Rail Freight Solutions to Roadway Congestion--Final Report and Guidebook (2007)

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27 This chapter presents case studies exemplifying public ini- tiatives in rail freight, most of them featuring some form of public-private partnership. The goals of the chapter are to show how investments in the rail freight system can alleviate road congestion and to show the range of the potentially rel- evant types of situations and solutions where they may apply. Many of the issues and dynamics identified in the Literature Review appear as live elements in the cases presented here, and a number of the projects are current both chronologically and in their fresh approach to problems. There are nine case studies examining freight rail-related projects primarily in the United States, but including exam- ples from elsewhere in North America and from overseas. The projects are of four types: intercity corridors, urban corridors, metropolitan citywide initiatives, and facilities. Most illustra- tions treat a single undertaking, but the two concerned with facilities consider groups of projects or programs that centered on a single theme. Half of the examples are connected to ports, which is a reflection of the importance of foreign trade in rail- road transportation and the ability of ports to concentrate freight traffic volumes into trainload quantities. The nine cases are identified by type and motivation in Table 3-1. The case studies focus on the relevance of each project to the relief of roadway congestion and the motivations that caused the project to be funded and done. The treatment of each initiative is not necessarily exhaustive and may not dwell on aspects that in other contexts might be regarded as essen- tial, although the main features of all projects are covered with a fair measure of completeness. Each case study begins with a description of the project or projects, then examines the relevance to this research and its motivations. Last, the case studies review the outcomes and lessons that may be drawn from the case for the guidance of planners, often with emphasis on the practical means of implementation. There are variations in the presentation of projects, mainly because of innate differences in their characteristics and status, but presentations adhere to this general format. All of the cases considered here create solutions to roadway congestion, but in almost no case was this the primary moti- vation for the project. The most common impetus was eco- nomic development or the related matters of port or regional competitiveness. Viewed from the perspective of how projects attract political support and financial backing, these illustra- tions suggest that the economic card is a strong one to play and can win relief for roadways where a program based on congestion happens not to suffice. Even so, reduction in road congestion formed an important part of project justification in every instance, and crowded roads are linked to the ques- tion of competitiveness. Congestion was a particularly resonant issue where the relief was obvious—as in grade cross- ing improvements—or was bound up with safety perceptions. Finally, as truck volumes continue to grow and capacity strains increasingly turn acute, congestion may drive more projects, because of the logistical effect on economic per- formance and public frustration with deteriorating highway levels of service. Case Study 1: Pennsylvania Double-Stack Clearances Type: Intercity Corridor The Project1 The 1980s were not kind to the Port of Philadelphia. While ports across the country were experiencing vigorous growth as international traffic soared, Philadelphia’s share of the Delaware River cargo fell from 70 percent in 1980 to 42 per- cent in 1987. The drop in port activity resulted in a loss of high-paying longshoreman’s jobs at a rate of 6 percent per year during that same period. C H A P T E R 3 Detailed Case Studies 1The material presented here is based on presentations made by and con- versations conducted with representatives of the Pennsylvania DOT, for- mer Conrail employees, and several secondary research sources. Nevertheless, opinions expressed herein are those of the authors.

Efforts to diversify the Port’s leadership position as the nation’s leading temperature-sensitive cargo port2 had been successful for several “dry” break bulk commodities such as paper, steel, and cocoa beans. Container traffic, however, was declining at an alarming rate, idling significant portions of the Tioga and Packer Avenue Marine Terminals. The Philadelphia Port Corporation’s Strategic Business Plan of that period suggested that the Port continue to focus on break bulk cargo—a sector that represented nearly 60 percent of the Port’s traffic volume. Opportunities in higher margin traffic, such as long-distance international containers and imported motor vehicles would be limited, inasmuch as the regional transportation infrastructure could not accommodate the more efficient double-stack contain- ers and multi-level automobile racks de rigueur in the rail industry and available to several competing ports along the Eastern Seaboard. Dissatisfied with a future in which Philadelphia’s role as an international cargo destination could be marginalized, the City, State, and Port officials undertook a series of bold ini- tiatives to modernize port and regional transportation facili- ties and position Philadelphia to compete with Baltimore, Norfolk, and New York. But while the modernization of port facilities and highway connectors was wholly within the con- trol of the state government and port agencies, the regional rail infrastructure was not. Without needed improvements to railroad clearances, the value of the other modernization pro- grams could be lost. Hence, the Port of Philadelphia and the Commonwealth of Pennsylvania approached Conrail to outline their vision for the future and to solicit their support—both financial and tactical—to facilitate change. Conrail was then the leading provider of Class I rail freight services to Pennsylvania. Critical to the public-sector coalition’s success with the pri- vate sector was the assurance that the clearance investments would not upset the balance of traffic currently enjoyed by the railroad. Similarly, the Canadian Pacific railroad, and an international shipper of dimensional cargo who was one of the Commonwealth’s major employers, sought to improve their competitive position through direct investment in the project. Ultimately, the $100+ million investment for the Pennsyl- vania Double-Stack Clearance Program was shared among state and local governments, regional port agencies, railroads, and a major shipper. The funding formulas used on the project sought to allocate public funds to common use improvements. In such areas, the State’s matching funds constituted as much as 50 percent of the total. For restricted-use segments, Conrail provided most funding, up to 100 percent in many places. Of the total investment, the State provided approximately 38 per- cent, Conrail provided 60 percent, and the balance was made up from local sources and state-sponsored bonds. Between 1992 and 1995, the Pennsylvania Department of Transportation (PennDOT) coordinated the work of the rail- roads and numerous contractors, who “cleared” 163 obsta- cles (e.g.,/i.e., by undercutting rail rights-of-way and raising vertical clearances on railroad signal bridges and tunnels, as well as highway and township road bridges) on Conrail’s east-west operating route from the Ohio border to the Port of Philadelphia, and Canadian Pacific’s north-south operating route (a portion of which was over Conrail tracks) from the New York border to the Port of Philadelphia. In addition, the project improved horizontal clearances in order to accom- modate dimensional movements from Wilkes-Barre to the Port of Philadelphia3. The project brought about various benefits in three pri- mary areas: • Reduced Shipping Costs and Improved Service—The improved clearances provided both the commercial incentive and the operating efficiency for Conrail and Canadian Pacific to provide improved service and lower rates to the region’s shippers. Although Conrail, as the rail dominant carrier in the region, sought to maintain the existing competitive balance, several commercial and operational concessions were required to achieve the 28 3http://www.fhwa.dot.gov/freightplanning/ Project Type Case Illustration Motivation 1. Intercity Corridor 1) PA Doublestack Clearance Port/Regional Competition 2) VA I-81 Marketing 1st Safety, 2nd Congestion 3) Betuweroute Freight Line Port/National Competition 2. Urban Corridor 4) Alameda Corridor Port Capacity & Competition 5) Sheffield (KC) Flyover Hub Capacity 3. Metropolitan Citywide 6) Vancouver Gateway Gateway Competition 7) Chicago Rail Futures Economic Development 4. Facility 8) State Rail Access Economic Development 9) Inland Ports Port/Regional Competition Table 3-1. Types of case studies. 2http://www.inventpa.com/

desired public benefits. In a few circumstances, the clear- ance improvements provided a viable competitive rail alternative where none had previously existed. • Competitive Positioning for the Port of Philadelphia— Clearance improvements for the east-west and north-south routes helped Philadelphia recapture some dimensional traffic lost to other Mid-Atlantic ports and connected the Port to the national double-stack network for inland distri- bution of international cargo. • Improved Economic Development Opportunities—The clearance program helped Pennsylvania capture a significant amount of regional economic growth. While the National Highway System has long favored Central and Eastern Penn- sylvania as an ideal location for manufacturing and distribu- tion activities, the lower cost of double-stack intermodal service enhanced the attractiveness of the region, such that the rate of growth in trucking and warehousing employment more than doubled in years following the completion of the Clearance Project4. Relevance The Pennsylvania Clearance Project is a moderate-scale intercity corridor project that improved the competitiveness of both the region’s industrial base and the Common- wealth’s primary distribution and international port facili- ties. Its stimulus to the development of intermodal freight services diverted traffic from the highways of the host state and its neighbors and strengthened the national intermodal network. The project is an instructive example of public- private partnership, and at the time of its inception, it was considered a radical departure from traditional railroad- State relationships. Railroads had eschewed public monies, fearing an unending demand for commercial and opera- tional concessions. States, conversely, had viewed the rail- roads as obstructionists to economic development and competitive diversity. The successful implementation of the Pennsylvania Clearance Project proved both hypotheses incorrect and provided a model for future public-private cooperation for rail investment. From the public-sector perspective, the perceived benefits included the following: • Preservation of High-Paying Jobs Associated with the Port of Philadelphia—These included the direct employment jobs at the Port and the indirect employment associated with Port-related activities. • Preservation of Port Competitiveness—The prospect of improved operating efficiency for the railroad was expected to result in “lower transportation costs for businesses and, ultimately, lower prices for consumers.”5 • Highway Traffic Diversion—Absent the completion of the Pennsylvania Clearance Project, the growth of rail inter- modal activities in Pennsylvania was stifled. Two markets relatively untapped prior to the clearance work blossomed following its completion: – International containers moving into Pennsylvania and Maryland from the West Coast. The movement of international containers to Pennsylvania and Maryland had previously been accomplished through long-haul drays from railroad terminals in Ohio and Illinois. The completion of the Double-Stack Program permitted these containers to move to Harrisburg and Philadel- phia respectively, substituting rail movement for high- way drayage. – Intermodal traffic to and from the Pittsburgh market. The ability to run double-stack trains to New York and Philadelphia through Pennsylvania provided the needed critical mass to make serving the Pittsburgh region with rail intermodal service economical. The NS Terminal in Pitcairn, Pennsylvania (former Conrail), brought long-absent premium intermodal service back to the region. Motivation The motivation for the Pennsylvania Double-Stack Clear- ance project can be thought of in terms of the combined effect of opportunity and risk. While the potential for regional and commercial economic benefit was clear to all parties, the public-sector officials also recognized the risk of economic harm to their constituents that could result from inaction. Relief to highways was a useful by-product of the initiative, but the initiative was founded on considerations of economic development and preservation. For Philadelphia, the Port represents a significant factor in the regional economy. The Port employs approximately 3,500 people directly and supports an additional 10,000 area jobs in the service, retail, and financial sectors. These jobs provide the region with some $16 million in City and State revenues, including wage, sales, and income taxes6. But while the 1980s saw modernization investments in excess of $250 million by competing ports like Baltimore, New York, and Norfolk, Philadelphia’s investment was less than $10 million7. The Port recognized that without an aggressive investment program, the economic vitality of the region was at risk. 29 4http://www.bea.gov/bea/regional/gsp/ 5http://www.cgp.upenn.edu/CGPDocLib.nsf/ 6http://www.cgp.upenn.edu/CGPDocLib.nsf/ 7Ibid.

The Pennsylvania Legislature saw the issue in terms of its potential to enhance economic development across the Com- monwealth and to promote industrial development among high-technology industries that rely heavily on components imported from Asia. The legislature commissioned a study by PennDOT that concluded that such benefits could indeed be achieved through the completion of the Double-Stack Program. Conrail recognized the potential of the double-stack clear- ances to improve their competitive position vis-à-vis motor carriers moving manufactured goods into the Mid-Atlantic region. The opportunity to operate stacked containers and fully enclosed multi-level automobile carriers would reduce the effective cost of providing transportation and would pro- vide improved cargo handling. The fortunate alignment of these strategies and the com- mon urgency of timing resulted in a cooperative venture that succeeded in helping each of the participants achieve their strategic goals. Although there was compromise along the way, the parties recognized that no single issue was worth the loss of the whole project. Lessons and Outcomes The Pennsylvania Double-Stack Clearance Program has been operating for approximately 10 years as of this writing. In addition to its intended benefits, it has produced signifi- cant additional benefit to the State and the entire Eastern Seaboard. The program has produced outcomes of interest to this study through its performance and through the imple- mentation of a successful public-private partnership. Performance The Pennsylvania Double-Stack Clearance Program cre- ated a powerful economic development tool for the State and for the railroads. At its peak, the Pennsylvania double-stack corridor handled approximately ten trains of excess-height equipment daily, most of them stack trains laden with 150 or more containers. The hoped-for economic development con- tinues to be realized. Lower costs to shippers have solidified Pennsylvania’s position as an East Coast manufacturing and distribution hub. In recent years, three cities along the Penn- sylvania Double-Stack Clearance Route have been among the 50 fastest growing manufacturing regions in the nation. These are Pittsburgh (ranked 19), Allentown-Bethlehem- Easton (ranked 26), and Harrisburg-Lebanon-Carlisle (ranked 46)8. Since their takeover of Conrail, Norfolk Southern and CSXT sought to use the benefits of the Pennsylvania Double-Stack Clearance Program by expanding the number of cleared routes and the capacity of intermodal terminals along the routes and by further promoting economic development in the region. The creation of new and the expansion of existing manufac- turing and distribution centers is a testament to the foresight of those involved in this project. In addition, the Pennsylvania Double-Stack Clearance Pro- gram has generated significant environmental and congestion benefits, transferring a significant portion of long-haul motor carriage to rail intermodal movement. Intermodal traffic growth along the corridor served by the clearance program exceeded the average for the rest of the eastern network, and that growth came quickly. Within the first few months of operation, intermodal loadings increased 10 percent9. Implementation Part of the importance of the Pennsylvania Double-Stack Clearance Project is that it was an early success in the move- ment toward public-private partnerships and that it signaled a fundamental shift in the willingness of railroads to accept public funding for infrastructure improvements. Several of the factors that brought this about may be instructive for other rail projects: • The funding program sought to use private capital to accel- erate and magnify potential benefits. While a Pennsylvania Double-Stack Clearance Program might have existed in some fashion absent public-sector involvement, the urgency of timing and the desire to promote specific eco- nomic development opportunities prompted the State to initiate a joint-venture development with the railroad. • Railroad cooperation in the project was negotiated carefully. Conrail as the dominant railroad in the region was unwilling to accept the creation of a state-subsidized competitor through the project. Because this project repre- sented a significant departure from traditional public- sector dealings with the railroad, some additional points should be recognized: – Although the commercial and operational demands of the marketplace were already pressuring Conrail to invest in clearances, the railroad was concerned that public-sector investment would require unreasonable commercial compromise. To avoid the introduction of subsidized competitors, Conrail negotiated investment- matching formulas that served as a threshold for access. Other railroads—if unwilling to commit financial resources to the project—would largely be denied the benefits of the program. 30 8Expansion Management; January 2003; “50 Hottest Cities for Manu- facturing Expansions and Relocations”. 9http://www.fool.com/decathlon/1996/decathlon961004.htm.

