Appendix B
Review of Freight Survey Collection Techniques

Rick Donnelly, PBConsult, Inc.

The movement of freight is the economy in motion. Firms and households trade with and compete against one another in the marketplace. The marketplace in which many firms operate today is truly global. Almost every person and business in the world obtains goods and services that are provided through a supply chain whose inputs come from around the world. Firms use information technology to make real-time adjustments to production and inventories, the latter of which may be stored in “rolling warehouses” of containers, trucks, and railcars.

Transportation planners in both the public and the private sectors need to understand the dynamics of freight if they are to wisely allocate resources designed to improve the efficiency and safety of freight movements. These movements are considerably more complex than person travel in urban areas and change far more quickly than do commuting patterns. The picture is further complicated by the recent emergence of supply chains, which portray the often lengthy process of production in a spatial context. A few chains are very short, as in the case of fresh fish



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A Concept for a National Freight Data Program: Special Report 276 Appendix B Review of Freight Survey Collection Techniques Rick Donnelly, PBConsult, Inc. The movement of freight is the economy in motion. Firms and households trade with and compete against one another in the marketplace. The marketplace in which many firms operate today is truly global. Almost every person and business in the world obtains goods and services that are provided through a supply chain whose inputs come from around the world. Firms use information technology to make real-time adjustments to production and inventories, the latter of which may be stored in “rolling warehouses” of containers, trucks, and railcars. Transportation planners in both the public and the private sectors need to understand the dynamics of freight if they are to wisely allocate resources designed to improve the efficiency and safety of freight movements. These movements are considerably more complex than person travel in urban areas and change far more quickly than do commuting patterns. The picture is further complicated by the recent emergence of supply chains, which portray the often lengthy process of production in a spatial context. A few chains are very short, as in the case of fresh fish

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A Concept for a National Freight Data Program: Special Report 276 taken from the dock to a nearby restaurant for consumption that evening. The production of automobiles and aircraft is at the opposite end of the spectrum. They are assembled from components produced in many different places, which are in turn made up of smaller components from other suppliers. The production of a single automobile is contingent on parts supplied by hundreds of vendors, who move their products to the final assembly point. The importance of understanding supply chains can be illustrated further by considering foods on the shelves of supermarkets. They are almost always shipped from the initial producer to a regional distribution center. There they are assembled for delivery to the local supermarket. The movement from initial producer to distributor is often invisible to decision makers in local communities, who encounter trucks making the rounds from the few distribution centers to many local supermarkets. Upset about congestion, they wonder why more shipments cannot be pushed back onto rail. The movement from initial producer to distributor might be a candidate for intermodal shipment. But the comparatively short end of the chain from distributor to retailer, which might amount to 20 miles— the contributor to congestion in the urban area—most certainly is not. It is only with a complete picture of how freight moves through the transportation system that policies and investments can be formulated that will enhance the economic competitiveness and reduce the costs associated with freight transportation. The need for information on how the freight transportation system operates is readily apparent. Most transportation agencies, especially those in the public sector, play no role in the production or consumption of the freight. Thus, what they know about it must come from direct observation, usually in the form of user and carrier surveys. The sheer complexity and number of agents involved in even a smaller supply chain make a single survey process that would illuminate all parts of it impossible to design. Different parts of the chain operate at different spatial and temporal scales and involve different business processes. A multitude of agents influence freight movements, including the shipper, receiver, customer, carrier, regulator, and distributor. Each makes travel choices or influences those made by others at one or more points in the supply chain. Moreover, many of these agents have limited or incomplete knowledge of the factors influencing the choices made by the

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A Concept for a National Freight Data Program: Special Report 276 other agents. Thus, in order to understand the system as a whole, one must examine and synthesize information from each major step in the supply chain. The challenge in collecting such information is to acquire it as efficiently as possible, without disrupting the target of interest. Freight transportation surveys are typically carried out at the places where goods are produced or distributed, since they tend to be relatively small in number and easy to locate. At least three classes of survey are used to collect data at these points of concentration. Establishment surveys typically target the producers and consumers of goods. Historically, there has been a much greater emphasis on understanding producers than consumers, since the former are considered the linchpin of the economy, while the latter are often considered as a large and widely spread marketplace. Distributor surveys can capture information on goods movement through intermediaries, a fast-growing segment of the transportation industry. Both can be supplemented with information from carrier surveys. These surveys are focused on the physical agents of distribution, the business patterns of which are felt in terms of flows on the transportation network. The key benefits of each of these approaches are discussed in the following sections. ESTABLISHMENT SURVEYS Freight flows reveal the patterns of trade between firms and households in the marketplace. Collecting data from one or both ends of this transaction makes sense for a number of reasons. One of the most important is that it allows generalizations from the survey to be applied to the economy or local marketplace as a whole. If something is known about the shipment of widgets from surveys of a few factories that produce them, the total traffic of widgets can be inferred by simply counting the number of widget factories and ascribing the observed behavior to all of them. Many commodities are produced by only a small number of firms but consumed by a larger population. Collecting data at a few locations (the producer) is far more efficient and less costly than attempting to capture the same data at the much more diffuse level of the consumer. Most establishments both produce and consume goods. Thus, they are both shippers and receivers. If the economy is assumed to be a closed system, a survey at either location can be assumed to illuminate the same

