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Talking Freight Transcript

Freight Transportation's Role in Economic Development

November 14, 2012

Presentation

Nicholas Kehoe
Good afternoon or good morning to those of you in the West. Welcome to the Talking Freight Seminar Series. My name is Nicholas Kehoe and I will moderate today's seminar. Today's topic is Freight Transportation's Role in Economic Development.

Before I go any further, I do want to let those of you who are calling into the teleconference for the audio know that you need to mute your computer speakers or else you will be hearing your audio over the computer as well.

Today we will have two presenters: Tom McQueen from the Georgia Department of Transportation (DOT) and Trevor Brydon of the Southeast Michigan Council of Governments. In addition, Carrie Kissel, the Associate Director of the National Association of Development Organizations (NADO), will start off the seminar with a brief overview on the work NADO has completed on case studies on transportation and economic development.

Tom McQueen currently serves as Assistant Administrator for the Georgia DOT's Office of Planning. Since starting with Georgia DOT in 1995, he has managed some of the State's largest and most complex planning studies, including the Georgia Freight and Logistics Plan, which received a 2012 "Transportation Planning Excellence" award and is one subject of today's webinar. This award is sponsored by FHWA and the Federal Transit Administration (FTA), and co-sponsored by the American Planning Association and Transportation Research Board (TRB).

His project portfolio also includes other freight- and commerce-focused transportation studies, including the Georgia DOT Truck-Only Lane Feasibility Study and Georgia DOT Interstate System Plan. In addition, he managed the most recent update of the Georgia Statewide Transportation Plan, which included its first focus on freight, and the Southwest Georgia Interstate Accessibility Study, which looked at growing that region's economic engines.

Trevor Brydon has served as a Planner for the Southeast Michigan Council of Governments since 2006, where his work has focused on regional analysis, planning, and policy for freight transportation, border crossings, and economic development. He graduated with Master of Urban Planning degree from A. Alfred Taubman College of Architecture and Urban Planning at the University of Michigan, with a concentration in Transportation Planning.

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 chat area. Please make sure you send your question to "Everyone." The 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. If we run out of time and are unable to address all questions, we will attempt to get written responses from the presenters to the unanswered questions and forward them in an email with follow-up information.

The PowerPoint presentations used during the seminar are available for download from the file download box in the lower right corner of your screen. The presentations will also be available online within the next few weeks, along with a recording and a transcript. I will notify all attendees once these materials are posted online.

One final note: Talking Freight seminars are eligible for 1.5 certification maintenance credits for AICP members. In order to obtain credit for today's seminar, you must have logged in with your first and last name, or if you are attending with a group of people, you must type your first and last name into the chat box. I have included more detailed instructions in the file share box on how to obtain your credits after the seminar. Please also download the evaluation form from the file share box and submit this form to me after you have filled it out. Finally, while FHWA does not formally offer the professional development hour credits and will not provide proof of attendance, we have made an agenda available in the file download box that participants can use to self-certify and submit for credits on their own.

We're now going to go ahead and get started. Today's topic, for those of you who just joined us, is on Freight Transportation's Role in Economic Development. As a reminder, if you have questions during the presentation please type them into the chat box and they will be answered in the last 30 minutes of the seminar. Before we begin the presentations today, we have a special introduction from Carrie Kissel of the National Association of Development Organizations (NADO) to give an overview of the work NADO has completed on case studies on transportation and economic development. Carrie, when you are ready you can begin

Carrie Kissel.
Thanks, Nick. Thanks also to FHWA for inviting me to be a part of today's webinar. This is a subject that's very close to the issues that we work on. I'm joining you from the Appalachian Regional Commission headquarters today, where freight transportation and economic development has been the subject of discussion all morning.

I'll give a quick background on who the National Association of Development Organizations (NADO) is. We serve the national network of 500 or so regional planning and economic development organizations, which are called something different in every state. Oftentimes they're called council of governments, regional planning commissions, or development districts. They are different in every state, but they all serve multiple jurisdictions - usually multiple counties - and administer many Federal and State programs related to planning economic development and human services. That includes in many states rural regional transportation planning organizations, and some also have MPOs in-house.

I wanted to let you know about a new report that we recently developed: Aligning Strategies to Maximize Impact: Case Studies on Transportation and Economic Development. This was developed with support from FHWA. It is available at the link that you see there as well links from our home pages, nado.org and ruraltransportation.org. This report focuses on initiatives from across the U.S. in rural and metro regions that are addressing both transportation and economic development, and where noteworthy planning and implementation practices are followed. Our Board of Directors and leaders within our membership identified these seven characteristics as being noteworthy planning and implementation issues. We're focusing on improving regional resiliency, aligning plans and investments - all of these are ways to move plans into actual project implementation and to make sure that public dollars are invested in the best way possible. It features 10 case studies in 11 states, and some of those case studies focus on freight.