– The State, by negotiating adroitly with the railroad as to the routes to be cleared and the type of access to be provided, was able to develop a solution acceptable to Conrail and ultimately to all parties. PennDOT resisted the temptation to use this initiative as a forum to resolve all outstanding issues between the railroad and the State. By not overreaching the scope of the project, PennDOT earned the trust of the railroad and opened the door for additional ventures. • Community support was founded on minimizing the detrimental effect of the construction. Three distinct efforts helped mitigate community backlash: – The participants made a significant effort to preserve the historical character of the improvements. Even in rural areas, concrete tunnel facings were carved to resemble the original cut-stonework and historic bridges were under- cut or raised rather than replaced wherever possible. – Aiding community acceptance was the smooth handling of problems and concerns during the most controversial portions of the project. Rock blasting in two tunnels located beneath suburban Philadelphia communities caused numerous broken windows, cracked walls, and smashed household items. This incidental damage was handled quickly, and special call-in numbers were pro- vided to ensure prompt and appropriate settlements. – Through the close coordination of several PennDOT agencies, many communities benefited through the acceleration of bridge replacements and repairs associ- ated with the corridor improvements10. Beyond its originally identified goals, the project provided a second cleared access route from the Midwest to the New York market. This provided Conrail with significantly greater operating flexibility and ultimately permitted the successful division of Conrail assets to Norfolk Southern and CSX. Shippers in the East continue to reap the rewards of the Double-Stack Clearance Program through lower rates, and industrial development in the region continues to flourish. For the Port, however, the competitive advantages brought about by the program may be more difficult to sustain. The Port of Norfolk is an unintended beneficiary of the Double- Stack Clearance Project with some trains to the Midwest moving across Pennsylvania to that region.11 Similarly, com- peting ports in Wilmington and Baltimore are both seeking to obtain access to the national double-stack network through the Pennsylvania clearances. In many ways, the com- pletion of the Pennsylvania Double-Stack Clearance Program continues to provide benefits far in excess of its anticipated results and far beyond the region it serves. Case Study 2: Virginia I-81 Marketing Study Type: Intercity Corridor The Project12 The Virginia I-81 Marketing Study examined the potential for new railroad freight services to attract truck traffic from Commonwealth highways to alleviate roadway congestion and improve safety. The project used primary market research, competitive and operational analysis, diversion modeling with traffic data, and cooperative planning with rail- road officials to establish the product features and attendant costs and investments that would be required to shift varying levels of highway volume to rail. Earlier studies had deter- mined that the direct benefits of freight modal diversion along I-81 were significant and included improvements in highway user, safety, and pavement maintenance costs, as well as in air quality. Although formally concerned with a complex of roads that included I-95, the project chiefly focused on I-81 and the practical means to produce direct benefits in that corridor. The Virginia Department of Rail and Public Transportation undertook the work at the direction of the Commonwealth legislature, with financial support from the Tennessee DOT and the Federal Railroad Administration (FRA), and in-kind support from the Norfolk Southern Railroad. The evaluation concluded that efficient and frequent inter- modal service in the corridor could divert up to 3 million trucks annually, or approximately 30 percent of the projected truck traffic in 2020. The evaluation further determined that the investment in infrastructure and equipment required to effect such a diversion was between $7 and $8 billion, and identified the location and timing of the proposed expendi- tures. This evaluation then became a catalyst for three forms of action: (1) Commonwealth of Virginia initiatives to seek federal monies for both rail and highway improvements; (2) organization of a multi-state I-81 corridor coalition to examine, coordinate, and pursue funding for such improve- ments; and (3) investments by Norfolk Southern in new serv- ices consistent with the long-term opportunities identified in the project. The study had three core elements: • Interviews and Surveys—Primary market research was conducted among the freight users of the Virginia highway 31 10http://www.fhwa.dot.gov/freightplanning/. 11This will change as the advent of the Heartland Intermodal corridor opens a direct double-stack route from the Port of Norfolk to the Ohio valley. 12The material presented here is taken from the final report of the proj- ect issued December, 2003, and from project papers. The author of this case study was a participant in the study.

corridors. These users fell in two general categories: ship- pers whose goods traveled in Virginia on their way to mar- ket, and truck lines who served such shippers. Each user type made decisions that caused traffic to move by highway and could cause it to move by rail. Shippers did this by their selection of carriers, and truck lines by their choice to perform or purchase linehaul transportation. Decision makers were identified and questioned about the potential for their use of rail intermodal services and the perform- ance characteristics required to attract their business. • Scenario Development—Based on the findings from inter- views and surveys and on traffic flow data and the experi- ence of railroad officials, a series of alternative railroad service designs were prepared. These designs included the introduction of new services and technology and were associated with improvements to facilities and structures that would support higher quality operations. These improvements were calculated to raise railroad perform- ance to levels sufficient for the diversion of traffic from highways. The location, timing, and capital requirements of specific improvements were developed, and their effects were summarized according to whether Virginia acted alone to invest in facilities within its borders or had coop- eration for investments in other states along the corridor. • Diversion Analysis—Scenarios were translated into inter- modal cost and service characteristics for individual origin/destination traffic lanes that contributed to truck volume on Virginia highways. These performance charac- teristics were compared with those competitively available from all-highway operations, and lane-by-lane modal diversions were estimated. Freight volumes were evaluated with respect to four major characteristics that influence its divertibility: (1) the origin, destination, and routing of traf- fic in relationship to serving facilities; (2) the density of traf- fic in lanes and operating paths; (3) the commodity and equipment mix; and (4) the distance traveled door to door. The determination of diversion amounts was accomplished by use of a cross-elasticity model, informed and supported by the findings from interviews and surveys. The key dynamic in the traffic diversion analysis was pub- lic investment that allowed the introduction of new inter- modal trains, raised their performance characteristics, and reduced their cost of operation to the point where it could shift the competitive modal balance. Funding of infrastructure improvements was the main form of investment considered, particularly through the upgrading of right of way and also through the expansion or new development of terminals. The outline and potential from improvements was explored in the development and testing of operational scenarios, and the per- formance effect and influence on diversion from specific proj- ect elements were evaluated in the last stage of the study. Relevance The I-81 Marketing Study evaluated a major inter-city cor- ridor for the direct purpose of roadway traffic relief through investment in freight railways. The public projects it pointed to and could impel would be multi-million dollar alternatives to interstate highway spending—not eliminating but proba- bly reducing such spending, and certainly providing addi- tional freight system capacity in a railroad right of way that is naturally segregated from automobile traffic. Although the study itself was small in comparison with engineering proj- ects and dealt with prospective analysis instead of accom- plished facts, it was substantial as a piece of research and encountered a number of common or important issues in the use of rail for highway assistance: • New rail services considered in this study were exclusively intermodal, because of a joint judgment that carload services could not capture enough traffic to be meaning- ful for congestion mitigation. This judgment reflected the scale of the project’s objective, which was to produce material changes in statewide and multi-state corridor traffic. In less ambitious circumstances, local planners might feel that carload alternatives are sufficiently pro- ductive for their smaller geographic area, and for rail- roads, added carload business normally is attractive if there is capacity for it. • Deployment of alternative intermodal technology had an important role in the project, for two reasons: (1) it extended the reach of rail services beyond the dry van equip- ment types and long lengths of haul to which they conven- tionally appeal; and (2) it established competitive service for domestic highway trailers, which accounted for most of the truck volume on I-81 (and on most roadways), but are a declining portion of intermodal traffic. Expressway-style technology13 in particular proved useful, through its accom- modation of flatbed and tank trailer equipment and its effec- tiveness for domestic traffic at distances dropping toward 300 miles. • Lack of alignment between railroad capital priorities and public preference stood out as a clear challenge. Virginia’s interest was in parallel rail services to compete with North- South highways. Nevertheless, one railroad had withdrawn North-South service, not because it was unprofitable or 32 13Expressway is a trade name used by the Canadian Pacific railroad to describe a long, articulated, roll-on/roll-off platform set that is designed for highway trailers. The platform can be split at many points and accessed with removable ramps. Loading and unloading is fast, termi- nals are cheap, but platform sets are not. Its primary advantage is a high degree of compatibility with over-the-road operations, both in equip- ment accommodation and in service capability. An earlier generation of the technology was known in the U.S. as the Iron Highway.

unsuccessful, but because it paid less well than East-West services that used the same terminals—and the railroad regarded terminal capacity as fixed. Similarly, the Com- monwealth was interested in short- as well as long-haul services, to more thoroughly erode the traffic volume on highways. However, short-haul business had limited attraction for the area’s railroads, because profit margins were thinner than for long-haul business the carriers had yet to convert—and because railroad capacity was limited and internal hurdle rates for investment were high. The fundamental problem was that railroads were allocating resources under capacity and capital constraints and did not use public benefits in determining resource priorities. When public resources were introduced to this determina- tion, it raised the priority of public interests. • Looking toward implementation of investments,Virginia, like many states, needed to seek regional cooperation, not only between the Commonwealth and its neighbors, but also between the states and their municipalities. This was espe- cially true in regard to terminals and their drayage service, whose location and operation were crucial to the intermodal product and were the dominant component in shorter dis- tance lanes. Sixty percent of Virginia highway traffic began and/or ended its trip outside its borders, rendering Virginia and a number of other states interdependent for intermodal end-point service. This implied as well that the construction Virginia could initiate within its own jurisdiction produced a shared benefit, through the reduction of highway volumes for neighbors. Interdependence and shared benefits consti- tuted an argument for coordinated action and contribution, and led the Commonwealth and its rail partner to a dual strategy: (1) identify improvements that could be undertaken independently, and still conform to the larger strategic objec- tives of the project; and (2) form a multi-state coalition to respond to joint, multimodal needs and opportunities. Both components of this strategy were pursued. Motivation The I-81 Marketing Study was an intercity corridor proj- ect aimed at the reduction of truck volume and improvement of safety on interstate highways, and it could act as a precur- sor to publicly backed railway construction for this purpose. It was commissioned as an outgrowth of directives from the Commonwealth legislature, who in two resolutions called for examination of “the potential for shifting Virginia’s highway traffic to railroads” through alternative investments in rail facilities. The study had three motivations, as expressed par- ticularly in the resolutions HJR-704 and SJR-55: • Safety—Improvement to highway safety was probably the core political impetus for the study and was the central theme of SJR-55. The design standard for I-81 allowed for trucks at a maximum of 15 percent of total vehicle traffic. Truck activity in fact reached 15 percent during the morn- ing and afternoon peaks, climbed to 20 percent during the day, and approached 50 percent overnight.14 Nearly 30 percent of Virginia truck volume originated and termi- nated outside its borders, so a significant subset of I-81 commercial traffic traveled the full length of the state while having little economic connection to the Commonwealth. Finally, the highway itself lay in rolling, often rural terrain. As a result, the common experience of Virginians traveling I-81 was that of being surrounded by large, heavy trucks on dark, hilly roads, with the inevitable consequence that the automobile driver felt unsafe, regardless of the actual performance of the trucks. Accidents involving commer- cial vehicles were said to generate strong local sentiments, presumably because they resonated with this experience, and the weak economic bond of the trucking activity with the community allowed hostility to grow. The legislature cited truck volume and not accident statistics in its call to boost safety by removing highway traffic to rail, thereby perhaps recognizing the real source of public support. • Congestion—Relief to highway congestion is a second stated purpose of the study. The legislature cited the effec- tiveness of intermodal terminals for eliminating trucks from overcrowded highways in eastern Virginia and sought to extend this benefit to I-81. This was the main theme of HJR-704, and it was echoed in the later SJR-55, with its wish to “alleviate excessive volumes of traffic on Interstate Route 81.” Read narrowly, there was no explicit claim in the resolutions that I-81 was an overcrowded interstate—when compared with the more urban and easterly I-95 it was not as yet. Rather, the legislature’s emphasis was on the quantity of truck activity per se, because it contributed to such traffic slowdowns as existed, influenced capacity requirements, and shaped perceptions of safety. However, and more broadly, forecasts of conges- tion were very much part of the picture for state planning agencies responding to the legislature’s direction. For these officials, the federal projection of 90-percent growth in I-81 truck volume by 2020 was a concern specifically for its effect on capacity and congestion, as well as on safety. The planning agencies accordingly pointed to “the critical need to address the existing and future safety and congestion problems on Virginia’s highways” in their statement of the study’s rationale. • Alternative Investment—Railroads, as an additional option for the public provision of overland freight capacity, with 33 14The time-of-day figures were based on VDOT observations outside Roanoke. The corridor-wide daylong average for I-81 in Virginia was 29 percent, according to other VDOT statistics.

an expense profile and implementation schedule different from highway investment, formed the third motivation for the study. The legislature in SJR-55 took note of the multi- billion dollar cost and decade-long development required for widening of I-81 and put forward railroad investment for investigation as a shorter term solution.15 Another set of motivations were those of the Norfolk Southern railroad, a willing partner to the study. The I-81 Corridor was an underdeveloped intermodal market for var- ious historical reasons and offered large opportunities for rail market share growth with conventional long-haul services. As one point of comparison, intermodal market share in the lane between Harrisburg, PA, and Atlanta, GA, was 5 percent, versus 40 percent in the Harrisburg-Chicago lane of similar distance.16 In addition, the eastern coal business, which for generations had been the traffic baseload for Norfolk South- ern railroads, had gone into decline, and intermodal business built with highway diversions was the only likely replace- ment. However, additional north-south train services required capacity additions the railroad could not finance on its own, some of it affecting right of way with a meandering, 19th Century configuration or traversing countryside whose citizens resisted development. Although hard issues of resource prioritization made some and not all of the I-81 truck traffic attractive to Norfolk Southern, those priorities could be transformed by public investment. The strategic motivation for Norfolk Southern cooperation in the project was its need to construct a new traffic baseload on a reformed network, calling on new forms of financing to remove the constraints to growth, and to ensure a future for its railroad. Lessons and Outcomes The I-81 Marketing Study produced useful results and approaches. Interviews with shippers and truck lines yielded typical but valuable outcomes, with service reliability, cost of transportation, and transit time predictably named as the key criteria in selecting or changing modes. Railroad perform- ance was acknowledged as less costly but inadequate in speed and reliability, and the position of the I-81 corridor as under- served in the intermodal system was highlighted. Although buyers were willing to trade service for lower cost to an extent, they were not willing to pay more for superior serv- ice—although framed as a comparison of intermodal with over-the-road performance, it is not likely that respondents took superior service as a credible option. What did seem clear was that better service required less of a cost discount, and competitive service joined with significant cost reduction probably became a compelling option. Transit time was less flexible for motor carriers, who were concerned about the use of their assets and had made time commitments to their customers; for them, second-rate tran- sit pushed rail into a backup role or out of their picture entirely. Finally, although shippers of the most time-sensitive goods claimed to be more willing than others to switch carri- ers for the sake of small improvements in on-time percentage performance, most respondents used somewhat imprecise methods of performance measurement in any case. The con- sequence was that on-time improvements in the 5- to 1-point range tended to be required in order to be noticeable or material. Diversion estimates indicated that 700,000 trucks could be taken annually from the I-81 corridor in Virginia in the medium term (about 14 percent of its total truck traffic).17 In the long term, diversions could rise to 3 million trucks annu- ally (i.e., 30 percent of corridor truck traffic). This represented a medium-term diversion of one in seven trucks and a long- term diversion of one in three. Although these proportions were large enough to be meaningful for safety and congestion management, truck growth still was expected to continue on the corridor because of the general increase in commerce. However, because rail would be able to absorb 60 percent of new truck traffic, it could prevent I-81 from becoming more of a truck-dominated highway route than it already was, and this could appeal to citizens concerned about sharing the road with these larger vehicles. Several strategies were employed to increase the rate of diversion: • Segmentation—A range of services was used to appeal dif- ferentially to distinct segments in the market. Through such a combination of appeals, a greater portion of the highway volume could be put into play. The services varied by rail equipment types and their associated terminal require- ments and often called for separate trains. Conventional stack trains were aimed at international trade and such business as that of the Intermodal Marketing Companies (IMCs) that could use domestic containers. Standard TOFC equipment addressed IMCs and truck lines that depend on rail trailers or that had outfitted their trailer fleets for intermodal lift. Expressway-style service targeted 34 15During the period of the marketing study, Virginia transportation agencies also began to entertain proposals for expansion of the I-81 roadway. Proposals included truck-only lanes aimed at highway safety through segregation and were to be coordinated with railroad planning. 16Market figures are from Global Insight’s TRANSEARCH database, employed in the I-81 project. 17Based on capture of traffic measured in TRANSEARCH versus the aver- age AADTT of I-81 in Virginia. The scenario in which Virginia acted alone produced attractive but much lower diversions, because of the interstate character of truck traffic in the corridor.

