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Integrating Freight into MPO Activities 3-45 Public policy on freight transportation Develop champions and advocates for freight and investments. With the exception of roadway- freight planning. Few local decision-makers and gen- related freight projects, current public policy eral public members understand the link between often hinders investments in existing freight efficient freight movements and quality of life. Artic- infrastructure and operations. This relates to ulating the positive benefits of freight can help create public investment or subsidy of private for advocacy for freight planning and garner support for profit operations. Many local, state, and federal freight improvement projects. agencies currently are struggling with this issue, because freight transportation continues to be challenged with continued growth. Lack of dedicated funding. In general, there are Investigate existing funding programs. Many states a limited number of dedicated funding sources and metropolitan areas have existing programs that available specifically for freight transportation. can be used to fund specific types of freight improve- While some states have programs like rail grade ments. Many states manage industrial rail access pro- crossing safety programs, most local agencies grams, which provide capital to short-line and must use existing programs or rely on their regional railroads for completing improvements. ability to access federal earmarks or other federal Other states manage similar programs for other aid programs. modes. MPOs should investigate the types of funding programs that could be made available for freight improvements. New project development partners. The success- Develop outreach strategies. There are a number of ful development and implementation of freight strategies that can be employed to more fully engage projects often relies on private sector participa- the private sector freight community in the planning tion. This requires the development of relation- and programming process. Users should also reach ships that currently do not exist in many areas. out to economic development agencies and chambers In addition, the development of these relation- of commerce, because they often have existing rela- ships is often challenged by the differences in tionships with the private sector and many even man- planning horizons between public and private age their own funding and financing programs. sector partners, as well as by the requirements placed on private entities to use public funds. Assessing Freight Project Impacts Overview A critical part of transportation planning and programming is the ability to measure the potential impact of specific projects. These impacts feed into the overall program and help identify the best projects and their resulting impacts on a variety of factors. Specifically, an impact assessment provides a decision tool for comparing investments in alternative projects, provides justification for government investment and the type of government investment, and calculates distributional benefit-cost ratios. The questions the assessment answers include the following: What are the transportation system performance impacts of the project? What are the nonfreight implications of freight projects? What is the economic effect of improvements to transportation system performance? What are the broader industry and economy effects from direct transportation impacts? Who benefits from improved freight transportation? What are the logistics and business process effects of improved freight transportation? Will the freight transportation project lead to business attraction or retention for a region? To accurately conduct a thorough assessment, MPOs must use a variety of methods. The appropriate method or process will depend on the type of project and anticipated impacts. MPO staff should develop a set of activities that best address project goals. Figure 3.2 illustrates the types and the interrelationships of the various methods used to evaluate transportation investments.

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3-46 Guidebook for Freight Policy, Planning, and Programming in Small- and Medium-Sized Metropolitan Areas Travel Demand Methods Transportation Impact Methods Economic Impact Methods External Impact Methods Decision Methods Figure 3.2. Framework for evaluating transportation investments. Figure 3.2 represents an idealized framework that can be applied to all transportation invest- ments. It is idealized in the sense that several models do not fit neatly within a single box. It does, however, provide a convenient framework for describing how freight investments can be converted into public benefits. Travel Demand Methods include the traditional four-step models (trip generation, trip distribution, mode split, traffic assignment), with special attention paid to truck and rail diversions. They also include some of the current thinking on freight models. Transportation Impact Methods determine the transportation-related benefits from the pro- posed improvements. These can include reduced roadway maintenance costs, reduced oper- ating costs, and reduced shipper costs. These also include hybrid models that blend multiple methods together to address specific needs (Highway Economic Requirements System [HERS] for highways, ITS Deployment Analysis System [IDAS] for ITS deployment, etc.). External Impact Methods include nontransportation benefits attributable to transportation improvements. These include land use, safety, security, and environmental. Economic Impact Methods convert the various impact measures into direct and