Understanding freight's regional impacts is a case study from the Valdosta-Lowndes Metropolitan Planning Organization (MPO), which is housed in the parent organization, Southern Georgia Regional Commission. One aspect of their transportation planning that we found of interest was the series of freight studies that have been completing, including a location quotient analysis, which looks at employment by economic sector. It's something that is far more common in economic development work, but they completed it as part of a freight study. It is of beneficial use for economic development planning, business recruitment, and transportation planning, not just the work that is completed within the MPO and Regional Commission, but also for their partners throughout the public and private sectors in the region.

Another study is locating freight users through an inventory, which was conducted by Kentucky's Area Development Districts under contract to the Kentucky Transportation Cabinet. All of the Area Development Districts function as Regional Transportation Planning Organizations and some of them also staff MPOs in-house. This project generated significant data for transportation and economic development and has been beneficial as the Area Development Districts are seeing more private sector participation in their transportation advisory committees and their economic development committees as a direct result of the outreach that was conducted during this freight inventory.

There are several other case studies in this report with freight elements related to technical advisory committee composition, project prioritization, corridors, and partnerships with different local entities. You can find this report on our website, www.ruraltransportation.org or www.nado.org, and if you are interested in having a hard copy, feel free to send me an e-mail. My e-mail address is here, and you're also welcome to follow us on Twitter and on Facebook, at RPO America, which is the name of our program that serves as the national professional organization for rural transportation planners. I appreciate having the opportunity to share this report with you.

Nicholas Kehoe
Thank you for giving us that introduction. With that, we will move onto a presentation from Tom McQueen from the Georgia Department of Transportation (GDOT).

Tom McQueen
Thanks, Nicholas. I would like to thank everybody for the opportunity to discuss my most recent experience with freight and economic development. The focus of my talk today is Georgia's Freight Logistics Plan, which we wrapped up earlier this calendar year. Ask just about any economic developer, chamber president, or elected official, and they are likely to tell you that transportation is the key to expanding companies and jobs. Roads, rails, airports, and other transportation infrastructure are the key selling points when attracting new business and industry. What I just said pretty much sounds like the beginning of a story. In fact, it was the lead in an article that appeared last week in the Atlanta Business Chronicle, titled "Transportation Is Key for Economic Development." The article had a good basic discussion of the issue; however, I think it had one element that was missing - the importance of connections. Connections among the various stakeholders as well as the transportation modes are what I believe to be the magic ingredients to support freight logistics as an economic development engine.

As part of the completion of the State's Freight Logistics Plan, several other major transportation initiatives were setting the stage in Georgia. One of the most significant was IT3: Investing in Tomorrow's Transportation Today. It includes development of a State Strategic Transportation Plan covering all transportation modes and their issues, viewed from a strategic policy perspective. Here is a chart from that report. The theme of the graph shows a positive historic connection between Georgia's infrastructure investment and an increasing share of GDP. The key objective of IT3 was to inform elected officials and public and private stakeholders that Georgia has been coasting on past successes and that under-investing erodes the transportation performance that drives competitiveness.

Another initiative was Governor Perdue's Commission for a New Georgia, which created multiple task forces for strategic growth sectors. The task forces functioned as blue ribbon committees comprised of political and industry leaders. Task force research and recommendations were couched in an overall theme of business competitiveness and economic development for the State. The Freight Logistics Task Force had several facets. For example, in addition to infrastructure, the Freight Logistics Task Force touched on issues such as workforce development. It also gave specific attention to a State Freight and Logistics Plan, which we started to develop shortly thereafter.

I have mentioned that the Georgia Freight Logistics Plan was part of a strategic progression involving themes. It is worth mentioning that GDOT included freight focus in our most recent State Transportation Plan. We understood that freight logistics supported the State's economic health. However, we needed a plan that told the explicit economic development story for freight logistics. It was focused on that sector's economic potential and done in close cooperation with senior leaders of the public and private sectors.

Now that I have given you background and context on the project, I'll take you through the Freight and Logistics Plan itself in more detail. What planner doesn't like a good graphic showing an overview of work tasks, which we have here? There are traditional infrastructure planning metrics that most people are familiar with. In addition, you'll see core economic considerations woven throughout. Themes with terms such as making a business case, economic value of freight, and others were a large part of the work we did, in addition to conducting these strategic analyses.

Key stakeholders needed to be involved throughout. The overarching blue area at the top signifies their continuous role for input throughout the plan's development and adoption. Here is an overview of the vital stakeholders that were involved throughout. You'll notice that the core project team included representatives from the Governor's Office and our fellow State agency, the Department of Economic Development. To say their role was crucial would be a serious understatement. They were included in every meeting, including routine project status meetings on a monthly basis. That ensured we were all connected, included everyone's perspective, and were always on-message. Multiple industry briefings and industry sessions where held with senior executives from Georgia's largest freight logistics-insensitive industries.

Our meetings were pretty well attended, and the insights gained during the meetings were important to the analysis, the recommendations we made, and ultimately the consensus-building that came out of the exercise. One of our early findings that got folks' attention was similar to the theme that I discussed earlier regarding the connection between infrastructure investment and economic activity. Not too long ago, Georgia's economy was at a historical high of 21% of the regional freight and logistics sector. It's now at 19%. Returning to the historic level could translate into $20 billion additional economic activity in a 10 year period. This message definitely seemed to resonate with the public and private sector leaders that we worked with continuously. It set the tone for our discussions and analysis in the project and this sector's important role in Georgia's economy.