the great majority of motor carriers and their customers who rely on unmodified equipment or non-van trailers, among them the private fleets. This service also shortened the lane distance that could be competed for domestically. A fourth service identified but not adopted in the study was the rolling highway configuration operating in some parts of Europe, where the tractor and driver accompany the trailer on the train. The market segment for which this could appeal consisted of the small truck lines and inde- pendent contractors (“owner/operators”) who have no driver or power to meet up with a load they forward by rail. For this group, the train functions as a kind of moving truck stop. • Product Strategy—Rail product design is central to its competitiveness and, therefore, its capability to divert traf- fic. The design for the I-81 study stressed speed, frequency, and reliability in order to offer a product that was fully the equivalent of single-driver, over-the-road service and not an inferior good. Its central focus was an appeal to a motor carrier clientele, because of the belief that market penetra- tion may be achieved more rapidly by this route and because the door-to-door integrity of the product may be stronger and therefore satisfy shippers more fully. The product featured trailer service, particularly through use of Expressway-style technology, because of the versatility of that equipment and its ability to accommodate trailers just as they are on the highway. This was a very substantial point, because it removed a capital investment requirement for truck lines to move their own equipment by rail, allowed their fleets to remain uniform and retain the efficiency of interchange- ability, and reduced (but did not eradicate) the costly problem of trailer imbalance. This kind of equipment also lent itself well to the attraction of confluent volume, in which travel routes from multiple points converge for a time over a section of highway and then diverge again. These routes are evident in the corridor network for I-81, displayed in Figure 3-1. Trainload volumes could be composed between terminals peripheral to Virginia to divert its through traffic, using long dray stems with low circuity, without necessarily providing terminal service directly to origins and destinations. The flex- ibility of Expressway-style technology made this kind of long- stem service feasible, and it already existed in Canada. Short-Haul Features—The rapidity and low cost of termi- nal transfers in Expressway-style service also rendered it effec- tive for the high-volume, shorter haul traffic, whose capture would raise the productivity of railway alternatives to road investments. Coupled with this was the appeal of the service design to large network motor carriers, through its use of fre- quent trailer service and transit speeds equivalent to the per- formance of single-driver trucks. These carriers could provide superior pickup and delivery service, because of the presence of operating assets in virtually all important market areas and their high degree of control over them. For those with irregu- lar route structures, the ability to balance equipment without return trips drove down drayage costs. The combined factors of terminal lift and dray expenses approached three-quarters of the total cost of intermodal operation at shorter distances (see Figure 3-2), making the combined influence of Express- way-style service for network carriers a strategic solution for the shorter lengths of haul. Lastly and as a policy option, public allowances that supported drayage service and reduced its cost could be added to aid the viability and penetration of rail. Rebates of the fuel taxes or tolls paid by these trucks were two of the possibilities—and here again, cooperative agree- ments between Virginia and its neighboring states could be effective, because drayage normally is tied to an interstate rail shipment. Network Strategy—The introduction of highway- competitive north-south rail service added a critical link to 35 Figure 3-1. Interstate 81 Through Virginia—Millions of Annual Trucks.

the national intermodal system, by completing a network cir- cuit in the East that was vital for equipment repositioning. Once large motor carriers could duplicate on the intermodal network the fleet balance economy they achieved on the high- way, their use of rail was apt to rise and their cost competi- tiveness to climb. This had a second-order influence on road diversions, because the large network truck line with a low- cost structure could win business away from less efficient operators or cause them to convert to intermodal. The Virginia I-81 Marketing Study made clear that mean- ingful relief to highway freight volumes in intercity corridors is possible with rail service and indicated some of the ways it could be brought about. I-81 in Virginia had certain advan- tages of location that tended to funnel traffic over sustained distances, but the lessons of the study are generally transferable. The adoption of a portfolio of products to address distinct market segments, frequent service that rises fully to over-the- road standards, and network and technology strategies to deepen penetration and produce systematic effects will be fruitful approaches for highway corridors in many quarters of the Country. Case Study 3: The Betuweroute Freight Line—Netherlands Type: Intercity Corridor The Project The Betuweroute rail freight Line (BRL) is a 160-km, £4.55 billion (US $5.1 billion) undertaking that will run from the Port of Rotterdam in the Netherlands to the German border, linking with the German rail network to continue south to the eco- nomic centers of the Rhine/Ruhr region. (See Figures 3-3 and 3-4.) From there, connecting lines run to Eastern Europe and through Switzerland to the Italian commercial centers of Milan and Bologna. Scheduled for completion by 2006, the BRL includes five tunnels with a total length of 18 km and 130 bridges and viaducts with a total length of 12 km. All tunnels are being built to accommodate double-stack trains. The imple- mentation of the new European Rail Traffic Management System and European Train Control System (ERTMS/ETCS) for communications between trains and traffic control on BRL will allow the trains to travel at a speed of 120 km/h with up to ten trains per hour in each direction. At this writing, this is the largest freight-only rail project under construction in Europe, although several other large rail infrastructure projects with sig- nificant freight elements are under way or planned. The Betuweroute project is made up of two sections: (1) a 48-km railway line between the Port of Rotterdam and the Kijfhoek switching yard, and (2) a 112-km connection linking 36 Figure 3-2. Dray and Lift Share of Total Cost by Mile Block. Figure 3-3. Map of Betuweroute for Rail Freight.

the switching yard and the Emmerich-Oberhausen rail line in Germany. Thirty-five km of the first section involves recon- struction of the existing port railway, with the remaining 13 km entailing construction along new alignments. The second sec- tion entails construction of a brand new alignment, of which 95 km is along the existing A15 expressway. The port railway line is designed to provide an efficient rail connection between the seaport and Kijfhoek, a major rail freight hub near the port that provides access to the European rail network. The 112-km connection to Germany provides speedy and efficient access to the port’s most important hinterlands in Germany and south- ern Europe. Rail traffic from the port is already substantial— in 2001, roughly 270 container block trains connected Rotter- dam with thirty destinations on a weekly basis. When construction began in 1999, the entire project was planned for completion in 2006. The reconstruction of the existing port railway segment was to be finished first in 2003 with the remaining sections completed around 2006. The project is complex, involving not only extensive tunnel and bridge construction, but also adoption of a new-to-the- Netherlands electrification technology (25kv AC instead 1.5kv DC), and the new ERTMS/ETCS, which has only seen limited adoption thus far. The BRL line is being built by the Betuweroute Project Orga- nization, a cooperation of the Dutch Ministry of Transport’s Directorate-General of Freight Transport and NS Railin- frabeheer railroad, which is part of Nederlandse Spoorwegen NV (Dutch Railways)—the rail operating company working for (and under the responsibility of) the national government. NS Railinfrabeheer is charged with ensuring the construction and maintenance of existing and new rail tracks. The Betuwe- route Management Group within NS Railinfrabeheer is re- sponsible for construction of the BTR and acts as a contractor and client for the line. The BRL is funded by the government of the Netherlands, along with some assistance from the European Commission (EC). Germany is funding connector rail improvements in that country. The idea of public-private partnerships (PPPs) is a new concept that was not even feasible until changes in Dutch government policy were enacted after the year 2000. However, on completion, it is anticipated that the BRL will be managed by a private organization that will aggressively mar- ket the BRL to any qualified train operating company. At this writing, several private freight operators are certified to operate in the Netherlands. By the time the project is com- pleted, all of the EC rail network should be accessible in a non-discriminatory manner to train operating companies that meet the necessary requirements specified by the EC and the infrastructure providers. Relevance and Motivation The Betuweroute is a large-scale intercity corridor designed to expand freight rail capacity and protect the competitive trade position of the Netherlands and its major port. The European Commission appointed the BRL as one of the 14 priority infrastructure projects in Europe. This is one of a series of rail freight projects being supported by the EC as part of its effort to discourage road haulage in favor of rail freight across Europe. As such, the Betuweroute is expected to reduce roadway congestion and yield environmental benefits, which are prominent policy goals of the EC. The BRL line forms a critical link in the European Union Trans European Network (TEN) for railways and will also link up to the sys- tem of Trans European Rail Freight Freeways (TERFFs). It is, therefore, a network-level investment whose systemic effects would multiply its policy benefits beyond the local area. However, the driving motivation for the project lies in its economic influence on the Netherlands. The existing railway lines in the Netherlands are primarily used for transport of passengers with only modest use for freight. Over time, changes in the logistics supply chain have led to increasingly flexible, diverse, rapid, and more customized transport systems of frequent small shipments. As a result, the use of road transport has increased by more than 30 percent between 1980 and 1991 and accounts for about 70 percent of all freight transport activity in the nation. In recent years, rail has 37 Figure 3-4. Betuweroute Parallel to a Roadway.

accounted for only 8 percent of transport output in the EC member countries—a very modest share. By 2010, the trans- port volume through the Netherlands is expected to grow to 1,106 million tonnes, an amount that cannot be transported by road alone. Expanding the use of rail to haul freight, particularly in cross-border trade, cannot be accomplished without new line construction. Whereas the Netherlands’ highway and rail net- works provide good cross-border connectivity, its rail network does not. The BRL will address both capacity and cross-border connectivity, by providing a direct rail route to the Netherlands’ most important trading partners and critically needed mainline capacity that can be devoted to freight. The primary and initial motivation for the BRL was to strengthen the international competitive position of Rotter- dam and all of the Netherlands as a transport and distribu- tion hub that serves as gateway to the industrial hinterland of Europe. A 1997 Dutch Study, Mainports in the 21st Century (by Gout, Haffner, and Van Sinderen, and published by Wolters Noordhoff) stated the Dutch policy case, which was that the nation’s long-run economic well-being depended on strengthening airport and seaport facilities and their freight connections to the interior of Europe. Based on a forecast of future growth in international trade, the analysis showed that existing roadways and rail lines could not provide the neces- sary capacity to allow the Port of Rotterdam to maintain its economic position as the pre-eminent container port for Europe. The “no build” scenario was for increasing road con- gestion, ultimately causing a loss of freight growth away from the Port of Rotterdam. Given this national objective of supporting freight growth, there was still the question of balance between expanding highways for trucking or expanding rail lines. A formal analy- sis considered issues of energy use, environmental impact, and traffic congestion implications. Dutch transport policy has been aimed at deploying all forms of transport in the best possible combination, with an emphasis on promoting alter- natives that lessen dependence on road haulage. The analysis concluded that a rail line best supported the accessibility and congestion reduction objectives of the Dutch government’s traffic and transport policy. The Betuweroute was thus seen as playing “an important role in maintaining and improving employment levels in the Netherlands.” According to the central planning office of the Netherlands government, the added value of the total direct and indirect effects from the presence of the BRL will range between US $4.0 and US $6.9 billion for 2003–2010, and between US $6.8 and US $12.7 billion for the period 2003–2025. Lessons and Outcomes Since the project will not be in operation until 2006, no results or effects have occurred yet. However, the project has been justified on the basis of achieving certain performance goals. The estimated future use of the BRL indicates that, by 2010, the total rail freight volume in the Netherlands will triple from 18 million to 65 million metric tons—traffic that most likely would move otherwise by road or not be seen in the Netherlands at all. A substantial portion of this growth is expected to be absorbed by the BRL. The port railway segment between Rotterdam and Kijfhoek is anticipated to carry 55 million tons, and the main stem of the BRL to the German border is expected to carry 32 million tons in 2010, or about 50 percent of the Netherlands’ total rail freight volume. From the perspective of the U.S. economic and political environment, the Betuweroute can be compared with a regional project with national significance. Even though the political and planning environments are very different, significant similarities can be found with Alameda Corridor I in the Los Angeles region. Both are essen- tially port projects aimed at moving high volumes of interna- tional trade to inland locations. Their underlying rationales are also quite similar. Both aim to preserve and advance the market position of a port vis à vis potential competitors through improved land-side transportation efficiencies, while ameliorating a broad range of negative effects on local communities resulting from increased traffic. The extended and extensive planning process led policy makers to reach similar conclusions: the most viable route to accommodate and indeed promote growth was through investment in rail infrastructure and that continued reliance on highways to absorb traffic growth was not feasible. Of course, the institu- tional arrangements are quite different, and the overall BRL investment is approximately double that of Alameda Corri- dor I. Moreover, whereas most of the funding for the Betuweroute will come from the greater public, the Alameda Corridor is being largely paid for through user fees by the private railroads using the facility. Case Study 4: Alameda Corridor Type: Urban Corridor The Project18 The Alameda Corridor connects on-dock and terminal rail facilities at the San Pedro Bay19 ports to terminals and the con- tinental rail network at downtown Los Angeles, California. 38 18The material presented here is based on a case study prepared for NCHRP 8-39, publications by Alameda Corridor East, and on presen- tations made by and conversations conducted with a representative of the Alameda Corridor Transportation Authority. Nevertheless, opin- ions expressed herein are those of the author. 19Composed of the Ports of Long Beach and Los Angeles.

