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Talking Freight

Freight's Role in Economic Development: Success Stories from Urban and Rural Areas

January 19, 2005 Talking Freight Transcript

Operator:

Good day, ladies and gentlemen. Welcome to the Freight's Role in Economic Development: Success Stories from Urban & Rural Areas conference. My name is Michelle and I will be your audio coordinator for today. At this time all participants are in a listen only mode. We'll be conducting an audio question-and-answer session at the end of the session. You may submit your question at any time by using the q & a feature on the lower right-hand corner of your screen. If during the call you require assistance press star zero and an operator will assist you. Should you experience any difficulties with today's presentation please contact WebEx technical support at 866-779-3239. I would now like to turn the presentation over to your host for today's call, Ms. Jennifer Seplow. Please proceed, ma'am.

Jennifer Seplow:

Good afternoon or good morning to those of you to the West. Welcome to the Talking Freight Seminar Series. My name is Jennifer Seplow and I will moderate today's seminar. Today's topic is Freight's Role in Economic Development: Success Stories from Urban & Rural Areas. Please be advised that today's seminar is being recorded.

Today we'll have two speakers. Leo Penne of the American Association of State Highway and Transportation Officials, or AASHTO, and Glen Weisbrod of the Economic Development Research Group.

R. Leo Penne is Program Director for Intermodal and Industry Activities with the American Association of State Highway and Transportation Officials (AASHTO). He is responsible for issues involving freight transportation by all modes--rail, truck, aviation, ports and waterways—and for liaison with industries having significant interests in freight movement and transportation infrastructure.

He shares the responsibility for developing and communicating the case for the economic benefits of transportation and for demonstrating the linkage between transportation and economic development.

Previously, Mr. Penne held the following positions: Director, State of Nevada Washington, D.C. Office; Program Director for Housing, Community and Economic Development, Public Technology Inc.; Director, Office of Policy Analysis and Development, Economic Development Administration, US Department of Commerce; Senior Legislative Counsel and Assistant Director of the Office of Policy Analysis, National League of Cities; and, President, R. Leo Penne Associates, Inc.

Mr. Penne coordinated and directed Nevada's Washington, D.C. strategy focused on transportation, tourism and economic development. He initiated and chaired for eight years the Transportation Working Group of the Governors' Washington representatives, which supported the advocacy of governors for increased transportation investment, and for the ISTEA and TEA21 authorizations.

Mr. Penne developed and carried out programs for advocacy, policy development and research in areas such as transportation, economic development, urban development, environmental protection, public finance, training and tourism and has written and edited books, reports and articles on these subjects.

He is the principal writer of The Economics of Amenity: Community Futures and Quality of Life—A Policy Guide to Urban Economic Development and the editor of a companion case study book. Other publications include a guidebook for the National League of Cities on collaboration between city governments and community-based organizations and a book on interjurisdictional cooperation in metropolitan regions for the US Department of Housing and Urban Development, which Mr. Penne edited.

Mr. Penne holds degrees in political science from Seattle University and the University of Washington and has served as an adjunct faculty member at the University of Maryland Baltimore County.

Glen Weisbrod is President of Economic Development Research Group and Chair of the TRB Committee on Transportation and Economic Development. He co-authored a TRB primer on economic impacts of transportation, authored the NCHRP synthesis of practice on methods for assessing economic development impacts of transportation, and was co-principal investigator of the NCHRP study to develop a guide for evaluating social and economic impacts of projects. His work also focuses on freight economic issues. He is currently co-principal investigator of the NCHRP study of integrating rail and highway planning to improve freight transportation options. He was also principal investigator for two NCHRP studies – one on the economic impacts of highway turn restrictions, and the other on economic impacts of highway congestion affecting freight flows and deliveries.

In addition, Mr. Weisbrod has worked on a series of studies of freight transportation and economic development associated with inter-modal facilities in Appalachia, international gateway/port facilities in British Columbia, railroad yard development in Chicago, airport development in Wisconsin and highway network improvements for Montana. He also evaluated business shipping needs and associated economic benefits and costs associated with highways for California, 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.

I'd 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. The Operator will give you instructions on how to ask a question over the phone during the Q&A period. However, 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. Presenters will be unable to answer your questions during their presentations, but I will use some of the questions typed into the chat box to start off the question and answer session in the last half hour of the seminar. Those questions that are not answered will be posted to 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.

If at anytime you would like to zoom in on the slide that is showing on your screen, you can click on the zoom icon at the top of your screen. It looks like a magnifying glass with a plus sign in it.

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. To access the recorded seminar, please visit Talkingfreight.webex.com and click on the "recorded events" link on the left side of the page and then choose the session you'd like to view. Due to the size of the file, recorded files are available for viewing/listening purposes only and cannot be saved to your own computer. We encourage you to direct others in your office who 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 are now going to hang on a few moments until 1:00 just to give other people a chance to join and at 1:00 we'll jump in with the first presentation.

Operator

Welcome to the Freight's Role in Economic Development: Success Stories from Urban & Rural Areas seminar. I'm your audio coordinator today. At this time all participants are in listen only mode. We'll conduct an audio question-and-answer session at the end of the session and you may submit your question via the web at anytime by using your q & a or chat feature in the lower right-hand corner of the screen. If innocent during the call you require assistance, press star 0. Should you experience any web difficulties with today's presentation contact WebEx technical support at 866-779-3239. Here's Jennifer Seplow your host.

J. Seplow:

Thank you. It's now about 1:00 and I see that some others have joined us so we are going to go ahead and get started. Today's topic for those of you that just joined us Freight's Role in Economic Development: Success Stories from Urban & Rural Areas. Our first presentation of the day will be that of Leo Penne of AASHTO. Questions will be answered in the last 30 minutes of the seminar. .

