At the conclusion of this session press star one to ask a question. At this time I will turn the call over to Ms. Jennifer Symoun, you may now begin.
Good afternoon or good morning to those of you to the West.
Welcome to the Talking Freight Seminar Series.
My name is Jennifer Symoun and I will moderate today's seminar.
Today's topic is Rail Issues and Solutions: The Challenges of Getting More Freight on Rail and Away from the Road.
Please be advised that today's seminar is being recorded.
Today we'll have three presenters. The first presentation will be given jointly by Joe Bryan of Global Insight and Glen Weisbrod of the Economic Development Research Group.
The second presentation will be given by Bill Schafer of Norfolk Southern Corporation.
He was the managing principal prior to its merger with global inside and possesses a broad practical experience in freight carrier management.
He has held senior positions for both operations and has been associated with various freight companies appeared he assist government and flare clientele and policy and operations for analysis.
Mr.Bryan provides strategic direction for studies and market studies and for the Commonwealth of Virginia and as a sub contractor for a national freight corridor study where he directed the analysis of the private sector aspect.
Before railroad merger applications he expanded intermodal network and prepared verified statements.
He is an author of the "freight rail bottom line report".
To examine and recommend Braille Street solutions.
He was the lead associate member working with a team of consultants on a multi modal freight analysis remarked study.
And for the project described and assessed national trends in the freight industry that addressed federal policy.
Mr.Bryan has aided Metropolitan Planning organizations to characterize the patterns and operating requirements of future needs of goods and services and to develop a response of strategy.
He's the chairman of the committee of the transportation board and serves on the freight transportation planning and logistics committee.
Glenn is president of the Economic Development Research Group and share on the transportation and economic development committee.
He was co-principal investigator on the integrating rail freight operations to reduce highway congestion and Highway planning to reduce freight transportation operation.
He also co-authored method for accessing.
The study on economic cost of congestion and the recent U.S. DOT guide to measuring the benefits of multi modal freight projects.
For the Vancouver region the Portland Oregon region Toronto Ontario and the Chicago region.
He is currently directing the can in connection study which is supporting freight movement across the region of four states.
He evaluated business shipping needs and associated economic costs for Montana, Louisiana Kentucky Scotland Wisconsin Massachusetts Maryland and York state.
He has a B.A. in economics and and and CP and planning and AMS and civil engineering from the Massachusetts Institute of technology.
Bill Schaefer is a Maryland native whose career began in 1967 with the Baltimore and Ohio railroad.
After graduating in 1970 he joined Southern Bride and has progressed.
Following the 1982 North fork seven merger he joined the strategic planning group to manage and coordinate activities.
He has worked for many years at the State Department of Transportation, particularly those involving passenger services.
In 2006 he managed to to ease highway congestion by observing.
He lives in Pennsylvania with his bride, Linda.
I'd like to go over to the logistical details.
Today's seminar last 90 minutes the 50 minutes for the speakers and the final 30 minutes to question and answer.
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Power point presentation is used will be available online trading I trading I will notify all attendees of the availability of the power point we will not go ahead and get started.
Today's topic is real issues and solutions the challenge.
Our first presentation will be given jointly by Joe and Glenn.
As a reminder if you have questions please type them into the chat box and will be answered during the last 30 minutes of the seminar.
This is the show.
You should all realize you were the tested later in identifying speakers by the sound of their forces so pay careful attention.
This presentation will look at the recently released study rail freight solutions to Broadway congestion.
I will hand off to Glenn in addition, to our two firms this research was done by Karl Marx land of MIT.
What is the study about?
In its purpose is road congestion relief all the surrounding issues are broader as you would hear in the low bid.
There are three objectives the first is to span the scope of the public planning process.
The second is to improve methods to identify and assess solutions and the third to cultivate cooperation between the public
and private sector but also between various members of the public sector such as the adjacent states treat the city has two or products the guidebook and final report.
Both of these are available on line references are in the presentation as to how to get to the PDS form.
Here are the three major points from the research.
The first is that real relief of roads is a viable.
It is the road planners that need to know this tree any of you who are real planners already have come to this conclusion could the second major point is there are clear please in order to judge will projects
and to proceed on with them in the study products show how to read the third point is the biggest barriers are not market shares in right conditions Braille competes with other modes.
The biggest barriers in fact our institutional and capital priorities.
Why are we looking at this subject their converging interest between the public and private sector.
And the public side what we've found is the alternate as for providing capacity are diminishing.
What we need to do is to supply capacity in any way that is going to be effective which is causing us to look hard multi modal options.
Rail is going to be the most primitive alternative, not only because it can carry the most but because it provides a whole republic benefits.
On the private side, the rail industry has been constrained to finance capitol improvements.
Even with relatively high capitol expenditures, most of that money is going to maintain a capacity and not to expand it.
Let's-- what is needed?
Public agencies typically have paid scant attention to rail freight train that it limited scope for action.
If you are not limited the of the issues to a subject you got a how to tackle it appeared for railroads, they have not been used to interacting with the public sector.
Both parties need to forge new partnerships.
They are going to be aided by systematic approaches as to how to tackle the problems which is what this research provides.
What kind of practice of talking about?
There are four major types, inner city borders, and urban, Metropolitan and city wide and facility.
These things range from very large to quite small.
Ed are examples of several here which have been elucidated in the research.
Glenn is going to return to this site later and he is going to show you another angle.
To get you orient this is the sort of thing we mean when we talk about rail options.
What affects the practical feasibility of rail projects?
The first point is they are pretty different perspectives on freight between public sector and private sector.
In order to overcome that issue and begin to see, we need tools for tackling the problem and better methods.