Another early deliverable needed to be presented using the language of business. You will see on this slide, it is more than simply an inventory of infrastructure typically done in planning studies. Rather, these are interrelated assets of our freight system in the state. This is the Port of Savannah complex. It's the fourth busiest container port after LA, Long Beach, and Newark, New Jersey, one of the fastest growing container ports, and second in exports. Second but not least is the Port of Brunswick, which is now third in US auto imports and number five in total U.S. auto and vehicle imports and exports. If you drive a Volkswagen, it came into the Port of Brunswick.

Continuing with the other assets, we have two Class One railroads, shown in black on the map. The orange airports are our top air cargo airports. The green dot two-thirds down the state is our intermodal yard in Cordele, which looks to be off of I-75 and not close to the port, but it is connected to the Port via short line railroad. The DOT invested in improvements to connect the intermodal yard to the Port of Savannah. It is relatively new.

Next we needed to know how our freight was moving in, through, and out of the state. As you can see, Georgia's freight it primarily moved by truck, especially when we are benchmarked against regional and national trends. If anyone is curious what the maroon color means with water only, that would be something like barges. We don't have a lot of that.

Next we needed to know what the freight-intensive areas of the state were. In Georgia, the metro areas of Atlanta and Savannah really stand out. The next thing we started to think about was how/are the areas economically related? What are the freight assets that connect them? Savannah is one area of freight-intensive activity primarily through the Port of Savannah on the Savannah River. For our work, we were able to build on previous freight-related studies we had done in Georgia. Several years ago, we conducted truck intercept surveys at many locations throughout the state. This slide is one of the sample locations where we did those surveys. I worked really closely with the Georgia Ports Authority and we stopped truckers coming into the main gate of the port and asked where are you coming from and what are your carrying. Many were coming from relatively locally close warehouses. However, many had distinct distance origins; in fact, a significant number were coming from the I-75 corridor and metro Atlanta areas. What this told us and what the overall trend supported was that rail intermodal is part of the asset of the Port of Savannah, but trucks on local and long haul roads are vital to moving freight in Georgia, especially as it relates to the ports.

I mentioned that trucks are important to move goods in and out of the Port of Savannah; however, all assets are important in order to have a truly connected freight system. We looked at rail. I use the term "trading partners" with the Port of Savannah from an intermodal perspective. I started with intermodal rail. This is a picture taken on the Port of Savannah grounds. For intermodal rail, Atlanta and Savannah are linked pretty strongly. Intermodal rail is not the entire story, though. The rest of Georgia is highly reliant on non-intermodal rail, such as carload and bulk products like raw lumber, cut lumber, woodchips, and clay. Kentucky is connected to Georgia and shows up in some of Georgia's state rail flow data due to one of our largest cash crops: peanuts. Georgia produces about 50% of the nation's peanuts, much of which is shipped to the Jiff peanut butter plant in Lexington, Kentucky. If you eat Jiff peanut butter, there's a good chance it came from Georgia peanuts, shipped by carload rail.

On the national level, we found that metro Atlanta is a very busy freight region. I went ahead and took out the metros that don't have direct water access. That puts Atlanta as the number 2 inland port in the country. What is coming in and out of Atlanta? Who are its trading partners and trading regions? For truck movement, Atlanta "stocks the store" for the entire southeast, with activity stretching into the industrial Midwest and the Gulf Coast. The rail connection also involves several key states, including the Southeast, the Midwest, and the Gulf Coast.

I talked about road and rail being important for metro Atlanta; however air cargo is also increasingly important. Atlanta Airport is the number one busiest passenger airport in the world, and it recently broke into the top 10 busiest air cargo airports. Most air cargo is carried in the belly of the plane. Air-Tran was recently acquired by Southwest Airlines. Air-Tran did not carry cargo, but Southwest does, so we expect to see more growth in that. In addition, we're getting increasing number of cargo-only airlines coming in. As a matter of fact, on the bottom left is a photo of the Atlanta mayor welcoming the inaugural flight of Asiana Air two years ago. They have four flights a week from Seoul, Korea, with an economic connection to Georgia via cargo consisting mostly of auto parts for Kia. Not so coincidentally, the parts come off of the planes, go on trucks, and go an hour and to an hour and a half southwest to a Kia auto plant in Georgia. Again, the connections are there and the story can be told. Atlanta Airport recently won Air Cargo Week's prestigious World Air Cargo award for airport of the year for the third time. One of the reasons for the award was the airport's immediate adjacency to three Interstate highways. Modal connections prove to be important to economic development.

What are the recommendations for the Freight and Logistics Plan? Here are the overarching themes from the needs analysis. They represent what came to be called the three C's: capability, capacity and connectivity. Focusing on these themes helped us from getting stuck in modal silos or focusing too much on modal performance without also being mindful of the economic potential of the entire system and the connections between it. I have included a couple of examples of what the three C's would look like so you get a feel for their definitions.