Leo Penne:

Thank you, Jennifer. Good afternoon, good morning, depending on your location at the moment. The general topic for today's session is freight's role in economic development, and I'm especially happy to be paired with Glen Weisbrod who in my view may well be the country's most knowledgeable person on this subject. So I'll try to hurry through here and get to Glen as quickly as possible. For me, the opening proposition for this general subject is no transportation, no economy. And I think that has become more and more true despite the fact that economists spend a lot of time dissecting the details analyzing to paralysis the relationship of transportation and the economy. The fact is that without a functioning transportation system, no economy can be successful. And that certainly as I say has become more evident in recent years when products are delivered directly to every address in this country by truck and these products may come from any point on the planet. And so the reach of freight, the extensiveness of freight, the importance of freight, for the economy has grown even more significant overtime. I want today to organize my observations under a half dozen general categories. One, some general points about economic development. Two, challenges that confront anyone who want to do transportation projects for economic development purposes, three some examples of how states are getting organized and connected to do transportation for economic development, and 4, some success stories and ones that I will be discussing today are in the rail and port areas. Five, some comments about public-private partnerships and six, some examples of how states are structuring their approaches to doing development for economic development purposes. Economic development is not simply identifying economic benefits, doing cost-benefit analysis, it's undertaking an intentional and targeted program to achieve economic development purposes. Intentional actions to increase private investment for the purpose of creating or improving jobs, increasing personal income and public revenue, and improving an area's quality of life. Targeted, in the economic development world there are a variety of ways to focus on what you want to accomplish and on this particular slide, which I will now get to, I have identified four examples of how an economic development program might be targeted. And in every case, transportation can play and probably will play an important role. Many locales, many states, will focus on business retention expansion or attraction. In the case of retention expansion an economic development strategy would identify any problems that companies were having and in the economic or in the transportation field, this would include things like difficulties in getting deliveries because of congestion or poor access to a warehouse or a distribution center, or a locality may be focusing on attraction. Attempting to encourage a company to locate or relocate in their area. And typically there will be attraction incentive packages put together and typically there will be economic development transportation elements. And these might include things like the addition of an exit or an entrance or an interstate, improving access with turn lanes, expanding a road, creating a new access road, all of which would be packaged with other items like tax incentives, employment and training services, to encourage a location. I think an economic development strategy can also have an area focus a downtown or industrial focus and in the case of downtown, traffic circulation including package delivery, freight distribution, will be important. And an economic development transportation program will include projects that will improve circulation. An industrial attraction program or an industrial area program will include items such as the ones I mentioned earlier. Having to do with access and circulation and not only road but rail, as well. Which might include sidings or extending a line of a short line to reach a particular industrial site. What about the obstacles to incorporating transportation into an economic development program? It's often said that freight doesn't vote and as a consequence, in public decision-making, it doesn't get a high priority. And in fact, it seems to me that frequently freight doesn't even register to vote. It's not on the screen when a decision is being made. It's not government as usual because it involves being very closely involved with the private sector. It involves cooperation amongst jurisdictions, local and state, state and state. It involves the blending of the various modes of transportation, and it is not often unimodal, it involves connecting global and locally, which means thinking and acting globally and locally simultaneously and involves a clash of cultures and by that I mean that transportation agencies have a certain set of cultural characteristics including a time frame which tends to be long, processes that tend to be quite intricate and detailed. And engineering and planning perspective which is oriented towards public accountability and open and full assessment of alternatives. On the economic development side, there is a culture that is somewhat closer to business sector and that's one that has a short time frame, if I don't succeed in the next six months I'm out of business. It's oriented towards promotion and marketing. It's oriented towards making the deal and when you try to get those who are involved in transportation and economic development together to work cooperatively, it sometimes can be difficult in -- to mesh the cultures. There are a number of examples of states that are getting organized to do this job. And I have on this slide I have listed examples that I think are representative of probably a dozen or so states that have put extra effort into getting their freight transportation responsibilities centered someplace within their department and organized to carry out their particular program. One of the most recent is the state of Maryland which is established afraid freight logistics office in the office of the secretary, and because Maryland is one of the few DOTs that has all of the modes within it, has a major port, has a major airport, has the transit and commuter rail systems, it has the highway program it was thought that if one was going to get a comprehensive and coordinated approach to afraid it would make sense to put a group into the secretary's office and provide policy direction and coordination. The state of Minnesota has for many years been active in the freight field and it has organized the major modes of transportation within the department in the office of freight and commercial vehicle operations. Again in that case providing a planning policy and an operational center for freight activities and an entity within the departments that can relate to the private sector. Oregon is another state that has for some years had a multimodal freight transportation office, has -- and its sister state Washington also has a freight planning and policy office which makes it possible to bring together the various functions of the department focused on freight. Which gives the staffing to gauge successfully with the private sector. There are some related and additional examples of what I call getting connected. Getting organized is one thing. If within the department you have staffed and you have organized to carry out a freight program, you will you will have noticed that most of freight operations goes on in the private sector, trucking, rail, marine terminals, are all in the private sector. They are private companies, they are not part of government, they are not part of your department in the road world, a department may own, operate, build, maintain, highways, but in the other areas of freight, the department has only a secondhand connection to freight operations. So a number of places both local and state have organized institutional mechanisms for connecting their departmental operations with the private sector. And I have mentioned four on the slide and I suspect that most people on this call will be acquainted with some, if not all, of these examples. In the local world, two of the leading examples of success at getting connected are the Puget Sound regional council, which has a freight advisory group which now, for many years, has been providing advice on freight projects, freight strategies and plans, and which has been behind the fast corridor which I will describe in a little more detail in a few minutes. The freight action strategy for Everett, Seattle and Tacoma. Though when I spell fast, I never see the e in there. And this is a set of projects stretching from Everett on the north to Tacoma on the south involving a number of local jurisdictions as well as the state. And involving the expenditure of multimillions, over a long period of time prove the circulation of traffic all modes in relationship to the port in the three major cities. The Delaware Valley Regional Planning Commission has had a freight advisory committee for some years, very active, very effective, very influential, and one of the outcomes has been that Delaware Valley Regional Planning Commission has pioneered the use of CMAQ spending or funding in freight project investments. The Minnesota freight advisory council, the Colorado freight advisory council, Minnesota being one of the first Colorado one of the most recent, in both cases a public sector -- or rather private sector representative group that engages with the public sector including both the state DOT and the MPOs, in trying to come to a common understanding of what freight investments are needed and how they will be successfully carried out. I want to take a few minutes to mention some projects that are success stories. There are success stories in getting organized and getting connected, there are also success stories in projects or programs of projects. In the case of the Kansas department of transportation, the Kansas department of transportation has an investment fund for its short line railroads. A recent example of the use of that fund is the Kyle railroad, and they have through the fund with matching money from the Kyle railroad made upgrades over long stretch of the railroad's track in Kansas. And the premise in that case is that that investment will hold freight on rail and they have done the analysis to conclude that if they don't make that investment, they will be making a much larger investment in the maintenance of rural roads. Roads that were not built to carry the trucks that would be carrying the freight if it was not carried by rail. And so they have created the fund on the premise that they -- the public money that comes through that fund is justified by the avoidance of the spending on the roads. Mid-Atlantic rail operations to this point is a planning effort but the planning effort in which five states have agreed on a set of projects both near term and long term. That will improve the efficiency of rail movement both passenger and rail in the mid-Atlantic states to the benefit of not only individual states but of the states collect ill. They have had to make hard decisions about another state they are supporting but which they can justify in terms of improved system efficiency in their state. The CREATE program in Chicago, which in the aggregate is 1.2, $1.5 billion program, public and private money, and essentially all modes of transportation. Focused on freight rail in order to improve the movement of freight through Chicago, which is at present still residing in the 19th century. Not necessarily including passenger rail, commuter rail, transit, and a good many great separation projects in order to reduce the incidence of intersections between rail and road traffic. Shelpot bridge, the Shelpot bridge and the Kansas city flyovers, the last two examples here, are more discreet projects. The Shelpot bridge he described as being the first [ indiscernible ] pull bridge in the united states put a rail bridge back into service which connected the port of Wilmington to the Delaware, Maryland, Virginia peninsula, and thereby increased business for the port, opened up an agricultural area for freight movement, and in that case, the state government was able to do the up front financing through the issuance of bonds and now with the use of ezpass type technology, every card goes through registers and the more to upon-southern pays $10 dollars per car and over time will reduce the debt. Two flyovers in Kansas city. Kansas city is the second largest rail intersection point in the U.S. and has had intersections like a four-way stop on a highway and has since 2000 built through a public-private partnership two flyovers which separate those rail lines. And again in this case it involves the issuance of tax-exempt debt, and the retirement of the debt by payments from the railroads and in the case of the first of these flyovers, the Sheffield flyover, the state purchased some rail right of way in order to provide a cash infusion into the project. So it is five railroads multiple state and local jurisdictions, traditional tax-exempt financing, and then an imaginative piece of financing through the purchase of the rail right of way. The general point on port initiatives and perhaps in all of these cases is that what's being done in at least urban areas will involve all the modes. If you look, for example, at Los Angeles Long Beach the granddad difficult projects, the alameda corridor, intended to take afraid off 710, the highway serving the two ports, intended to rationalize the rail system and to get the freight 20 miles inland and has been a tremendous success retired its debt early, and is a connection of maritime with rail with highway and as usual, simply leads to more of the same. In the case of Seattle that comb may mentioned the fast corridor, in the case of Seattle Tacoma. I mentioned the fast corridor. This is 15 projects, 10 of which are either completed or under way, all of which are intended to improve circulation, connectivity, access and while it is frequently described as a rail project, the bulk of it is separations that have equal benefit for trucking as for rail and it is a partnership of a dozen local jurisdictions state, rail companies, the trucking industry and the ports. New York/New Jersey, many things going on. One of the most notable is the container on barge shipments to inland ports. This is a case where maritime is using maritime in new and innovative ways in order to relieve both port congestion and land sides congestion in that area. Gulfport Biloxi, major ports, one of the largest of the banana importing ports, it currently sends thousands of trucks through residential streets of Biloxi to make it to the interstate. And the state of the Mississippi is embarked on a connector project that will cost in excess of $250 million. But will make that connection much more efficient and will make the quality of life for the residents of Biloxi much better.

