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139 APPEN D I X G Stakeholder Perspectives

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freight performance measures would extend not only across the entire network of also across the network of private-sector producers, shippers, carriers, warehouse 140 and customers with whom they interact. Table G.1. Public and private perspectives. Introduction Table G.1.Public and private perspectives. Substantial effort was expended to determine stakeholder Public Private Public- Stakeholder Stakeholder preference for freight performance measures, including sur- Interests Interests Perspe veys and interviews with public- and private-sector stake- holders. The responses are summarized below. Bridge, Pavement The resear Conditions stakeholder Do system explicit or i Categorizing Stakeholder Preference Railroad Network conditions interests are System Condition One way to categorize stakeholders who could be served increase operating surveys and Condition Age of shipping costs? by a freight performance measurement system is to divide measures a fleet captured th them between public and private sectors. The public sector is largely responsible for building highways, airports, ports, Adequacy of governmen Interests in Freight Performance inland waterways, and many of the connections between Airports could be ar stakeholder them and for regulating many aspects of freight operations. Highway speeds than the ex The private sector provides railways, rolling stock, trucking Highway Reliability of the implied companies, ships, barges, the air freight industry, and the Reliability deliveries led to conc goods that move across these networks, and it provides the measure, m substantial intellectual capital that manages the logistics net- Rail speed, Availability to some aspec works. The project approach, therefore, was to examine the System reliability needed modes Such exam Performance perspectives of both the public and the private sector (see Rail access Direct and indirect areas such Table G.1). costs of quality, haz Port throughput congestion, releases, tru Harbor, Channel reliability and weight Private-Sector Perspectives Dimensions records, rai The great diversity of private-sector stakeholders is evi- import secu Emissions Concern of highway cr dent from earlier tables and descriptions of the substantial regulatory cost these regula diversity that exists across the U.S. economy. Nearly every cat- Hazardous egory of firm would have some interest in freight system per- Concern of because of Policy Material Releases regulatory fairness of some gro formance. Those interests, however, would be quite diverse, Implications Operator Safety the public a even within similar categories of industries. A very localized Concern of small manufacturer's interests will be different from those of Licensing, regulatory As noted, p a multinational manufacturer who relies upon tightly strung Taxation predictability transportati global supply chains. Likewise the real-time high-value- express inte package focus of UPS is quite different from that of an upper Midwest grain shipper barging corn to New Orleans. Their scales of timeliness, cost, waste, and reliability are signifi- cantly different. companies view transport through labor agreement perspec- NCHRP 8-70, Target-Setting Methods and Data Manage- tives and outsource it to avoid expanding the purview of ment to Support Performance-Based Resource Allocation by labor agreements. Therefore, even within a similar category Transportation Agencies,1 notes that there are divergent ways of industry, the key metrics for freight transport could vary, in which a private-sector company might view freight move- depending on the corporate strategy and corporate structure. ment performance. To some companies, freight movement is Further complicating the "private-sector" perspective on simply a cost center, and the corporate goal is to reduce cost freight performance measures is that "freight movement" in a of shipment to the lowest level, even if it sacrifices some qual- modern logistics system is part of a much larger web of logis- ity. To other companies, reliable delivery is a key corporate tics activities that extend beyond the highway, railway, port, principle, and to these companies freight movement quality or terminal. For a large company, freight movement is part of is a key corporate value. Other companies are not primarily the larger logistics cycle that involves sophisticated systems transport oriented but try to make transport a profit center for predicting inventory needs, timing manufacturing out- or value-added activity and source of revenue. puts, minimizing warehouse times, maximizing turnaround Still others outsource all transport to focus instead on times, tracking inventory, and billing customers promptly. core manufacturing or production capabilities. Finally, some Only one part of the logistics chain is the actual shipment of

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141 goods along public highways, on private railways, on private NHS because of its disproportionate importance to national air freight carriers, and through publicly owned but privately freight movement. The Surface Transportation Board (STB) operated water port terminals. To private-sector logistics and the Federal Railroad Administration (FRA) produce professionals, a set of comprehensive freight performance voluminous data on the safety, performance, competitive- measures would extend not only across the entire network ness, and service levels of the Class I railroads. The U.S. Army of transport facilities but also across the network of private- Corps of Engineers (USACE) has a lock and dam performance sector producers, shippers, carriers, warehouses, information measurement system to track the volume and condition of systems, and customers with whom they interact. inland waterways. The U.S. Department of Commerce moni- tors daily the imports and exports from ports. The Federal Motor Carrier Safety Administration (FMCSA) produces Public-Sector Perspectives monthly data on truck crashes, truck company safety, and the The research has identified stakeholder interests that are adequacy of on-the-road vehicles. EPA is closely monitoring either explicit or implicit. The explicit interests are those and regulating truck emissions. Crash data are gathered for expressed in the surveys and interviews. The implicit mea- all surface modes, with significant geographic and temporal sures are those that have been captured through earlier specificity. To capture a broader range of stakeholder inter- statutes or government regulatory actions. It could be argued ests, the research effort examined both the stated preference that the implied stakeholder interest may be stronger than of private- and public-sector stakeholders and the implied the expressed interest because the implied interest has in the preference that exists in federal regulatory systems. past led to concrete government action to measure, man- The effort to identify stated stakeholder preference for age, and regulate some aspect of freight performance. Such freight performance measurement relied primarily upon sur- examples would be in policy areas such as emissions affecting veys and questionnaires. Surveys were deployed to: (1) all 50 air quality, hazardous materials releases, truck crashes, truck state DOT planning departments and freight offices; (2) 4,000 size and weight, import and export records, railroad competi- private-sector members of the Council of Supply Chain tiveness, import security, or railroadhighway crossing safety. Management Professionals (CSCMP); (3) 10 national trade Each of these regulatory frameworks arose because of acute associations; (4) three Class I railroads; (5) a representative interest on behalf of some group of stakeholders, often the sample of trucking firms; (6) four ports; and (7) five relevant public at large. federal agencies. The results of these surveys, questionnaires, As noted, public-sector transportation stakeholders tend and interviews are summarized below. to express interest in performance measures closely aligned with the government function for which they are responsible. State Perspectives Public-sector freight stakeholders tend to further differenti- ate their interest in the transportation system to those links Surveys were distributed to all 50 state DOTs. Targeted and nodes that carry the most freight. Freight volumes are were officials within the state freight offices, of which approx- highly concentrated. As noted, the Interstate Highway System imately 22 exist. In state transportation agencies that do not (IHS) is only 1 percent of all public road miles, but it car- have freight offices, the surveys were sent to the DOT's plan- ries 49 percent of truck vehicle miles of travel (VMT). The ning officials. National Highway System (NHS) carries another 26 percent The state DOTs generally expressed a keen desire for freight of truck VMT. Together these two networks carry 75 percent performance measures, with some strong exceptions. State of all truck VMT, although they comprise only 4 percent of officials overall expressed greatest interest in measures that all public road miles. Likewise, the Class I railroads comprise captured information regarding the performance of local and only 1 percent of U.S. railroad companies, but they generate regional freight networks, such as highway, railway, and port 93 percent of rail revenue. Similarly, the top 10 U.S. container systems, with lesser interest expressed in aviation and inland ports handle more than 86 percent of all container volume. waterway systems. This probably is attributable to their lack Although the nation lacks an explicit set of national freight of responsibility for those systems and their lack of eligible performance indicators, it does contain an implicit set of indi- funds to invest in them. cators. These indicators, however, are not clearly articulated as The states generally indicated that they would use the per- performance information but tend to be obscured within the formance measures as one input for a wide array of purposes, data captured by various state and federal agencies for their including project selection, funds allocation, legislative com- use within their own statutory purview. For instance, Congress munication, system monitoring, and long-range planning. and FHWA differentiate the data they gather on system con- For the most part, the states indicated a higher interest in dition and performance to allow analysis of the IHS and the performance measures at the regional and local levels, and on

