiary that operates independently of the railroad. Triple Crown's stock in trade is the transportation of over-the-road trailers from dock to dock. They do their own marketing and draying. What the railroad does is haul trains from one Triple Crown terminal to another. Triple Crown is a profitable subsidiary; if it were a stand alone trucking company it would have a very respectable profit and loss statement. The service offered by Triple Crown is one that a number of customers really, really like.

J. Symoun:
Thank you. The next question I will pose it to you, Bill, although the others may jump in. The question is what kind of incentives would the railroads consider to undertake improvements with a higher public benefit than shareholder benefit? Aside from the infusion of cash payments which are pretty scarce from the public sector?

B. Schafer:
Joe and Glen had a line in their presentation that stated that if there is a level of investment from a public source that lowers the ROI hurdle that has to be surmounted for any capital project on the railroad to be approved, then it makes sense that more projects would get done because -- or effectively, the ROI threshold would be lowered, because not all the money had to be generated internally to make the project work.

J. Bryan:
There are also ... when we were discussing the roles of other private parties, one of the things to consider is that many times what the private sector is looking at is traffic that is dense but shorter distance than the railroads typically are going after. One of the things to recognize when you are looking at the intermodal traffic that is shorter distance is a huge part of the total delivered cost is in terminals and in pickup and delivery. Some of the things that the public sector can do - and it costs money but is doesn't cost cash - are tax incentives that may benefit the construction of a terminal or tax incentives that might offset the fuel taxes paid by truck draymen performing pickup and delivery services at a rail yard. So there are - with a little bit of imagination, there are a variety of ways that public incentives can be used to change the role of rail.

G. Weisbrod:
I'll just add a little bit in addition to that. There are also investment tax credits and there are things like a lot of creative methods using land: land grants, land swaps, development rights, public ownership and so on - right of way purchases and so on - none of which have to involve directly throwing money at it. But in the end they all do as Bill said: they affect the rate of return that railroads can achieve. And after all, if there is a public benefit that comes out of the analysis, then it's not unreasonable that there should be some public involvement in making it happen as well.

B. Schafer:
We pursue this sort of thing routinely, for a lot of rail projects.

J. Symoun:
The next question is for Bill. I think you already touched on this. With freight rail averaging speeds of 25 MPH over the 500 mile haul threshold, how will rail be able to compete with trucking who can deliver goods in substantially less time?

B. Schafer:
We're not talking about all freight but we're talking about the best example you have. If you're talking about delivering perishables in 3 to 5 days from California to the east coast, the only way you can do that in a truck is with team drivers. The vast majority of freight can't afford to be moved with team drivers, which means drivers have to either relay or take their mandatory rest. If you are talking about a 2,000 mile truck haul where there is a single driver that has to take mandatory rest, the average speed will be somewhere around 25 miles an hour, too. This is where the railroad can come in handy over long distances, effectively stretching the day. I think that has a lot of value. In connection with the study we have underway now we have acknowledged and our partners have acknowledged that we need to get the average speed up. It's not going to be a quantum leap but it is going to be better than what we are averaging today.

J. Symoun:
The next question I will address to all presenters. On the highway side some cities charge impact fees to developers because of the impacts their businesses create congestion wise on the highways. These funds are used to help minimize congestion in the highway corridors. Are there any examples where this is also occurring on the rail side to create funds to assist with rail improvements?

Response:
Not aware of any.

Not aware of any, either.

You can certainly make that argument.

J. Symoun:
This is to all presenters. Is the process of calculating benefit/cost/need different for Class I than for shortline and regional railroads?

B. Schafer:
I don't think so. Money is money and return on investment is return on investment. Where the short lines tend to be able to have a different calculus is they typically depend more on public assistance for routine operations than the Class I's do.

J. Bryan:
I agree. It's not fundamentally different. The cost structures will be different, but the analysis is not.

J. Symoun:
This again is for all presenters. Would railroads consider blocking intermodal trains to allow "cut-off drops" - allowing other destinations besides major terminals? E.g. How can a state like Wisconsin best capture intermodal benefits when it is "stuck" between major service areas in Chicago and the Twin Cities?

B. Schafer:
That's a great question. The sad part about it is that you need volume to drive where the terminals are going to be - whether they're block swap terminals, or terminals where you originate and terminate freight. Without the volume, it's just not going to make sense.

J. Bryan:
There are trains that will cut off blocks en route to another place. That actually happens. The question is what does it do to - the question is, what is your geography to begin with, and what does it do to the service requirements at the other end. If there is enough volume to make it work, and if you are not going to mess up the service, you can do it. In the course of things between the Twin Cities and Chicago, service is going to be tough to begin with, and the ability to do cutoffs there is probably going to be limited.

J. Symoun:
The next question is for Bill. Will improvements to rail corridors take some of the existing freight off highways or just the growth in freight?