In all of these projects, the relationship between the public and private sectors is at the center. On this slide public partnership principles I have actually reproduced a set of principles that the freight railroads are promulgating. And I think now all or nearly all of the 7 North American class one railroads support this set of principles and principles for public-private partnerships are -- are critical for undertaking freight projects. I will simply do what you can do. I will read these. Produce balanced transportation policy. The railroads are concerned that historically, the financing arrangements for trucking infrastructure have given an advantage to the trucking industry and the railroad industry is interested in trying to -- to right that balance. Voluntary on both sides. That which is to say that one ought not and cannot successfully compel a private business to undertake an investment. Public pays for public benefits, private pays for private benefits. Very important and also an item of great current interest in places like Chicago or on the I-81 corridor or for that matter anyplace where there will be private money and public money. Involved in a promise. The private sector doesn't want to make investments in excess of, wants to make -- in excess of what makes sense for them in business terms of the public sector doesn't want to make benefits that simply subsidize private profit and it's -- people are developing techniques for making these calculations. Private commits to formal responsibilities and performance standards. Historically in the economic development field, what you can hold a company to is important and problematic which is to say the public sector may make a large expenditure in incentives for a company to locate or expand on the expectation that jobs will be created and that they will be permanent. Companies haven't been successful or not or kept their commitments and the question, what does the public sector do? Can it retrieve its investment or not? And in this case, the freight railroads are saying that they are willing to commit to certain responsibilities and performance standards. Coordinated planning to sure prudent investments consistent with law and the market. Private companies are very concerned as I said earlier that they not be pushed into investment that is don't make sense in terms of their own market and business plans. They are also concerned that they get too projects that will have adverse implications for things like their safety responsibilities, under existing law and regulations. And for the public sector, it's important to understand these concerns of a private company because if you don't, you're not likely to go forward successfully.