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142 an annual or quarterly basis. Performance measures regard- of-logistics measure may also have been affected by its avail- ing the national freight network and daily freight system per- ability only at a national level. The score for that measure formance generally were not as highly ranked by the states. was notable because that category was among the highest The exception was for travel-time data, which some indicated rated by the private-sector respondents. It should be noted they would like on a daily basis. Because the states indicate that respondents were commenting upon their need for and they would use the performance measures for planning and use of specific freight performance measures. They were not project-selection purposes, the need for daily operational asked to comment upon the importance of national freight measures probably is less acute for them than it would be data sets, from which they could pull local freight data. for logistics providers who are concerned about daily freight The difference in the importance of local versus national routing decisions. measures was clear-cut between the state respondents and The states were asked to rate potential measures on a sim- the later private-sector respondents. The state respondents ple scale of 03, with 3 indicating they would find a poten- gave high ranking to all local or regional measures. The pri- tial measure to be "very" important to them. They also were vate sector ranked most measures highly as long as they were asked to indicate any difference in preference if the measure national. The private sector appeared to be influenced by its was available at a local, regional, or national level. The highest involvement with long international and inter continental overall scores were for measures addressing congestion and supply chains. The state officials were influenced by their reliability at the local and regional level. Both were scored local and state responsibilities. at a value of 2.5 or higher out of a possible highest score of One strong sentiment emerging from at least two states three. As can be seen in Figure G.1, the lowest overall scores was opposition to any national set of performance measures. were for the cost of logistics (as a percentage of GDP), for Some state respondents expressed strong concern that any set train speeds nationally, and for environmental performance of measures might be used to inaccurately measure states and regarding the emissions, pollution, and energy impacts of to make arbitrary national fund-allocation decisions. This freight. The measures for cost of logistics had an overall value concern has been strongest among some of the Great Plains of only 1.2 from the state respondents, while the environ- states, whose respondents stated that their low populations mental and energy measures scored 1.8. However, the states and large distances create unique transportation conditions. indicated a higher interest in the energy and environmental When national statistics for congestion, crashes, and other measures if they were available at the local level. The cost- traditional indicators of "need" are examined, the some states Figure G.1. States' ranking of potential measures.

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143 can appear to have little need and may therefore not receive AASHTO recommends that after national goals are estab- adequate federal investment. Accordingly, they have strongly lished, each state would adopt its own performance mea- urged that any performance measures be state specific and sures to account for how it is achieving the national goals. developed by the states in a fashion that best meets their indi- AASHTO recommends that each state, MPO, and transit vidual needs. AASHTO has incorporated these sentiments agency adopt a planning and programming process to focus in its official positions regarding performance measures. federal funding on meeting the federal goals for the system AASHTO advocates that no national targets be set, instead under that entity's jurisdiction. In turn, each state would allowing states to set targets that meet their needs. adopt performance targets for each of the six key national goals. It recommends commensurate changes to the feder- ally required planning factors to focus those planning factors AASHTO Perspective on Measuring Freight on achievement of the national goals. AASHTO recommends Performance that each state be asked to develop a process to track progress AASHTO has spent considerable effort on examining toward the goals. AASHTO would be required to recommend its membership's perspective and need for national perfor- a process by which states self-define targets that would work mance measures. It also has developed a formal position on in their unique context rather than have measures and tar- how the nation should develop national freight investments. gets imposed through federal statute, federal regulation, or Although the organization has not formally proposed a spe- funding distribution. AASHTO also recommends a "carrot" cific set of freight performance measures, it has described to rather than a "stick" approach to the performance measures. a much greater degree than many national organizations the It recommends a Performance-Oriented Pilot Program for type of freight performance measure that should be consid- the states or MPO regions that meet the goals. They would be ered and how such measures could be used. rewarded with regulatory relief, relaxed engineering require- Freight-specific measures are only a small component of ments, or federal 4(f) avoidance relief in exchange for having AASHTO's recommendation on performance measures. achieved the goals. However, the issues surrounding AASHTO's recommenda- AASHTO's position has not progressed to the point where tion are representative of the overall concerns and priorities it has proposed formal national strategic goals or formal per- AASHTO has for national performance measurement, includ- formance measures. It has, however, discussed and presented ing freight performance measurement. AASHTO's position, general concepts for the types of goals and performance mea- not only on which measures to identify but also on how those sures it believes should be included. The goals and nested per- measures should be used, has been drafted to incorporate the formance measures it has discussed are: concerns of states mentioned above. AASHTO and the states have focused their comments more on how measures will be Safety: Reduce the number of fatalities by 50 percent over used--or misused--than they have focused on the details of 20 years. individual measures. Number of fatalities AASHTO's consensus position on performance measures Number of serious injuries is that national goals should be established in six areas: Accident rates Safety Preservation: Reduce the percentage of pavement in poor Preservation condition on the IHS and NHS by an agreed percentage Congestion in 10 years; reduce the number of structurally deficient System Operations bridges on the IHS and the NHS by an agreed percentage Freight in 10 years; keep the transit fleet in a state of good repair Environment by maintaining the average age of fleet at an agreed age and the rail fleet at an agreed age. Its position is that the next transportation authoriza- Pavement roughness tion legislation should require AASHTO to work with other Bridge condition stakeholder groups such as the American Public Transit Asso- Age of transit fleet ciation, metropolitan planning organizations (MPOs), and others to establish national goals for each of the six areas. Congestion: Immediate goals would be established to AASHTO does not support federal rule making to adopt the move toward a consistent method for measuring and goals, other than a conforming rule making to accommodate tracking congestion levels (total delay) for all urban areas the changes in statute. above a certain population. Once those goals are in place, a