B. Schafer:
It probably depends on the corridor but the reasonable expectation is it will absorb the growth, but it will be the kind of thing where if you're driving on Interstate Highway today, before the service took effect and driving down the same stretch of Highway five years from now you probably wouldn't notice a difference. Where you would notice a difference is if for some reason all the trains stopped operating.

J. Bryan:
I agree with that; that is a fair assessment. In a variety of analyses we have done, what we are doing is absorbing growth. In order to turn back the tide of the highway so the rail market share becomes greater, it just takes a whole bunch of investment beyond what we see likely to happen. It is true that in local environments you might actually make a very big difference in turning back. But on a broad scale, that is less likely to happen.

G. Weisbrod:
The reason for that is that truck growth is occurring at a far greater rate than cars -I think it is double. As a result, you have such a large growth of trucks, that even if you took a large part of it off, because it is growing so much faster, you are just getting back down to where you started. It is because of that increase in national and international trade that is causing trucks to grow so much faster than cars on the highway.

J. Symoun:
How does NS factor public funds into its project selection and decision making?

B. Schafer:
Usually it is something our customers want us to do and we think it's good idea but don't have the province to do it entirely on our own. We will seek partnerships with the public entities assuming we can make a case for a public benefit as we undertake a project. For most projects, we tend to finance our improvements internally. I am not sure if that answered the question.

J. Bryan:
What you are saying is fair. For the most part the public funds aren't built into the equation because for the most part they are not available. When they are available, then it's a reduction in the capital cost. That makes the return on the project substantially better.

B. Schafer:
If a public entity brings us a project and says "we think this is great idea, we think you guys ought to get on board with it", it is something we're going to look at through the prism of the discipline of the marketplace. If it doesn't make sense for us to have as much enthusiasm for a project as say the public sector entity does that brings it to our attention, then it's going to be a very, very hard sell.

J. Symoun:
Thank you. The next question for all presenters is rail freight considered "greener" than road freight in terms of emissions per unit of freight?

J. Bryan:
The answer is yes. There is a study I saw recently done by some kind of federal agency which did a comparison of - I want to say it was emissions but it may have been fuel efficiency per ton mile of freight. The rail worked out to be 10 times better than truck on a ton mile basis -it's is a huge factor. If we assume on the conservative side that number was on a fuel efficiency basis (I think that's what it was), then the emissions are still going to go along with it -that's a big difference.

B. Schafer:
Federal Highway had a body of information like that, that we dug into for this study we have underway, because we are going to want to quantify that type of benefit. Right now, there is an issue with a specific kind of emissions (I'm not an expert at it). There's some kind of emissions where the truck engines have been refined and improved so much over the past decade, that there are some emission-control features they have that locomotive engines do not have. In fact, you may have read about these hybrid locomotives, or what you call Gen-set locomotives which are being used in California and Texas and other places to perform switching duties. The idea is you have a locomotive of say a nominal 2100-horsepower, where it has three large truck engines of 700-horsepower apiece under the hood. And if you only need 700-horsepower for the type of rail work that you're doing, then the other two engines shut down. This is a very clean and green type of application that we have. But if you are looking at stuff like carbon dioxide, there is an enormous difference in output between truck engines and rail engines. When you think intuitively that the whole reason for railroads to exist in the first place is because you have steel on steel, and you reduce the rolling resistance quite a bit in order to move a ton a mile. It just makes sense then, there's so much less energy needed to provide a given unit of work, and by the same token the footprint of a rail right-of-way is much smaller and safer than highway.

J. Bryan:
Somebody just posted a comment that spurred my memory. That 10 times factor is from the Oak Ridge National Lab, and it was BTUs per ton mile.

G. Weisbrod:
I think the important thing to add is that the train size makes a difference, the number of cars per engine.

B. Schafer:
Or, the horse power to trailing ton ratio. (Weisbrod: Exactly.)

J. Symoun:
The next question is for all presenters. The options discussed today are all very costly. What can be done to get more freight on the railroads - cheaply? In other words, where is the low hanging fruit?

J. Bryan:
There are several different ways to tackle that question. One is you can lend support to the people -let's say project execution support - to people that are conducting initiatives on their own. For example, the case we were referring to with Schneider National was done without any public assistance. So, you look at where your allies are, and look at the things they are trying to get put together, and see if there aren't public obstacles that might relate to "Oh, we don't want more trains coming through our neighborhood," - or, things relating to public relations or environmental approvals. There are a number of ways in which the public sector governs what happens and makes things more feasible. That is one type of way to do something that is not using money. Another thing that makes the money that's available more efficient, without having to go after lots more, is regional cooperation. If adjacent states and neighboring towns and such are looking at what their needs are, what really needs to start happening is [for them] to understand rail as a network, and look at what a network strategy is, so that we begin to have a cumulative effect on a region. The way you can do that is align the monies that you have and the initiatives that you have, so that what one person does in one place also has a beneficial effect on what somebody else does. A related thing is, a number of states have decent standing pools of money that they make available for rail projects. If you are able to bank them year to year, then $20 million this year may turn into $40 million over two years. Then you start to have a have a fair amount of money that you can work with. So those are a couple of ways to answer that question.