How do you organize how you understand your need for freight projects? And then how you connect that understanding to action? That is to investments. And I have listed here five examples of how multi-state groups have gotten together in order to make an assessment of freight transportation realities, freight transportation future, and the need for freight transportation investments. And currently every state is involved in some form of a corridor or a network initiative. I mentioned MAROPS earlier. I8 is focused in Virginia the question is how can you make freight movement and traffic movement in general more efficient on I-81 and treated that Virginia has devoted considerable effort to trying to determine whether or not investments in the parallel Norfolk Southern main line might give them some benefits on the highway. To combine rail and freight and get benefit for freight and passenger movement. I mentioned the alameda corridor earlier. A point to be made is that the alameda corridor wasn't long enough. The alameda corridor is -- is a connector a rail connector from the port to an inland terminal but it's only 20 miles. And the corridor for freight extends considerably longer and you could say it extends to Chicago and beyond New York and New Jersey. And so currently there is efforts under way to get the alameda east project that would take it at the next stretch and get it out or at least move it farther from the urban center of southern California. I-10 all of the states on I-10 have collaborated on an investigation of how to make freight movement more efficient and that has included consideration of diversion to water and to rail as well as the possibility of tolled truck ways and particularly congested segments. The Latin American Trade and Transportation Study LATTS, the southeast states organizing to do an investment needs study based on the proposition that they will have to make investments to respond to substantial increases in Latin America of American trade. And that has gone through two phases in which they have included all modes and including marine rail, water and aviation. Excuse me, truck and aviation. And they are now entering into a third and I think permanent phase where they will be he attempting on the one hand to get agreement amongst the states on investments and on the other hand, to do additional studies and analyses to confirm their earlier conclusions. So that's my overview. And I arrive at half a dozen questions. How do you connect public and private? How do you reconcile passenger and freight? How do you overcome the balkanization amongst local and state jurisdictions? How do you proportion local costs and national benefits? Since many freight projects are in particular places, in fact all of them are in particular places, but the benefits are not necessarily accrued to that locality. They are regional, they are national, but weather don't have good mechanisms for taking that into account and for sharing in the cost of the investment. How do you turn value into investment? I think in many of the cases that I noted earlier, the financing trick is to figure out how value is created by the project and then to capture some of that value in order to make the investment possible. And in cases where you have one financing capacity in the public sector, the issuance of tax-exempt debt, another financing capacity in the private sector, which is the generation of revenue from their on going operations when you can put these together, then you turn value into investment. Making the case, freight doesn't vote, doesn't register to vote, isn't on the screen. In many places. How do you get it on the screen? Had you do you make known to the public that freight is important and that investment in freight produces a public benefit? How do you make known to the elected decision-makers that there is a benefit that they can take to the campaign and expected to be able to explain plausibly to voters that it's valuable that public money be put into freight transportation projects. So those are my questions. And I'm hoping before the end of this session today that I'm going to get some answers from the other participants. Thank you.

J. Seplow:

Thank you, Leo. Again, I do want to remind everybody listening if you have questions please type them into the chat area on the screen and indicate who your question is directed to and then go ahead and send your questions to all participants. Let's move to Glen Weisbrod of the economic development research group. Glen, you can begin when you are ready.

Glen Weisbrod:

Thanks Jennifer. I think Leo has laid out very nice framework and examples for considering freight and the economy and probably nobody comes close to Leo when it comes close to being on top of all the different kind of projects occurring around the united states. Out I'd like to focus in on urban and rural cases specifically. Let me start off by saying when considering freight's role in economic development, it's important to examine the issues specifically confronting freight in those different urban and rural settings and the ways that we can identify some of the associated economic development opportunities. From an economic development perspective, an important issue for freight is what we can do in our transportation investments to improve access and connectivity. And this means taking a look at how our transportation investments affect linkages and accessibility to resources and markets. The relevance of what I'm calling this economic development view comes in several ways. For some of our rural areas left out of the interstate highway system or otherwise suffer from limited access to markets and resources which really limits their ability to get out of poverty and improve their economic opportunities, for some of our urban and intercity connections, we have existing connections but they are becoming degraded as congestion worsens and basically a bottleneck is equivalent to reducing or eliminating access that used to be there. And finally with continuing development of the global economy, new kinds of connections are becoming necessary and justified and as more and more of the economy is globalized looking at intermodal connections, error -- air and seaport connections become important in a way they weren't 10 or 20 years ago. So basically connectivity and access are key words to consider over and over as we look at our cases.

Now, I'm going to focus on two specific cases. An urban case which is Vancouver British Columbia, and a rural case, which is Appalachian regional commission study of international trade clusters. Both of these are going to look at the cases at what was done analytically to identify the connection between freight and economic development and to identify from that analysis the needs for actions to go forward. Now, the Vancouver/British Columbia it's a Canadian case, it's lessons to be learned are equally applicable for the united states, Europe or any other urban metropolitan region. In many ways this study by looking from a multimodal perspective at rail, sea, air, and highway, can be a model for many metropolitan areas concerned about freight and congestion issues. Key core of the study was to look at the regional economic development consequences of investment versus failing to invest in road and rail improvements to address rising traffic congestion. But it was not just a study, it was to identify the ahead in for, case for and priorities for moving forward on transportation improvements. A notable aspect of this whole study and planning element was that it involved a collaboration of the greater Vancouver gateway council which basically represents shippers, transportation business, and ports, the greater Vancouver transportation authority which is both transit operator and metropolitan planning organization, BC Transport, and the economic development department.