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144 national goal to reduce total delay by an agreed percentage major implications for changes in the federal-state-local rela- over 10 years could be established. tionships. Thus, AASHTO and its member states are proceed- Hours of delay ing cautiously in suggesting a set of performance metrics and Travel times a measurement system. Transit load factors Federal Agency Perspectives System Operation: An initial goal would be to establish a consistent approach to measuring incident clearance times Interviews were conducted with five federal agencies to on the IHS (and potentially other systems). Once consis- assess the agencies' use and need for freight performance tent measurement is obtained, a national goal to reduce in- measures. The interviews sought to obtain perspectives on the cident clearance time by an agreed amount within 10 years agencies' need for performance indicators beyond the indica- could be established. tors that they already compile to satisfy federal statutes. The Travel time index five interviewees were either current or former employees of Incident clearance times one of the following entities: Lane closures USDOT, Federal Highway Administration (FHWA) Freight/Economic Development: The suggested goal USDOT, Federal Motor Carrier Safety Administration would be to increase the average speed on the freight- (FMCSA) significant Interstate and National Highway systems by an U.S. Department of Commerce (DOC), International agreed amount. Trade Administration Average IHS and NHS operating speed EPA, Office of Transportation and Air Quality Border crossing time U.S. Army Corps of Engineers (USACE) Bridge clearance for double-stacked containers Container throughput at ports The interviews were not intended to be comprehensive assessments of the agencies' performance measurement Environment: Reduce the growth in greenhouse gas emis- needs but rather to be indicative of the types of performance sions (GHE) from transport by an agreed percentage by an issues relevant to the agencies. The literature review included agreed horizon year. discussion of federal freight performance data because the GHE data collected by the agencies reflects generally the agen- Agency use of recycled products cies' interest in freight performance. One agency representa- Agency use of energy tive from the U.S. Army noted in a separate interview that it Carbon footprint would require an exhaustive analysis to determine all of the logistical performance measures that are important only to AASHTO notes a number of challenges to the development the U.S. Army, not to mention the other diverse branches of of a national set of transportation performance measures. the military. The Army representative noted that U.S. military First, all parties must agree on the national goals. Second, logistics concerns within the continental United States are decisions must be made as to whether to establish the same much different from the logistics needs of battlefield com- targets for all state and urban areas or to have varying targets. manders. He noted that any stated preference for military- Third, AASHTO insists that states and regions must drive the related freight performance measures would be very general- target-setting process. Fourth, how the setting of goals and ized. The same sentiments are likely to be true for the other targets changes the federal versus state versus metropolitan agencies interviewed. area relationships must be determined. Currently, the federal transportation role is to monitor state processes in the use of Data Collection and Analysis federal funds. Moving to a performance-based system could involve federal transportation agencies monitoring how states The interview participants were asked 18 questions related choose projects or adopt operational strategies. The FHWA to freight performance measures. All indicated that their and FTA could be in a position of reviewing and approving agencies had expressed a need for freight-related perfor- state, MPO, and transit agency decisions much more closely mance measures. Next, participants were asked to give the if the federal role is to ensure that state and local agencies motivations for specific organizations to use freight perfor- achieve predetermined federal target levels. The movement mance measures and to highlight specific measures that were to a performance-based federal program holds potentially currently used. The following responses were given:

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145 U.S. Department of Transportation, Federal SmartWay Transport program measures Highway Administration -- Overall efficiency of fleets -- Aerodynamics Motivation: Uses freight performance measures to align/ -- Engine model year allocate resources to areas of greatest need. -- Rolling resistance of tires Key measurement category: highway measures -- Use of idling control devices Travel time -- Trailer size Speed -- Measures of program effectiveness Congestion level Participants versus total registered trucks Reliability Participant VMT versus total truck VMT U.S. Department of Transportation, Federal Motor U.S. Army Corps of Engineers Carrier Safety Administration Motivation: Facilitates compliance with Office of Manage- Motivation: Uses freight performance measures to ensure ment and Budget (OMB) requirements and aids in deter- compliance with federal mandates and to monitor the safety mining that projects are included in funding requests (and of FMCSA-regulated motor carriers/motor coaches. prioritizes the funding of such projects). Key measurement categories: safety and compliance Key measurement categories: coastal and inland waterway Number of large-truck crashes Lock usage Number of large-truck inspections Tonnage moved Specific databases produced/utilized -- By facility Motor Carrier Management Information System Vessel size (MCMIS) Port access depth --Roadside inspection results Cost of operations -- Motor carrier census Docking time -- Crashes -- Compliance review results Of the five agencies represented in the interviews, three -- Enforcement were aware of additional measures that would be produced Licensing and Insurance internally in the future. FMCSA discussed several initiatives to improve or develop U.S. Department of Commerce, International Trade current or future performance measures. Improvement of data Administration collection techniques was mentioned as a first activity, with an example being the future deployment of remote computers to Motivation: Uses freight performance measures to monitor vehicle inspectors so that data can be transmitted and assessed the competitiveness of the U.S. economy with other coun- in real time. Other future freight performance measures, iden- tries, as well as to monitor various elements of the U.S./ tified within the scope of the CSA-2010 program, will help international supply chain. FMCSA prioritize compliance review resources by identifying Key measurement categories: export/import volumes company and driver behaviors that are deemed high risk. A second agency, EPA (specifically the SmartWay Trans- Environmental Protection Agency, Office of port program), is currently transitioning to a broader set of Transportation and Air Quality metrics to measure the operational efficiency of fleets and will focus on emission rates per ton-mile. Motivation: Uses freight performance measures to provide Finally, the Department of Commerce is consulting with insight on how fleet operational changes can reduce emis- stakeholders to discuss the needs and benefits of freight per- sions and/or reduce fuel consumption rates. formance measures. It will focus on the competitiveness of Key measurement category: vehicles emissions U.S. transportation and trade networks compared with those GHE in other countries. NOx The interviewees were next asked the following question: If Particulates a national set of freight performance measures were to be pro- Key measurement category: energy consumption duced, what measures should be included? Participants offered Efficiency/miles per gallon (mpg) a variety of insightful responses.