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A Concept for a National Freight Data Program: Special Report 276 patterns of movement between them. Aside from the obvious differences in scale at each end, there are some subtle differences that distinguish the two types of establishments. Shipper surveys are often favored because shippers tend to be fewer in number, easier to classify and characterize, and easy to identify and locate. In addition, they are often considered the true drivers of the economy. Shippers usually either own the means of transportation to the customer or have a distribution manager who is familiar with the details of how the goods are shipped. The goods they produce are most often identified with the sector of the economy they belong to. Food companies produce food, for example, and paper is produced by paper companies. Thus, linking the output of firms segmented either by commodity produced or their industrial classification is typically a simple exercise. Finally, the production cycles of firms often result in fairly regular intervals of shipments. Shipper surveys have typically been oriented toward firms in the mining and manufacturing sectors of the economy, under the assumption that such firms produced the majority of goods transported by freight carriers. This was probably a valid assumption 25 years ago, before industrial consolidation became common. Many industries were vertically integrated and produced most of the components of their products. The automobile industry is an example of such a business model. Until recently the industry not only produced the final product but also all of the intermediate products within it, such as a upholstery, glass fixtures, stereos, tubing and hoses, batteries, and the like. The shipment from the shipper to the receiver was thought to portray most of the time and distance traveled between production and consumption of most goods. Even when a manufactured product was sold through intermediaries, such as wholesalers and retailers, they typically were located close to the ultimate consumer of the product. This may still hold true for certain types of commodities, but it is no longer universally true. The advent of supply chain logistics has all but eliminated the ability to understand freight movements through shipper surveys. A recent study of trucks crossing the U.S.–Canada border revealed that half were bound to or coming from a warehouse, distribution center, or transportation terminal. Indeed, almost a quarter of the trips were between such transshipment points on both ends of their journey. The shipper is

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A Concept for a National Freight Data Program: Special Report 276 rarely visible in these transactions. Moreover, a shipper survey can capture information about exports to other countries, but these transactions are often handled by a domestic intermediary who is characterized as the receiver of the goods. Finally, in a supply chain environment many shippers produce only parts of a larger product, one that may undergo several incremental stages of assembly before it is ready for delivery to the final consumer. Many planners wishing to better understand freight have advocated surveying receivers in addition to or instead of shippers. While the universe of consumers is far larger than the universe of producers, it has been argued that their purchasing decisions directly determine the level of goods being moved. Moreover, it is thought that the presence of thousands of receivers in urban areas, each consuming goods produced by several sectors and in relatively small increments, gives rise to the large number of urban truck movements. Such urban truck movements are seen as both major contributors to and victims of congestion. Many analysts have pointed out that almost all of the inefficiencies of the transportation network are encountered in congested urban areas, which receivers are more sensitive to than shippers. Receiver surveys can reveal the mix of goods consumed by firms and households, including goods purchased from abroad. Given the large deficit of trade in America, where imports amount to three to four times exports of merchandise, this constitutes a significant portion of goods movement that cannot be captured in shipper surveys. The trend toward globalization and the transition of the U.S. economy from industrial production to a service economy underscore the importance of foreign imports in the domestic supply chain. The sheer number of consumers in the economy is a significant limitation to the use of receiver surveys. A single truck leaving a factory may deliver goods to a handful of intermediate destinations, each delivery in turn being divided into many individual shipments to the final consumer. Thus, hundreds of surveys of receivers would need to be carried out to capture the information about the output of a single factory. Many final consumers are households. Individual households may only purchase durable manufacturing goods on an infrequent basis, but collectively in an urban area they may consume the same products over regular intervals.