We need public investment planning processes that are able to approach multi modal planning.
Methods for assessing the issues and solutions which is where the 842 research comes in and public, private or private -- corporation.
We need to begin with having a basis for working together.
We don't have relationships is good to establish before you wait into projects.
You can look at -- organize advisory meetings in which you look for common goals.
Make use of high-level contacts.
Freight advisory councils which a lot of people on this call probably have in place.
The second step is to look at the distribution of roles between the public and private sector.
The public sector may be much better in active in with the local media or as the railroads are going to be much better at understanding what rail capacity looks like.
A third point is that people frequently report complex between public planners and railroad interests.
The point we want to make in to this slide is that there are well-defined that it's for a untangling this in the field of collaborative dispute resolution.
These methods of dispute resolution are available in many states of Sao the Transportation department.
You are able to find out about them, and the have available to you and the lead to better decision making as low as ways to get yourself out of entanglements.
How are we going to draw support to a public application of rail options?
And the private cite the important issue is that when capacity and capitol get scarce, but traffic is giving way to better.
You can have traffic that does well for the railroads but where there are new opportunities that actually do better and one is going to give way to another.
This has been driven by the explosive growth of import containers which have been taking up the capacity and the rail system created as a rational process railroads go about doing this but they are not bringing public benefit.
For what public benefits to be brought into this and to be part of how the prioritization is put together, what we need to do is put public capitol on the table.
If you don't print money to the table you probably not going to change a private side of the prioritization of you to print money to the table the changes comparison to the project
and used the project that has important public benefits and interests the return on investment to the relics of it will want to make the project work.
On the public side.
How are we going to bring support and elevate the priority of rail projects.
The public priority setting is often based on a worldwide level of service.
Because that is made a passenger issue it can be hard for freight products to compete.
The first is to reformulate projects in freight terms.
This isn't just a real argument.
The point is that freight is a good fit itself.
It's how we get fat
and products that benefit freight contain their own justifications' apart from whenever the passenger effects might be cured as freight planning expands as a discipline to this argument is going to get easier to make
and it aids will trigger the second point to make is that rail is not going to remove congestion as something that we ought all facing.
Rail is not going to eliminate it but rail can contain it and that kind of expectation is important to seek and important in terms of how the nation's response the third point is to make use of broader criteria.
Economic development you with her about and a second safety is something that has broad public appeal.
When the citizenry have an interest in truck only place the reason that are interested is because it separates the truck from the floor of the cars
and makes people feel safer just because they are split apart Braille removes the freight and use it to an entirely different right of way.
The last point I am going to cover is how to go about putting together money?
We aren't just limited to the railroads and public agencies.
The capital requirements show up in many categories be on track.
To show up in equipment or terminals are in the fixed costs of training starts.
There are other private operatives who have an intrinsic interest who can bring money to the table.
This past year we saw the first instance of a major motor caring combined a train.
In the Schneider brought in equipment that a standing commitment to the railroad to operate the train every day and they had another private partner who is providing the terminals.
The original projection for that service is that it would carry about 60,000 truckloads a year.
That is already within the first year of operation being elevated to 90,000.
How are we going to analyze these projects?
Blend is going to take over from here to look at that subject.
Thank you, Joe.
I'm going to talk about some of the steps that are laid out in the guidebook that we develop.
It talks about evaluating the alternative and identifying how they make sense.
The first element is to identify there is six applicable situation which rail freight solutions can't make sense.
We will walk through a couple of examples.
The first is when you have a highway corridor and seems to be quite extensive like adding lanes that might not be feasible.
An example that would be the I-five corridor where there was a short haul container train service that is helping to reduce the highway congestion there.
The second is the case where over relies on trucks.
An example is the congestion in the New York new jersey port area and the efforts of the Port Authority to implement programs to supporting real alternatives.
Many of these are part of the distribution network program.
The third situation is where the rail network structure use.
The Chicago rail study and Chicago create are part of an initiative proposed that would address some of the problems of use of rail yards and issue of interconnection and particulate the interconnection between the Western
and Eastern railroads which make for more trucks being on the road and would need to be necessary.
The force would be restricting in the role of highways.
The Kansas City fly over project was as a project that not only addressed issues of rail to rail intersections but also a major industrial area was hemmed in by railroad tracks.
The fifth is for the freight users are too small or scattered for efficient use of rail parent that would be in Maine where this date develop a facility to help serve a broader region to get some of the freight moving
and the last is economical development this threatened.
The Vancouver date rate study was an effort of the airport property is to look at the problems of a road and rail congestion
and limitations on capacity the idea here is if we can identify six applicable situations that will help us define the type of solutions that make sense.
This is a flow chart of the decision making process that is state or metropolitan transportation planners have to consider if they are thinking about rail freight.
The first step indicated by the Oval here, is to identify which of those six situation seems to make sense.
The second is identify let's evaluate it from two viewpoints.
The viewpoint of public planners concerned about highway congestion and the viewpoint of decision makers and players that puts the only government but the railroads and trucking companies.
From that, we can hold in all the alternatives that wouldn't seem to make sense at all.
That's a screening process to get to a limited number of alternatives.
The next step is to evaluate those alternatives to an actual in violation of the cost and the number of people benefiting from those three viewpoints.
What is the effectiveness of rail and the railroads.
How about the people who are shipping.
The may be shipping by rail or by a truck but is this saving them money are costing them money
and they are getting time for other improvements in the third is the external benefits that go through everybody because reducing congestion for drivers on the road.
Having evaluated those one can come up when are the cases where the benefits exceed the cost.
Knowing something about that we can decide who is bearing the benefits who is bearing the cost and what kind of arrangements which makes sense for implementing?
