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OCR for page 62
62 The elephant in the room is the threat of re-regulation. There Revise the Hours-of-Service limits to allow some flexibility to is no incentive for rail investors to expand capacity if legislators address worker shortages that develop in a particular region. and the Surface Transportation Board (STB) will limit return [including compensation for risk]. Capping returns at average capital cost at the top of the business cycle virtually prevents 5.4.2.1 Methods and Approaches investment whose long-term recovery must span the entire busi- to Selecting Improvements ness cycle. A shot at earning a premium at the top is needed to carry the investment through bad times. And it is that premium Most survey respondents indicated that their companies that attracts further capital to expand capacity. used at least informal cost-benefit analysis in setting capital There is the urgent need for national initiatives employing project priorities. A semi-formal cost-benefit evaluation on railroads to address energy imperatives and reduction of the every project is utilized where it can be demonstrated that a nation's carbon footprint. Some respondents suggested invest- project can result in capacity or operating improvement. In ments in passenger transport facilities that could benefit freight other cases, where external funding is sought, then a return on operations collaterally. The Investment Tax Credit (ITC) to investment (ROI) analysis will be undertaken. Financial per- accelerate investment (a neutral device as among competing formance in the form of a rate of return exceeding 15 percent companies and management prerogatives) was mentioned as and/or a payback of 18 months or less typically would qualify an ideal way to lower mobility costs for users. A stronger Fed- the project. In general, the required rates of return have to sig- eral preemption to head off local obstructions harming rail nificantly exceed the cost of capital. In the absence of this, the mobility projects might be needed. Measures to fund and facil- project has to satisfy a regulatory need or else be required to itate PPPs would be much in order. sustain operations. Despite concerns about "strings" on public funding, many Most railroads and rail suppliers apparently have a cross- respondents believed that there should be increases in public functional senior management team responsible for review of funding of capital investments in rail infrastructure. A short- capital investment needs and project priorities. The senior line executive stated the need for Federal funding as follows: team reviews formal capital requests from managers and direc- From our standpoint, state assistance programs similar to those tors, and these are supported by standard financial analyses. in Ohio, Pennsylvania, New York and other states that provide funding for customer-related rail infrastructure would be a major plus. Normally states or local road authorities fund high- 5.4.3 Deepwater and Inland Waterways way improvements associated with new or expanded customer Improvement Strategies facilities but neither [of the states our short line operates in] pro- vide any funding for customer rail access. Such funding would be Three major methods of selecting improvement options particularly helpful to speed the adoption of new technology were identified by the survey respondents: [-based] safety improvements, which are often difficult to justify for our low-density lines. 1. Undertake an evaluation to identify and execute ways to Very little research funding finds its way to topics of keen inter- improve or change their business process. Decisions to est to the short line and regional railroad community, yet local rail- roads now compose roughly 25 percent of the national freight rail undertake a change in business process to improve per- network. The relatively modest purchasing budgets of short lines formance are driven by labor rules, capital cost, operation don't encourage suppliers to devote much product development to cost, risk, capacity, productivity, and rate of return. This areas aimed at low density lines. Federal and state government reflects the private-sector approach to decision making that could play a role here to identify cost-effective solutions to improve involves constant evaluation for process improvement. the safety, efficiency, and utility of the local railroad network. 2. Dialogue with key stakeholders to identify problems and From the labor unions' perspective, low-cost solutions ways to address them. Several ports organize meetings should: among their stakeholders so that labor, motor carriers, regulatory agencies, and others can meet in various com- Allow special agreements where engineers can transfer, mittees to address concerns. For example, one "port coor- temporarily or permanently, from one seniority district to dination team" on a major shipping channel meets to another to address severe engineer shortages. determine when to open and close the channel to accom- Improve channels of communication so that issues can be modate vessel traffic requirements. Another terminal oper- worked out at the local level and overlapping management ator focuses on its customers to keep them informed of the roles are streamlined. various factors affecting the delivery process and to work Continue to allow long-haul crews to meet and swap trains with them on how to improve the system. while en route when both crews have sufficient time left to 3. Discuss Federal regulatory impacts on terminal operations work under the law. Under some circumstances this can be with Federal agencies to address effective operational and cost neutral and can be implemented in relatively short enforcement policies so that they can be applied reason- order. ably while meeting the required objective of the initiative.