It is an intra-urban corridor consisting of 20 miles of public, multi-track rail line, half of it grade separated in a sub-street trench, and controlled with centralized traffic management technology. It consolidates and governs access to the country’s top international container port by its two serving Class I rail- roads and, as such, is a nationally important infrastructure. The corridor accommodates container traffic growth for an expected 20 years, with capacity for 100 trains per day at speeds of 40 mph, in an urban environment. (See Figure 3-5.) The $2.4 billion project opened in April of 2002, after 20 years of development and 3 years of construction and is one of the largest public rail infrastructure initiatives in the United States. A planned second phase would improve connections between the space-constrained downtown operations and the huge goods distribution complex and available land in the so-called Inland Empire, at the rim of the metropolitan region. If finished, the second stage would produce a complete trans-urban rail corridor with a 55-mile span. The project brings about various benefits through two primary measures: • Route Consolidation—The Alameda Corridor Trans- portation Authority acquired and rationalized the network of rail lines serving the San Pedro Bay ports, consolidating all traffic to one route.20 • Right-of-Way Improvements—Reconstruction of the con- solidated route featured multi-tracking, grade separation, upgraded track material, and traffic control systems. Relevance The Alameda Corridor is a large-scale city project that supplies access capacity and reinforces the competitiveness of a major seaport. In so doing, it restructured portions of the metropolitan rail network and improved operations across it. Roadway congestion relief was not the chief impe- tus for the project, but congestion benefits certainly were claimed in the case for implementation and in the assembly of financing: • Two hundred grade crossings were eliminated by rebuild- ing the right of way and by redirection of traffic to a con- solidated route. This was estimated to remove 15,000 daily hours of vehicle delay from Los Angeles roads. • The street parallel to the rail corridor was widened and improved as part of the right-of-way reconstruction, lead- ing to better traffic flow. • The corridor is expected to prevent a large portion of the rapid, sustained growth in port container traffic from gen- erating new truck trips, on highways that already bear up to 28,000 trucks per day. By the year 2020, the access high- ways are projected to carry 60,000 trucks, and the corridor to handle another 30,000 that would otherwise have gone by road. – International containers serving Los Angeles regional consumption, production, and consolidation travel by 39 20This kind of rationalization is one of the effects railroads seek when they merge their networks. (a) Aerial View (b) Construction Figure 3-5(a, b). Alameda Corridor.

truck. Containers proceeding further inland by train can be railed directly from the ports or from an adjacent terminal or drayed over the road to more distant rail- heads. It is growth in the latter, drayage category that the corridor is projected to mitigate, by substituting direct rail from the port locations. However, no claims were made that current dray volumes would be diverted (and at least one local dray operator believes there is no risk of that occurring, mainly for reasons of service and operating effectiveness).21 • Approximately $90 million, or a bit less than 4 percent of total project financing came from grants for reduction of congestion. Part of this money was a State of California Flexible Congestion Relief Grant, but the great majority was sales tax revenue from the Los Angeles County MTA, authorized by local voters for freight rail service in relief of rising traffic congestion. The viability of a short-distance, high-volume urban rail project for congestion mitigation is of great interest to public planners, because rail typically is most effective at much longer lengths of haul and because most truck trips are rela- tively short. In the dry van markets for which rail intermodal services (like the Alameda Corridor) normally compete, one- third of the truck volume is below 100 miles, and railroad market share is not significant below 500 miles.22 If rail could penetrate local markets, its effect on congestion might be material. The difficulty is that the Alameda Corridor is not really competing in a local market. The rail traffic is continuing to inland destinations largely east of the Rockies, and although the corridor itself is a short-distance trip, its appeal is as a con- necting service. The competitiveness of schedules and costs exists within the context of long-haul lanes and the traditional strengths of railroading. The Alameda Corridor is not con- tending for Los Angeles metro area traffic, and it is not thought to be diverting current dray volumes. In addition, it enjoys the advantage of economies of density that are rela- tively rare in the national marketplace: an enormous, regular baseload of stackable containers going from a single origin to concentrated destinations. The unit of production in rail- roading is the train, and its efficiency is multiplied when cargo can be stacked; the San Pedro Bay ports routinely generate full trainload stack volumes almost by the score. There are few places like it. Even so, the corridor underscores the importance of density in making rail operations successful, and the sec- ond phase of its program creates intriguing possibilities. Alameda Corridor East extends the original structure 35 miles inland to Ontario, CA, through a series of rail cross- ing, signaling, and road improvement projects, some of which are now under way. Capital requirements approach one billion dollars through 2007. About one-half of this money is committed,23 with most coming from Los Angeles County and State of California congestion relief funds. The claimed benefits focus on grade separation and attendant gains in road traffic mobility and safety, train speeds, air quality, and direct and indirect employment. Nevertheless, the completed corridor will offer a trans-urban freight bridge through Los Angeles congestion. A rising quantity of container volumes, consisting both of foreign goods that are stripped and consolidated with domestic products for shipping onward, and of imports destined locally to Los Angeles, move from the ports to Inland Empire distribution facilities, around Ontario. The Alameda Corridor makes no assertion that it will capture any of this traffic for rail. Still, it is a worthwhile speculation24 whether some local contain- ers will choose to ride atop the normal railroad baseload to avoid the highway congestion and whether rail operators— already possessing frequent train service and obligated to add terminal capacity that is apt to be near Ontario—will see this as an opportunity.25 Motivation The Alameda Corridor is a port access and grade separa- tion project. It was not motivated by congestion relief, but it provides relief and employed that point in organizing community and financial support. Its chief objectives were as follows: • Raise Access Capacity and Maintain Port Competitive- ness—The economic and logistical performance of the San Pedro Bay ports is dependent on throughput and market access, both of which require adequate landside outlets. The ports’ competitiveness substantially has stemmed from the size of the indigenous Los Angeles market and the 40 21From a field interview conducted for the National I-10 Freight Corri- dor Feasibility project. 22From Global Insight’s TRANSEARCH freight traffic database. 23As of March 2003. 24At least one Los Angeles area distributor makes this point in an article from The Journal of Commerce, Volume 4, Issue 16, 4/21-27, 2003, page 17, “Wide Open Spaces.” 25The Alameda East projects affect Union Pacific right of way and are organized under a joint powers authority independent of the Alameda Corridor Transportation Authority. A separate set of proposed and par- tially funded projects affect BNSF right of way, also from the downtown end of the Alameda Corridor eastward to the Inland Empire. These projects feature triple-tracking and grade separations and include a 5-mile trench structure; sponsors of different sections are the Metrolink commuter service, CalTrans, and yet another joint powers authority with the acronym OnTrac. (Source: NCI Weekly Newsletter, 7/7/03, and conversations with local agencies.)

qualities of the available inland service. With import con- tainer traffic growing at a 12-percent compound annual rate, capacity is a persistent, pressing, and strategic chal- lenge that must be met at the piers and at the outlets. The Alameda Corridor is a response for each, because it facili- tates on-dock rail loading and penetrates from the docks to the key inland staging yards. • Improve Road Safety and Reduce Delays—The corridor grade crossing program is aimed at safety through lower accident risk and wider latitude for incident management on the roads and rails. Elimination of crossings means reduction in crossing delays and backups for traffic travel- ing the streets and tracks and for emergency vehicles that may be part of that traffic. This is accomplished by (1) funneling rail volumes to one corridor and away from alternate routes and their crossing points and (2) radical grade separation of the single remaining route. Route con- solidation limits the scope of disruption while the project is under construction, affecting the displacement of people and businesses in addition to traffic. • Improve Train Operations—Train speeds are doubled because of new and multiple tracks in a separated right of way. Reaching 30 to 40 mph and assisted by centralized traffic control, locomotive operating hours drop by 30 percent and the incidence of train passing delays drops by 75 percent. • Diminish Environmental Impacts—Environmental ben- efits from the project are of two sorts. The first is air quality improvement from fewer idling emissions, which is a direct result of better train operations and traffic delay reduction. Emissions by rail were projected to fall 28 percent, and by autos and trucks up to 54 percent. Second is improvement in neighborhood noise and vibration, which is produced by better track material, sub-grade right of way, sound walls, and consolidation of traffic to a more industrial route. Both kinds of bene- fits make living with freight easier for residents—as do the changes to road safety and delay and the separated route itself. • Promote Economic Development—The project created 10,000 short-term construction jobs and aids the produc- tivity of the region through its congestion benefits. How- ever, its key economic influence is accommodation of growth in foreign trade and improvement to its logistics. This has local and national dimensions, because of the value of the ports to the Los Angeles economy and the value of international trade to U.S. business. Approximately 70 per- cent of total project financing is to be reimbursed from user fees. These are paid by freight carriers and presumably reimbursed by their customers, making the shippers and receivers of freight the ultimate financiers and beneficiaries of the corridor. Lessons and Outcomes One year after opening, the Alameda Corridor was meet- ing its objectives. Through its performance and its imple- mentation, it was producing outcomes of interest to this report. Performance The corridor was carrying 33 trains per day after 1 year,26 most of them stack trains laden with 200 or more containers. Operations were attaining the 40-mph design speed and were performing 98 percent on schedule. With much faster transit and marked reliability improvements, railroads transferred 100 percent of their traffic to the new facility and kept it there from the inauguration of service. Successful performance meant there were a number of de facto outcomes whose achievement could be taken as pre- sumptive, although they had not necessarily been measured. Grade crossing delays will have been eliminated and road congestion therefore reduced. Rail and road emissions will have declined, and the opportunity for accidents decreased. The Burlington Northern Santa Fe reportedly stated that it would have failed to meet its commitments to customers for on-dock rail service were it not for the corridor. This state- ment implied that growth in street drayage had been moder- ated, and the throughput and competitiveness of the ports improved. Finally, as the corridor was operating at one-third of its capacity, the ports’ continuing growth had been accom- modated and its position as a rail-ready load center protected for a number of years ahead. Implementation Part of the importance of the Alameda Corridor is that it was funded and implemented despite the ambitiousness of its scale. Several of the factors that brought this about may be instructive for other rail projects: • The $1.6 billion in bonds and loans was expected to be repaid by user fees, but the funds were not guaranteed by the port, the railroads, or any government. Instead, the Author- ity achieved a kind of monopoly control by acquiring all of the rail access routes to one of the largest rail traffic generat- ing facilities in the country, and by assessing the user fee per container, regardless of the mode by which the container actually leaves the ports. The second measure not only guar- antees the fee so long as the port is active, it reduces any financial incentive a railroad might have to dray containers to an inland terminal. In combination, the two measures 41 26By the beginning of its 4th year, train volume had reached 50 per day.

ensure that any port container that moves by rail will use the corridor and, therefore, in a pragmatic sense, these measures guarantee the benefits as well as the loans. • Railroad cooperation in the project was bought. The rail- ways reportedly were not supportive of the corridor in its early stages and were brought on board by the purchase of their right of way. They contributed to the project’s design specifications, but did not make capital investments and, in fact, received cash. That said, the railroads are directly responsible for payment of the use charges that will retire the corridor’s debt, and they jointly agreed to the public sale of a strategic portion of their networks. Because the circumstances of rail cooperation are a sensitive part of the lessons to be taken from this project, two additional points should be made: – The nearly two-decade gestation period of the Alameda Corridor ran from the years just after rail deregulation, when freedom from government control was a hard- won gain, through a time when private capital was rela- tively accessible for railways and capacity underutilized, to the more constrained situation of the new century. Railroad needs, their managements, and their percep- tions and attitudes toward public projects and financing evolved during this time, if not uniformly. A proposal of the type contained in the Alameda Corridor would not necessarily meet the same railroad reception today, although the corridor’s method of winning rail cooper- ation is often effective in human affairs. – There were three railways originally affected by the corridor. One of them—the Southern Pacific, which owned the key piece of infrastructure—was later pur- chased by another. However, during a large part of the development phase of the Alameda Corridor, the Southern Pacific was independent and in poor financial health and its principal owner can be speculated to have had as much interest in its real estate as in its oper- ations. Although this may not be a unique set of moti- vations for railroad management, it is not a typical one, and it caused a special stress to be placed on the cash payment. • Community support was founded on frustration with daily delays at grade crossings and the recognition that they would grow. Through its use of a trench, the project sepa- rated and segregated freight traffic without imposing major adverse impacts on the surrounding neighborhoods. Aid- ing community acceptance were the absence of substantial changes to land use patterns and a right of way that ran mainly through industrial zones. Finally, a range of steps was taken to beautify the nexus of the corridor with resi- dential areas, some of which were economically depressed. The recognition that grade separation can produce freight segregation in particular is useful for planners, because it simultaneously treats concerns for mobility, safety, and community impacts. • The national value of the corridor, in U.S. foreign trade and in supply chains reaching across the country, provided jus- tification for the federal loan, which contributed 16 percent of total program capital. In addition, the dual character of the corridor as a private rail and public highway-grade sep- aration project meant that almost one-half of the bonds or 21 percent of total funds earned tax-exempt status from the Internal Revenue Service. The Alameda Corridor is promi- nent but not alone in its strategic importance to the national freight network, and many rail initiatives that alleviate congestion will also separate road grades. Conse- quently, portions of the case that substantiated this project’s financing are transferable to other projects of comparable or non-comparable magnitude. • Establishment of the Alameda Corridor Transportation Authority was an effective institutional step that gave the proponents of a complex, long-maturing plan the stamina, resources, focus, and power to reach and conclude con- struction. Even for projects that will not warrant a stand- alone organization, the Authority demonstrates the utility of sustained and dedicated management in some form, to drive a program forward to completion. By making freight activity easier to live with, exploiting its local and non-local significance, and tightly controlling eco- nomic incentives, the Alameda Corridor was able to mitigate roadway congestion, raise the capacity of the freight network, and encourage the growth of trade. Case Study 5: Sheffield Flyover, Kansas City, Missouri Type: Urban Corridor The Project27 The Sheffield Flyover increased the capacity and improved the performance of a major bottleneck in the rail network in and around Kansas City. At-grade crossing of high-density rail routes had not only led to train backups, but also caused extensive delays to highway traffic when trains blocked local streets. An innovative public-private partnership helped secure funding for and ensure the successful implementation of the flyover. (See Figure 3-6.) This project demonstrates 42 27The project was highlighted in an FHWA conference on “Financing Freight Transportation Improvements” (Transystems Corporation, 2001). The presentation to that conference provides many details con- cerning the project, including the steps taken to coordinate public and private efforts as well a description of the physical improvements to the system.

how public agencies can work with the rail industry to expand capacity and improve the performance of the local trans- portation system, with benefits to the region and the nation as well. Because of the success of the Sheffield Flyover, the railroads and public agencies decided to build a second major flyover in Kansas City in order to secure similar benefits. The project is a large-scale urban corridor initiative. It addressed a key bottleneck in the system where the Burling- ton Northern Santa Fe (BNSF) main line crossed the Union Pacific (UP) and Kansas City Southern (KCS) main lines. With 100 to 120 trains operating on the BNSF, 60 to 80 on the UP and KCS, and another 40 to 60 local trains operating in the area, this was described as the “third busiest railroad intersection in the country.” Trains were inevitably delayed as dispatchers worked to route them through the interlock- ings; the delayed trains blocked intersections for a mile or more. The resulting delays were especially difficult for trucks seeking to enter or exit a major industrial area hemmed in between the main lines. By constructing a flyover, it was possible to eliminate rail and highway delays associated with train interference at the crossovers. The project began operation in 2000 and covered nearly 3 route-miles almost entirely constructed on the Kansas City Terminal Railroad’s right-of-way; it included a main bridge of 6,740 feet and two other bridges of 890 and 150 feet. By double-tracking the flyover and keeping the existing tracks, it was possible to greatly increase the capacity of the intersec- tion, improving flow of through trains, and allowing better service to local rail customers. From the public’s perspective, the most visible benefit was expected to be a reduction in delays at grade crossings. Transystems28 estimated that 530 vehicle-hours would be saved daily for cars and trucks by elimination of grade crossings, based on the train volume, the average time that each train blocked a crossing, and the 4,500 daily highway vehicle movements through the area. At $14/hour, this was estimated to amount to a savings of $1.85 million annually. In addition, with fewer trains and vehicles delayed in the area, emissions were expected to be sharply reduced. Transystems did not provide details on the railway bene- fits, but indicated they would be approximately three times as great as the public benefits. This is borne out by a quick assessment of the benefits from reduced train delay. If 150 to 180 trains per day each saved 20 minutes in moving through this region (as estimated by Transystems), that would be a savings of more than 60 hours of train delay per day or 20,000 per year. The cost per train-hour is commonly estimated to be on the order of $250 per hour based on the hourly cost of equipment ownership plus the opportunity cost associated with the loads themselves. Hence, the delay cost of an average 20-minute delay to these trains would exceed $5 million per year. The project cost was $75 million. Raising the capital was a stumbling block for the railroads, even though they were will- ing to pay for the project on a continuing basis. Another prob- lem was that construction would increase the assessed value of the property and, therefore, the property tax owed by the railroads. Various public agencies were interested in provid- ing financial support, but there were barriers to using public funds. At one point, it appeared that an FHWA Section 129 loan would be approved to finance 25 percent of the project, based on the public’s share of the project benefits. This loan possibility fell through when trucking interests objected to the use of highway trust money for rail projects. State agencies were interested, but were prohibited from investing in a private-sector project. The financing problem was resolved by creating a “Trans- portation Corporation,” a quasi-governmental entity that can be created under Missouri law that can receive highway funds. A “T-CORP” can issue 20-year, state tax-exempt bonds to fund transport projects, and it receives ad valorem tax abatements. A T-CORP is represented jointly by the project owner and the Missouri Highway Department; the T-CORP owns the land and the project until the loans are paid off, at which point the land goes back to the previous owners. The net result for the Sheffield Flyover was that the T-CORP issued the bonds, the US DOT provided a letter of credit, and the railroads agreed to repay the loans. In addition to benefiting from low interest rates, the corporation enjoyed a property tax abatement worth $1.4 million per year (estimated by Transystems as being nearly 20 percent of the annual amortization costs). The project required a few other elements of cooperation. The project was supported by the Heartland Freight Coalition and the Greater Kansas City Chamber of Commerce, as well as Missouri DOT, FHWA, and the railroads. Some public land was needed for the flyover, and a land swap was arranged 43 28Transystems is the engineering firm that coordinated the project. Figure 3-6. Sheffield Flyover.

