SPECIAL REPORT 252

POLICY OPTIONS FOR INTERMODAL FREIGHT TRANSPORTATION

Committee for Study of Policy Options To Address Intermodal Freight Transportation

TRANSPORTATION RESEARCH BOARD

NATIONAL RESEARCH COUNCIL

National Academy Press

Washington, D.C.

1998



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Policy Options for Intermodal Freight Transportation: Special Report 252 SPECIAL REPORT 252 POLICY OPTIONS FOR INTERMODAL FREIGHT TRANSPORTATION Committee for Study of Policy Options To Address Intermodal Freight Transportation TRANSPORTATION RESEARCH BOARD NATIONAL RESEARCH COUNCIL National Academy Press Washington, D.C. 1998

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Policy Options for Intermodal Freight Transportation: Special Report 252 Transportation Research Board Special Report 252 Subscriber Categories IA planning and administration VII rail VIII freight transportation (multimodal) Transportation Research Board publications are available by ordering individual publications directly from the TRB Business Office, through the Internet at http://www.nas.edu/trb/index.html, or by annual subscription through organization or individual affiliation with TRB. Affiliates and library subscribers are eligible for substantial discounts. For further information, contact the Transportation Research Board Business Office, National Research Council, 2101 Constitution Avenue, N.W., Washington, D.C. 20418 (telephone 202-334-3214; fax 202-334-2519; or e-mail aarcher@nas.edu). Copyright 1998 by the National Academy of Sciences. All rights reserved. Printed in the United States of America. NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competencies and with regard for appropriate balance. This report has been reviewed by a group other than the authors according to the procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The views expressed in the individually authored papers that are included in this report are those of the authors and do not necessarily reflect the views of the committee, the Transportation Research Board, the National Research Council, or the project’s sponsors. The study was sponsored by the Federal Highway Administration and the Federal Railroad Administration of the U.S. Department of Transportation and by the Transportation Research Board. Transportation Research Board funds came from unrestricted contributions of the Association of American Railroads, the UPS Foundation, Norfolk Southern Corporation, and Consolidated Rail Corporation. Library of Congress Cataloging-in-Publication Data Policy options for intermodal freight transportation / Committee for a Study of Policy Options to Address Intermodal Freight Transportation. p. cm.—(Special report ; 252) ISBN 0-309-06451-1 1. Freight and freightage—Government policy—United States. 2. Containerization—Government policy—United States. I. National Research Council (U.S.). Transportation Research Board. II. Series: Special report (National Research Council (U.S.). Transportation Research Board); 252. HE199.U5P65 1998 388' .044'0973—dc21 98-16533 CIP

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Policy Options for Intermodal Freight Transportation: Special Report 252 Committee for Study of Policy Options To Address Intermodal Freight Transportation EDWARD K. MORLOK, Chairman, University of Pennsylvania, Philadelphia ROBERT E. BOWLES, PPG Industries, Pittsburgh, Pennsylvania MICHAEL S. BRONZINI, Oak Ridge National Laboratory, Tennessee WILLIAM J. DEWITT, University of Tennessee, Knoxville ROBERT H. FRENZEL, United Parcel Service, Washington, D.C. JOHN L. KING, University of California, Irvine RICHARD C. LARSON, Massachusetts Institute of Technology, Cambridge YSELA LLORT, Florida Department of Transportation, Tallahassee ROGER E. NORTILLO, Maher Terminals, Inc., Jersey City, New Jersey ELIZABETH OGARD, Schneider National, Inc., Green Bay, Wisconsin JOHN R. PLATT, New York State Thruway Authority, Albany THEODORE PRINCE, “K” Line America, Inc., Glen Allen, Virginia ANDREA RINIKER, Port of Tacoma, Washington DAVID STEIN, Southern California Association of Governments, Los Angeles ERIK STROMBERG, North Carolina State Ports Authority, Wilmington Liaison Representatives SHERRI ALSTON, Federal Highway Administration, Washington, D.C. EVIE K. CHITWOOD, Maritime Administration, Washington, D.C. STEPHEN M. GRIMM, Federal Railroad Administration, Washington, D.C. PETER A. JOHNSON, Marine Board, National Research Council, Washington, D.C. Transportation Research Board Staff JOSEPH R. MORRIS, Senior Program Officer, Transportation Research Board