In the next slides I will give you mode-specific recommendations. I will caveat this by saying that this is not an exhaustive list of freight needs in the state, but these are the macro-level, State perspective, high-level priorities. Starting with the waterways, deepening the Port of Savannah channel to further accommodate shipping was the State's top freight and logistics priority. The Port of Savannah needs to be deepened to accommodate the deeper and larger container ships that will be making port calls to the Panama Canal. Right now, Savannah can handle some of the larger ships, but only at high tides. Last week, Georgia received good news in that the record of decision was received from the Federal government for this deepening project. A second finding is that the continued growth of the Port of Savannah will occur until it is "built-out" or bumping its head on the ceiling, meaning it is completely filling up its space. At that point it would be feasible to pursue development of a second port downstream, what is commonly referred to now at the Jasper Port. That is being talked about now in coordination with the State of South Carolina.

Again, on a macro or State level, there are major highway recommendations that are very important. To facilitate current and future demand, additional capacity is needed on several key interstates to provide long haul travel for freight trucks. Many radiate out from the metro Atlanta area, as you can see in purple. In addition, several key interchanges that connect interstate t interstate need improvement. Many are in metro Atlanta, but several are in the Savannah area as well. One is midway in between the two in Macon, Georgia.

Interstates are important; they are the workhorse in Georgia and in most places in the country. There are also several minor state routes we found that are really freight-focused from the State level perspective. You can see in orange I labeled a Macon-La Grange, east-west connection, which improved connection from the Atlantic Ocean ports (Savannah and Brunswick) to the Kia auto assembly plant in La Grange, Georgia, where the arrow is. In addition, you can see a north-south route, labeled U.S. 441. An improvement there would provide better access for a soon-to-be-opened Caterpillar plant. One of the key reasons that plant location was chosen was its ability to access the Port of Savannah for export capability. That Caterpillar plant is located approximately where the arrow is.

Rail improvements are vital, too. For these assets, newer height and weight limit standards and double stacking train capabilities were identified for several locations, primarily on short line routes. There's a picture of a double stacked train at the bottom. Class One railroad information is shown on the right on the map. I want to make a special thank you for the ongoing cooperation we had developing this information and some of the needs and findings.

Terminals are where the rail and tuck modes interact and they are extremely important to a healthy rail system. I will not spend a lot of time pointing out the map, but you will see in green that there are the four intermodal terminals in metro Atlanta, several in Savannah, a new one in Cordele, and bulk transload terminals and large carload yards in yellow and orange. The biggest issue for these was that in urban sized areas, Savannah and Atlanta, some of the bulk intermodal and carload yards are located in older areas of the city and either gentrification or new development is happening around these neighborhoods, so there is competing interest with residents and trucks needing to come in and out of there to move freight. That gave special attention to areas that will have to maintain a vital presence in the network.

Last but not least is air cargo. I won't reiterate what I said about Hartsfield-Jackson, except that it's our number one airport in the state for air cargo. Albany, Georgia is our number two. UPS and DHL have package sorting facilities there, and a longer runway would be beneficial to their operations.

Hopefully I've given you an idea of important economic considerations in our plan. To further illustrate the point, I would like to share case studies. We looked forward to what industry sectors would be expected to grow in Georgia in the future. Of these, we singled out three that could be considered the most freight intensive. From there, we selected three Georgia-focused industries as example companies. Information came from interviews with them and/or publicly available information. From these three, you will see that everything really is connected within the state, the adjacent region, and the nation. Freight knows no boundaries.

Our first industry case was for broilers. Broilers are chickens that are bred and raised for meat production. They are shipped in a frozen condition. This industry is very important to the American South and Southeast, as you can see on the map. Georgia is the top producer and exporter of boilers. In fact, it is so important that it contributes approximately $4.4 billion to our economy. For this case study, in the center of the map, there should be a little yellow star. That's Perry, Georgia, where we picked one typical distribution center for one typical broiler company. You will see that this site has many connections with neighboring states; for example, receiving live chickens from neighboring states and the east coast. That's shown in blue. Processed meat is distributed within Georgia and to adjacent states. In addition, some of the processed meat is exported to Russia via the Port of Jacksonville, Florida. Russia is one of the top markets for US broilers. It is important to the State of Georgia and there are other State production areas that are part of this network.

The second case study is on another big Georgia industry: forest products, which are approximately 24% of our manufacturing output and $25 billion to our economy. Again, this is just one company operating in Georgia. For this company, raw wood is brought in from other states for processing and distribution. Distribution can include foreign export markets; in this case, we have an example of paper products that are produced in Savannah and exported through the Port of Savannah to Europe. I did a little bit of digging to find out where this company gets their raw wood from - North Carolina, Mississippi, Alabama, Louisiana, Arkansas, Oklahoma and Texas. Again, the wood is crossing state borders, and everything is connected.