with the City. While the project was under way, work was done to modernize or coordinate 14 different utilities serving this industrial area. Also, a portion of one of the city streets had to be reconstructed and temporarily closed to enable completion of the flyover. Relevance and Motivation The Sheffield Flyover enlarged capacity and improved oper- ating performance in a top national rail center, reducing inter- ference with urban road traffic and raising the competitiveness of rail with highway services in the regional and cross-country markets. It affected roadway congestion in each of these dimensions, and it protected the highways from additional demand by helping to prevent depletion of the rail traffic base. Kansas City is the second-largest rail freight hub in the country after Chicago. Despite the marked reduction in the number of rail systems in recent decades, Kansas City remains a complex railroad operating environment. It is served by four Class I railroads (i.e., BNSF, UP, NS, and KCS), while the KCS-owned Gateway Western provides a route that reaches CSXT in St. Louis. The Kansas City Ter- minal Railroad supplies local switching services (actually per- formed by the Gateway Western), and various short-line and switching railroads serve the area. The metropolitan area has an intricate network of classification yards, industrial support yards, and through tracks. A major problem in the region is that major rail routes intersect in Kansas City, resulting in extensive delays to both trains and highway vehicles. The Mid-America Regional Council (MARC) (the local MPO) has documented the importance of rail to the region (MARC, 2002). Rail handles just over one-half of the freight tonnage moving through Kansas City. Over 80 percent of the rail freight is passing through the area, and this traffic amounted to 150 million tons in 2000. Much of this traffic is intermodal. The BNSF’s route from Los Angeles to Chicago, which handles 1.6 million containers and trailers annually, goes right through Kansas City. Another 23 million rail tons was received by Kansas City industries, while about 11 million tons were shipped out by Kansas City shippers. Rail’s market share varies greatly with the type of movement. Rail accounted for approx- imately two-thirds of the freight moving into or though the region; truck accounted for all of the intra-regional freight and more than three-quarters of the outbound freight. The rail share versus truck is growing for through traffic, stable for traf- fic inbound to the region, and declining for outbound traffic. During the 1990s, it became increasingly evident that var- ious national trends in rail freight traffic were disrupting both rail and highway traffic in the city. System rationaliza- tion was concentrating more traffic on fewer routes, leading to congestion and interference within the rail network, as well as increasing delays to highway traffic. Trains waiting for authorization to move through an interlocking often blocked grade crossings, frequently for 20 minutes or longer. Mergers, traffic growth, and shifts in freight traffic patterns required greater capacity along key rail routes within the city, but the bottlenecks where key routes intersected threatened to limit growth of rail traffic. The project, therefore, was seen to have both local and national significance. Grade crossings and local air quality were the obvious benefits for the local area. However, the movement of 1.6 million trailers and containers by train rather than by highway was recognized as much more than a local benefit, given that these shipments might otherwise be moving on the highways—not just through Kansas City, but also through many other cities throughout the country. Expanding the capacity of such an important rail hub was also of major significance for the national rail system. The 150 million tons of freight moving through the rail hub repre- sented at least 7 million truck shipments, including the inter- modal trailers and containers mentioned already. This is a good illustration of a network-level investment, whose broad system effects on railroad performance help retain rail traffic while ultimately diverting truck traffic from the roadways. Lessons and Outcomes The solution that was adopted involved construction of a rail flyover that separated major flows, expanded capacity of the through routes, improved highway access to existing industrial areas, and reduced congestion related to grade crossings. To implement the project, a mechanism was worked out to use public involvement to • Obtain a lower interest rate than the railroads could receive on their own, • Reduce property taxes, • Enable related improvements to local streets and utilities, and • Attend to details that might otherwise have stopped the project. This project is an excellent example of a public-private partnership that reduces highway congestion through rail investments that expand capacity and improve performance. It is worth emphasizing that the Sheffield Flyover addressed critical infrastructure needs for the national, main line rail network; the benefits were large enough to support substan- tial investment because of the high volumes of freight already moving over these rail lines. The project demonstrates how public investment can contribute to what might be called the “top of the network,” not just to the light-density lines whose preservation has often been an important concern for state and local governments. 44

Performance The Sheffield Flyover achieved its goals. Following the opening of the new facility in 2000, travel times for trains dropped from 40 to about 15 minutes (Cookson, 11/05/01). This is a clear improvement in train efficiency that translates directly into the hoped-for reduction in grade crossing delays and air quality. The institutional structure also worked well enough to be expanded. In February, 2002, BNSF announced that a second major flyover would be constructed to provide grade separation at the intersection of two of their main routes and improve access to Argentine Yard, their major freight facility in the region (BNSF, 2/15/02). The “Argentine Flyover,” which would cost about $60 million, was initiated using the same institutional arrangements as the Sheffield Flyover. The project has received broad recognition as an out- standing example of public-private cooperation. The Intermodal Advisory Task Force of the Chicago Area Transportation Study identified this project as one of the few best examples of “holistic” planning “involving major transportation industries, the political decision-makers, plus the industries (shippers and receivers, essentially) that stood to benefit” (Rawlings, 05/08/02). Rawlings noted the key roles played by the Chamber of Commerce and the Mid-America Regional Council, who funded preliminary freight studies and were able to focus interest on and achieve a consensus for the flyover and a few other critical projects. Implementation In this case, the train volumes were so high and the bene- fits so large that it was easy for local parties to agree that the benefits justified the costs of the project. At intersections of busy rail lines, trains back up and clearly block the local high- way network. These local costs were easily identifiable and large enough to justify public participation, even though the national significance of the project is what motivated FHWA’s interest. The benefits were equally clear to the rail- roads, as were the costs to operations if action were not taken. This project provides various lessons for promoting public- private partnerships that seek to enhance the role of rail freight in reducing highway congestion: • The involvement and support of the local freight interests is essential. • The willingness of the various railroads to work together and to negotiate ways to share the costs is essential. • Federal, state, and local cooperation can provide innova- tive financing mechanisms and enable a complex project to be completed quickly. • Environmental benefits may provide part of the story in support of the project, but the financing may need to be based on a clear understanding that the system improve- ments—for both highway and railway—translate directly into enough cost savings to justify the project. • The national scope of the project may add to the story and motivate federal involvement, but it may not directly affect the local assessment of the project. In other locations, where the local effects are not so evident, it may be neces- sary to make a stronger case for the indirect and national benefits in order to secure local support and a broader base of funding. • Once a coalition is formed to identify, finance, and imple- ment projects that fulfill clear needs, then that coalition can quickly move on to additional projects. Case Study 6: Vancouver Gateway Transportation System Type: Metropolitan Citywide The Projects29 The Major Commercial Transportation System (MCTS) for the Vancouver region of British Columbia is a system of key transportation facilities and routes that connect the region to external gateways, as well as provide connectivity to the major commercial activity centers. Vancouver is recognized as the major western gateway to Canada, as well as a supporting international gateway for the northwestern United States. The facilities serving interna- tional travel and goods movement include several marine ports, Vancouver International Airport, rail yards for three railroads, and four major international border (rail and high- way) crossing facilities. From 2000 to 2003, the MCTS planning process identified a set of surface transportation projects designed to support a balanced flow of rail and truck movements. They were intended to minimize local traffic congestion, while maxi- mizing the economic health of the region’s international gateway function—which is the flow of cargo via marine port, airport, and international border crossings. The “Current and Planned Infrastructure List” made the case for 17 major new investments, comprising highway upgrades, rail links, river crossings, new rapid transit lines, and an additional har- bor crossing. These projects are listed in Table 3-2. Prelimi- nary studies put the cost at $6.2 to $6.9 billion. The Greater Vancouver Gateway Council is an organization of senior executives from industry and government who 45 29The material presented here is taken from project papers. The author of this case study was a participant in the study.

subscribe to a common vision that Greater Vancouver become the Gateway of Choice for North America. The Coun- cil includes the gateway facility operators (i.e., airport and seaports) and freight transportation companies (i.e., airlines, railroads and trucking companies), with the BC Minister of Transport serving as the honorary chair. The MCTS and planned transportation infrastructure improvement projects were identified by members of the Greater Vancouver Gate- way Council, working jointly with the Greater Vancouver Transportation Authority (“TransLink”) and BC Ministry of Transportation, to address many of these congestion issues on the road (and, by implication, transit) and rail networks. The specific needs addressed by proposed road and transit infrastructure projects were to • Relieve congestion on the major highway and arterial routes within the region, either by increasing capacity or by diverting automobile drivers to transit; • Provide a bypass or give priority to commercial vehicles on congested routes; and • Provide more direct connections to major gateways and commercial activity centers. The needs addressed by proposed rail infrastructure proj- ects were to • Provide capacity to the rail network, either though addi- tional tracks or sidings; and • Reduce conflicts between rail and road-based traffic. However, underlying those specific needs were several broader objectives for the MCTS, which were to • Provide a continuous network for efficient commercial vehicle operations; • Use multi-modal solutions (i.e., road, rail, and water courses) to alleviate traffic congestion; • Accommodate future growth in (local and international) goods and passenger movements; • Enable 24-hour unrestricted commercial vehicle and rail traffic use; • Provide rail movements free of road intersection constraints; • Enhance connectivity to north-south and east-west trade corridors; and • Provide for cost-effective solutions to specific bottlenecks. Although the MCTS focused largely on goods movement, it also recognized that efforts to improve goods movement would help improve passenger movement. The improved movement of passengers (as well as freight) by rail within the urban area of Greater Vancouver would also improve local conditions on the road network by diverting commuters from their automobiles. Accordingly, the MCTS project list was coordinated with plans to address the commuting needs of workers. In addition, the MCTS planning effort considered how traditional regional and provincial transportation invest- ment assessment tended to give short shrift to freight and goods movement. By adding consideration of the importance 46 Rail Project Description of Project (motivation is noted in parentheses) Trains/Day New Westminster Rail Bridge Replacement of the existing 100-year-old rail bridge with two-track tunnel. Tunnel preferred because this will avoid conflict with marine traffic. (Capacity of existing bridge causes significant delays, which will worsen in the future.) 46 Pitt River Rail Bridge Short-term upgrade and long-term replacement of existing two-track bridge. New bridge to have more efficient swing bridge mechanism (Current swing bridge causes additional marine traffic delays and CP Rail crossing delays.) 45 Roberts Bank - 41B Grade Separation Construct an overpass at 41B Avenue in Delta to provide separation between the rail line to Roberts Bank. (To permit unrestricted switching of trains and to permit longer trains at Roberts Bank. Increases operational efficiency.) 22 Mud Bay Area West Leg of the Wye Construct a connection between the BNSF line and the BC Rail Line to Roberts Bank to permit the movement of south to west/east to north. (Relieve congestion on Roberts Bank route—shorter route for southbound trains.) 13 BN New Yard to Spruce St. Double Track Provide two tracks between the New Westminster Rail Bridge and the BN yard. (To provide support for new Fraser River rail crossing because approach track has limited capacity.) 46 Siding Colebrook North & South Construct new siding on the BNSF line north of east west BC Rail line. (Increases capacity on BNSF line from U.S. Border to NWRB, necessary for proposed increase in Amtrak usage) 12 Siding & Grade Sep- Colebrook East & West Extend siding on the BC Rail line east of the north section of BNSF line. (Increases capacity on Roberts Bank route. New siding on BC Rail line west of the north section of the BNSF line.) 22 (A) Freight Rail Projects Table 3-2. Vancouver major commercial transportation system projects. (continued)

and function of international gateways and their economic function, the MCTS planning effort was seen as providing a broader perspective to the multiple objectives in evaluation tools such as the Province’s Multiple Account Evaluation for rating proposed transportation projects. Motivation The primary motivation for the MCTS and its planning initiatives was concern about threats to the economic posi- tion of the Greater Vancouver Region as an international gateway and conduit for goods movement. At the outset, the British Columbia Ministry of Transportation and the Cana- dian Federal Department of Western Economic Diversifica- tion became actively involved in funding MCTS needs and planning efforts because they saw major economic threats and opportunities associated with the failure or success of the Vancouver region in addressing surface transportation congestion and capacity for growth of ports and border crossings. The Greater Vancouver Gateway Council and its reports noted that the current transportation system, in all its 47 Highway & Transit Project Description of Project (motivation is noted in parentheses) Highway 1 - Vancouver to Langley South Fraser Perimeter Road, from Hwy 1 to Hwy 91 Fraser River Crossing Rapid Transit - Richmond to Airport North Fraser Perimeter Road New Westminster Rail Bridge (with road tunnel) Massey Tunnel (Hwy 99) Oak Street Bridge (Hwy 99) Hwy 15 – Hwy 1 to U.S. Border Hwy 10 – Hwy 17 to Hwy 1 Access to Pacific Border Crossing – Hwy 99 Additional capacity on Highway 1 from Grandview Highway to 200th Street. Includes twinning of the Port Mann Bridge, upgrades to the various interchanges, and extension of the HOV lanes to 200th Street. (To address capacity constraints resulting in significant congestion and delays. New connection between Hwy 1 at 176th Street and Hwy 91 at River Road, with extension to Hwy 99 and E. Ladner Bypass. (To provide improved connectivity between major corridors and commercial activity centers. The existing route between Highway 1 and Highway 91 as well as Highway 99 is circuitous and limited in terms of capacity.) New river crossing between Maple Ridge/Pitt Meadows and Surrey/Langley. Connection at approximately 200th Street. (This new connection provides a much-needed access improvement for the unmet demand between the communi- ties of Pitt Meadows/Maple Ridge and Surrey/Langley.) New rapid transit line from Richmond and Vancouver International Airport to downtown Vancouver via Cambie Street corridor. (This corridor has high transit demand that can be expanded with the improvement of service.) Improvements and additions to existing road corridors between the Mary Hill Bypass and Queensborough Bridge, including segments of United Blvd, Brunette Ave., Columbia St., Front St., and Stewardson Way. (Upgrades to major goods movement route to provide needed efficiencies via reduced congestion). Road tunnel to parallel proposed rail tunnel under portions of New Westminster and Fraser River, connecting McBride Boulevard and South Fraser Perimeter Road. (Combined with the rail tunnel, this road corridor will provide improved capacity across Fraser River as compared with Patullo Bridge, which experiences significant congestion.) Widening of the Oak Street Bridge from four lanes to six. Two additional lanes to be designated as HOV lanes. This project will tie into the improvements on Hwy 99 associated with the Massey Tunnel. (The bridge experiences significant congestion in the AM peak period which can be mitigated with the inclusion of an HOV lane that gives priority to carpools to bypass the congested area.) Improvements to the Hwy 15 corridor between Hwy 1 and the U.S. Border, including increasing capacity from two to four lanes. (Current two-lanes and signalized intersections limit mobility along this route. Additional capacity is required to relieve congestion.) Improvements to the Hwy 10 corridor between Hwy 1 and Hwy 17. Improve- ments consist primarily of increasing capacity in the two-lane sections to four lanes. (The two-lane cross section and various signalized intersections limit mobility along this route. Additional capacity is required to relieve congestion.) Widening of 8th Avenue between Hwy 99 and Hwy 15 along with interchange improvements at Hwy 99. (Access to the truck crossing at Hwy 15 is limited, and as such needs to be upgraded to protect the level of service.) Improvements to Hwy 99 corridor at the river crossing, including two new lanes under river, extension of HOV lanes from King George Hwy to Westminster Hwy. (This river crossing experiences significant congestion in both directions because the counter-flow system only partially addresses the demand in the peak direction.) (B) Highway and Transit Projects Table 3-2. (Continued).