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146 A first opinion was that metrics should measure perfor- Next, a series of four-level Likert scale questions were mance across each element of the entire supply chain and asked. Participants ranked specific freight performance mea- U.S. transportation network. The resulting outputs should surement categories with one of the following classifications: be input into transportation infrastructure investment formulas. Not at all valuable Another opinion was that a national system of measure- Somewhat valuable ment should focus on fleet efficiency and specifically take Moderately valuable into account actual costs and benefits. A respondent named Very valuable miles per gallon (mpg) as an example of a current measure that does not consider cost/benefit accurately and suggested The overall results of the Likert scale questions are shown that a better measure of fuel efficiency would be the amount in Figure G.2 as average scores, with 1 being the lowest score of goods hauled per energy unit consumed. possible (this would occur if all participants state that a mea- A third interviewee suggested that a more accurate and sure is "not at all valuable"), and 4 being the highest possible consistent truck VMT measurement was required nationally. score (this would occur if all participants state that a measure A fourth opinion was that measurements should include is "very valuable"). the cost of moving freight within each mode. The first question related to the usefulness of an annual Finally, four specific measures, according to one respon- report that outlined the cost of logistics as a percentage of dent, should be included in a national freight performance the GDP. Four of the respondents indicated that this would measurement data set: be "somewhat valuable"; FMCSA stated that this would be "not at all valuable." Travel time The second question asked interviewees to rank the value Travel time reliability of measurements of congestion on the nation's major freight Freight-related highway improvement expenditures transportation facilities (i.e., highways, ports, rail, and water- Intermodal connector assessments ways). There were three indications that such measures would be "somewhat valuable." EPA and FHWA, however, stated Participants were next asked how frequently freight that such measures would be "very valuable." performance measures should be reported; of those who A next question asked how valuable measures of truck answered, two said annually, one said quarterly, and one travel time and operating speeds on major U.S. corridors said monthly. would be. Three participants (FHWA, DOC, and EPA) stated Generally speaking, those interviewed thought that agen- that such measures would be "very valuable." cies would be willing to spend funds to produce freight per- The fourth question asked: How valuable to you would formance measurements specifically useful to them. be a national survey of the satisfaction of logistics users in the Figure G.2. Federal agencies' performance measure preferences.

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147 nation's freight system? The results leaned toward "moder- manufacturers, third-party logistics firms, warehouse opera- ately" to "very" valuable. tors, and other groups who are involved in day-to-day move- The fifth question asked how valuable performance mea- ment of freight. sures that assessed the condition of the nation's infrastruc- The response rate was not high. Out of 4,000 firms e-mailed, ture would be. Results were mixed, with three indications that only 73 responses were received. Clearly, such a low rate does such measures would be "very valuable" and two entities stat- not provide a statistically valid number of responses, but it ing that such measures would be "not at all valuable." does provide a useful convenience sample. A reason for the The next question asked participants to value measures of low response rate was suggested by the comment from two- the environmental impact of freight systems. As indicated in thirds of the respondents that they had never sought publicly Figure G.2, most participants felt that this type of measure provided measures. was "moderately" to "very" valuable. The responses, however, did provide consistency in several Asked if a measure of future demand for freight shipments informative areas. Primarily, the results appeared to indicate would be valuable, all participants stated that such a measure that, although most respondents had never expressed a desire would be "very valuable." for government-produced freight performance measures, Also, the interviewees were asked what modal and/or they had clear preferences regarding what they would want infrastructure measures were desired. Highway, Intermodal, to measure: timeliness, reliability, and the costs of shipping and Intermodal Connector measures were selected by all par- freight. This apparent trend will be further explained. ticipants. The remaining modes were selected by three out of The following analysis and charts illustrate the survey five participants. respondents and their opinions. CSCMP members were allowed to note whether several measures would be valuable to them at national, regional, or local levels. They could note Private-Sector Responses that a particular measure was important to them at one, two, To capture private-sector stakeholder preference, the or all three levels. This granularity was sought to produce research team collaborated with CSCMP to conduct a Web- insight into whether certain types of measures had more based survey of its membership. CSCMP has approximately value to them based upon the measure's geographic. 8,000 members, approximately 4,000 of whom were solic- As can be seen in Figure G.3, the large majority of respon- ited for the survey via an e-mail request from CSCMP. It was dents were engaged in providing logistics services, with the explained to the membership that the survey results would second largest category being retailers and the third largest, influence the report's final recommendations and that their wholesalers/distributers. Few of the respondents were involved opinions were solicited to gain insight into the private sec- primarily with only state or local logistics (Figure G.4). The tor's perspective regarding potential freight performance large majority were either involved in national or interna- measures. Two follow-up notices were sent to members who tional supply chains. This population was desired as survey had not responded. respondents because of the interest in measures that could be The CSCMP membership represents a cross section of the used at international, national, regional or local levels. private-sector logistics industry. Among its largest groups Two-thirds of the respondents rated as "very" or "mod- listed in approximate order by category are: 1,985 logistics erately" high their interest in the CSCMP's measure of the and management planning firms; 1,938 manufacturers; 1,061 cost of logistics as a percentage of gross domestic product, third-party logistics providers; 630 food and beverage pro- as seen in Figure G.5. This report tracks a variety of logis- viders; 420 consulting firms; 411 transportation management tics cost indicators and compiles them into an annual report firms; 400 educators; 398 warehouse operators; 307 pharma- that uses GDP as a denominator. Twenty-seven percent rated ceutical and toiletry producers; 222 auto and transportation it as "somewhat" useful, and only 5 percent said it was not equipment producers; and 206 department store or general useful at all. As was seen earlier, this interest in the cost of merchandise firms. These, of course, are only the largest cat- logistics was not shared by the state DOT respondents, who egories, while more than 2,324 members list themselves as rated it among the least important measures. Another dif- "Other" firms. The remaining members listed themselves ference noted was that the private-sector respondents' role among nearly 40 smaller categories. in national and international supply chains caused them to For the survey, not all members were solicited. The intent be more consistently interested in national and international was to get private-sector logistics practitioners' opinions as measures, as opposed to local or regional ones. to which performance measures would be of greatest import As seen in Figure G.6, a significant majority of respondents to them. Non-practitioners such as academics, other trade listed as "very" important potential measures of changes in associations, and consultants were deleted from the survey logistics costs. The CSCMP survey breaks down logistics costs list. The remaining 4,000 included groups such as retailers, into labor, inventory, overhead, fuel, and other major catego-