G. Weisbrod:
When you talk about cost it really depends on the context. If you talking about new right-of-way through the middle of an urban area like the Alameda corridor, you're maybe talking in the billions, but if you're talking intercity like the Seattle to Portland [example], that was done with no public money at all.

J. Symoun:
The next question is do you think new ITS technologies can help to speed up the trains?

B. Schafer:
The equivalent of that would be some kind of train control system. The railroads have been working on it for quite a number of years. The big thing to get into is the fail-safe requirements that you have. I think that is on the horizon. In some cases we will see elements of it implemented in the next year or two.

J. Symoun:
The next question, how do you define the reliability factor (60-70%) and how does that compare with trucks?

B. Schafer:
That was my figure. That is the terminal to terminal average typically. It does not tell you what the dock to stock average is, which is typically much higher. That means, as long as it is delivered exactly when the customer wants it, that level of reliability is higher than the 60-70%. Even so, I think we will need to get the terminal to terminal reliability up, if we are going to implement this new service network that is under study right now.

J. Symoun:
How can increased freight traffic by rail coordinate with many state's plans for high speed rail in the same corridors?

B. Schafer:
It depends on which corridor. In some it may be feasible and some it will not. I think the public sector needs to make up its mind which is more important -passenger trains or trucks off the highway because in many cases that is what it's going to come down to. I think the capacity the rail freight companies have between cities now is precious and it will be with great reluctance they make any cheap capacity available [for passenger service] where the potential for freight could be greater.

J. Bryan:
I would say Bill's view is widespread across the industry.

J. Symoun:
Next question. Increases in passenger rail services, either regional commuter or intercity services, at public expense, may require infrastructure upgrades at public expense. Has this factor been included in the public benefit model? and have the rail carriers found this to provide a positive benefit for rail freight business interests?

B. Schafer:
In general, I am sure it has been a factor in some cases. But increasingly -I go back to the answer I gave to the previous question, which is that the prism we are going to be looking at this through, is through public-private partnerships for freight. I think particularly since AASHTO's Freight Bottom Line Report came out in 2002, there's been a much greater concern and much greater interest in the role of rail to absorb freight growth, and since that's really the line of work that we're in, that is the avenue we're most interested in pursuing.

J. Symoun:
This question is for Glen. It seems that the benefits of an investment in an intermodal facility in Detroit will have benefits beyond the region. How do I tackle a BCA where the benefits accrue in other regions?

G. Weisbrod:
An important aspect of benefit cost analysis is actually the geographic area where you define them [the benefits and costs]. The textbooks will all tell you to consider all benefits and all costs no matter where they occur, but in fact you're never going to see a public agency in one area do a project where almost all the benefits are to someone else. I think that is widely recognized. What it comes down to is, understanding doing the benefit cost analysis that encompasses ... It's a multi regional. In effect, you say what's the benefit-cost to a broader region that includes our state and beyond our region, and secondly, that of the users, how many of them are in our state versus the others? I'm sure there are many, many examples. The State of Maine is doing a study right now looking at highway and rail investments across the state, that basically would connect Quebec with the Maritimes, and they are working together with those provinces to identify where it makes joint sense for the whole group involved. And if so, would the other parties be interested in some sort of mechanism by which one state would make an investment, where other states and provinces would end up having a benefit. Of course, there are all kinds of pricing mechanisms -it doesn't have to be investment up front. One state invest in another state -it's not going to happen. But they can have pricing mechanisms they agree to, and cooperate on the study. So I think that's a very important issue, and it's just a nuance in the way you define the benefits and the costs. This comes back to the kind of issue Joe started out with, which is bringing all the right parties to the table.

J. Symoun:
The last question for today. Could unused capacity of freight tracks be used for a light passenger service and are there examples?

J. Bryan:
One initial point is, there isn't a lot of unused capacity because it has been spun off. To the extent there is capacity on a line beyond what is being used, theoretically, "yes" - but the operator is going to want to be sure that freight is able to run first, and is also going to be looking at what the growth prospects are, so there would be a lot of care put into it. The [answer to] the question theoretically is "sure", but in a practical fashion there would be a lot of caution that would go into the subject.

J. Symoun:
I think we will close out for today. Is about 2:30. If you think of additional questions, I have the presenters of e-mail addresses on the screen. And you can also send your question to the Freight Planning LISTSERV. I want to thank all three presenters today and thank everyone in attendance. The recorded version of this event will be available within the next week on the Talking Freight website.

The next seminar will be held on April 18 and is titled "FHWA/AASHTO Freight Partnership Conference Findings/Discussions." If you haven't done so already, I encourage you to visit the Talking Freight Web Site and sign up for this seminar. The address is up on the slide on your screen. I also encourage you to join the Freight Planning LISTSERV if you have not already done so.

Enjoy the rest of your day!

Updated: 03/29/2011
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