indirect eco- nomic benefits. These include input/output, regional simulation, and regression models. Decision Methods include methods such as benefit-cost and internal rate of return used to evaluate and help determine the best allocation of public investments. Basic versus Advanced Approach Freight project impact assessment activities range in complexity based on the type of project, the geographic area, and the anticipated impact areas. In general, assessment activities tend to be more complex than some other transportation planning and programming activities. At the most basic level, nonquantitative evaluations can be undertaken to determine potential impacts on communities and key regional industries. The basic approach for freight project impact assessments focuses on qualitative assessments generated from public and private stakeholders and the use of traditional tools historically used by MPO staff, such as travel demand models. More rigorous assessments involve the use of a variety of tools and models to quantitatively measure potential impacts. The advanced approach builds on the basic approach by increasing the use of tools and models to conduct the project impact assessments. The outline of methodologies provided summarizes the types of analyses available to MPO staff based on the type of project. Key Activities The assessment of projects is closely related to the project evaluation criteria and builds on the identification of projects. The results feed into the performance and funding as part of the project justification. Assessment activities focus on the calculation of anticipated impacts to system per-

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Integrating Freight into MPO Activities 3-47 formance, whether they be economic-, environmental-, or transportation-specific. The approaches focus on activities that identify potential impacts from the qualitative and quantitative perspectives. Qualitative efforts focus on interviews and focus groups with impacted communities (private and public) and can be undertaken with low levels of effort as part of the basic approach. The quantitative activities focus on the use of models and more rigorous stakeholder input. Basic Approach Activity Assessing Freight Project Impacts--Basic Activity Type Programming Level of Effort Low to Moderate Technical Complexity Low Data/Analytical Tool Needs Moderate. Conduct significant private partner outreach to evaluate quali- tative impacts; use existing travel demand model, as appropriate. Outreach/Partnership Needs High. Conduct significant outreach to private partners to build support for projects; activities should consist of interviews, focus groups, and for- mal freight technical advisory committee meetings. Training/Education Needs Low. Requires staff to apply freight knowledge to impact analyses; should explore resources available from FHWA. http://ops.fhwa.dot.gov/freight/FPD/index.asp Related Activities Regional Freight Profile, Freight Project Identification, Freight Project Evaluation Criteria, Freight Project Funding and Innovative Financing. Key activities: Conduct qualitative assessments of the impacts of freight projects. Step 1. Identify potential impact areas. Individual projects will have specific impacts, how- ever, these impacts will fall into similar categories, including economic, environmental, com- munity quality of life, and transportation access and mobility. Step 2. Identify key stakeholders. To ascertain the specific impacts, it is necessary to identify the key stakeholders. These stakeholders will consist of industry representatives (carriers, manufac- turers, retail operations, etc.) and the general public (residential areas, community centers, etc.) located in close proximity to the project area. These stakeholders will be accessed to identify key qualitative impacts. Step 3. Conduct stakeholder interviews and focus groups and analyze findings. The list of stakeholders identified in Step 2 will be contacted and engaged in a series of interviews and focus groups to identify impacts and issues. Step 4. Review existing transportation model for application. Basic model outputs can be used to highlight problem areas and project impacts. Many MPOs may have already developed truck assignments that can be used in existing travel demand models to calculate the impact on truck operations. If the existing models have the capabilities, their outputs should be used to calculate project impacts. Step 5. Develop recommendations and impact assessment summaries. Based on the stake- holder input and potential model outputs, a summary of the impacts should be developed. The results will feed into project prioritization and funding activities. Advanced Approach Activity Assessing Freight Project Impacts--Advanced Activity Type Programming Level of Effort High