The study focused on the fact that Vancouver plays -- every metropolitan area plays a different an unique role. This particular metropolitan area is an important air and seagate way for north America, but while it's an air and seagate way, the effectiveness of the gateway depends critically on the surface transportation of road and rail access to those gateway points. And so the key focus was the area's niche in the global economy depends on maintaining its transportation connectivity and access and as the numbers point out in that little box, the stakes are high in terms of tons of cargo, air passengers, and sea passengers. An important motivating factor here is global change. The fact that technology is changing in terms of more focus on intermodal and containerization for both sea and air, growth and change in where the economy is occurring along the pacific rim, and consolidation that's occurring in some ports and gateways in north America. Now, if you look at the little chart in the white box, on the left side lists the most important exports flowing through the gateway. Minerals and coal, wood, fertilizer, mechanical equipment and paper. The right column lists those that are fastest growing, electrical machines, plastics, furniture, instruments, motor vehicles. So what we see here is a mismatch. Those are the fastest growing are not those that are that have traditionally been the most important. This means that there will be very important changes in the nature of the gateway ports, and the kind of, connections between industries and transportation that are necessary to serve it.

This next chart compares Canadian provinces in terms of examination of what% of their total jobs are in the transportation industry. And let's compare that to the national average. What you see is that the western Canadian provinces Manitoba and British Columbia in particular, have a substantial higher portion of their economy in jobs and transportation related industries than other areas. What this means is this is confirming the fact that they area that the gateway and the transportation serving the gateway plays an important role in a disproportionately role for the surrounding area going quite a distance inland from the port itself. We can see the same kind of economic connection if we look at where the exports are going out of these -- this half of Canada and you see that the four provinces nearly all of their exports are going to Asia and it's specifically through the Vancouver gateway. So we see here that the economic dependence on our gateways is much, much larger area than just the port or metropolitan area. And this exact same kind of way of viewing things can be done for any part of the united states where we see and we will in fact see in our Appalachian case, how specific states are very much dependent on their connections to ports that could be hundreds of miles away. Here's a chart of the relative growth in container traffic. The left blue side is the early to mid 1990s and the red side is the later '90s and early part of this century. What you see is that container traffic in north America is growing but the rate isn't particularly picking up the west coast of the U.S. and Canada is picking up more. That's reflecting the fact that the pacific rim Asia area is where the fastest growth is occurring, but you see that the acceleration of growth is even greater for the Vancouver gate way. So this is again reinforcing the same points that the dependence on the gateway is growing, the importance on the gateway is growing and this is putting pressure on the surface transportation system. We see this pressure in the next chart, regional growth projections. The chart shows substantial growth in tons expected across the board for maritime, rail, truck and air. And if you look at the numbers on the left side you see that the expected growth in rail and truck activity is substantially higher than population and car traffic growth. Because of the increasing globalization, and we see this all across united states, that the truck and rail in an aggregate sense are becoming more and more important to our transportation flows so this raises the concern for international competitiveness, local, state and national competitiveness. And with the numbers in the box, they show that when you look at population, vehicle trips and so on, the volumes are very high and the stakes are high now, the specific gateway facilities in this case are 30 marine terminals, 22 rail yards, 6 border crossings, and one airport. Together, they account for 57,000 jobs. Looking at the specific trucking and rail systems that feed into it, we see that the actual number of jobs has doubled so it's important to consider that you don't have to be working at the airport or sea for the have a job that's directly feeding into it. So the NCTS major commercial transportation system was developed by the gateway business council to identify specific investments necessary to maintain their goals of a continuous efficient network for commercial vehicles one that would accommodate the growth that's being forecast, provide 24-hour use for commercial operators, improve some of the links, minimize the bottlenecks that are going for both road and rail systems because of the various intersections and provide cost-effective solutions to all the identified bottlenecks.

The system that was developed is approximately $5 billion of proposed improvements. These are highway improvements, rail improvements, and urban transportation rail improvements. If you look on the left side you see, let's see, the red line here, that's the Richmond airport Vancouver line which is a light rail line. Now, we may ask ourselves, why is it that when we are talking about freight corridors we are talking about urban transit. And the answer is, because one of the most effective ways of improving truck flow is to move out of the road cars that have an alternative way of getting to work. And it ends up that a rapid transit line can move people to and from work much easier than you can rapid transit doesn't work for freight so by moving computers off on to rapid transit, one can do a very important role in improving freight flow. So this looking multimodal and looking at effective freight is not separate from freight solutions are not separate from general car congestion solutions. It's very important.

The issue then becomes from an analysis point of view, what is the benefit of investing in the $5 billion major commercial transportation system instead of the status quo? Sometimes you refer to it as do nothing, but it's never really do nothing. It's really keep building at the rate we are doing which is insufficient to meet the growth of traffic needs. And so the analysis comes down to how many jobs will we lose if we let traffic congestion get worse and worse and we have limitations that prevent our rail system from growing beyond a certain point because of -- because of certain bridge crossings.

The analysis process is notable in this case because it included not only usual traffic simulation but a specific analysis of railroad, supply and demand, examining how the effects spill over into other provinces, an looking at international trade and competitiveness issues facing the ports. I'm not going to go into details on the numbers. The point is that the difference between the building versus not building the $5 billion of improvements had dramatic impacts for raising shipper costs, reducing business competitiveness, the limitations on the rail system of bridge bottlenecks were not passed would cause some shippers to have to go through alternative ports, which raised their costs. Shifted activity elsewhere and one could document these limitations these costs and put numbers on them.

This is again a sensitivity analysis, the number of jobs that would be at stake to be gained or lost was estimated to be between 7,000 and 16,000. So it's important that this was a sensitivity analysis t depended on assumptions about the extent to which people move away or move in. Depend okay when jobs are created or not. The feeling is it's better to give a sensitivity analysis and make the point that regardless of what kind of economic model assumptions you want to make the numbers are big but in fact this is just what's estimated from the cost impact. The fact is there are 150,000 jobs in production industries that fended on getting their shipments through -- depended on getting their shipments through this gateway and the extent to which some of those jobs would be at stake or in danger if the gateway was not kept up to its total capacity needs is an open question. Some of them may be at stake. What's important is this was not just a study. It based on that case plans were made to go forward with major improvements to the road network, a new crossing of the river, new rail bridge, and new rapid transit line and those projects are all in various stages of planning and implementation. Also listed in smaller print are a number of medium sized projects in the $100 million range going forward. And if you look in the parentheses you see that almost all of them had something to do with the river crossing or rail line crossing, port access or rail yards. So again, we see how the mode connections are so much important.