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A Concept for a National Freight Data Program: Special Report 276 The large sampling frame required for receiver surveys has kept them from being widely adopted. However, such surveys are the most effective means of collecting information about certain types of commodities, such as consumer electronics and textiles. Many of these goods are produced abroad, and their largest concentration in the domestic supply chain occurs in distribution centers close to the point of final consumption. It should finally be noted that the distinction between shipper and receiver is perhaps unhelpful and leads to disjointed data collection efforts. As previously noted, almost all sectors of the economy are both producers and consumers of goods. A survey program that would focus on both patterns simultaneously would offer more value and insight than each completed separately. DISTRIBUTOR SURVEYS The importance of warehousing and distribution centers has increased dramatically in the last two decades. When goods move through one of these intermediate points the visible linkage between the original shipper and the ultimate receiver is broken. The shipper most often no longer knows who the end purchaser will be, nor does the final consumer deal with the original shipper. The intermediary, who then controls the distribution of the goods from shipper to receiver, is the only agent in the supply chain who understands these linkages. Among such intermediaries are transportation terminals (including marine ports, intermodal centers, and truck terminals), warehouses, and distribution centers. Customs brokers and some freight forwarders also function as distributors, although they do not take physical control of the shipments. It is apparent that surveys of such distributors would be superior to either shipper or receiver surveys. Such surveys would capture two legs of the supply chain, as well as the characteristics of the transition between them. Like shippers, distributors tend to be relatively concentrated in number and location, which reduces the size of the required sampling frame. A shipment moving through a distribution center also implies the possibility of a change in mode of transportation. Despite their apparent advantages, such surveys are only infrequently carried out and are not known to form the basis of any public-sector

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A Concept for a National Freight Data Program: Special Report 276 freight data collection program. The private ownership of some distribution hubs may make them harder to detect, and securing the cooperation of the owners may be more difficult. Other centers may have high flow rates concentrated during relatively few hours, making data capture impractical or disruptive. Finally, many distributors have a legitimate business requirement to protect the confidentiality of their clients or may lack permission to share such information with third parties. These limitations must be overcome through a combination of nonintrusive survey methods and careful recruiting, because distribution centers are rapidly becoming the most efficient place to gather information about freight movements and their metamorphosis during the movement from initial production to final consumption. CARRIER SURVEYS Capturing data about shipments while in transit is perhaps the easiest and least expensive way to gather information about them. This is especially true for surveys completed in intercity corridors, where carriers can be stopped without immediately generating bottlenecks and congestion. These surveys are most often used to gather information from truckers, about whom little information can be gleaned from other surveys. Carrier surveys allow not only the collection of origin–destination and commodity information, but also detailed statistics concerning characteristics of the vehicle and the driver. Large numbers of surveys can be collected in a short period of time and can easily be expanded to represent the population of trucks passing the survey point. As such, carrier surveys are more suitable for local studies or characterizing areas that can be enclosed by a survey cordon. Most carrier surveys are able to gather information about both the weight of the shipment and the vehicle, which are key data required in calculating the design requirements of roadway infrastructure. This information is almost never available from other surveys, where the agents typically focus more on the metrics of shipment size and value. Information about routing, travel times and temporal patterns, and carrier responses to delays and congestion is only available through carrier surveys. Moreover, by randomly sampling from the traffic stream, the full universe of shipments can be illuminated, perhaps revealing important seg-

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A Concept for a National Freight Data Program: Special Report 276 ments of the market that are not covered by traditional surveys or that are growing faster than others. Carrier surveys also suffer from important limitations. Of all the links in the supply chain, carriers usually possess the least information about the commodities carried or the true origin and destination of the shipment. Carriers often lack any information at all about the contents of containers. Even when they do know the origin and destination of the goods, they often have a difficult time characterizing their industrial classification. This frustrates efforts to understand how the shipments fit into the supply chain or opportunities for alternative means of shipment. The mix of carriers and commodities also varies considerably by region of the country, making it difficult if not impossible to generate a regional or national picture of freight movements. COMMENTARY No single survey type is capable of capturing information about the entire supply chain. This is even more so today than in the past, owing to the rapid increase in globalization, industrial consolidation, and the use of intermediate distributors. All of the survey methods discussed are capable of illuminating only a single link in the supply chain, with the exception of distributor surveys, which can capture two. From an efficiency and cost standpoint, distributor surveys would be superior in all cases except for single shipments from original producer to final consumer. While common in the agriculture and fossil-fuel segments of the economy, such simple shipments appear to be rare in the larger realm. The value of each of these surveys becomes readily apparent when they are used together to capture information about the entire supply chain. A carrier survey, for example, can be used to estimate the universe of commodities flowing on a multimodal freight network. This in turn would reveal which commodities are typically moved through distribution centers. Surveys conducted there would greatly increase knowledge about such movements, as well as about which commodities are likely to benefit from such consolidation. Some commodities will be better represented in shipper or receiver surveys than in distributor surveys. The choice between survey types will depend on the structure and size of the industry. Receiver surveys are likely to be a far more efficient way to

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A Concept for a National Freight Data Program: Special Report 276 gather information about food shipments than any other survey type, for example. In contrast, the distribution of many durable manufacturing products will be better understood through traditional shipper surveys. Using each survey program to focus on the commodities that are concentrated in its domain during shipment is the only way to paint a lucid and robust picture of freight flows. Using a combination of survey programs will complicate the overall freight data collection and summarization process. Yet it offers the only means of fully understanding the freight transportation system and the factors influencing choices made by the users and managers of the system.