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148 Figure Figure G.3.G.3. Role Role of of respondents. respondents. Figure G.3. Role of respondents. Figure G.4. Geographic scope of respondents. Two-thirds of the respondents rated as "very" or "moderately" high their interest in the CSCMP's measure Figure Figure G.4. G.4. Geographicof Geographic scope of respondents. of the cost of logistics as scope respondents. a percentage of gross domestic product, as seen in Figure G.5. This report tracks overhead, fuel, and other major categories. When asked if such categories were important, the clear a variety of logistics cost indicators and compiles them into an annual report that uses GDP as a Two-thirds majority of the respondents answered rated as in the affirmative. "very" They orrated also "moderately" highly the high their interest usefulness of thein the CSCMP's measure cost-related denominator. Twenty-seven percent rated it as "somewhat" useful and only 5 percent said it was not of the cost ofmeasures performance logistics as at a percentage national, of and local, gross domestic regional product, as seen in Figure G.5. This report tracks levels. useful at all. As was seen earlier, this interest in the cost of logistics was not shared by the state DOT a variety of logistics cost indicators and compiles them into an annual report that uses GDP as a respondents, who rated it among the least important measures. Another difference noted was that the denominator. Twenty-seven percent rated it as "somewhat" useful and only 5 percent said it was not private-sector respondents' role in national and international supply chains caused them to be more useful at all. As was seen earlier, this interest in the cost of logistics was not shared by the state DOT consistently interested in national and international measures, as opposed to local or regional ones. respondents, who rated it among the least important measures. Another difference noted was that the private-sector As seen in Figurerespondents' role in national G.6, a significant majorityand internationallisted of respondents supply as chains "very"caused them important to be more potential measures consistently of changes ininterested in national logistics costs. and international The CSCMP measures, survey breaks downas opposed logistics to local costs or regional into labor, ones. inventory, As seen in Figure G.6, a significant majority of respondents listed as "very" important potential measures 14 of changes in logistics costs. The CSCMP survey breaks down logistics costs into labor, inventory, 14 Figure Figure G.5. G.5. Importance Importance of of cost of cost of logistics aslogistics % of GDP.as percentage of GDP.

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149 overhead,were ries. When asked if such categories fuel, important, and other major thecategories. clear When cent asked of its if such categories members werethat reported important, the clear they lost or risked losing majority answered in the affirmative. They also rated highly the usefulness of the cost-related majority answered in the affirmative. They also rated highly a customer during the past five years because of a freight performance measures at national, local, and regional levels. the usefulness of the cost-related performance measures at bottleneck. national, local, and regional levels. Slightly less interest was stated for measures that reported In regard to truck travel speeds on major corridors, Fig- on environmental issues, such as air pollution, energy use, ure G.7, a plurality of respondents rated the potential of such or GHE related to freight, Figure G.9. There was a slightly a measure as "very" important to them and gave near equal smaller majority who rated such measures "very" or "moder- weight to such measures at the local, regional, and national ately" important to them. As was seen earlier, these measures levels. Fewer than 14 percent indicated the measure would be appeared to be of more interest to the public-sector respon- of no value to them. Open-ended comments also revealed dents than to those from the private sector. The public-sector considerable interest in operating speed data to be available respondents face many environmental compliance require- daily, as opposed to monthly or annually. ments that create a strong interest in such data. Travel-time reliability, Figure G.8, was another highly The respondents also gave high scores to potential mea- rated measure. In responses to questions about performance sures regarding the satisfaction of the logistics users with the measures regarding congestion, slightly higher preference national freight system. Slight preference was given for that was shown for state and local measures. Local granularity potential measure at the national, rather than local, level (Fig- was desired. One trade association reported that 20 per- ure G.10). Figure G.5. Importance of cost of logistics as % of GDP. Travel-time reliability, Figure G.8, was another highly rated measure. In responses to questions about performance measures regarding congestion, slightly higher preference was shown for state and local measures. Local granularity was desired. One trade association reported that 20 percent of its members reported that they lost or risked losing a customer during the past five years because of a freight bottleneck. Figure Figure G.6. G.6. Importance Importance of in of changes changes in logistics costs. logistics costs. In regard to truck travel speeds on major corridors, Figure G.7, a plurality of respondents rated the potential of such a measure as "very" important to them and gave near equal weight to such measures at the local, regional, and national levels. Fewer than 14 percent indicated the measure would be of no value to them. Open-ended comments also revealed considerable interest in operating speed data to be available daily, as opposed to monthly or annually. 15 Figure G.7. Rating of measures of travel time. Figure G.7. Rating of measures of travel time. Slightly less interest was stated for measures that reported on environmental issues, such as air pollution, energy use, or GHE related to freight, Figure G.9. There was a slightly smaller majority who rated such measures "very" or "moderately" important to them. As was seen earlier, these measures appeared to be of more interest to the public-sector respondents than to those from the private sector. The public-sector respondents face many environmental compliance requirements that create a strong interest in such data.

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154 Figure G.15. Practitioners' preferences. highway expansion, highway speeds, highway reliability, con- Again, although this was a small population, the responses tainer lift volumes and port tonnage reports, highway conges- are consistent with what has been discerned from other stake- tion, and rail line velocity. In addition, one cited the need for holder groups. These findings are that: national data to help a trade association advocate for freight projects of national significance. Practitioners prefer measures that are scaled to their opera- The respondents did report generally similar measures that tions, be their operations national, regional, or local; were most important to their internal operations. Most of the Great diversity in interest exists; cited measures were generally related to speed or reliability. In Measures of speed and reliability consistently rate highest; addition, safety was also mentioned as a highly ranked inter- and nal measure. Interest in several modes is apparent. When asked what measures policy makers need in order to understand the freight system, out of the top measures cited, Trade Association Perspectives two respondents cited measures related to rail speed, one to port throughput, three to congestion, and one to the length To further understand the needs of the private sector for of time it takes to deliver public projects. freight performance measures, efforts were made to interview