The third case study is about retail. Home Depot's corporate headquarters is 7 miles up the road from my office. They have stores in Canada, the U.S. and Mexico. This case was unique because in addition to using truck and rail modes, we finally have intermodal connections I can talk about. That's the purple cluster in metro Atlanta. Georgia is the center of Home Depot's distribution and deployment activities for stores in the state and the Southeast. Working together, rail, trucking, and the Port of Savannah are the predominant modes in this example.

I'm almost at the end of my talk and I would like to take a minute to revisit the Plan's recommendations and look at the economic impact matrix we did for the recommendations. For this plan, we focused on return of investment as the overall economic metric. Sometimes people use benefit-cost, but for this we needed a more robust metric. In addition, we found this was the economic metric that we heard from the private sector stakeholders. That term sung to them when they saw this. GDOT's Office of Planning purchased the data and used it for this, and we're also currently developing a framework and tool to pre-process data for input into REMI and post process outputs. In other words, prioritization of individual products based on their ability to support economic development and competitiveness will definitely be on the radar very soon.

Here is an example of a project that's out in traffic now. What you are looking at in the background is one of the Port of Savannah main gates. Those trucks are all there because the dirt, excavated area to the right is the grade separation where a rail line and a highway cross right now. The trucks have just gotten stopped by a train. The train passed, the gates went up, and the trucks were released in a torrent to head towards the main gates of the port. The project is open and the main justifications for the project were providing better operations on the highway and increasing safety at the rail crossing. But you know what? That is the planner vernacular. Everything we do needs to be talking about those issues plus economic development. From the same vantage point, I looked to my left and took this picture. Lo and behold, the grade separation will allow expansion of the intermodal yard on port property, as you see on the right. What does that mean? This project cuts roundtrip rail time to Atlanta by 6 hours, and those are intermodal. I spoke to you earlier about the connection of intermodal between Savannah and Atlanta, and that's part of my story. We need to connect all of our work.

For those of you interested, here is the website where you can get this and all of the information on the Freight and Logistics Plan. On a personal level, I found this quote from the poet Jane Hirschfield that summarizes the biggest thing I learned about freight logistics and economic development. This is a short one. She said everything changes, everything is connected. Pay attention. Thank you for your time.

Nicholas Kehoe
Thank you very much, Tom. Again, we will take questions at the end of the seminar. We will now begin with our second presentation from Trevor Brydon of the Southeast Michigan Council of Governments (SEMCOG).

Trevor Brydon
Thank you, Nicholas. I'm to talk a little bit about the freight and economic analysis study that we conducted here at SEMCOG. It was concluded earlier this year. I want to give a little bit of background on why we went into this. For a number of years now, Michigan has been a part of a single state recession throughout the 2000s, and then with the most recent economic situation we almost experienced near death occurrence of our core industry, the auto industry. In the 2000s, it gave us soul searching - "us" being many different institutions in Michigan - about our reliance on the auto industry being such a predominant part of our economic makeup. We began looking at many other sectors for possible diversity and expansion. Among those industries that were looked at, transportation distribution and logistics seemed like a possible good fit for expanding because 1) we had infrastructure built out to serve the auto industry, and 2) because it seemed like we had a lot of labor that would suit it well.

We developed a number of working partnerships. We have been working pretty closely with the Detroit Regional Chamber, which identified transportation as a priority for their institution and has been a big promoter of infrastructure projects that are planned for our area. They have a trans-lake initiative that focuses on trying to promote the transportation distribution logistics sector, and they were instrumental in getting us private sector feedback for our planning efforts. Also, the State of Michigan has been part of bringing together several departments within the State government. The Michigan Economic Development Corporation, the Michigan DOT (MDOT), and Michigan Department of Agricultural and Rural Development (MARD) have had their heads meeting together for a good number of years now to talk about how to meld economic development with transportation and how to get the most use out of our transportation assets and the service of economic development. Local governments have also taken a close look at this. There was recent legislation passed to form what are called next Michigan development corporations that can use certain incentives to parlay their transportation assets and mix those with incentives and tax abatements to create development zones that focus on development with a transportation focus. Our large public communities, Michigan State, Wayne State, and U of M, amongst others, had some of their departments lend intellectual resources and energy to expanding this part of our economy, as well as some foundational support to fund studies here, particularly the New Economy Initiative. This particular study I'm going to be detailing was a grant from MDOT, and they were a close partner in working through this as well.

Just to give you a geographic perspective, this is a map that focuses in on our region. The seven-county planning region that SEMCOG serves is outlined in blue in the center. The Freight Regional Chamber has the darker orange; they cover ten counties. In general, our core economic connections are those counties that are highlighted in light orange that are outside of our region. Those include the counties just outside of our planning region as well as counties in northwest Ohio, particularly those that are covered by the Toledo Metropolitan Area Council Governments, a close partner with us, as well as counties in Canada that participate regularly in our economy from across the river.

Going into the study, we thought we knew a few things in our freight system. It's a system that is extensive and mature. If you look back at the map, you'll see we have roads that connect many places throughout our region. We have railroads that run the same way and airports and marine ports that serve core parts of our business as well.