modes, was showing signs of neglect and lack of investment as congestion continued at unprecedented levels. They con- cluded that investment in the Greater Vancouver Region’s transportation network was urgently required to reverse the past trends and to provide a transportation system that sup- ported the nationally important gateways in the region. Many members of the Gateway Council feared that if the current trends continued, the transportation system in the region would erode to a point that the Greater Vancouver Gateway lost its competitive edge along the west coast of North America. This would adversely affect the regional economy, with effects across the Western Canadian econ- omy (to say nothing of the effect on everyday travel condi- tions in the region). The economic basis of the rationale was key. The Federal Department of Western Economic Diversification funded the Greater Vancouver Gateway Council to conduct a study of the implications of the MCTS and its proposed improve- ments for the economic development of four Canadian provinces. The study30 showed that Vancouver’s interna- tional gateway function had broad economic importance that would be threatened, if capacity constraints and con- gestion within the region’s surface transportation system undermined the ability of the region to serve international freight movements competitively in the future. Performance Although the MCTS projects were not yet built at the time of this writing, they had been evaluated through baseline forecasts of freight flows in the province. Growth rates for long-distance freight movements in British Columbia were expected to vary significantly across modes, with long- distance truck cargo growing slower and air cargo growing most rapidly. However, rail and maritime shipments also included truck deliveries at origin and destinations. As a result, total trucking within Greater Vancouver was expected to grow more than 50 percent over the 2001–2021 period. It was estimated that, by 2021, almost 75 million metric tons of product would be transported by truck within the province annually. Rail tonnage was also expected to grow steadily during the period, with a cumulative increase of 60 percent. By 2021, almost 300 million tons of freight were expected to move by rail through British Columbia, mostly in the Vancouver region. As demonstrated in the GVGC consultants’ reports, these forecasts reflected expected future changes in domestic and international economies and trade patterns that would increase pressure on the Greater Vancouver regions’ trans- portation system. Key findings from the transport forecasting and economic impact study were as follows: • Economic Performance—The BC and Western Provincial economies depended significantly on international exports and hence the movement of goods and services to interna- tional gateway facilities. Because of its position astride the route to East Asia, Vancouver and its transportation facil- ities served a critical role in supporting the economies of this large region. The future economic performance of BC and other western provinces would depend on maintain- ing and improving the performance of the Vancouver region’s MCTS. • Commercial Growth—Forecasts for continued popula- tion and economic growth in the Greater Vancouver area would lead to increasing pressure on the region’s ground transportation system. The growth of road and rail traffic was expected to be particularly strong for commercial movements, which serve freight cargo moving to and from airport, marine port, and international border crossing facilities. As a result, future congestion delays and future capacity constraints would hit commercial traffic particu- larly hard. • Capacity Repercussions—Projections of future road and rail demand indicated that this demand would surpass the current capacity of significant elements of the current transportation system. As a result, severe effects on future travel times and travel costs were expected unless there was a significant investment made to upgrade and expand many aspects of the region’s transportation facilities. The magnitude of these travel impacts represented very large dollar values. • Risk—The stakes for the future of British Columbia’s economy, as well as that of other western provinces (that depend on Vancouver’s ports as a gateway to Asia), were high. Without investments made to upgrade the perform- ance and capacity of the region’s transportation facilities and services, there could be significant losses of business activity as travel times and costs for commercial shipping were increased. To maintain the economy of BC and other western provinces, there would, therefore, need to be care- ful attention to making investments necessary so that costs of doing business in this area did not become prohibitive. Implementation The initiative to formally designate a Major Commercial Transportation System was initiated by the Greater Vancou- ver Gateway Council (GVGC) in 2000, following a series of studies in the late 1990s that showed the strong economic 48 30The economic study was prepared by DelCan and Economic Research Development Group.

importance of the region’s gateway transportation facilities. Over the 2001–2003 period, the Greater Vancouver Trans- portation Authority (“TransLink”) developed its 3-year short-term plan and worked to solidify its long-range invest- ment plan by working closely with the GVGC to affirm and prioritize a list of major infrastructure projects. These lists were coordinated so that the regional list of high-priority projects would be consistent with ongoing work on the MCTS being led by the GVGC. Additional consultations were held with local municipalities, the province and federal agen- cies, and stakeholders such as the Board of Trade. In 2001, the Greater Vancouver Board of Trade sponsored a public policy forum on “Regional Transportation: Gridlock or What?,” featuring a discussion of the Major Commercial Transporta- tion System and its maps of current infrastructure and planned infrastructure requirements. In 2002–2003, the Canadian Federal Department of West- ern Economic Diversification and the BC Ministry of Trans- port provided support for a study documenting the costs and economic benefits of the recommended infrastructure plan. The study also examined the economic development impli- cations of alternative scenarios for either investing in the MCTS or maintaining the status quo. This study affirmed that some but not all of the recommended projects passed a traditional user benefit-cost analysis (that effectively valued goods movement based on driver and vehicle operating costs). However, it was also found that the overall package of projects provided even greater economic development bene- fits when additional issues such as the value and timeliness of goods being transported, and the competitiveness of interna- tional ports were also considered. As of 2003, regional, provincial, and federal agencies were discussing options for funding the 17 major projects. It was expected that the proposed projects would be funded over time through a combination of federal and provincial public funding, as well as public-private partnerships for rail-related facilities and tolling to pay the costs of planned bridges and tunnels. Case Study 7: Freight Rail Futures for the City of Chicago Type: Metropolitan Citywide The Project31 Chicago’s stature as the nation’s rail freight hub has immersed that city in the issues of multi-modal policy devel- opment. The region’s vast network of terminals and track constitutes the world’s most densely packed rail-rail and rail-truck transfer point32. Since its emergence as the largest interchange point between the western and the eastern rail carriers during the latter half of the 19th century, Chicago has served as the most important hub of the North American rail- way network. With the advent of rail intermodal traffic during the 1950s, its significance as the central point of inter- change has become even more critical. At present, nearly three-fifths of all U.S. rail intermodal traffic and one-third of all U.S. rail traffic flows through the Chicago region. Despite the massive volumes and transformation in the railroad’s business, Chicago’s rail infrastructure remains largely unchanged from the early 20th century. See Figure 3-7. As overall traffic volumes have grown and mergers have concentrated volumes on fewer and fewer traffic corridors, the region faces a rail congestion problem. Although trains can make the trip from the West Coast to Chicago in a truck- competitive 2 days, once they get to Chicago they can take 3 more days just to move across town. In recent years, expanding traffic and increased competi- tive pressures have forced the railroads to undertake concrete steps to reduce the delays encountered by traffic moving through the Chicago region. Although the primary tactical response has been to improve coordination among the carri- ers and operational adjustments, over the longer term, more extensive changes will be necessary, including development of new intermodal terminals (some already constructed) and 32Rawling, Gerald F.; “Are we still eligible for the Yellow Jersey?”; C.A.T.S; 08/29/00. 49 31The material presented here is based on an analysis performed by Global Insight for the Chicago Department of Transportation. Never- theless, opinions expressed herein are those of the author. Figure 3-7. Chicago’s Regional Rail Network.

restructuring of the physical network to better meet present and future needs. Given that railroad operations are still largely concentrated in the City of Chicago and the urban core of the region, any major changes in terminals and trunk- lines could have a significant effect on the City. Recognizing the evolving changes in the railroad industry and its potential effect on the City of Chicago, the City com- missioned a study to better understand trends within the railroad industry and to evaluate whether Chicago’s eco- nomic interests would be better served by preserving its role as the nation’s premier rail freight hub or by supporting other activities in lieu of rail freight. “Freight Rail Futures for the City of Chicago” was sponsored by the Chicago Depart- ment of Transportation and undertaken from 2001 to 2003. The study assessed the economic effect of rail freight on the City in terms of its effect on labor, land use, business activ- ity, congestion on roadways, and passenger train expansion and presented development options for the future. Through a combination of interviews and surveys, transportation data analysis, forecasting, and economic modeling, the study esti- mated the economic consequences for a set of distinct scenarios, each representing a strategic direction for the City and the railroad industry. Relevance Roadway congestion was just one of the many inter-related issues touched by this study, whose real focus was economic and whose ultimate purpose was political. Still, such focus and purpose are relevant to the circumstances commonly faced by planning agencies, which must possess or assemble a body of public support for their projects. The extent to which freight rail is tied to the vitality of a region is the extent to which investments in rail have clear payoffs and are there- fore easier to justify—so long as the investments themselves are productive, roadway conditions may be relieved ipso facto. Chicago admittedly is an extreme case, in that it is very large as a city, a rail center, and a freight market, but these ele- ments make the measurement of railroad influence more obvious and help to point up the benefits of which a healthy rail sector is capable. There are 600 grade crossings in Chicago; traffic interfer- ence at these points is one of the chief road-related issues and important in the question of network rationalization. Other prominent roadway concerns in this study were as follows: • The ability of the rail industry to handle projected growth, particularly for the intermodal traffic that offers the best prospect for relief of highway congestion. This growth can only occur if there is sufficient line and terminal capacity. However, railroads building capacity are content to posi- tion terminals outside major cities, where land is cheap, economies of scale are readily achieved, and highway access is good. This trend, evident in Chicago as well as many other cities, may reduce truck traffic on the rural interstates, but it will leave many trucks in dense urban areas where air quality, safety, and congestion concerns are greatest. For Chicago, a feasible strategic response appeared to be a twin terminal system, whereby older downtown facilities would operate in tandem with new ones at the urban rim, using shuttle trains to preserve rail service to the urban core. • Efforts by the railroad industry to improve all-rail connec- tions and to rationalize infrastructure and operations in a complex operational environment. These have been under- way through an industry-wide initiative, the Chicago Coordinating Committee, whose work led to the proposed Chicago CREATE project. The financial ability of private industry to make appropriate investments, however, has been somewhat in doubt, and the form of rationalization it might favor in these circumstances is a concern for public planners, because any traffic shed from rail is probably headed to the highways. Cooperation with the public sector must be established if rail infrastructure investments are to favor the city, where opportunities—but also construc- tion costs, project complexity, and collateral impacts— are high. • Cross-town drayage is the main way that railroads inter- connect their intermodal services in Chicago, moving trail- ers and containers between terminals by truck across city streets. This adds to urban congestion and can be reduced with rationalization in the rail system. However, not all drayage is undesirable. Because car loading sequence and car blocking requirements demand greater destination volume densities for all-rail than for drayage connections, some cross-town trucking actually supports through rail service to more markets than could be accomplished without it. Motivation The rail freight system provides various economic benefits to regional and national economies. Direct benefits include employment opportunities in rail and rail-related industries and access to competitive transportation services to and from major economic centers in the United States, Canada, and Mexico. Cost savings resulting from transportation efficien- cies and the competitiveness of the freight system permeate the local, regional, and national economies. Although, as a percentage, relatively few people or firms have direct contact with the freight railroads—except at grade crossings—they all benefit from the existence of the national rail freight system. Chicago sustains a tremendous concentration of rail freight. Over 70 million tons of rail intermodal traffic are hosted by the region’s railroads and highways; translated into 50

trailers and containers, this means that 4.6 million loads begin or end their trip in the Chicago region. The City’s moti- vation for undertaking the rail futures study was to under- stand the economic effects from this high level of activity, to know whether its infrastructure demands should be accom- modated, and to project the consequences of policy courses ranging from status quo to strategic development. Between 1985 and 1998, overall traffic for the Chicago region grew by over 150 percent. Rail carload tonnage approximately doubled, while intermodal tripled. At the same time, the volume of traffic moving by highway grew by over 200 percent. Volume growth is forecast to remain strong over the next two decades, albeit at a somewhat slower rate of 62 percent between 1998 and 2020. This means that Chicago’s transportation infrastructure must accommodate an addi- tional 439 million tons of inter-regional traffic (inbound, outbound, and through), above the 707 million tons handled in 1998. Out of these 439 million tons, 156 million are expected to use rail for at least part of their journey. Where and how this additional tonnage—and millions of additional vehicle trips—will be handled depends on deci- sions being made by private carriers and public planners. For rail, the expected continued growth in traffic could result in significant collateral effects: more frequent interruption at rail/highway grade crossings, greater noise from more fre- quent trains, and growing truck traffic over City streets trav- eling to and from intermodal terminals. The existing rail infrastructure, such as bridges and viaducts, will, without substantial additional investment, become more severely stressed and deteriorated than it already is. This recent and impending growth, combined with the many changes in Chicago’s economy, population, and devel- opment trends, have made it apparent that the traditional relationship between the railroads and the City has changed greatly. Effectively addressing these alterations requires a conception of how much of the Chicago economy continues to be linked to the fortunes of the rail industry. The study found that coordinated planning efforts could create a more effective and more efficient rail system for passenger and freight services, with lower impacts on neighborhoods and highways. Left to themselves, railroads and their customers will pursue strategies that, while in their own best interest, could be damaging to the City economy. The economic ben- efits to the City of a coherent planning process for the rail freight system are both significant and attainable. Lessons and Outcomes The study determined that it is in the best interests of the City of Chicago to remain the leading rail hub in North America. Although rail freight service is no longer the driving force for economic development that it once was, it remains an important underpinning for the City’s economy. From an economic development perspective, it was indicated that the City should support continued or improved freight opera- tions rather than seeking to constrain or eliminate them. The best available strategy for the City will be to support the rationalization of freight operations so as to reduce conflicts between rail and highway operations, improve coordination of freight and passenger services, offer better access to inter- modal terminals, enhance freight service, and reduce freight costs. The study concluded that rationalization of the rail freight system would increase the City’s Gross Regional Prod- uct (GRP) by more than $1 billion per year by the year 2020 and provide more than 8,000 additional jobs. The successful redevelopment of land freed by rationalization would more than double these benefits. The problem arising from aggressive efforts to move freight operations outside of the City is that some rail users will follow the rail facilities, others will end up using more trucks, and a significant amount of economic development will shift to the suburbs. The City may avoid some problems if rail operations are reduced, but could lose much more than just the trains. Results from the regional economic analysis show that moving freight away from the City would, by 2020, reduce GRP for the City by $1 to 3 billion annually, while eliminating 5,000 to 15,000 jobs. Redevelopment opportuni- ties could offset some or all of these losses, but the net bene- fits would still be substantially lower than under a network rationalization scenario. The total swing between upside and downside is about 3 percent of GRP, which is material as a marginal economic shift. As this was written, results from the study were being incorporated into strategy development discussions with Chicago’s major railroad partners. The study highlighted the role that the railway industry played and could continue to play in Chicago, or any other locale’s economic firmament. The study further suggested that, although the focus of plan- ners has traditionally been on the absence or presence of regional infrastructure, the effects of transportation on the regional economy are more logistical in nature. The presence of infrastructure is a necessary requirement for quality trans- portation service and economic vitality, but not a guarantee of economic success. To maintain the competitiveness of rail operations in a region, there are four generic strategy options for investment that a public agency might want to consider: • Invest to obtain public benefits—This strategy could include such things as elimination of grade crossings in order to reduce highway congestion and curtail the noise from train whistles, or, reduction of intermodal rubber tire interchange, again to alleviate congestion and to slow the deterioration of pavements. Required by such an approach is the demonstration that rail is an equivalent or superior 51