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155 or survey major trade associations. Responses were mixed. sures they use and their interest in potential publicly provided Out of 10 trade associations that were contacted, five eventu- measures. Such a small sample size was not intended to be rep- ally responded after repeated requests. Responses from the resentative of the entire industry but rather to be illustrative trade associations were limited but consistent. The associa- of how a small cross section of the industry used performance tions generally reported that members were concerned with measures (see Figure G.15). transportation costs and reliability. "We've never expressed Company representatives noted that they rely heavily on a need for freight-related performance measures, but an performance measures but on ones that provide specific and understanding of system-wide performance is important highly granular insight into the operations of their company, to our membership," said the representative of one national their suppliers, their fleets, and their employees. association. "Delay and congestion along the most heavily All eight indicated that their company relies on perfor- traveled interstate corridors would be a useful performance mance measures, with the primary use of them being in this measurement," said the representative whose membership order of frequency: relies primarily on trucking. One association that is highly focused upon international Efficiency, profitability, and cost savings (13) supply chains reported that its members rely on all modes Customer service (5) and therefore would be interested in all aspects of interna- Competitiveness (3) tional freight performance. That industry trade group rated Compliance (1) as "most important" forward-looking measures that would Pricing (1) help predict future demand for freight. All other potential Routing (1) measures were rated as only "somewhat" or "moderately" important. The use of performance measures to make business One retail-focused association rated as "most important" practices more "efficient" was by far the strongest motiva- measures related to infrastructure condition and future freight tor. Thirteen of the top motivators fell into the "Efficiency, demand. The representative wrote on the questionnaire, Profitability and Cost Savings" category and included ratio- nales such as: Developing a set of national freight performance measures is critical as we continue to ask the federal government to develop 1. To improve efficiency and bottom-line return on resources; a National Freight Policy that will help to identify the future needs of the goods movement system within the United States. 2. To increase operational efficiency; The current infrastructure will not be able to meet the future 3. To increase productivity; demands of the system. It is important that we have as much 4. To control costs; information as possible to develop a system that will be able to 5. To increase and measure profitability; and handle the future needs of the system. 6. To measure employee performance. Another major national trade association representative The most important measures used by the companies were: said that national freight performance measures would be important, Labor productivity; On-time pickup and delivery; . . . to help make the case for direct public sector investment, tax incentives for private investment, and removal of barriers to pri- Revenue yield by shipment or by mile; vate investment in freight-related infrastructure. I expect we will Shipments per truck/ truck productivity; need updated information on system performance and return Fuel economy; on investment to advocate for Federal policies that target invest- Profit or loss per truck; ments (rather than "spread the peanut butter" formulas). . . . A Equipment utilization; single, authoritative source of information that allows for annual comparisons--even if it in part consolidates the work already Maintenance costs; being done by associations--would be very useful. Out-of-route and loaded miles; Loading and unloading times; and Border crossing time/delays. Trucking Industry Perspectives Current Measures Eight interviews with trucking company managers and executives were conducted to ascertain that industry's per- Respondents were asked: Are there currently measures that spective on measures. Insights were sought on both the mea- your organization intends to produce but has not yet developed?

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156 Five of the eight companies indicated that new performance future. Respondents indicated that the following would be measures were or would be under development, including: beneficial: 1. Out-of-route miles; Performance measures based on ECM data; 2. Maintenance cost per mile; Delay at fueling locations; 3. Driver- and vehicle-based operations via engine control Delay at weigh stations; module (ECM) data; Delay at roadside inspections; 4. Revenue generated per square foot within facilities (this Accounts receivable collection times; measure is specific to freight warehousing); Infrastructure performance measures (to support national 5. Cost of regulatory compliance, with a focus on hazardous freight mobility); materials; Urban congestion measures (to support freight mobility); 6. Cost of operating in Canada; and and 7. Cost of transportation worker identification credential Accident/congestion ratios. (TWIC) deployment. The final seven questions were quantitative in nature, and Interview participants were asked about utilization of respondents were asked to select from the following four value trucking performance measures developed by other com- rankings (see Figure G.16 for trucking industry responses to panies or organizations. Although all respondents indicated these seven questions): that performance measures from other individual trucking companies were not used, aggregated data were accessed and No, Not Valuable; used for benchmarking purposes. The sources of such data Somewhat Valuable; were indicated to be the following: Moderately Valuable; or Yes, Very Valuable. Industry association publications and statistics; U.S. Department of Transportation publications and statistics; Interviewees were first asked the following quantitative Trade magazines; question: Would measures of congestion on major U.S. highways Productivity/ modeling software; and be valuable to your company? The majority (50 percent) indi- Consultants and universities. cated that such measures would be "Somewhat Valuable." No interviewees indicated that this information was not valuable. To the question: Would measures of highway travel time or Needed Measures operating speed on major national corridors be valuable to your In the final open-ended question, interviewees were company? three respondents indicated "Very Valuable," while asked what performance measures were needed in the another three indicated "Somewhat Valuable." Figure G.16. Trucking industry responses.