With all of the economic change, we built many of these assets to serve the auto industry, which has been a large part of our economy for many years. The heavy manufacturing aspects of the auto industry require the movement of large volume of heavy goods in and out of our region and around our region and around our region. Since we are a peninsula state, many of the goods that we draw in, produce, and send back out are in service to local industry, so we have less of a traditional transportation distribution logistics operation or "hub" than other areas in the middle of the country. To the degree we do serve as a hub, it is mostly related to our trade with Canada. We serve as an essential gateway both in Port Huron and in Detroit, where there are multiple land crossings for trucks and for rail.

Since our economy was changing so quickly, we wanted to know how well our current system was serving freight-focused businesses. We wanted to know how the freight system was acting as a barrier to or an asset for economic growth, and we wanted to see how we could best realize the greatest return on investments to our transportation system and the freight system in particular. So we designed a study in four different parts. We wanted to focus on developing internal resources to be able to continue this work and integrate it into our transportation planning. We wanted to broaden our relationships with the freight community in our region. We wanted to have a solid description of freight flows. We wanted to take a look at individual core industries and see how transportation needs fit their overall businesses. We also wanted a way to approach economic analysis since it is becoming a greater part of a number of different planning requirements, both in the broader plan and for discretionary grants.

Whenever possible, the study tried to expand beyond our core county borders. We included representation on the study advisory committee from Toledo and Windsor and wanted to gather data from outside of our region whenever possible. To learn more about how businesses were interacting with our freight system, we conducted a number of interviews and surveys and got responses from a broad range of system users, including manufacturing, logistics, railroads, warehousing, and retailing. We asked a wide variety of questions, not just transportation-related, to try to get perspective of how broader business concerns were relating to their concerns about the transportation system. In general, the core business concerns prevailed for the businesses. They were much more concerned at the time with access to credit, labor, and other business-side concerns. When they expressed transportation concerns, they talked about incoming delivery cost concerns, concerns related to our peninsula status, and logistical concerns at our borders and ports, where that can be variability in how you can cross the points in our system. Also, they expressed concerns regarding railroads accessing customers since they've drawn back some from having individual points of service at railroad sightings and are moving towards accessing their customers through terminals.

We also asked them about particular bottlenecks on our system and where they were experiencing trouble. I mapped these out to show approximately where they said they were having some issues. These are spread throughout the core urban part of our region. However, if anyone described any particular part of the system, I colored it down. There are also small numbers that represent the number of the instances that a particular area was mentioned. Some of the recurring assets that were called out were border crossings; rail and intermodal assets; urban freeways, and especially the confluence of the freeways at interchanges; and a number of local connections that were identified as well. This is a zoomed in version of the map. You can see the clustering of some of these responses at major interchanges, at railroad yards, and especially at border crossings.

For a large part of it, there weren't a whole lot of new assets that were identified as needed in our region, but the better performance of existing assets and our connection internationally to Canada were identified. We also took a look at freight flows. This is common for these types of studies. We took a look at modes of transport and breakdowns by industry and origin and destination. The data for this was in a data base supplied to us by MDOT. This is an example of some of the information that we pulled out as characteristic of freight travel in our region. About 50 percent of our goods in come from adjacent states, within Michigan, or from Canada, and 50 percent go out. This is characteristic of the auto industry supply chain, which is largely truck based and ships goods very quickly between suppliers and plants. There is also a strong connection that we have with Mexico as well. We do have lots of flow in and out along NAFTA trade corridors that have developed over the years since NAFTA came into effect, and the auto industry has located its plants and suppliers to take advantage of that free trade agreement.

We took a look at industry characteristics. We knew that different industries have different transportation needs, and we wanted to look closer at our core industries. We created transportation profiles of these industries to include industry-specific trends, issues, and opportunities. We looked at site selection criteria and supply chain characteristics of the industries. We weren't able to cover every industry in our region, so we selected industries with high regional concentrations and large employment bases in our area, industries that are growing, and industries that rely on shipping. There is a bifurcation in our region between industries that are highly concentrated with large employment consisting of one group and growing industries consisting of another group. Those industries relying on shipping tend to be those with a high regional concentration and large employment bases rather than those that are faster growing, which tend to be more in the healthcare and hospitality area.

Here is a list of industry areas that we profiled: transportation equipment manufacturing, machinery manufacturing, plastics and rubber parts manufacturing, and fabricated metal parts manufacturing. All of these are largely tied to the auto industry. We looked at wholesale trade because of its high dependence on transportation and it being a focus for economic development efforts. We looked a healthcare and food accommodation services to make sure that there weren't any trends with large impacts on transportation that we should be taking a close look at.

Moving onto the final phase of our study, which was to develop a way to approach economic analysis, we wanted to have something that was more spreadsheet-based, consistent with SEMCOG practices and existing tools, and able to leverage available resources - for instance, our travel demand model and MDOT's economic tools. MDOT has the capability of running a pretty sophisticated REMI model and has pre- and post-processing tools that are able to answer questions as they come and apply them to their own transportation plans. We also wanted to consider economic impacts of freight-related transportation projects.