They're is a number of policy mechanism put in place to implement these projects.
The first is that there is public financing of capacity expansion on the real side the other is public ownership of the right of way.
Both are applicable in the alley that corridor serving the Lost Los Angeles Long Beach area where the corridor was developed to support expansion of rail as opposed to truck lead of the court.
The third is redevelopment of rail facilities that's part of what is being proposed in the Chicago area.
Part of that is to rationalize rail yards by having the system work better and free up railyards that can be redeveloped for apartments or commercial development
and that money can be used by the railroads to help pay for some of the other improvements.
The fourth and fifth are various financial proposals that can involve taxation relief or incentives.
There is also planned grants and land swaps and the last will be supported by dense the lines.
The interesting point is these seven are all in addition, to what people might think is the most obvious which is if we are going to use rail to reduce highway congestion can we take highway money and put it into a will?
For make logical point that's not crazy but in fact they don't have enough money for the existing Highway project is worth considering is more creative policy mechanisms.
Critical aspect is this idea of a three face solution.
Basically, why aren't people doing more evaluation of rail freight as a solution to the highway congestion?
They are scared off.
It's lot unless it's difficult to get all the cost and service information.
The idea of a three phased in Dallas this approach is let's start off with a quick and simple approach.
The rail solution even make sense.
In this case you can rely on commodity flow data and national information about which commodity you can go by.
Where are the commodities.
What is the free flow pattern and what kind of intermodal shares are white.
There is quick and dirty.
National data sources that can be used to do this first level screening and only if it passes the first level screening would one go to a detailed analysis of what actually collecting the specific information for your area
and running various cost tools for looking at operating costs and capacity associated with the model alternative freight.
If a project is passed that in some detail benefit cost analysis, then we can't move to the third which is a decision making process saying this is the best use of money.
That is the three-phase approach.
And all three phases there is effectively a consideration of the factors indicated on this flow chart.
The idea here is that once you have some forecast of the kind of freight flows expected to occur in an area along a corridor you have two columns here.
The right column tracks from a public planners point of view and what is the current and future Highway delay pattern which congestion is going to occur, air pollution what is our forecast for on the highway with the change
and without the change considering highway expansion of changes?
That is the public planner side.
On the left side with three boxes that represent special consideration for fleet planning which are the truck and rail movements from the point of view of the private shippers, what are the problems?
How much freight can be diverted?
That's how they can identify economically feasible and efficient spending that should result when we get past the initial screening and have to look at and let tools,
it's important to know there are different benefit categories listed on the left column, different parties that are interested in different analysis tools available for each of those.
When I might call your attention to first is from the public's point of view many of these factors, cost, maintenance and economic aspect are factors affecting the public view point.
And the point of view of the shippers, railroads and trucking companies the considerations are a little different they have to do with the congestion and scheduling and reliability.
All of those factors have to be considered in due time.
Having looked at those various elements of benefit and cost, we can roll them up from looking at a multi-modal benefit cost viewpoint.
We can organize as follows.
First, we have categories of benefit and cost that basically come down from the point of view of the transportation system, cost expense and time.
From the point of view of the user's your talking about the logistics and other processing costs.
Point of view your other social environmental benefits personal travel time and quality and so on.
We cannot look at those various user costs and transportation provider costs from the truck side and the real side for each of our alternate history having done that we can roll it up to look at these cost
and benefit streams with the present value which takes into account the fact that some of the cost come up front and some come later on.
Most importantly, organize the benefit from different perspectives.
Transportation the efficiency perspective is from the point of view of the transportation system, the float and cost of that flow.
From the point of view of the user's freight which take into account just in time processing, breakage, loading dock, travel time durability and other factors.
With a total benefit which we include in these other social aspects I talked about.
Here is the interesting part I talked about the benefits and cost to users and to the broader public and the Highway users.
The interesting element is if we take these same list of projects that have been introduced by Joe at the beginning and I was giving you examples and look at what motivation's release sold them, economic development or competitiveness
and up been mentioned far more often than anything else.
Even The Alameda corridor which was sold for public funding as a safety project ended up being sold also promoted to the public as a way of improving the national competitiveness for Pacific trade.
This is interesting because it's as safety and economic development even though the side from the benefits and cost of shippers, economic development safety is what sells to the public.
As Joe mentioned, that is what is very important.
In conclusion, rail freight solution are being done and they're worth considering for many more cases.
It can be a viable solution.
Second, it is not necessarily a fight between the truckers and the railroads.
Many people see that they can enlarge the market the mortar carriers our allies.
They're facing labor charges contract delays and many of the trucking companies are seen rail freight as a positive option.
People shouldn't feel they are getting themselves in the middle of a fight.
That's not the case at all.
People should feel comfortable that none of this is saying let's subsidize a bad idea.
The final issue is that you have to talk about when talking about highway and railroad spanning public and private access because there is private ownership.
Public, private partnerships are very realistic.
Being done more and more.
The institutional barriers are quite surmountable.
And put all together these considerations with the guide book paves the way for more and more Highway plan to consider the opportunity to expand rail and freight analysis.
In closing, costs I've given the e-mail addresses for the offices of port, and the Internet web links for downloading the report and backup guidebook -- the guidebook was a primary
and was a backup report additional information supporting it.
You can also go to the web site and find it there.
I want to encourage everybody in the audience if you do think of questions please put them in the chat area.
We will now move onto the next presentation.
If you give me a moment, I will get your presentation.
You can go ahead and get started.
Thank you, Jennifer and thank you for giving us an opportunity to talk with us today how really don't mind falling behind Joe and Glenn because the presentation they gave is very important.
And sometimes I agree with just about everything that is in it.