option to the provision of highway service and that the potential benefits justify significant public expenditures. • Invest to maintain rail infrastructure for long-term growth—The goal of this strategy is not necessarily to alter current mode share, but to ensure that deficiencies in the rail system do not become a deterrent to regional growth or a significant cost factor for local industry. The economic analysis from the Chicago study suggests that annual eco- nomic costs rise far into the millions of dollars if rail infra- structure problems restrict industrial development—and can reach the billions in a major urban network center like Chicago. • Invest to relocate rail facilities to allow redevelopment— This strategy seeks to make better economic use of land and rights-of-way currently used for rail operations. Such a strategy must be carefully implemented however, because the costs and benefits of each such proposal will be highly site specific. • Invest to rationalize the system—This strategy seeks to achieve both the economic and environmental benefits that are possible. This differs from the first approach pri- marily in the level of coordination, planning, and invest- ment required. Rationalization implies a systems approach to the regional rail network, with considerable restructur- ing and investment to achieve more efficient operations, better service, more effective control, or higher capacity. In Chicago, as in other rail-heavy economies, the contin- ued growth of the region is vitally linked to maintaining the capacity and performance of the local railway network. Capacity-limited performance will, over time, weaken the attractiveness of a region as a location for businesses and industries that use rail service. If transport costs rise and serv- ice deteriorates, local firms will have more difficulty compet- ing both regionally and nationally. They will be forced to relocate outside the region, and a significant part of the local economy—and much of the future development of freight- dependent activities—will slowly slip away. Case Study 8: State Rail Access Programs Type: Facility The Programs33 Many states have local transportation grant programs designed to help fund local rail and/or highway projects needed to help attract and expand industry in the state. Several of these states operate separate rail programs specifically focused on supporting local projects addressing these economic develop- ment objectives. Among them, Maine and Ohio offer particu- larly interesting examples of rail economic development programs, because the programs in those states have docu- mented how their projects have explicitly served to reduce highway demand and associated needs for highway-related investment. These two programs are offered as case study examples; because of similarities in their design and operation, they are discussed together. Key aspects of the programs are summarized below: • Maine Industrial Rail Access Program—IRAP was designed by the Maine DOT to encourage economic devel- opment and increased use of rail transportation. Type of projects eligible for funds include accelerated mainte- nance, rehabilitation, new siding improvements, right-of- way acquisition, and inter-modal facility construction. Project applications are solicited from any and all inter- ested parties and are ranked using a competitive rating scheme that focuses on economic enhancement and pub- lic benefit. Project grants are subject to a 50/50 public- private cost-sharing agreement. • Ohio Rail Economic Development Program—REDP was designed to induce companies to locate or expand in Ohio. REDP funds are available for the construction or rehabilitation of industrial lead tracks, rail spurs or other rail infrastructure, and passenger rail facilities. The pro- gram provides both grants and loans. Qualified applicants can include railroads, private corporations, and industries requiring rail service; political subdivisions, government agencies, and boards or commissions; regional transit boards; and port authorities. Grants are used for cases with the most need or without a direct revenue stream. Grants are generally limited to less than 50 percent of project costs and up to $1,000 per each job created or retained. In both states, most of the projects are new or rehabilitated rail sidings and spur lines, although the eligible projects can (and occasionally do) also include transload facilities, bridges, rail/roadway crossings, track interchanges, and rail yards. Examples of specific projects for both states are listed in the Section 4.1 discussion of implementation in the Guidebook. Relevance Rail programs in the two states provide funding for local rail projects that allow new and existing companies to use rail rather than trucking for their incoming and outgoing freight shipments. Local rail projects are funded to facilitate the loca- tion of new businesses and the retention or expansion of exist- ing businesses at specific sites in the state. This is accomplished 52 33The material presented here is drawn from State sources.

by providing new rail facilities and upgrading existing rail facilities to effectively serve those sites. Among projects that address these basic goals, each state also has a series of additional criteria for evaluating applica- tions. These criteria assess the extent to which the project will lead to effective use of the rail facilities, support economic activity as a result, and lead to environmentally positive benefits in terms of reduced road congestion and truck emis- sions. There are also criteria to ensure that the level of fund- ing maintains some reasonable ratio of public benefit per dollar of investment. Specific criteria for each state program are as follows: • Maine Industrial Rail Access Program—Project selection criteria are based on five types of attributes: (1) trans- portation and logistics cost savings for rail users; (2) employment and economic development opportuni- ties for rail users and the community served by rail; (3) benefit-cost ratios justifying expenditure of public funds; (4) the significance of the project for continuous and productive improvement of rail service levels; and (5) environmental benefits through decreased air emis- sions, decreased highway maintenance requirements, decreased dependence on foreign oil, or decreased levels of highway congestion. • Ohio Rail Economic Development Program—Benefit analysis is often used to determine eligibility for assistance. Eligible benefits include, but are not limited to (1) job cre- ation and job retention, (2) transportation cost savings and preservation of existing competitive transportation costs, (3) new investment in plant and facilities by rail users and the associated tax benefits to the state, (4) increased viabil- ity of the rail operation, (5) relief of highway congestion and maintenance, and (6) improved safety for Ohio’s citizens. Motivation These programs are all fundamentally justified and funded as a form of support for economic development—specifically to encourage new and expanded business activities in the state, so as to create more jobs and income for state residents. In both states, there are various programs, operated by different state agencies, all focused on supporting this under- lying goal. These rail programs are authorized by the state legislatures and administered by the state transportation departments as one aspect of those broader economic devel- opment strategies. Each state DOT has its own version of the wording that explains the program motivation. These are as follows: • Maine Industrial Rail Access Program—“The Industrial Rail Access Program has been designed by the Maine Department of Transportation to encourage economic development and increased use of the rail transportation mode.” • Ohio Rail Economic Development Program—“The goal of this program is to induce companies to locate or expand in Ohio. The Ohio Rail Development Commission (ORDC) often works closely with the Ohio Department of Devel- opment in administering this program.” Lessons and Outcomes The specific projects and outcomes vary from year to year. Maine DOT has noted that projects improving and expand- ing rail facilities under this type of program generally have four common outcomes: (1) providing shippers with lower cost transportation; (2) providing railroads with increased revenue; (3) providing the state with reduced highway main- tenance costs; and (4) providing the public with reduced highway congestion. The same common outcomes also appear to apply for the Ohio DOT program. However, both states fund projects that fall into two categories: (1) projects that primarily enhance existing rail service for current rail users, and (2) projects that bring new rail services and new rail users. In the context of this report, interest was focused on projects of the latter type, which effectively increase rail use as an alternative to reliance on trucking. Admittedly, projects of the former kind also may prevent the loss of rail traffic to highways. Tables 3-3 amd 3-4 provide examples of Maine and Ohio’s state-funded projects during FY2001, focusing on the subset of projects that explicitly increase rail use. The tables include notes on the project and its highway avoidance impacts, as well as other economic development benefits when documented. (Because of differences in the reporting among the states, their project descriptions vary in breadth and detail.) Implementation Both Maine and Ohio have programs operated by public state agencies, with most or all of the financing coming from funds allocated by the state legislature. Specific details of the implementation and funding process for each state are shown below: • Maine Industrial Rail Access Program—The Office of Freight Transportation within Maine’s DOT operates the Industrial Rail Access Program. Annual funding has been around $4.4 million/year, with the Maine DOT share being a combination of general obligation bonds (representing over 2/3 of the funding) and federal CMAQ (Congestion Mitigation/Air Quality) dollars accounting for the rest. 53

54 - Location - Project - Program Cost Highway Investment Avoidance Winterport New rail siding $215,000 75,000 tons/yr of gravel shipped by rail that would otherwise travel by highway, keeping 2,000+ truck trips/yr off highways Stockton Springs New rail siding $210,000 125,000 tons/yr shipped by rail that would otherwise travel by highway; keeping about 4,000 truck trips/yr off highways South Portland Rehab siding & new transload facility $570,000 New rail access to gravel pits, shifted clay-carrying truck trips to rail for access to seaport; reduce port truck trips by 100,000 to 150,000/yr; reducing traffic congestion in Maine’s largest metro area Easton New and rehabbed siding $125,000 50,000-75,000 tons/yr of French fries shipped by rail that would otherwise travel by truck; reducing congestion on I-95 from N. Maine to NH border Hinckley New siding at paper mill $550,000 Created 700 carloads/yr of rail movements, removed 2,100 log truck moves from northern Maine to Hinckley (300 +/- miles) $200,000 Walton Agri-Service, Inc. Expansion of 39-car spur in Upper Sandusky to handle 65-car unit trains of grains and fertilizer; $25,000 loan Generate 1,926 rail carloads Retains 38 jobs Generates more than $400,000 in private investment New Bakery Co. Transload Track New 2,878 ft track at East Point Industrial Pk (Muskingham County); $200,000 grant Promotes development of rail use at industrial park Creates 74 jobs Retains 230 jobs Cloverleaf Cold Storage New 1,300-foot rail spur and bridge to serve proposed warehouse in Massillon; $328,000 Generates 1140 rail carloads Creates 30 jobs Jackson warehouse Spur Cost Increase Complete new 3,000-foot spur; $235,250 grant, $160,250 loan New transload facility 35 jobs created Lower storage cost for food industry. 20/20 Custom Molded Plastics, Ltd New 1,500-ft. rail spur for new facility in Holiday City; $50,000 grant Generates 96 rail carloads Creates 62 jobs - Location - Project - Program Cost Rail Support; Highway Investment Avoidance Economic Benefits Nickles Bakery Spur New track from W&LE Brewster Canton Line and Nickles Bakery spur track; $265,000 grant, $265,500 loan Re-institute service to Nickles Bakery. Keeps 750-1,000 trucks off local roads Helps preserve 550 jobs Panhandle Georgetown branch Reopen track on the Panhandle Georgetown Branch to serve Oxford Mining coal traffic; $138,292 grant Re-institute rail service, facilitating coal movements to the Conesville Power Plant Creates three new jobs Helps retain 50 coal mining jobs City of Lebanon New 3,800 ft. track to serve Quantum Metals; $340,000 loan, $25,000 grant Opens up Columbia business to rail service as alternative to trucking Creates 25 new jobs Retains 15-20 jobs Generates 240 rail cars annually Miami Products & Chemical Company New 950 ft. and 545 ft. rail spurs at new chemical company facility in Fairborn, Ohio; Generate 64 rail carloads Creates 12 jobs Retains 31 jobs Table 3-3. Maine industrial rail access program (selected projects, 2001). Table 3-4. Ohio rail economic development program (selected projects, 2001).

The latter source of funding is targeted for projects that reduce traffic congestion and improve air quality, thus confirming the role of Maine’s IRAP in reducing traffic congestion. • Ohio Rail Economic Development Program—The Ohio Rail Development Commission (ORDC) was created by the Ohio General Assembly in 1994 and is governed by 14 commissioners. ORDC’s mission is to plan, promote, and implement the improved movement of people and goods, faster and safer on a rail transportation network connecting Ohio to the nation and the world. In practice, ORDC provides direct loans and grants and may issue bonds for qualified rail projects. It is set up to provide this support to public and private entities. For fiscal year 2002, the legislature allocated nearly $5 million for the agency’s annual budget, most of which is spent on grant programs. The Rail Economic Development Program is just one of ORDC’s programs. It is administered by ORDC working closely with the Ohio Department of Development and other public and private development related organizations to induce companies to locate or expand in Ohio. ORDC has other funding programs for projects that are not related directly to economic development, but rather, to function- ing of the state’s rail system. This includes special funding for Branch Line Preservation, Branch Line Enhancement, the Rail Acquisition Program (purchasing short lines to prevent cessation of service) and the Strategic Corridor Program (funding improvements on Ohio’s mainline system). Case Study 9: Inland Ports Type: Facility The Projects34 A true Inland Port is a remote freight processing facility and body of infrastructure that provides advanced logistics for ground, rail, and marine cargo movements outside the normal boundaries of marine ports. In effect, it extends a marine port to an off-site, inland location by providing (1) a remote, inland multimodal distribution center for marine/rail and marine/truck transfers, with (2) a direct rail or barge shuttle that moves cargo between ocean-going ves- sels at the main port and the intermodal transfer site on a fre- quent basis, and (3) advanced scheduling and tracking of cargo so that the inland port is effectively functioning as an extension of the main port. By relocating the truck and rail distribution facilities away from the main port site, the inland port facility • Reduces congestion from truck traffic in the area of the main port, • Reduces rail/roadway intersection delays, and • Removes constraints on port expansion that are attributa- ble to truck capacity limitations. There are several similar examples of inland port infra- structure projects, which are all discussed here because they incorporate similar characteristics. They are the Virginia Inland Port (VIP), the European Container Terminal (ECT) in the Netherlands, Nilai Inland Port (NIP) in Malaysia, and New York’s Port Inland Distribution Network (PIDN). Each of these inland port facilities includes all three of the num- bered criteria listed above, and addresses all three of the issues identified in the preceding bullets. Each of them is operated either directly by the main port management or through an entity that is closely integrated and coordinated with the main port management. Following are brief descriptions: • European Container Terminal, Venlo (ECT)—The ECT is a remote port cargo processing facility in Venlo, Nether- lands, near the German border and close to the Belgian border. It is 120 miles inland from the Port of Rotterdam. It works as a central processing center for container traffic flowing between the port and other parts of northern and central Europe. Containers are transported by rail to and between the ECT and the Port of Rotterdam, and by truck between the ECT and other locations in Europe. A new rail line to Germany (the Betuweroute) is also under construc- tion. Land is available to steamship lines for container stor- age. A key feature is that the ECT controls inland port freight rail service and runs the trains on schedule to ensure timely deliveries in an advanced logistics network with the Port of Rotterdam. • Virginia Inland Port (VIP)—The VIP was inspired by the Netherlands ECT. Operated as an intermodal container transfer facility, the VIP provides an interface between truck and rail for the transport of ocean-going containers to and from the Port of Virginia. It is located west of Washington, DC, in Warren County, VA—220 miles inland from the Port of Virginia and its marine terminals in Hampton Roads. Containers are transported by truck to the VIP for immediate loading on a rail car or for short- term storage prior to loading. Containers arriving from Hampton Roads terminals are unloaded from the train and dispatched by truck to inland destinations. Daily trains run between the VIP and the marine port. The VIP allows for both USDA inspections and SGS inspections 55 34The material presented here is taken from reports and presentations of the various projects.