Here is a quick diagram of the modeling tool that we developed. We have travel modeling that feeds into county-level transportation performance measures, largely vehicle miles traveled (VMT) and vehicle hours traveled (VHT). When you take a look at a project that improves transportation, there will be a difference between VMT and VHT, before and after. We were able to work closely with MDOT to receive responses from their economic modeling and create general curves that were able to estimate the impact by county of transportation improvements in our area. We were able to get rule-of-thumbs built into our spreadsheet tool that will put us within 10 percent of what we'd get with full economic analysis using a sophisticated tool. From there you get the direct, indirect, and induced economic effects. This tool estimates many of the things that are commonly expected from economic analyses, such as gross regional product, personal income, total employment by industry group, and cost-effective measures, including benefit-cost ratio and net present value. Here are some sample results from the output for the tool that show you the industry breakdown and some of the other outputs that we would get from running this tool.

Coming out of this full study, there has been some reinforcement of existing policies and some re-invigoration of others. There has been a large emphasis on improving our border crossings. This includes and a new proposed crossing, the New International Trade Crossing. This got a large boost this past election by having a proposal defeated that would have hampered the advancement of this project. This is one of the Governor's major priorities in Michigan and it is Canada's number one infrastructure priority. There are also existing crossings at Port Heron that have large improvement projects that are slated to occur. Those continue to be very important for freight. We want to improve intermodal freight transfers. There is a project in development that will advance intermodal freight travel in our area. We want to improve freeway performance and reliability. The number of freeways that we have seems to be adequate, but their performance and reliability, especially in the p.m. peak hour, needs to be considered heavily in our plan and weighed against other concerns in our plans. We recommend taking a look at last-mile connections between major highways and rail lines, especially for some of the businesses that got back to us about connecting to the freeways. There were a number of concerns about extending the life of pavement and the toll that our roads take on transportation equipment for trucks. A national ballast water standard was the top priority from the marine side. Michigan has a ballast water standard that exceeds those of surrounding states, and as a result has lost business to other states on the marine side. Having one national rule that protects our water quality and gives a standard for commercial business on the Great Lakes is desperately needed.

As far as recommendations on the planning side, we want to continue coordinating with the Detroit Regional Chamber and others interested in advancing transportation and economic development. We need ongoing industry engagements to springboard off of our outreach with the study. We also want to focus on system flexibility, both with intermodal transfer, border trade, and freeway performance.

Just to focus on our top priority projects, the New International Trade Crossing connects the world's largest trading partnership. There is over $90 billion a year that goes across the Detroit crossings. It supports Canadian trade and a lot of Michigan-based jobs, over 230,000. It is needed for redundancy so that should one span go out we have a way to continue to provide crossings for businesses across the border. It is Canada's top infrastructure priority so much so that they are willing to pay Michigan's share of the bridge, which is a great deal for us.

The Detroit Intermodal Freight Terminal will be able to fix many of the rail interlockers that have caused major delays in the region for decades. It will also add lift capacity to meet future demand and improve business and residential conditions around the terminals. These terminals are in neighborhoods that are in substantial need of attention and investment. It is a pretty decent deal as well, being a 50/50 public-private partnership with the railroads. Here is a map showing the concentration of some of these projects in the southwest Detroit area, Detroit being north of Canada on the left side and Windsor being on the right side. The new crossing is at the bottom and a proposed improvement of the Investor Bridge is up the river. The improvement of a rail tunnel will also be a very helpful development in our area. The Detroit Intermodal Freight Terminal will be happening just a mile away from the new crossing.

If you want to check out more of our resources, you can visit our website. I have provided a link for our freight and economic analysis on our freight page, which has the core report and all the appendices, as well as a look at our economic analysis tool. Also, I want you point you towards the Detroit Regional Chamber's website. They have conducted a companion study that looks at more towards our connections to other areas of the country and internationally to look at our strengths as far as trade goes. With that, I will turn it back to Nicholas.

Q&A

Nicholas Kehoe
Thank you, Trevor. I would like to now start off our question and answer session with the questions posted online. We'll start off with questions for you, Trevor, just to keep them fresh in everybody's mind. The first question is could we have a copy of the survey you were discussing in your presentation?

Trevor Brydon
I would be happy to send it. You can also find it on our website. It is included in the appendices of our report, which you can find on our website. I believe it is Appendix B.

Nicholas Kehoe
How did you handle assumptions on traffic originating from Canada and how did you address issues with gathering that data? Also, what assumptions have you made on bridge capacity?

Trevor Brydon
We didn't do travel modeling to and from Canada. We used the data set from MDOT, which does include origins and destinations in Canada. That was the freight flow aspect of it. Also, for our industry profiles, we took in the equivalent of our county business patterns from the Canada side to take a look at similar industries on their side of the river. As far as bridge capacity, we weren't trying to duplicate the purpose and need for additional crossings. Our highlights from our recommendations come from both our surveys, and in general, looking at where we could expand the transportation distribution logistics sector, Canada is an obvious target for transitioning goods to and from our region.