This is about the third for fourth time I've seen it so I've had a chance to absorb most of it even though for the early stages it started to make my teeth hurt.
I'm hoping my presentation will be complementary to their presentation by just giving an idea of how we look at some of the issues they raise, we been Norfolk Southern a shareholder own private sector freight transportation company.
There are a couple of things we are doing to test the hypothesis of whether or not rail can reduce highway congestion by attracting an increasing number of trucks from the highway to the railway mode.
This is fairly old picture, but it's one of our double stack trains going to pretty scenery.
In eastern Tennessee or western Virginia with steam ship containers on it.
I think Joe made the point that one of the reasons there's been a huge surge in rail intermodal is because of coming over the course and being transported over land and steam ship containers such as this one.
The discussion points, highlights I would like to hit on are these very briefly.
I am assuming there is a level of knowledge, blend Stover lists here.
There's an awful lot of public offs representatives who are in no in many personal cases do have the low level of understanding rail intermodal ism is.
I'd like to give us an overview of how of rail intermodal works today whether it works or doesn't work how we are testing the hypophysis and are coming to conclusions appear if frankly this presentation may not last the full half hour,
but I am happy to answer questions if there is something I haven't touched on if someone would like further information hundred 50, nor folks Southern is a major transportation company.
We own and operate over 21,000 miles of track largely east of the Mississippi River we are trained to serve virtually all of the Mississippi River particularly if you include intermodal for boxes can be transported on the highway.
There are a and increasing number of selective and growing numbers of markets serving in west of the Mississippi.
If this is clear enough on Fort screen take a look at the dotted lines that appear on here they indicate rail partners of ours who actually transport our freight for us to markets beyond where our rail that we tone of go.
We have been successful in attracting freight in the New England area.
Also down in the Florida area.
Probably, the brightest area with some of the best potential is west of our system into Texas and Mexico.
Essentially, sort of vague map to spine if you will.
If we also in our ability or effort to halt freight to these markets we have spent on our own money by putting North folks Southern intermodal terminals off of our line.
We have some doubt in Florida and in Albany, New York, Massachusetts and west of our territory here.
our intermodal business is -- the boxes that we call on our trains are traveling over 500 miles from the terminal where they are put on the train to the terminal where they're at taken off the train trip if typically our trains link any
given intermodal terminal once a day and the average speed is -- varies from lane to Lane and route to route but in general it is something from the order of 25 miles per hour.
The real Rob liability is summer in the neighborhood of 60 or if 70 percent.
Even if this doesn't sound particularly impressive, we still have been growing intermodal business since 2002.
On average somewhere around 8410% a year.
It didn't do quite that rate of growth and 2,006 but that was a softening of the economy at the end of the year.
Other characteristics of our intermodal business were touched on by Joe and Glenn.
It is customer-focused we run our trains and offer our services and price for our services to give customers what they want while we can still make money at the same time.
All the growth that I mentioned has been organic.
Growth that has been generated solely in citing the company with our marketing efforts and I guess as a companion to that we've funded the new terminals and Prince of that nature with our own internally generated funds.
The benefits to our stakeholders are ones that the people are basically the customer's our employees and our owners.
What drives what we do is in the marketplace Joanne and when it touched on this.
We have in and of itself no incentive to reduce highway congestion.
We do have an incentive to make money that we call.
Better for it will replace good for it.
There is great out there we are making money on today and additional freight comes along we can make more money, but our railroad can only handle so many trains and the better for it is going to replace the good for it.
We're good freight may have been on at one time it may face some point in the future.
We generally make capitol improvements that enhance our shareholder value it will make more money for others.
Jill and Glenn mentioned there is not a public benefit component.
Now, in 2002 most of you are probably familiar with the bottom line report.
In fact it is now in the midst of creating a freight bottom line report that will cover all of the molds.
There was this interesting graph that I have excerpted from the 2002 report.
The point of the graph is that rail pass the share of inner city freight indicated today by the lighter gray wedge in the inner circle.
In 2002 the whole size of the free if high is expected to grow as much as the blue ring.
For rail to hold onto the same share of freight in 20, 20 that it has in 2000 to will require it's absorbing the level of freight indicated by the purple Heart in the blue circle.
The conclusion of the report is that freight railroads and and of themselves cannot finance the capacity improvements needed to observe all the freight represented by that purple heart.
Going forward frail will continue to replace a good fight with better freight because a lot of the investments that will be necessary to a source the quantum increase in volume adjust beyond typical real world's ability to finance the
Graf leads to a key question and that is can rail reduce truck congestion.
How much and what is needed and how much will it cost and where is the money going to come from?
As you have already heard it is happening in some places today.
One of the lanes is probably where to get the most publicity is Chicago to meet California.
That was the poster child for the intermodal slain, 2,000 miles long.
Depending which source you look at it may have as much as 80 percent of the truck business on some portions or in some lanes between Chicago and California.
Thousands of containers a day are being handled on dozens of trains both going to northern Santa Fe and Union Pacific in fact the ZNFF is betting the farm that the growth there are experiencing today is going to increase into the future.
Their route between Chicago and Southern California is the premier route is pretty much the shortest and fastest.
Part of that route had single tracks they are not in the process of closing the gaps and within a year or so they will have an all double-track route between Chicago and Southern California.
Their business is growing so much there are portions that are in getting triple track to handle the increased business.
Between New York and Chicago that is a much shorter lane, but even so, there is about a 30% penetration of the truck business by the two rail roads that link New York to Chicago.
I know from [ indiscernible ] standpoint we have about 5,000 trailers or containers a day in that corridor that otherwise would be on the highway on about 45 trains.
CSX operates about the same number of trains.