Now I'd like to switch to the rural case and talk about a study that the Appalachian Regional Commission recently completed of the global competitiveness of export industries in the Appalachian region. As you see from the title, the word transportation isn't even mentioned but it ends that up any study of global competitiveness after looking at the industries and the markets connections that those industries depend on it ends up that a transportation analysis is in fact a key element of the global competitiveness of these industries. The study looked at specific export clusters which were key industries, clustered in various ways, that were sources of exports and when -- from an economic point of view when you are exporting your products it means you have inflow of dollars coming to support jobs in the region. They had to be located in appear arranges they depended on foreign demand they are all in common by facing various committee pressures and trade relations issues and the study looked at what were some of the leakages lost concerns he and expansion opportunities. These particular industries here some of them like electronics, food processing and packaging have been growing. Some of them like the furniture industries have been stagnant and declining, or some like auto is up and down. Chart here if you can read it makes outs of out -- the chart here if you can read it makes out for the specific export industries where the destinations of their exports are. I would like to actually read across and what you will see is that the exports to Asia, the dominant one was electronic components. Exports to Canada was motor vehicles and the furniture. Mexico isn't highlighted but our other partner in NAFTA would be electrical components and motor vehicles so again, we see there is an important motor vehicle movement of motor vehicle parts between Appalachian, Mexico and Canada. On the other hand the food processing machinery and packaging machinery are the products going to Europe. So each of these different industries has a different dominant flow of where the destinations are meeting different transportation needs.

The transportation modes used as a result also differ. This shows the distribution of for four of these industries of what modes are used to carry them, this is% by weight, there is some double counting, just about everything that goes by sea or air needed to go by highway or rail to get to that port. Nevertheless, there are some interesting findings. The rail percentage is particularly high for transportation equipment. The water percentage is relative higher for machinery and the air percentage for electrical equipment.

The ports that these go out of were surprisingly distant. You had up in the Detroit, New York, Miami, and down south in Jacksonville. But what's most interesting is how the specific ports were different for every, single one of these industries. I'm just going to show you real quickly to make the point. If you look here for auto parts, the key port were Detroit, Michigan, New York, and down in Florida. You had a lot of north/south flow. And you don't see arrows east/west. Now, watch when I move to the same exact chart for food processing and you will see a western lower left you will see western movement come out which is that now we have the key largest port is Laredo, Texas, where it's going out of. But still weather don't see much going east -- still we don't see much going east. Now we go to packaging machinery suddenly Charleston, South Carolina arises as an important port. And we go to electronic equipment, actually what's most interesting here is not the chart but the fact that the two largest ports were both airports. Miami and New York JFK. So we see here how the modes and the connections are all different for each one and in fact, when we are talking about exports, this locations of the rail intermodal and airport facilities are important. The left side is trailer on flatcar and loading facilities, the right one is the airports, the white shade something the Appalachian counties, 410 of them. What's most notable is that most -- almost all the airport facilities and most of the intermodal are actually outside the Appalachian region. This is not a shock because this is a mountain region and so fat silts tend to be in larger urban areas outside the mountains. But the cases of case is still made that it's the connections to these outside areas that become most critical. I'm going to illustrate this with one case which is the auto parts. And it's produced -- these are the 6 states producing the auto parts in the Appalachian area. Two states have interrail facilities in Appalachian and the other four depend on areas in those states outside of Appalachian. .

To make the connections between inside and outside, Congress has been funding the Appalachian development highway system. Some people have characterized it as the connections that were left out of the interstate system when it was first built because these mountain regions with the cost so high. And so these corridors which have various labels by abcde, letters of the alphabet are the connections being made to connect these areas to the interstate system. When analysis is done of where the products are being produced and where the ports are going out of we can identify gaps in the current system where it hasn't been -- the system is about 80% complete right now. We haven't completed the gaps holding back or raising the cost of products to ports. On the table here lists the specific Appalachian corridors and their highway system which are particularly affected by these export industries. So the case is made that looking at it transportation and intermodal connections are critical to these industries so the challenge is clearly that if we are trying to help these economically depressed regions which tended to lack their connections, investments need to be made to give them better accessibility clearly the charts have shown that there is a strong relationship between where the ports of lading are and where the firm locations are. This raises an issue of which came first is that the business location creates the need for the transportation investments or is it the location of transportation investments affected where the transportation -- or is it that where the business locations affect where the transportation investments need to be made or is it the transportation investment affect when the businesses decide to low case? -- locate? This came first, the chicken or the egg? We can debate that later. It's enough to say Appalachian is in the middle of some important manufacturing corridors but that because of the connections depending where they are located in Appalachian the specific ports that they depend on will differ. Last chart is to making point of attracting economists of inward investment which means foreign investment coming into the region where that investment is made is very much related to where the transportation connections exist not all projects can be justified by making transportation improvements not all transportation improvements create tremendous economic opportunity but at least we can make the clear case that these elements of freight opportunities are important to consider he that completes my presentation. You can get more information on these studies he from the website shown from the Vancouver gateway council has their study posted, the arc. It will compose it next week so check back and links to both of them:[ three links on the slide ]

Thank you.

J. Seplow:

Thank you, Glen. I hope everybody found both presentations interesting. I'm going to go ahead and leave this slide up on the screen for a few moments so people can copy down the web addresses if they would like. We'll start the question-and-answer session. The operator will give you instructions on how to ask questions over the phone and then I'll also read -- we have had a question typed in and I'll read that. But if you do want to ask a question over the phone, please listen for the instructions and then do so.