Nicholas Kehoe
Does the economic analysis tool belong to MDOT? Could we in FDOT obtain a copy of it?

Trevor Brydon
You can find a version of the tool up on the web page as well. The tool was made in partnership with MDOT and we relied upon them heavily in the development, but it is our tool. You can see the table that's built in there is based on the assumptions that we made for how the changes in travel time would affect each individual county, expressed regionally.

Nicholas Kehoe
I see that there are still some questions being typed in. While we wait, I'll go back to the questions for Tom. Did you consider including the United States Postal Service in your meetings for the Georgia Freight and Logistics Plan? I understand they are working to increase package delivery services.

Tom McQueen
That's a good question. What we did was a broader brush approach to get that state-level, macro level movement of trucks specifically, for example. Every year we get increasingly improved classification counts that we do statewide. When I started here 16 years ago they were really spotty. Now I have truck counts throughout the state. We also use our recently developed statewide model to start predicting truck trips and what locations and what volumes. We're also lucky to have the research arm of the American Motor Trucking Association, ATRI, and used quite a bit of data and worked a lot with them on the new evolving research they get. It doesn't say the truck data is from this company or that company, but those have been really good resources for us at a macro level, state perspective. Typically you will see a more detailed look when you get to the MPOs. The Atlanta Regional Commission has a robust freight plan program, and I didn't do into the details; I was macro and worked with MPOs that are more micro level. We were trying to stitch in the story of what we saw with what they said to have a real comprehensive view.

Nicholas Kehoe
You mentioned the REMI model. Can you please describe what variables/data you used in the model to obtain the economic impacts shown in the financial summary slide?

Tom McQueen
Basically, we use changes in travel time that were commonly referred to as vehicle operating costs for the trucks and the autos. We included environmental benefits, safety considerations, and safety benefits. Those were inputs for the REMI model. The model converted this into monetary impacts and we did benefit-cost. I mentioned that the more robust one that we talked about was ROI. With benefit-cost, it's hard to get good projects as part of a system and connectivity that do not kind of get left in the dust behind ones with great benefit-cost ratios because they're in areas with a lot of congestion, like metro Atlanta. That's pretty much it. If folks want to read, I have a full tech memo on it on the website.

Nicholas Kehoe
The next question is for both presenters. Would more detail for movements be useful, or do you feel you get all of the detail you need from typical sources, such as FAF, CFS and TranSearch? Also, would data for the last 12 months be useful for this sort of analysis?

Trevor Brydon
More recent data would be very useful. MDOT does a very admirable job in purchasing the TranSearch data on a regular basis to update its own modeling and very helpful in answering questions and distributing to us. However, the amount of change that took place in our region between 2008 and now was pretty astonishing for us. Even data that was 1-2 years old was so very out of date that we did the best that we could with it, but it needed to be taken with a grain of salt because the situation changed so rapidly for us during that time.

Tom McQueen
I had a boss that used to say data is good and free data is better. We're lucky to have a statewide model that would actually do model diversions so we can get estimates if someone says how much would you need to divert X amount of tons onto rail. Those kinds of questions could be answered. So, again, free data is good. In the interim, we have sources and we do the processing. I also remind folks, typically most big statewide plans and MPO long range plans have a 20-25 year window anyway. We're going back every 4-5 years and revisiting assumptions; for example, it fuel prices have gone up long-term, how does that effect modal shifts? We're going back every 4-5 years and keeping it fresh. So, give it to me free, but I'm trying to remind folks not in the industry that we're not done with this freight plan, and I'm sure that SEMCOG isn't finished either. It never ends, which is a good thing. Remember, everything changes, everything is connected. So, pay attention.

Nicholas Kehoe
Thank you both. I do not currently see any additional questions in the chat box, so I will begin reading the closeout information, but if you think of any other questions type, please feel free to type them into the chat box. We will check it before we close out the seminar.

I would like to thank you for attending today's seminar. The recorded version of this event will be available within the next few weeks on the Talking Freight website. As a reminder, if you are an AICP member and would like to receive 1.5 Certification Maintenance credits for attending this seminar, please make sure you were signed in today with your first and last name or type your first and last name into the chat box if you are attending with a group of people. Please download the evaluation form and email it to me after you have completed it. Please also download the CM Credit instructions if you are unsure of how to obtain your credits for today's seminar.

We will be holding a special Talking Freight session on November 28 on the topic of MAP-21 Freight provisions. Registration is available; to register please visit the Talking Freight website. The next regularly scheduled seminar will be held on December 19 on the topic of Freight Academy Capstone Projects. Registration for this seminar is not yet available, but an e-mail will be sent out when registration opens.

As an additional reminder, the Interim Guidance on State Freight Plans and State Freight Advisory Committees comment period closes tomorrow, November 15. I have included the link in the chat box to the Federal Register's notice for more information.

I encourage you to join the Freight Planning LISTSERV if you have not already done so.

Thank you for your participation, and enjoy the rest of your day.

Updated: 12/18/2012
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