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157 To the question: Would measures of the reliability of travel Environmental and energy data, including the volume on major national corridors be valuable to your company? of fuel used, that can then be extrapolated into GHE and nearly all participants indicated a "middle-ground" answer, other air pollutants; and with four stating "Somewhat Valuable" and three stating Extensive financial data including not only total revenues, "Moderately Valuable." profits, return on income, and return on equity but also To the question: Would a national assessment of the condi- whether railroads have earned their Cost of Capital. tion of the nation's public infrastructure, including highways, bridges, ports and airports, be valuable to your company? Fifty The Cost of Capital analysis is a formal measure conducted percent of interviewees stated that such measures/assessments by the STB and is used for consideration in decisions regard- would be "Very Valuable," and none indicated "not at all." ing rate disputes. In addition to the regulatory financial data To the question: Would a national survey of users' satisfac- provided to the government, the seven large Class I railroads tion with the performance of the nation's freight system includ- are publicly traded companies that produce extensive filings ing highways, railroads, ports, and the intermodal connections required by the Securities and Exchange Commission. be valuable to your company? answers fell in all four catego- With respect to safety, the railroads in many states are ries, with the most answers given to "Somewhat Valuable." still partially governed by forms of public utilities commis- To the question: Would performance measures on the sions that house vast data regarding local safety and crossing amount of air pollution, fossil fuel use and other environmental issues. Additionally, because state DOTs, state public utilities impacts produced by the freight system be valuable to your com- commissions, FHWA, and FRA are all active in highwayrail pany? answers also fell into all four categories, with the most crossing safety issues, extensive information is available to answers given to the "Somewhat Valuable" category. state agencies about to the location, configuration, safety Finally, to the question: Would a measure of the level of record, and safety-countermeasure deployment at virtually future demand for freight shipments be valuable to your com- every railroad crossing of a public road. pany? all respondents saw value in this measure, with an In addition to the large volume of railroad performance overwhelming 75 percent indicating that such a measure was data that is produced through governmental processes, each "Very Valuable." of the major railroads provides extensive websites that regu- In summary, the trucking industry respondents--although larly report on issues such as their on-time delivery, their representing a very small sample population--indicated a rate structures, and their shipment policies (Table G.2). greatest perceived utility for measures that relate to future AAR also produces a significant volume of performance data freight demand, condition of public infrastructure, and the including: travel speeds on major national corridors. Operating speeds by railroad and by class of cargo train; Dwell times for trains at major terminals; Railroad Industry Perspectives Statistical information on the volume of rail cars, locomo- Railroad stakeholders, their goals and objectives, and their tives, and other rolling stock in operation; subsequent interest in railroad freight performance measures The miles of track in service; have evolved over the more than 150 years that railroads Total wages paid; developed, were regulated, and then were largely deregulated. Number of employees; As a result, a rich array of railroad freight performance data is Revenue and financial performance; and available, particularly at the national or corporate level. The Revenue per ton-mile of freight. basic data available that already are used for performance or statistical measurement include: Table G.2 illustrates only a portion of the overall financial and operating data produced by the AAR. Taken over time, Data on overall rail volumes, both for passenger and such reporting data can produce insightful trend lines of freight, by railroad and by type of commodity on a weekly, performance or performance measures for a variety of issues monthly, and annual basis; regarding the financial viability of the railroads and their role Extensive information on rail safety, including not only in the national freight network. highwayrail crashes but also injuries and fatalities to In addition, AAR and the individual railroads are increas- trespassers, railroad employees, and others on railroad ingly involved in the public debate about transportation and property; regularly produce statistics and analyses regarding individual Information on hazardous material cargos, in terms of vol- policy issues. One recent analysis addressed the optimized umes and releases--including various categories of releases amount of capital investment necessary for railroads to max- caused by accidental spills or crash-caused releases; imize the movement of freight; a second analysis addressed

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158 Table G.2. AAR-produced statistics. Traffic 2006 2007 2008 Carloads Originated (millions) 32.11 31.46 n.a. Intermodal units Containers 9.40 9.43 9.03 Trailers 2.88 2.60 2.48 Total 12.28 12.03 11.52 Tons Originated (billion) 1.957 1.940 n.a. Ton-miles (trillion) 1.772 1.771 n.a. Operating Statistics Average Revenue per Ton Mile 2.840 2.990 n.a. Average tons per carload 60.9 61.7 n.a. Average tons per Train 3,163 3,274 n.a. Average Length of Haul (miles) 905.6 912.8 n.a. Financial Freight revenue (billion) $50.3 $52.9 n.a. Operating revenue (billion) $52.2 $54.0 n.a. Operating Expenses (billion) $41.0 $42.7 n.a. Net income (billion) $6.5 $6.8 n.a. Operating ratio 78.6% 78.3% n.a. Return on Average Equity 11.3% 11.49% n.a. Number of employees 167,581 167,216 n.a. Average wages $68,141 $69,367 n.a. Average total compensation plus $94,607 $97,401 benefits 29 rail safety after a commuter train crash; and a third addressed key issues at a national, regional, or railroad level. As shown rail's contribution to GHE reductions. in Figure G.17, train accidents by type are tracked, as are rail As a result of all this data and statistical information, it volumes and revenue by commodity type in Figure G.18, and would be possible--and often done--to produce a wide array deaths by type of train accident in Figure G.19. of rail freight performance measures that assess issues relat- What is not as readily available is information at a local ing to policy, investment, safety, environmental, and other level or at an individual producer level. For instance, Class I

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environmental, and other key issues at a national, regional, or railroad level. As shown in Figure G.17, train accidents by type are tracked, as are rail volumes and revenue by commodity type in Figure G.18, and deaths by type of train accident in Figure G.19. 159 highways, with commensurate savings in fuel, emissions, infrastructure deterioration, and crashes. However, the increased model of "hook and haul" of large-unit trains has resulted in some loss of service to local shippers. This has become a significant issue in some markets, such as among grain producers in isolated eastern Washington State. Local producers of commodities such as grain, timber, ethanol, chemicals, and minerals often desire rail service as an alternative to truck or to water. Although extensive data exist regarding what railroads haul, less information is available about what service they have discontinued, particularly at the local, regional, or individual producer level. This type of local service information is of acute interest to many public officials, as well as to the private producers who desire rail service. Likewise, local transportation planners have complained about a lack of information regarding very localized rail operations that may affect passenger rail service, commuter rail service, highwayrailroad crossings, and other local transportation planning issues. Highway designers have voiced repeatedly the need for information regarding the railroad's long-term track-expansion plans and how those plans may affect the repair or construction of highwayrailroad overpasses.3 Thus, although extensive performance and statistical data exist regarding national and regional railroad performance, the information needs of individual shippers and local stakeholders are less well met. It should be noted, however, that the same is true regarding the other modes. The service patterns, prices, and frequencies of inland barge companies, air freight carriers, and truckers likewise is proprietary information and is seldom shared with the public and local policy makers. Figure G.17. Rail accident statistics. Figure G.17. Rail accident statistics. What is not as readily available is information at a local level or at an individual producer level. For instance, Class I railroads have significantly increased their revenue and profitability by hauling larger volumes over longer distances to improve their efficiencies and economies of scale. Just between 2006 and 2007, average length of haul rose from 905.6 miles per train to 912.8 miles,2 a trend that has been evident for several decades. This reflects their increased hauling of massive volumes of coal from Wyoming and their increased movement of high-valued intermodal containers containing Asian imports. These relatively long-haul movements may have reduced the volume of long-haul truck moves on 30 Figure G.18. Rail volume by shipment categories. Figure G.18. Rail volume by shipment categories. 31 Figure G.19. Railroad deaths. Figure G.19. Railroad deaths. Highway-related train deaths are approximately one third of all train deaths. Most fatalities are trespassers, and the remainder are employees of either the railroad or of companies working on the tracks.