Operator:

Thank you. Ladies and gentlemen, if you wish to ask a question, please press star followed by one on your touchdown telephone. If your question has been answered or you wish to withdraw your question, press star followed by 2. In order to submit a question via the web, please use the q & a tab in the lower right-hand corner of your screen. Questions will be taken in the order received. Please press one to begin.

J. Seplow:

Thank you. I'm going to start off the first question typed into the chat area. Glen, I'll ask of this you but Leo feel free to jump in as well. The question is, what role can short line and regional railroads play in intermodal containers? What is the business model for a short line run satellite intermodal ramp?

G. Weisbrod:

Well, this is difficult to say. Clearly, it depends on the specific location and case. I mean, I think the most -- the ultimate one is what's occurring in New York city where short sea shipping and short railroad connections to basically having satellite intermodal facilities so that anything destined for the port will stop at some city or location between 50 and 200 miles away where it's put on either a short rail or a barge to get the rest of the way. That clearly is an example of a satellite facility. In other parts of the country, obviously things are on a much smaller scale than the port of New York city. But I think the same kind of business model would apply. Leo?

L. Penne:

Well, I'm thinking of a couple of examples which there is a container he operation between Portland, Oregon and Seattle, Washington. It runs on class one track but it's operated by an independent company. There are -- there is at least one operating example of an inland terminal, there are a couple others that appear to be on the way. In those cases they -- it's potentially short line. Stockton, California, which probably will not be a sort line operation but Virginia currently has an inland terminal and I believe that they are going to take advantage of right of way they preserved in the highway project for a second inland terminal. I think one of the areas of real interest dish know one of the areas of real interest is short haul urban bypass, in effect the use of rail for relatively -- no, narrowly the rule of thumb is that if it's not going 300 or 500 miles that it's not economically feasible to use rail but there are some people who believe that you can organize it in a fashion that would make it possible to do relatively short hauls of trailers to bypass urban congestion.

Most of the cases I'm aware of involving short lines are either agricultural such as the Kyle Railroad in Kansas or they are industrial cases in Pennsylvania where high density industrial areas or companies that are producing very heavy products are using short lines to connect to main lines. So I think the prospect for short line container is largely in the future.

J. Seplow:

Okay. Thank you. In response to Glen's answer, there was a question and a comment. And the comment is, freight does not vote. Land in urban areas is costly and the not in my backyard rules. So how can freight capacity be improved to meet the demand that you noted?

G. Weisbrod:

That's a good question. I'm not sure if I'm really answering it. There is an NCHRP project going on now that's looking at rail freight in relation to traffic congestion which is following up from a point Leo made which is in urban areas where there is a large land, sometimes the case is that, part of the reason for either rail freight in the h aren't p study or in the case of just other kinds of multimodal solutions as in the Vancouver case is that this will actually helps the voters get to work with a lot less traffic. A lot of passenger car riders would be happy to get rid of these giant trucks they are sharing the highway with. so any of these solutions that help minimize the interaction between car and truck can help. This is part of making a case to a broader constituency because the point is absolutely well taken that they don't vote and there is a kind of otherwise a NIMBY reaction to freight solutions but the case needs to be made that the freight solutions will help the regular residents and drives, as well.

L. Penne:

I would add a couple things to that. There is another completed NCHRP project which I think I may not have the exact title I call it friendly freight, I think it was titled something like freight as a good neighbor and it's a discussion of how you can operator undertake freight projects in a way that they are compatible with other land uses are not in conflict with community neighborhood groups and are environmentally friendly. I think there are two elements to this. One is strictly economic and this is the cost and use of land and here containers some areas are a huge problem. Given the trade imbalance, of course, there are more containers coming into the country than are leaving the country and in some places and I think probably especially New York/New Jersey and LA Long Beach, they are taking up a lot of land at the moment. But the economic problem you know ultimately solves itself somehow. You know? The market sorts out what people are willing to pay and how they are going to use it and so on and so forth. But the NIMBY problem... Is a problem that needs to be taken I think very seriously.

We recently had a meeting of the AASHTO water transportation committee in Long Beach and we have presentations from people from the port of Long Beach the port of Los Angeles and the port of Oakland and there was considerably more discussion devoted to the subject of conflict -- compatibility with the surrounding community than there was to the subject of maritime transportation. For those ports, figuring out how they can operate in a way that does not bring them into conflict on issues like air quality, congestion, noise, light, et cetera, et cetera, this is a very big issue. And in the LA Long Beach they seem to, you know, get these things first and then they appear other places. But it's not just ports. I have over the last several years off and on been involved with questions relating to truck stops and it's virtually impossible to establish a new truck stop or truck parking area in an urban area today. It is also, you know, places want the economic development or they want the employment related to a big box retailer and then it comes as a big surprise that it also involves trucks. They don't want the trucks. And at least in this region if you go out on the highway, you see queues of trucks on the shoulder at the rest stops all of which are positioning themselves for a just-in-time delivery someplace and the driver has virtually no leeway. He must be someplace at 8 -- between 8 and 8:15 if he is going to be that place at that time, he has to be in you know, within reaching distance at an earlier time and the infrastructure system is not set up to take that into account.

J. Seplow:

Thank you. The next question I'll offer up to both of you is in the area of identifying public and private benefits, what calculations are used to determine the benefits and who is doing it?

L. Penne:

Well, Glen, you're the world's foremost expert on this.

G. Weisbrod:

I was going to say you are!

L. Penne:

Well, let me mention a couple of examples where people are doing this or have done it and then... I -- I'm not the person who answer any technical questions. In Chicago for the CREATE program, they have as I understand it done a very elaborate ambitious estimation of public and private benefits and they retained as I understand it university consultants and private consultants, I won't mention names, to do that and I gather broke new ground. It's not simply, you know, the cost-benefit analysis you do on the highway project. In Colorado, they have undertaken a -- I forget exactly what they call it but a benefit allocation or apportionment study on a possible relocation of the rail main lines to class one railroads. That would move their lines from the front range Denver and Colorado springs to the plains in the east. And they have put a lot of effort into trying to calculate what the public gets and what the private gets. Now, on the private side in principle it's pretty simple, can they operate more efficiently can they generate more revenue, can they retain more profit? On the public side, you have a full range of easily quantified and other not easily quantified like reduction of congestion at crossings and then an estimate at cost savings related to that. The improvement of air quality... The elimination of noise, the freeing up of land for other uses that will generate both private and public income, et cetera, et cetera.