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Policy Options for Intermodal Freight Transportation: Special Report 252 Preface This study of policy options for intermodal freight was initiated by the Transportation Research Board (TRB) Executive Committee in 1995. The Executive Committee recognized that freight transportation is of critical economic importance to the United States and that intermodal freight transportation is one of the major technological and organizational trends affecting the performance of the sector. The Executive Committee also recognized that the federal government and many state and local governments are working to accommodate public transportation facilities and programs to the needs of intermodal freight. The Executive Committee decided to undertake a project that would highlight the importance of intermodal freight transportation efficiency, identify major impediments, indicate areas where research could resolve or reduce existing problems, and identify changes in public policy that could help foster more efficient intermodal freight movements. The scope of inquiry would focus on land access issues at intermodal freight terminals, including the public policy issues raised at major terminals serving interstate commerce, with an emphasis on the public role in resolving freight terminal access issues. Intermodal freight transportation is any movement of goods that involves two or more modes of transport, for example, shipments of goods in containers that are transferred between truck and rail, and shipment of bulk commodities that involves transfer between rail and water. The total of all such movements accounts for a minority of U.S. freight activity, measured in physical volume of freight or in the cost of services. However, intermodal freight is critical in international trade,

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Policy Options for Intermodal Freight Transportation: Special Report 252 in transport of many high-value products, and in military supply; it has been a source of trucking industry cost savings and rail industry revenue growth; and intermodal transfers, which often require coordination of government entities and multiple private-sector firms, can be physical and organizational bottlenecks affecting the performance of the entire freight system. Because it competes with single-mode freight, the intermodal option spurs efficiency in a large segment of the freight industry. The public sector is looking to intermodal freight as a means of controlling government highway costs, reducing pollution, and stimulating local employment. Freight transportation is a joint enterprise of the private sector, government, and public enterprises (for example, public port authorities). Private firms provide direct services to shippers, but public enterprises and government provide major components of the infrastructure. It is important to review public-sector programs that serve freight to determine how well they are keeping up with rapid change in industry. To conduct the study, TRB formed a committee that included members with expertise in intermodal freight transportation, state and local government transportation administration, and public policy. The committee was formed according to the procedures of the National Research Council (NRC) to ensure a balance of points of view. The study committee examined policy issues confronting government officials at the federal, state, and local levels. The committee selected topics to complement and update other recent reviews of intermodal issues, including the report of the National Commission on Intermodal Transportation and U.S. Department of Transportation studies of impediments to intermodal freight efficiency. The committee decided that its contribution should be in the definition of principles to guide decisions as governments venture into developing the new kinds of transportation infrastructure projects and new forms of arrangements with users that will be needed to respond to changes in the freight industry. The committee’s conclusions are in four areas: Principles for government involvement, Federal surface transportation programs affecting freight, Regulatory and operations issues, and Public finance of intermodal freight projects.

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Policy Options for Intermodal Freight Transportation: Special Report 252 As sources of information for its report, the committee organized a workshop for government officials, industry executives, and researchers and commissioned a series of papers on special topics. The papers appear at the end of this volume, following the committee’s report. The authors and titles of the commissioned papers are as follows: Randall W. Eberts, “Principles for Government Involvement in Freight Infrastructure”; Jean Lauver, “Federal Surface Transportation Legislation and Freight”; Daniel Smith, “Freight Projects of National Significance: Toward a Working Definition”; Barrie R. Nault, “Information Technology for Freight Transportation Coordination”; and John E. Petersen, “Public-Sector Financing in Intermodal Freight Transportation.” The committee acknowledges the contributions that these authors have made to this report through their participation in the workshop as well as their papers. The authors are responsible for the contents of their papers. This report has been independently reviewed according to procedures of the NRC Report Review Committee. Reviewers were chosen for their diverse perspectives and technical expertise. The purpose of the review was to provide comments to assist the authors and the NRC in making the report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following persons for their participation in the review of this report: A. Ray Chamberlain, American Trucking Associations, Inc.; John Glover, Port of Oakland, California; William J. Harris, Jr., Texas A&M University System; Lester A. Hoel, University of Virginia; David Luberoff, Harvard University;