The key to make it work is levee you are talking California, Chicago the key feature is there are five volumes of freight to be had in those areas.
In shorter hauls those left the mesh less than 750 miles and also where the margin and destination of pre fragmented.
As Glenn mentioned, the short haul intermodal service being operated, 170 miles that has succeeded in observing some of the highway traffic in that short lane.
Would have to have been a high concentration,
not a fragmented flow grid for may your folk Southern standpoint we have lanes similar to that ourselves say Charleston South Carolina the reason for that he is there is a major automobile manufacturing plan
and many of the parts of the port in Charleston and we operate and intermodal train to link.
That's another example of density of a freight that just applies operating a train trip there's a lot of places where it could happen.
These are areas where there are 500 to 1500-mile hauls we're neither rail or truck has a clear advantage.
As an example, it is where we are testing the hypothesis ourself.
This is not the official name is something we're calling internally the intermodal Expressway project but it is a study in the midst of one-year study to ascertain what is necessary to offer a service that will attract a large number of
trucks to our trains that are now on the highway.
It is a network of intermodal services between the North East and Texas.
Our target market is pretty much dried van freight which we handle a lot of today as major truckers are interested they are partnering with us in the study we're getting very good information on what it is it will take in order to operate
a service that they will utilize more greatly than they do today.
They're is a byproduct effect of the study.
That is the effect of this service we are designing on congestion on Interstate 81.
Virginia department of rail and public transportation are partnering on an ancillary study to the intermodal Expressway study and it is also one that involves Joe Bryant and Global in sight and his folks as well.
This is what we call the catch mixed area for the intermodal Expressway projects.
Essentially North East to Southwest to handle a lot of freight presently in the highway.
They're is a number of goals to the service we would propose to offer the first one of course are these, better service that would be delivered by faster speeds higher frequency moving between one train today.
Our trucking partners are insistent on this before they give us more business than they have given us today.
Additional goal is to ascertain what additional assets we will need in order to operate this type of train service.
Assets include track and structures with terminals do we need what equipment and what additional personnel will we need to man the trains.
Another goal are additional benefits that will figure into the equation will the public see from a Highway user's standpoint.
With improvement and from private standpoint what benefits would we get out of this project as well as our partners in the trucking industry.
It leaves it inevitably to the public, private partnerships because we have concluded for a service to be offered with the scope that I have just described is going to be beyond the ability to go it alone as far as funding is concerned.
We are going to be out there very soon forging partnerships and the public sector in order to help with the funding.
We have already done this.
With done this last year with heart land corridor which many of you may have heard about.
If you are not familiar I think a search engine search on the Internet will point you to where you can find more information.
In the case of the heartland corridor it is a partnership between federal, state and local governments and Norfolk southern.
Without going into too much detail this next map will show you essentially we're heartened corridor is.
This is a map of our railroad
and it is driven by a major port expansion in the port of Hampton roads that the influx of business coming of the Port of Hampton roads needs to get in in the West somehow but our most direct route is through the cold fields of western
Virginia and West Virginia and was not capable of handling double stack containers.
Between our partners in the government, our regional partners in Columbus Ohio, where their is a major model facility being constructed and partners in Virginia where they make part expansions,
we are in the midst of a project to improve clearance in the tunnels between those two points and that should be finished by the end of 2009 were beginning of 2010.
We think there is every indication that it can work on our intermodal Expressway project as well.
Our next steps complete our study will identify additional assets needed to make the project work.
Will identify sources of funding and begin our out reach to federal state and local partners and assuming we is exceed their we will move on with the project.
My next slide is when you have seen before.
I have plagiarized everything in this slide from the previous presentation.
This is toward the end of plans portion of the presentation were he said this is a three-phase analysis approach on how do you determine whether there is any benefit to rail freight off the highway.
Here is some steps you would go through.
We are already in the midst of steps one and two.
If in conclusion we believe rail can help with highway congestion.
We are pursuing that belief.
Present studies are underway and we believe benefits will be perceived by shippers, by our shareholders and by people who use the highways.
Jennifer, that is it.
Thank you, bill.
I hope that everybody enjoyed these presentations.
The question is will this information be presented at the surface Transportation Board capacity hearing on April 11th?
I have members in the room with me we will now turn it over to Scott the Zimmerman who will make a few remarks.
My name is Scott the Zimmerman I am the Attorney adviser.
I just wanted to say a couple of things.
Thank you very much to the Federal Highway Administration for sponsoring and hosting today's event.
Thank you up to the presenters for your very informative presentation.
I just wanted to put in a brief public service announcement and plug for an upcoming hearing that may be of great interest to the listening audience here today and which will dovetail nicely with the discussion today.
On Wednesday, April 11th the STB will hold a hearing on the issue of rail traffic forecast capacity and infrastructure requirements.
The hearing will be an simulcast on the boards website.
That address is www.stb.dot.gov.
On the homepage there will be a link for live Web cast.
If you just click on that link at 9:00 a.m. on April 11th, you should be able to view our hearing at that time.
There is no registration grid I would encourage charity out there who is interested in this very important topic to join us via the Internet on April 11th.
I want to think the Federal Highway administration for giving me the opportunity to make that plug and for hosting today's event.
Before we get to the other questions I have a slide showing about the freight.
Treat your program which is a program to facilitate information sharing between the public sector and professionals.
More affirmation is available on line at the Web address shown on your screen.
To set up an exchange you can call up the phone number or send an e-mail were you view the website and there will be information there with that you get started with the question and answer session for first question I have is for a blend.
Is there consideration of using congestion fees to capture the public benefit?
That is something that could be done.
I am not aware of anyone doing that state.