G. Weisbrod:

Let me just say a couple quick things on this. In the case -- Chicago "CREATE" is actually a model. The city of Chicago department of transportation had some consultants look at the benefits, in the impacts on the economy. The business organization, Chicago metropolis 2020 hired its own consultants and the city did their study. The business community did their study, and the railroads did their study and then all three could come back with some -- they have some very good discussions of politically how to work it out. The same people who were involved in Chicago CREATE are now completing NCHRP project 842 called rail freight solutions to highway congestion. And the product of this which will be available sometime in the middle of the year is actually a decision-making framework, an accounting framework and guidebook for how to do these calculations. But just to make it clear what it really comes down to is that most of the benefits are public. And most of the construction costs are private. Because when we are talking freight as Leo had said earlier you are talking railroads in particular, you are asking the private sector to make investments on their own and to -- into something where most of the benefits are public so this is where it really comes down then ultimately to some sort of political negotiating process.

L. Penne:

Let me jump in for a second. There is a web address at the end of my presentation, and I think there is material there on all of the projects that I mentioned and considerably more if people wish to go there.

J. Seplow:

We have a few more questions typed in but I just want to check, Michelle, do we have any questions coming in over the phone?

Operator:

No, ma'am. There are no audio questions at this time.

J. Seplow:

Okay. I'll continue with the ones typed in then. The next question is, from an mpo perspective, are there tech focus or strategies to predict how large-scale projects at primary national freight facilities affect other regions' freight and economic dynamics? For example, an improved alameda corridor affects freight dynamics in Kansas City.

L. Penne:

All right. Well, alameda corridor, although you would think that that would be a good one for doing the justification for that was largely safety which was to reduce the intersection -- at great -- at grade intersections between the rail trucks and the passenger cars. And so it was depressed largely on the justification of safety. The other -- however, the other examples which one might look at which would be the New York city study, some of the other LA Long Beach studies, the Vancouver study are all examples where people are explicitly using a multiregional economic models to look at the spillovers on broader regions.

J. Seplow:

Okay. Let's see. Moving on to the next question. , it's national security related. With national security measures heightened, what safety precautions will freight operators be implementing to improve national security on rail lines and ports? Glen or Leo I'll let either one of you answer this.

L. Penne:

Let me make -- give a general answer. That -- the general answer is that with respect to both rail and ports, the security burden has increased exponentially. And it remains to be seen where that will come to rest eventually and what -- and from the point of view of the operators, especially the ports, who will be responsible for paying it. But it's an extremely important issue and there is a lot of conversation about how you can have a, quote, win win outcome which is to say as you increase requirements for, say, prenotification, you know, 24 hours, you know, before the ship hits the port and prior to loading at the other end, in similar requirements for crossing the NAFTA land borders and requirements for, you know, having detailed manifests and prior notice, the argument is that this all makes it possible to move freight more efficiently because you have more information and that information can be incorporated into the logistics of the operations and so on and so forth. But I think those benefits are in the future someplace. And anytime you have something, say, like the South Carolina disaster of a couple of weeks ago, the rail hazmat wreck or you have the Madrid commuter rail bombing then you have another jolt to the system like the South Carolina disaster of a couple of weeks ago. It's not clear where I think this will wind up.

J. Seplow:

Glen, did you have anything?

G. Weisbrod:

I think that that's basically it. I think all this is -- this prenotify case preauthorization, scheduling and precertification are all things that could potentially be a win-win if they get to be ubiquitous enough because they really expedite shipments and improve reliability which is the area where the business side is most concerned.

J. Seplow:

Thank you. That's it for the questions that are typed in. I did want to mention in response to a comment Leo made a few minutes ago, someone did respond that the NCHRP synthesis that you were talking about is called Integrating Freight Facilities and Operations with Community Goals.

L. Penne:

Since Glen is a big-time thinker and I'm a foremost generalist, one thing that I am not sure either of us mentioned was direct economic development benefits of freight transportation investment. By that I mean, for example, the southern California association of governments did a study recently and I would actually pulled out a journal of commerce that was sitting here, January journal of commerce, which identified 500,000 southern California logistics jobs in warehouse, transportation, courier services ancillary activities, et cetera, et cetera, et cetera. So... for certain places, and these are jobs by the way that are accessible to people who don't have advance degrees, and which in general are relatively high paying jobs, and in southern California the forecasts are that this is an area of job growth. So if some areas, if you are an economic investment person, one important thing to know is that these kinds of businesses are important job creators for populations that you might be interested in targeting.

J. Seplow:

Thank you. Glen, did you want to add anything in closing?

G. Weisbrod:

No, except that there is some excellent questions here which point to the need in some future time to have a session on sort of how-to methodology issues.

J. Seplow:

We will definitely keep that in mind. If we have no additional questions on the phone, I think we'll close today's seminar. Are there any other questions, Michelle?

Operator:

There are no questions, ma'am.

J. Seplow

Okay. Thank you. Well, thank you, both Glen and Leo, and thank you everybody for attending today's seminar. 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 February 16, and is titled “Goods Movement: Urban Case Studies.” We will speakers from the cities of San Francisco and San Antonio, as well as a representative from UPS, sharing notable practices and case studies on how to better plan for and manage freight deliveries in cities and metro areas. If you haven't done so already, I encourage you to visit the Talking Freight Web Site and sign up for this seminar. We have now posted the seminars through June 2005 and you are encouraged to register for those seminars as well. 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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