and is a U.S. Customs-designated port of entry, with the full range of customs functions. • Nilai Inland Port (NIP)—The NIP is a new logistics facil- ity combining the services of a port and a distribution cen- ter. The facility is about 50 km south of Kuala Lumpur, 22 km from the International Airport, and roughly 40 km from Port Klang. It is directly accessible via an interchange of the North-South Highway and has its own rail spur con- nected to the main railway line connecting Kuala Lumpur to Thailand in the north and Singapore to the south. The complex includes container handling, port services such as documentation and customs clearance, cargo handling and consolidation, transportation to and from the Port Klang seaport, local and domestic distribution, bonded and third- party warehousing, and administrative services. It also features 522 commercial units (for small and medium-size factories and commercial businesses), an 8,500 sq. meter bonded warehouse, a container yard, a four-story office block, a temperature-controlled building, and a Customs office complex. Unlike the other three examples, NIP does not have direct rail service to the seaport. However, it func- tions as a central location along the main international rail line, from which goods can be efficiently distributed via truck to and from Malaysia’s main airport and seaport. As such, it functions as a remote facility for port services and container transfers to the railway system. • NY: Port Inland Distribution Network (PIDN)—The PIDN is an emerging network of remote facilities for pro- cessing and distributing containers moving into and out of the Port of New York and New Jersey by barge and rail— in addition to trucks. Started in early 2003, the system is designed to represent a “hub and spoke” extension of the Port of NY-NJ, with direct transshipment of containers between ocean-going vessels at the marine terminals, and barges or trains serving the marine terminals and inland regional truck and rail distribution facilities. The remote facilities are to (1) offer cargo handling, consolidation, and intermodal logistics for freight movements to and from the Port of NY-NJ and (2) reduce the need for container stor- age in the space-constrained NY-NJ Port district. The ini- tial Spring 2003 startup was a direct barge connection to a new container facility in upstate New York, at Albany on the Hudson River. Plans for the subsequent period were to stimulate development by the railroads of remote facilities linked by rail to Pennsylvania (Pittsburgh) and western New York (Buffalo) and to develop additional barge con- nections to upgraded facilities in New Jersey (Camden or Salem), Connecticut (Bridgeport or New Haven), Rhode Island (Davisville), and Delaware (Wilmington). • Other Inland Ports—Whereas all the above examples effectively operate as extensions of the main port, the term “inland port” is sometimes also applied more loosely, as a marketing concept. In this usage, it is promoting any location that features inland freight warehousing and dis- tribution facilities, with barge or rail connections to inter- national ocean ports. The term was actually introduced with the opening of the Erie Canal and was featured in “The Inland Port,” an article by Nathaniel Hawthorne published in 1835. Today, St. Louis promotes the fact that it is “the country’s second largest inland port with barge connections to 29 U.S. metropolitan centers and the world via the Mississippi River.” The Greater Columbus Inland Port (in Ohio) was set up in 1992 as a marketing and coor- dination effort to promote the fact that the Greater Colum- bus, Ohio, region has a set of transportation infrastructure, freight-handling facilities, and support services for distri- bution-sensitive companies that need freight shipped in a timely manner via air, rail, and/or sea. The Kansas City Smartport is an “Inland Port Trade Processing Demon- stration” that markets the Kansas City region by develop- ing and demonstrating the application of super-efficient international trade processing for movements between Mexico, Kansas City, and Canada. Finally, there is the March Inland Port—the name for an industrial park at the site of March Air Force Base in Riverside, California, which is being marketed as featuring a cargo airport along with freeway access and rail lines that make it desirable for busi- nesses requiring multi-modal access. Each of these other examples uses the term “inland port” to apply loosely to inland locations with transportation connections to sea- ports. However, none of them work as integrated exten- sions of the seaport. Relevance All four of the examples of Inland Port facilities address the same port transportation goals: 1. To make specific international seaports more cost- competitive for customers by reducing dwell times for transshipping containers to trucks and other modes. This is achieved through more efficient intermodal logistics activities relocated away from the crowded seaport. 2. To reduce space requirements and congestion at the port by reducing demand for truck traffic. This effectively allows the port to further expand container capacity and throughput, without the limitations of increasing space being needed for truck facilities. Both of these goals—the reduction in customer cost and the reduction in space constraints on future growth—are directly associated with moving truck traffic out of the port, and substituting a remote logistics facility that furthermore makes it easier to use a broad set of rail connections for longer 56

distance ground transport. By encouraging or facilitating rail transfers, the Inland Ports also end up supporting rail options as an alternative to truck movements along congested routes. Motivation All four of the examples of Inland Port facilities were moti- vated by a desire to preserve and enhance the market com- petitiveness of their associated marine ports. Specifics of these motivations are noted below: • European Container Terminal, Venlo (ECT)—The ECT Venlo facility was initiated as a joint venture of the Port of Rotterdam with private-sector banking and transporta- tion organizations, as part of a master strategy to maintain the Port of Rotterdam as the world’s number one con- tainer port. The Betuweroute rail line, profiled elsewhere, is also part of that same strategy of expanding the reach of the Port of Rotterdam into regional distribution centers. A consistent part of this overall strategy has been recogni- tion that expanded rail connections can provide cost efficiencies and environmental benefits over alternatives that would further increase truck traffic congestion at the port area and along major regional and international travel routes. • Virginia Inland Port (VIP)—The VIP was motivated by a desire for the Virginia Port Authority to strengthen its position as a center of maritime commerce. A market analysis research study showed that the Virginia port was primarily handling cargo traffic originating or destined outside of eastern Virginia, with a significant share of its current traffic (and a higher potential for growth) origi- nating or destined for the U.S. Midwest and Southeast. Following the example of the ECT in Netherlands, the study concluded that an inland port with rail connections to the Midwest could allow the port to expand its business base, add new customers, and aid ship lines in protecting their own customer base. In addition, it was noted that the VIP gives operational flexibility and competitive cost savings over existing methods for handling intermodal containers. • Nilai Inland Port (NIP)—NIP was initiated by the State Development Corporation of Negeri Sembilan, the Malaysian state that includes Kuala Lumpur. The facility was designed as a distribution and advanced logistics resource to encourage small and medium-size businesses to locate and expand in the region and to use the air, sea, and rail resources the region offers. Although it offers land and building space for businesses, it was motivated by a desire to provide a resource and advanced service that can work with, rather than compete with, existing transporta- tion and distribution service providers. • NY: Port Inland Distribution Network (PIDN)—The PIDN was initiated by the Port Authority of New York and New Jersey. It was motivated by a realization that increas- ing truck congestion in the New York City metropolitan area can undermine the cost competitiveness of the Port of New York and New Jersey and in the future threaten its market position as the leading East Coast U.S. port. It was also seen that future increases in truck demand would limit the future growth of port activity. Of the containers han- dled at the Port of New York and New Jersey, 84 percent are transported by truck, and truckers at the port already have to wait long hours for pick-ups at local terminals because of increased volume and security. The PIDN pro- gram was designed to improve connections to and from the port, reducing the dwell time through transshipping containers by barge and rail, and thus taking demand off trucks and speeding turnaround in the container yards. It was estimated that this could reduce the average cost of inland transport distribution by 20 percent. With future expansion of the PIDN, there would be the opportunity to locate inland terminals near or at centers of marine custom and service distribution activities in 13 states. Lessons and Outcomes The Inland Ports generally are run by private operators, which limits available information on their level of use. That they work in conjunction with the main ports also limits the availability of data separating inland port activity from total marine port activity. As a result, there are no hard statistics on the observed impacts of inland ports on shifting container handling or reducing truck traffic at the main ports. How- ever, some information can be gleaned on the actual and expected evolution of these inland port facilities over time, based on past history in the case of the Netherlands ECT and on future expectations in the case of the New York PIDN. • European Container Terminal, Venlo (ECT)—The ECT system has expanded from the first inland port facility in Venlo, Netherlands (opened in 1982) to include a second inland port facility in Willebroek, Belgium (opened in 1999) and a third in Duisburg, Germany (opened in 2001), as well as Rotterdam’s largest container port (Delta Terminal). The Port of Rotterdam opened two new rail service centers in 1999. The ECT Inland Terminal at Venlo started with one daily shuttle train to and from the Port of Rotterdam, but has now expanded that operation to three trains daily—two between ECT Venlo and the Maasvlakte Rail Service Center (at Rotterdam’s container port) and one between ECT Venlo and the Waalhaven Rail Service Center (at Rotter- dam’s bulk port). Container handling growth at the ECT Venlo facility was up by 20 percent in 2002, which ECT 57

attributed to the reliability of the rail link to the main port and to the reduced level of congestion on national motor- ways that had helped improve truck access to and from the distribution center. • NY: Port Inland Distribution Network (PIDN)—The inaugural barge service to Albany lasted about 3 years and moved approximately 8,500 containers. It was terminated because of the lack of long-term funding commitments able to support the service through 5 years or more. How- ever, the constraints and congestion at New York remained severe, and the promise of PIDN for systematic reduction of these problems still remained attractive to the Port and its regional partners. Consequently, the les- sons from the Albany experience have since been applied to the development of roll-on/roll-off barge service across Long Island Sound to Bridgeport, CT. Not ready for launch at the time this is written—and a short-sea initia- tive instead of a rail-based one—the Bridgeport service is appealing because of its potential for economic stimula- tion in a lagging area of Connecticut and its ability to reduce truck travel on the busy Interstate 95. The original projections for the PIDN program held that when all of the regional ports were in place, the percentage of marine containers moved by truck would fall by one-third, and almost 1,000 truck trips a day would be diverted from New York State roadways to other transportation options. Possible traffic shifts of this magnitude sustain interest in overcoming the program’s setbacks. Implementation All four of the inland port facilities were set up by public initiatives involving local or regional public agencies, work- ing in concert with private operators of shipping, rail, or barge lines. • European Container Terminal, Venlo (ECT)—ECT is a private limited liability company (BV) that provides advanced logistics and operation of container services for three-fourths of the container traffic at the Port of Amster- dam. ECT is an entity set up by three organizations—the public port operator (Rotterdam Municipal Port Manage- ment), a private company (Hutchison Netherlands BV), and the financing bank (ABN AMRO). ECT first estab- lished the Inland Terminal at Venlo in 1982, with daily rail service to the Port of Rotterdam. ECT has fully incorpo- rated the Venlo facility into ECT’s container control system at the main port, allowing for seamless scheduling and han- dling of containers that successfully allows users to view the inland port as an extension of the main port. • Virginia Inland Port (VIP)—The Virginia Port Authority (VPA) is a state agency that operates marine thermals at Newport News, Norfolk, and Portsmouth, VA. In 1983, VPA set up a separate company, Virginia International Ter- minals, to operate its marine terminals. In 1984, VPA and VIT conducted a study mission to Europe, which examined the success of the new ECT inland terminal in the Nether- lands. Subsequent discussions with Norfolk Southern Railway led to common interest in the concept and the development of a plan to establish an inland port facility in Warren County, near Washington, DC. In 1987, the Gover- nor of Virginia announced plans for state funding to estab- lish the facility, to be owned by VPA and operated by VIT, working with the railroad. In 1989, the Virginia Inland Port was opened. VIT has linked the inland port into its com- puter operations at the main ports, thereby coordinating all container movements with rail availability and ship line departures and arrivals. With the addition of the inland port, VPA operates at a profit, although it receives capital devel- opment and maintenance support from the state through its Transport Trust Fund and its Commonwealth Port Fund. • Nilai Inland Port (NIP)—NIP was set up as a public- private joint venture, involving Syabinas Holdings Sdn. Bhd and the State Development Corporation of Negeri Sembilan (Perbadanan Kemajuan Negeri, Negeri Sembilan-PKNNS). Seventy percent of the equity is owned by Syabinas Holdings and thirty percent by PKNNS. NIP commenced operations in mid-1995. The facility was developed at a total investment cost of RM120 million (US $32 million). That includes the building of offices, fac- tories, shop houses, a warehouse, and a container yard. The built-up factory units were specifically designed to cater to small- and medium-scale industries. • NY: Port Inland Distribution Network (PIDN)—The PIDN is a public-private partnership. Its partners include the Port Authority of New York and New Jersey, prospec- tive feeder port operators, and state and local government agencies that support PIDN development. The Port Authority of New York and New Jersey initially committed $6 million to assist with the start up costs for the new dis- tribution system, beginning in 2001. With an estimated total cost of $1.8 billion, the PIDN development process was expected to go through mid-decade in order to be completed. Federal Congestion Management Air Quality Program (CMAQ) money was used to provide almost 3 years of capital and operating funding for the initial PIDN service, which ran barges up the Hudson River to an inland container port at Albany, NY. Even so, this service did not become self-sustaining during the period and ulti- mately was discontinued for lack of funds. Although other potential ports in surrounding states have been slated for possible start-ups in subsequent years, a major obstacle to development of the full PIDN program remains the lack of external funding commitments to cover anticipated 58

deficits in operating and investment capital, during the long periods required for services to mature in the market. Additional References The Betuweroute Betuweroute web site, www.betuweroute.nl (referenced May 13, 2003). This is the official web site for the project. It contains general infor- mation on the project, press releases, and progress reports. Beinat, Euro, Michiel van Drunen, et al., “Case Study: the Betuweroute freight railway,” in A Methodology for Policy Analysis and Spatial Conflicts in Transport Policies, edited by Euro Beinat. Institute for Environmental Studies, Vrije Universiteit Amsterdam, The Nether- lands, 1998. Gout, M. W., R. C. G. Haffner and J. Van Sinderen. Mainports in the 21st Century. Wolters Noordhoff, 1997. Ministerie van Verkeer en Waterstaat [Netherlands Ministry of Trans- port and Water Management]. Progress Report 12/2002: Betuweroute. Available at http://www.betuweroute.nl/indexnew.html?tid=1 (refer- enced May 13, 2003). Port of Rotterdam, “Betuweroute” (referenced May 23, 2003) http://www.portofrotterdam.com/PortInfo/UK/PortDevelopment/Bet uweroute/index.asp?ComponentID=42879&SourcePageID=43704 Pressearchiv der Verkehrswerkstatt, “Freie Fahrt für den Güterverkehr auf der Betuweroute, 07.05.1999” (referenced May 13, 2003) http:// www.bics.be.schule.de/verkehr/presse/1999_1/v2891_07.htm Railway Technology, “Betuweroute Freight Line, Netherlands,” (refer- enced May 23, 2003) http://www.railway-technology.com/projects/ betuweroute/ The Sheffield Flyover BNSF News Release, “Second Flyover Bridge to Streamline Rail Traffic Through Kansas City” Kansas City, Kansas, February 15, 2002 http:// www.bnsf.com/news/articles/2002/02/2002-02-15-a.html?index=/ news/news_archive.html (This is a press release with some detailed information concerning the Argentine Flyover.) Cookson, Brian, “Railway putting flyover on track,” The Business Jour- nal of Kansas City - November 5, 2001 (from the November 1, 2001 print edition) http://kansascity.bizjournals.com/kansascity/stories/ 2001/11/05/story1.html Mid-America Regional Council, “Transportation Outlook 2030, Metropolitan Kansas City’s Long-Range Transportation Plan,” Mid-America Regional Council, 2002 http://www.marc.org/ outlook2030 Rawlings, Gerald, comments posted on “National Dialogue on Freight” Website (referenced March 14, 2003) http://www.icfhosting.com/ fhwa%5Cnfd_disc.nsf/CategoryAllThreadedweb/de3710dc6997c8fd85 256bb50071a7ce?OpenDocument Transystems Corporation, “Kansas City Terminal Railway Flyover Project: A Public/Private Cooperative Success, Presentation” to Financing Freight Transportation Improvements, FHWA Confer- ence, St. Louis, MO, April 29, 2001 http://ops.fhwa.dot.gov/freight/ Financing%5CAppendix%5Cpresentations%5CMalir.htm (This pre- sentation has excellent photographs, maps, and diagrams as well as slides and notes about the project.) USDOT, FHWA, Freight Planning Home Page (accessed March 14, 2003) http://www.fhwa.dot.gov/freightplanning/lop2.html (This site includes listings of freight projects, organized by state, that received FHWA funds under ISTEA and TEA-21.) 59