The next question I believe this is really for all presenters is it safe to assume that intermodal freight is incapable of supporting the shipment of merchandise that is part of just in time for delivery system?
The typical characteristics that I listed in my slides are probably average work typical but they're not necessarily typical of everything we do.
They're is a generally higher level of reliability for the nature of the freight you just mentioned.
When he'd talk about intermodal freight don't be deceived by the below average speed.
Its reliability more important than the average speed.
The answer is there are have a fair amount of just in time there will that we paid close attention to and retailer of our operations around.
The long and short of this if this service is designed right it can handle just in time and does.
The next question is for all presenters.
The question is trucks' leading the U.S. Canada for is a problem and forcing you agree that moving freight to Braille will relieve congestion have the borders.
I do agree that moving freight and rail and can you comment on any activities under way to address freight for crossing these two orders?
Rail certainly can reduce some of that congestion articulate if the transfers board crossing is taking place on the rail some of the intermodal operations have been split at the border.
If you are doing that you don't reduce the road congestion.
One of the things you know more about this but one of the things I have heard her attempts to pre-clear for Customs purposes goods moving by train so they can cross the border and moving inland to something like -- move under the bond
and be cleared elsewhere trade I've also understood there were obstacles to getting that put into place.
Are you from there was any of that?
Just pretty much you have said and what I have read in the media.
The next question I will put this out to all the speakers and the question is what should public decision makers use to evaluate the needs of the railroad.
That does not take into account the lead time.
That is entirely true.
To want to say a little bit about that?
Hall weaken public all contribute to that a little bit one of the things we looked at in our guide was that what is the capacity of track has to do with its nature of single track and double track that are operating on it.
It could be I think Bill may be able to say more on that but clearly this is part of the technical analysis.
The evaluation process if you have a track and the question do you have flows right on the highway in the same direction number three is there room for more capacity on that track which has to do with the nature of the track itself
and the services on it.
I think it is a multi step process and there is a number of analysis techniques that have to do with scheduling which make a big effect.
In some areas know yet train stop -- staffing -- Network balls used in conjunction which states all have access to that key issue a first cut as what kind of traffic is moving and what the service requirements might be like.
Most of the states have done inventories area have an idea as to the track rein in what is single but is a double track what the track skis are like.
That gives you a decent idea as to what the track is capable of doing what it comes to capacity analysis directly the single best thing to do is to talk to the railroads to start with.
I appreciate their maybe a desire to have a more natural beauty of that but frankly that kind of analysis railroads are the first and best place to understand that.
There is certain routes we have lines for there is not much density and quite a bit of capacity.
Increasingly that is becoming less and less typical.
One of the things we are doing in our study that we are undertaking is that there will be some train simulations over the most critical part of new service network that we are proposing.
We have got the routes but what we won't know until the train simulations have been completed is whether or not we have the capacity to handle the proposed increase.
Part of the study would be to identify what it would take in order to make the routes suitable for the higher levels.
I will make a final point because looking at the text of the question one of the things you are looking for when you do the kind of analysis were talking about is look at the mix of traffic
and that mix will save -- will imply things about the service requirements and from there I much capacity they are using.
For example if a line is carrying a lot of intermodal freight trains are faster the had rooms agreed to be greater than the amount of capacity and individual train is using is greater.
The next question is for Bill.
What are the relative profit margins on injured modal in comparison to other business lines.
Northrop Southern is a big mover particularly in the past both commodities have had returns.
Rate increases for intermodal was somewhat address this but aren't the commodity shipments to the better for it that will replace the good freight intermodal?
That's about 10,000 questions instead of when.
I will try to address two or three of them is possible for bulk freight to substitute highway transportation.
We do this all the time with what we call transfer load facility where the long haul is in the freight car
and when it gets to the transfer load facility the product is is transferred into trucks to finish the trip to the alternate user of that material.
This is a service which has its place but doesn't have the flexibility or Brett Hull of growth potential that intermodal business does.
Repeat the first part of the question.
What are the relative profit margins on intermodal in comparison to other business lines such as bulk?
One of the things that has happened in the last five treat seven years is that while it was true maybe tenant years ago, maybe intermodal was a low-yielding commodity for us, with the the increased congestion on the highways
and the scarcity of rail freight capacity we have been replacing good business with better business.
We've been increasing our profit margin intermodal to where now in the near folk Southern panoply of services from of the commodity handled yields a respectable level of profitability.
You will find in the 842 search is reference to a study Conrail did during the 90's which they recalibrate it the capital allocations to intermodal courses and other types of services
and stripped out some of the requirements like classification.
That's a good point.
Once they make that change to the calculation of allocated costs what they found was that the intermodal business was very attractive and very profitable.
For that's the principal reason intermodal terminals have been getting and conventional freight classification has not.
The next question is for all speakers.
Due to geology and geography some secondary slides are the only link.
Is there a potential for them to be upgraded?
Always a potential if there is enough money one of the problems we encounter in a situation like that is a lot of the alignments that were chosen for the rail routes today were chosen for the days of heavy earth moving equipment
and sophisticated construction methods result to bring them to interstate highway standards as far as alignment rate and speed are concerned would be very expensive and that's a number of reasons you see a number of compromises being made.
I think it is true for the industry.
None of the perspectives that we have heard is the industry for years is focused on trying to concentrate its traffic on the court system.
I have retained large amounts of secondary roads which are there for a particular purposes.
As the capacity gets chewed up and start looking at the secondary roots grid which you are looking at as Bill was describing Art geometries based on 19th century capabilities
and you got to do a lot of track straightening to turn that into a high capacity line.
There's potential, but it's not cheap.
The next question is for Bill.
Can you comment on the North slope seven Triple Triple Crown service?