OCR for page 62
63 The following is a priority ranking of actions that are often have well-trained union members who can meet all of the used to address freight mobility constraints. This ranking employers' requirements. reflects the relative effectiveness of the actions. Obviously, reg- Interoperability and uniformity of systems - currently, each ular communication and coordination of activities are the terminal operator has its own individual data systems for most effective tools in addressing mobility issues. clerks, checkers, and longshore personnel to use. If a checker moves from one terminal to another, he or she must be 1. Regularly communicate with elected officials, manage- trained in an entirely new system. ment, and community stakeholders to garner support for regulatory improvements Union specialist lock operators and mechanics are fre- 2. Coordinate capital improvement planning and improve- quently on single-person shifts to operate the facilities and ments with modal and community partners to avoid must have expertise in the total operational facility as they unanticipated negative congestion consequences are the first responders to any difficulties at the facilities. The 3. Use customized technology programs union representing these workers has worked with manage- 4. Support labor training programs ment at the local level to counteract contracting out to in- 5. Empower problem-solving action groups experienced workers. 6. Prepare and budget for implementing contingency plans. The Teamsters have responded to mobility constraints by allowing motor carriers more flexible use of Teamster driv- Among the potential low-cost improvements, the follow- ers. For example, the Teamsters now allow companies to put ing are considered to have some or high potential of imple- empty trailers on rail equipment, whereas before, the con- mentation to address freight mobility constraints: tract required motor carriers to use road drivers to do so. Also, to reduce travel during peak congestion times, the union Reconfigure terminal to add more capacity strongly advocates that trucking companies and their cus- Utilize wireless communications on terminal to facilitate tomers allow evening and weekend deliveries. In addition, the proper storage, ship operations, and gate operations Teamsters' new contracts create a new type of driver, a "util- Establish regular pre-planning meetings to coordinate ship, ity" or hybrid driver. This driver offers trucking companies rail, labor, and drayage requirements flexibility in working around mobility constraints by allow- Institute on-terminal traffic management by managers ing the carrier to use a driver in different roles, such as for Deploy "Fast Lane" at gates using paperless checking local pickup and delivery or off-hours pickup and delivery. Install auxiliary gate lanes Locate secured inspection areas outside of major traffic areas. 5.4.3.1 Approaches in Selecting Improvement Options These actions are ranked in order from the most likely to the least likely to be used. All respondents indicated that ter- The complexity of trying to identify a single process by minal reconfiguration to add more capacity has the highest which to select improvement options restricts system-wide potential for addressing freight mobility constraints at deep- improvement options, especially when so many players are water ports. This is followed by the use of advanced commu- involved who make individual decisions based on their own nication technologies to coordinate and facilitate terminal objectives and business frameworks. Decisions to undertake a activities. business process change focused on performance improve- Labor unions suggest the following strategies to address ment are driven by labor rules, capital cost, operating cost, risk, freight mobility constraints at the deepwater ports and inland capacity, productivity, and rate of return. Three out of the waterways: four respondents indicated that they routinely employ a cost-benefit analysis in evaluating and selecting alternative Greater uniformity of trained labor so that individuals can improvements. The survey respondents listed several factors be rotated from one port to another to perform similar considered in evaluating improvement options, including: jobs at all ports; so a crane operator in Philadelphia, for example, can be moved to operate a crane in South Car- Safety olina. The Seafarers union has placed an emphasis on con- Labor rules tinuous recruiting of labor supply as demand has increased Capital cost over recent years. Training at the Piney Point School is Operating cost aiming to achieve its goal of providing well-trained seafar- Risk ers to take on all types of work required by the industry. Productivity They provide all levels of training so that the employers can Rate of return