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Policy Options for Intermodal Freight Transportation: Special Report 252 Bradley L. Mallory, Pennsylvania Department of Transportation; and Paul E. Nowicki, Burlington Northern Santa Fe Railway. Funding for this study was provided by the Federal Highway Administration, the Federal Railroad Administration, and TRB. The study was performed under the overall supervision of Stephen R. Godwin, TRB Director of Studies and Information Services. The study director was Joseph R. Morris. Frances E. Holland provided administrative and clerical support. Norman Solomon edited the report and the commissioned papers. Suzanne Schneider, TRB Assistant Executive Director, arranged the report review process for TRB. The highlights of the consensus findings and recommendations of the study committee are given in the Executive Summary. The complete presentation of findings, recommendations, and policy options appears in Chapter 6. Background information on public policy issues concerning freight transportation and the scope of the study are described in Chapter 1, which should be read in conjunction with the Executive Summary by readers unfamiliar with the issues. The basis for the committee’s conclusions is explained in Chapters 2 through 5. Edward K. Morlok, Chairman Committee for a Study of Policy Options To Address Intermodal Freight Transportation

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Policy Options for Intermodal Freight Transportation: Special Report 252 Contents Part 1—Report of the Committee         Executive Summary   3 1   Introduction: The Intermodal Freight System, Policy Issues, and Study Scope   10      The Intermodal Freight System Today   12      Study Scope   17 2   Principles for Government Involvement   20      Changing Government Roles in Freight   21      Deciding on Government Involvement   29      Subsidized Versus Unsubsidized Participation   32      Analysis Tools   35      Guidelines for Determining the Scope of Public-Sector Participation   38 3   Federal Surface Transportation Programs and Freight   46      Use of Highway Trust Fund Revenues for Nonhighway Freight Projects   49      Project Selection and Priority for Freight Projects   51

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Policy Options for Intermodal Freight Transportation: Special Report 252      Projects of National Significance and Federal Responsibilities   54      Basic Structure of the Federal-Aid Program   61 4   Regulatory and Operations Issues   65      Facilitating Application of Information Technology   67      Economic Regulation of Carriers   69      Pricing Practices   71 5   Public Finance of Intermodal Freight Projects   77      Who Should Pay for the Project   80      Innovative Mechanisms for Raising Capital and Operating Funds   81      Management of Transportation Trust Funds   84      Rules for Use of Tax-Exempt Bond Finance   85      Relation of Federal Tax and Aid Policies to Privatization   87      Project Finance and Interstate Competition for Economic Development   88 6   Summary, Conclusions, and Recommendations   91      Intermodal Freight Policy Issues   91      Principles for Government Involvement   94      Federal Surface Transportation Programs and Freight   98      Regulatory and Operations Issues   102      Public Finance of Intermodal Freight Projects   104      Research Needs   108     Study Committee Biographical Information   111

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Policy Options for Intermodal Freight Transportation: Special Report 252 Part 2—Commissioned Papers         Principles for Government Involvement in Freight Infrastructure Randall W. Eberts   117     Federal Surface Transportation Legislation and Freight Jean Lauver   153     Freight Projects of National Significance: Toward a Working Definition Daniel Smith   199     Information Technology for Freight Transportation Coordination Barrie R. Nault   234     Public-Sector Financing in Intermodal Freight Transportation John E. Petersen   258     Paper Author Biographical Information   314

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