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3-48 Guidebook for Freight Policy, Planning, and Programming in Small- and Medium-Sized Metropolitan Areas Technical Complexity High Data/Analytical Tool Needs High. Relies on the data collected and tools developed as part of the regional freight profile, the freight needs and deficiencies, the freight project identification, the freight LRP element, and all the evaluation activities. Also, relies on significant private partner outreach. Outreach/Partnership Needs High. Conduct significant outreach to private partners to build support for projects; activities should consist of interviews, focus groups, and formal freight technical advisory committee meetings. Training/Education Needs High. Requires staff to apply freight knowledge to project impact analyses using advanced tools, such as models or simulation programs; should explore resources and training available from FHWA and NHI. http://ops.fhwa.dot.gov/freight/FPD/index.asp Related Activities Regional Freight Profile, Freight Project Identification, Freight Project Evaluation Criteria, Freight Project Funding and Innovative Financing. Key activities: Develop and implement quantitative project impact assessment process. Step 1. Classify the type of project. To assign the appropriate methods for analyzing large- scale freight projects, staff must first classify the project in terms of its spatial, modal and action/intervention characteristics: Type of Facility Location: (a) local entry/access point, (b) regional corridor, (c) facility; Type of Modes Involved: (a) air, (b) water, (c) rail, (d) truck, (e) combinations; Type of Motivation: (a) capacity, (b) access, (c) speed/flow, (d) cost, (e) reliability; and Type of Investment: (a) expand existing facility, (b) build new or alternative facility, (c) provide new modal service, (d) make an operational improvement to existing facility. Step 2. Define the relevant evaluation issues. Based on the type of project and potential impacts, staff should identify the key objectives and policies to be addressed, for example: National freight network capacity or LOS, National economic growth and productivity and international trade, Local or regional income and economic development, Benefits to particular mode, carrier, or industry-specific targets, and Allocation of costs and benefits to assess equitable funding. Step 3. Select and apply the relevant tools for calculation of transportation impacts. The primary analysis tools will establish direct impacts. The types of tools consist of the following: Network Analysis: Providing links, nodes, capacity and performance--rail, highway; Facility Handling Analysis: Capacity and cost for ports, terminals, bridges, tunnels; and Shipper and Operator Logistics Analysis: Ultimate cost implications of mode and facility choices. After selecting the required type of tool, it is critical to identify the types of input data needed and potential sources needed to use those tools for a freight investment analysis. The types of data include the following: Vehicular traffic in terms of origin-destination, time, distance, vehicle class or purpose; Commodity flow patterns in terms of volume, weight, or value by commodity type; Freight flow classifications in terms of bulk, break bulk, container, truck load, less than truck load; Prices and costs for operators and users; and Assumptions on values of time delay, schedule reliability, and cost-sensitivity.

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Integrating Freight into MPO Activities 3-49 Some projects will have complicating factors not addressed by the primary methods that can- not be ignored. These are primarily cases where the project focuses on a single mode, but has a secondary impact on other modes because it either (a) directly affects the cost, performance, or level of demand for other modes or (b) indirectly shifts the relative differences in cost or per- formance among modes. These secondary transportation performance impacts need to be con- sidered as part of the impact analysis and they are one of the critical features of many large scale freight projects. If any of these secondary impacts are expected, additional tools should be selected to charac- terize the nature of those impacts, which will then be used to provide additional input to the pri- mary analysis tools. These types of tools include the following: Shipper logistics choice models, Intermodal performance models, and Analysis of economic impact on modal competitiveness. Step 4. Select and apply the relevant tools for calculation of expected economic impacts. Having identified the direct effects on freight flow, performance and cost in Step 3, the next step is to provide guidelines for translating those findings into relevant policy impacts (as previously identified in Step 2). The relevant policy impacts will be defined in terms of magnitude and inci- dence, broken down by the following dimensions: Form of Economic Impact: Cost reduction, productivity, income generation, jobs; Geography of Impacted Markets: Local, regional, national, international; and Distribution of Economic Impacts: In terms of shipper/user (commodity and economic sector) categories or mode/operator categories, as applicable to address policy issues. To calculate or estimate those impacts, it is necessary to apply additional analysis models that will translate the "Step 2 transportation impacts" into the selected types of "Step 4 economic impacts." The types of economic models that can be applicable for each type of economic impact include the following: Supply chain models, Regional economic growth or impact models, National production or productivity models, and International trade models. Step 5. Apply relevant decision methods. Having estimated the expected economic impacts from proposed freight investments in Step 4, the final step is to present those eco- nomic impacts in a format that can be effectively used for investment decision-making. The user will be free to select among various project ranking and selection methods, including the following: Benefit-cost analysis, Cost-effectiveness analysis, Equity impact analysis, and Multicriteria weighting analysis. Common Issues and Potential Solutions Assessing proposed project impacts can be a complicated process, especially if the ultimate goal is to calculate quantitative measurements. Major challenges include data and tool avail- ability, the ability and expertise to use the tools, and the development of new processes to