Triple Crown service is one of our intermodal offerings and our portfolio of intermodal services.
Is a wholly-owned subsidiary that operates independently of the railroad.
Triple crown's stock in trade is the transportation of road trailers from doctors treat doctorate they do their own marketing.
What the transport trains from one Triple Crown terminal to another.
Dock triple Crown is a profitable subsidiary if it were a stand alone trucking company it would have a very respectable in com and profit and loss statement.
Is-- the service offered by Triple Crown is one that a number of customers really, really like.
The next question I will pose it to you Bill.
The question is what kind of incentive with the real root considered to undertake improvement at the higher public benefit than the shareholder benefit?
Joe and Glenn had a line in their presentation that stated that if there is a level of investment from a public resource that lowers the rate of ROI the hurdle that has to be surmounted for any capital project to be approved,
it makes sense that more projects would get done because -- or effectively the threshold would be lower because not all the money had to be generated internally to make the project work.
Another -- when we were discussing the roles of other private parties, one of the things to consider that many times with the private sector is looking at this traffic that is dense.
One of the things to recognize when you are looking at the intermodal traffic the huge part of the total delivered cost is in terminals and pickup and delivery traded some of the things that the public sector can do, it costs money
and it costs cash are cast incentives or tax incentives offset the fuel taxes there are with a little bit of imagination there are a variety of ways public incentives can be used to change the role of rail.
I will add that in addition, to that there is a lot of creative methods using land grants swaps development rights to public ownership and so on,
of right of way purchases none of which have to involve directly throwing money at it but they all do as Bill said.
If there is a public benefit that comes out of the analysis it's not unreasonable that should be public involvement in making this happen as well.
We pursue this sort of thing routinely.
The next question is for the bill.
I think he touched on this.
With freight rail averaging speeds of 25 miles per hour over the 500-mile threshold how will will be able to compete with trucking?
We're not talking about all we're talking about the free to use for the best example you have.
You're talking about delivering perishables in 3 to 5 days away you can do that in a truck is drivers.
The vast majority can't afford to be moved which means drivers have to either relay
or take their mandatory rest if you are talking about a 2,000 out trucks haul where their is a single driver that has to take mandatory rest the average speed will be somewhere around 25 miles an hour, too.
This is where the railroad can become a handy is to take over and distances and effectively stretching the day Art stretching the progress of a given shipment for the trucking company.
I think that is a lot of value.
In connection with the study we have underway now we have acknowledged and our partners have acknowledged but we need to get the average speed up.
Is not want to be a quantum leap but it is going to be better than what we are averaging today.
The next question I will address to all presenters on the highway side some city impact speeds because impact business is great.
These funds are used to help minimize congestion.
I there is any example where this is occurring on the rail side?
Not aware of any.
Not aware of any, either.
You can certainly make that argument.
This is to all presenters.
Is the process of calculating benefit costs any different for Class one and for short line and regional railroads?
I don't think so.
Money is money and return on investment is return on investment.
Short lines tend to be able to have a different calculus is a typically depend more on public assistance for routine operations.
It's not fundamentally different.
The cost structure will be different but the analysis is not.
This again is for all presenters.
Would railroads consider blocking intermodal trains to allow cuff to allow other destination beside major terminals.
How can a state like Wisconsin best captured and intermodal lettuce stop?
That's a great question.
The sad part about it is that you need volume to drive where the terminals are going to be.
Within their block swap terminals, terminals were you originated and terminate freight.
Without the volume it would make sense.
There are trains that will cut off blocks in the group to another place.
The question is what does it do -- the question is what is your geography to begin with and what does it do to the service requirements at the other end.
There is enough volume to make it work and if you are not going to mess up the service you can do it.
In the source of things between the Twin Cities and Chicago, service is going to be tough to begin with and the ability to do cost is probably going to be limited.
The next question is for Bill.
Rail corridors take some of the existing freight [ indiscernible ]?
Probably depend on the quarter but the reasonable expectation is it will absorb the growth, but it will be the kind of thing where if you're driving on Interstate Highway today, the service took effect
and driving down the same stretch of Highway five years from now you probably wouldn't notice a difference.
Where we would notice a difference if for some reason all the railroads stopped operating.
This is Joe and I agree grid that is a fair assessment in a variety of analyses we have done.
What we are doing is absorbent growth.
In order to turn back the tide of the highway so the rail market share becomes greater it just takes a whole bunch of investment beyond what we seek likely to happen.
It is true in local and farmers in my to make a big difference.
On a broad scale that is less likely to happen.
The reason for that is that trot growth is occurring at a far greater rates than cars.
As a result, even if you took a large part of it off because it is growing so much faster you are getting back down to where you started.
It is because of that increase in national and international trade that is causing trot to grow so much faster than cars on the highway.
How does nor folk factor public funds into its project selection lection and decision-making?
Usually it is something our customers want us to do
and we think it's good idea but don't have the province to do it entirely on our own we will seek partnerships with the public entities assuming we can make a case for a public benefit as welfare to undertake a project.
For most projects, we tend to finance our improvements internally.
I am not sure if that answered the question of.
What you are saying is fair.
For the most part the public funds aren't built into the equation because for the most part they are not available.
When they are available it is a reduction in the capital cost.
That makes the project are return substantially better.
If the public entity brings us a project and we think this is great idea, it is something we're going to look at to the prism of the marketplace if it doesn't make sense for us to have as much enthusiasm for a project
and the public center acted the does that is going to be a very, very hard sell.
The next question for all presenters is rail freight considered greener in terms of emission for a unit of freight?
The answer is yes.
There was a study I saw recently done by some kind of a federal agency.
Which did a comparison of I want to say it was admissions but it may have been fuel efficiency per 10 miles of freight.
The rail worked out to be 10 times better.
It is a huge factor.
If we assume on the conservative side that number was on a field efficiency basis than the admissions are still going to go along with it.
We dug into for a steady we want to quantify that type of benefit.
There is an issue with a specific kind of admission.
There's some kind of the mission where the truck engine have been refined and improved so much over the past decade
and that there are some emission Control features they have that mode of inventions did not have triggered you may have read about these Gen sets locomotives to perform switching do is treat the idea you had a locomotive a nominal
2100-horsepower where it has three large truck engines of 700-horsepower apiece under the hood is the only need 700-horsepower than the other two engines shut down.
This is very clean and green type of application.
If you are looking at stuff like carbon dioxide, there is an enormous difference in truck engines and rail
and in spirit you think intuitively the whole reason for where rose to exist in the first place is because you have still on steel you reduce the rolling resistance quite a bit in order to move a ton a mile.
It just makes sense there's so much less energy needed to provide a given unit at work and by the same token the footprint of rail right of way is much smaller and safer.
Somebody just posted a comment.
That 10 times factory is from the Ohrid national lab.
The important thing to add is the train size makes a difference, number of cars.
The horse power to trailing ton ratio.
The next question is for all presenters.
The options discussed today are costly what can be done to get more freight on the railroads cheaply?
There is seven different ways to tackle that question.
One is you can lend support to the people less saying project execution supports to people that are conducting initiatives on the their own.
The case we were referring to with Schneider National was done without public assistance.
You look at where your allies are and look at what they are trying to put together and see if there are public obstacles that might relate to we don't want more trains coming to power ever heard, public relations
or environmental approvals.
There are a number of ways in which the public sector governs what happens and makes things more feasible.
That is one type of way to do something that is not using money.
Another thing hiss that makes the money that's available more efficient is regional cooperation if the adjacent states and neighboring towns
and such are looking at what their needs are not what needs to start happening is to understand a Braille as a network and look at what a network strategy is so we begin to have a cumulative effect on a region.
The way you can't do that is align the monies and the initiatives so that what one person does in one place also has a beneficial effect on what somebody else does.
A related thing in number of states have is a decent upstanding pools of money they make her available for rail projects.
If you are able to make them year treat your and $20 million this year may turn into 40 million in two years you have a have a fair amount of money to work with.
When you talk about cost it depends on the context.
If you talking about the Alameda corridor are you talking the billions if you're talking Seattle to Portland that was done with no public money at all.
The next question do you think ITS New technology can help speed up the train?
He me intelligent Transportation?
Is that your question.
The equivalent of that would be a train control system.
The railroad has been working on it for quite a number of years.
The big saying to get into is the fail-safe requirements that you have.
I think that is on the horizon.
In some cases we will see elements implemented in the next year or two.
The next question, how do you define the reliability factor of 60 to 70%?
That was my figure.
That is the terminal to terminal average typically.
It does not tell you with the dock to Stock Average is which is typically much higher.
That means for as long is delivered exactly when the customer wants it that level of--- reliability is higher.
Even so, I think we will need to get the terminal to terminal and reliability up if we are going to implement this new service network.
Again how can increase freight traffic by rail coronate was state plans for high-speed rail in the same course?
It depends on which corridor.
In some in maybe feasible and some it will.
I think if the public sector needs to make up its mind which is more important.
Shuts off the highway because in many cases that is what is going to come down to and I feel.
I think the capacity of the rail freight companies have between cities now is precious and it will be a great reluctance to make any cheap capacity available where the potential for freight could be greater.
I would say Bill's view his widespread across the industry.
Increases in passenger rail services at public expense may require infrastructure at public expense has this factor being included in the public benefit model.
In general, I am sure it has been a factor in some cases.
The prism we will be looking at this through is through the public-private partnerships for freight.
I think particularly since the ASTO report came out in 2002 there's much greater concern and an interest in the role of rail to absorber freight growth and relieve the line of work we are in,
that is the avenue we're most interested in pursuing.
This question is for blend it seems that the benefits of investment in [ indiscernible ] facility how do I tackled the benefit cost analysis?
An important aspect have benefit cost analysis is the geographic area where you define them were almost all the benefits go to someone else.
I think that is widely recognized.
What it comes down to is understanding during the benefit cost analysis is multi regional.
It includes our state and beyond our region and of the users how many are in our state?
There are many examples.
The state of Maine is doing a study right now that basically would connect with back with the mayor times and they are working together with those provinces to identify where it makes Joint Center for the whole group involved
and so some sort of mechanism which one state would make an investment and there's all kinds of pricing mechanisms.
The last question for today.
Could unused capacity of freight tracks be used for a light passenger service and are there examples?
There isn't a lot of unused capacity because it has been spun off to the extent there is capacity on a line beyond what is being used, theoretically,
yes but the operator is going to want to be sure but the freight is able to run first so there is the question directly is short.
And a practical fashion there would be a lot of caution that would go into the subjects.
We did have a question type and about the website that I was trying to bring up.
I will send that to your URL.
I think we will close out for today.
Is about 2:30.
If you think of additional questions, I have the presenters of e-mail addresses on the screen.
And you compose question to the freight planning list serve.
I want to thank all three presenters today.
We had a really long question and answer session.
Thank you for attending today's seminar.
The recording as well as the powerplant and transcript will be available on line and I will send out an email when mail when they become available.
The next seminar will be held on [ indiscernible ] if you haven't done so already I encourage you to visit the talking for eight website.
Again, I encourage you to join the freight planning list server.
Thank you, everybody.
Enjoy the rest of your day.