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160 railroads have significantly increased their revenue and prof- tion is of acute interest to many public officials, as well as to itability by hauling larger volumes over longer distances the private producers who desire rail service. to improve their efficiencies and economies of scale. Just Likewise, local transportation planners have complained between 2006 and 2007, average length of haul rose from 905.6 about a lack of information regarding very localized rail oper- miles per train to 912.8 miles,2 a trend that has been evident ations that may affect passenger rail service, commuter rail for several decades. This reflects their increased hauling of service, highwayrailroad crossings, and other local transpor- massive volumes of coal from Wyoming and their increased tation planning issues. Highway designers have voiced repeat- movement of high-valued intermodal containers containing edly the need for information regarding the railroad's long- Asian imports. These relatively long-haul movements may term track-expansion plans and how those plans may affect have reduced the volume of long-haul truck moves on high- the repair or construction of highwayrailroad overpasses.3 ways, with commensurate savings in fuel, emissions, infra- Thus, although extensive performance and statistical data structure deterioration, and crashes. However, the increased exist regarding national and regional railroad performance, model of "hook and haul" of large-unit trains has resulted the information needs of individual shippers and local stake- in some loss of service to local shippers. This has become a holders are less well met. It should be noted, however, that the significant issue in some markets, such as among grain pro- same is true regarding the other modes. The service patterns, ducers in isolated eastern Washington State. Local producers prices, and frequencies of inland barge companies, air freight of commodities such as grain, timber, ethanol, chemicals, and carriers, and truckers likewise is proprietary information and minerals often desire rail service as an alternative to truck or is seldom shared with the public and local policy makers. Port to water. Although Industry extensive Perspectives data exist regarding what rail- Highway-related train deaths are approximately one-third roads haul, less information is available about what service of all train deaths. Most fatalities are trespassers, and the The U.S. particularly they have discontinued, Marine Transportation System at the local, (MTS) or regional, is a vast,remainder diverse system are of waterwaysof employees and portsthe either thatrailroad or of compa- stretch along all U.S. coasts, Hawaii, and Puerto individual producer level. This type of local service informa- Rico and deep into the continental nies working on the tracks. interior along the Mississippi, Missouri, and Ohio river systems (Table G.3). The physical network consists of more than 1,000 harbor channels; 25,000 miles of inland, intercoastal, and coastal waterways; 300 ports; and 3,700 terminals.4 This system is responsible for approximately $673 billion worth of goods movement or 5.2 percent of the nation's total value of freight and 8.6 percent of all tons shipped.5 Table G.3. Table G.3. Marine Marine Transportation Transportation System dimensions. System dimensions. Waterway Type Description Key Metrics Includes lakes Superior, Michigan, Huron, 9,292 total system miles Erie, and Ontario, their connecting 97 million tons domestic traffic Great Lakes waterways, and the St. Lawrence 63 million tons international traffic Seaway. Great Lakes waterways are Key commodities: ores and other mostly deep draft. crude materials, coal Includes shallow-draft (12 feet or less) segments of rivers, inland waterways, and intracoastal waterways. Ports on these waterways accommodate barges and 29.382 total system miles other limited-draft vessels. Leading Shallow Draft Inland 628 million tons domestic traffic subsystems include the Mississippi River and Intracoastal Key commodities: coal, petroleum and its tributaries; the Gulf of Mexico Waterways products, aggregates, food and (including the Gulf Intracoastal Waterway, Black Warrior, and Tombigbee rivers, farm products Tennessee-Tombigbee waterway, et al.); the Atlantic Intracoastal Waterway; and the Columbia River system. 23,670 total system miles 202 million tons domestic traffic Includes deep-draft (more than 12 feet) 1,502 million tons international international trade lanes to and from ports traffic on the Pacific, Atlantic, and Gulf of Mexico Key commodities: crude Deep Draft Coastal coasts; also includes coastwise trade petroleum, petroleum products, and Rivers lanes outside of the intracoastal food and farm products, waterways; also includes deep-draft manufactured goods, chemicals segments of rivers and inland waterways. (international); petroleum products, crude petroleum (domestic) In addition to its physical diversity, the MTS involves multiple stakeholders--private ship owners, public and private terminal operators, labor unions, the owners of modal connections into port facilities, and local, state, and federal government agencies that regulate and promote waterborne traffic. In recent years, the government network has been substantially augmented by security forces concerned about drugs, terrorism, and immigration. These governmental functions are in addition to the historic national regulatory function of capturing import duties and tariffs.

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161 Port Industry Perspectives The disposal of dredging materials created from deep- ening harbors and channels likewise is an ongoing The U.S. Marine Transportation System (MTS) is a vast, issue. diverse system of waterways and ports that stretch along all Until the recession of 2008, growing freight volumes at U.S. coasts, Hawaii, and Puerto Rico and deep into the conti- major seaports created growing landside congestion con- nental interior along the Mississippi, Missouri, and Ohio river cerns on local streets, interchanges, railroads, and the systems (Table G.3). The physical network consists of more crossings between them; than 1,000 harbor channels; 25,000 miles of inland, inter- The trend of steadily increasing ship size allows for coastal, and coastal waterways; 300 ports; and 3,700 termi- greater economies of scale at sea but creates additional nals.4 This system is responsible for approximately $673 bil- throughput and surge issues at terminals and local lion worth of goods movement or 5.2 percent of the nation's streets, railroads, and pipelines; and total value of freight and 8.6 percent of all tons shipped.5 Expansion of the Panama Canal will mean an increase In addition to its physical diversity, the MTS involves in large ships on the East Coast and possible diversion multiple stakeholders--private ship owners, public and pri- of West Coast container traffic to East Coast ports. vate terminal operators, labor unions, the owners of modal Improving technology at the ports to improve cargo connections into port facilities, and local, state, and federal handling, tracking, billing, taxation, and monitoring for government agencies that regulate and promote waterborne security has received continuous attention by private- and traffic. In recent years, the government network has been public-sector members; and substantially augmented by security forces concerned about Land use concerns in areas adjacent to ports can be a sig- drugs, terrorism, and immigration. These governmental nificant local issue. Coasts, harbors, channels, rivers, and functions are in addition to the historic national regulatory intercoastal waterways are finite environmental resources function of capturing import duties and tariffs. that spur interest in both preservation and residential/ Several major constituencies and policy issues surround commercial development. These efforts to preserve water the Maritime System in addition to the traditional economic resources or to develop them for other residential and com- issues. mercial uses can conflict with marine freight operations. Economically the marine system is critically important, It is also important to recognize that the many different because deep-water seaports comprise 11 of the nation's types of ports further complicate measurement and com- top 25 foreign trade gateways. Foreign trade has more parison efforts. Ports that primarily handle containers have than doubled as a percentage of the overall GDP in recent different equipment, operations, and facilities than do ports decades; or terminals that handle bulk commodities such as petro- Out of 300 total ports, the top 10 handle 86 percent of leum, chemicals, grain, aggregates, minerals, or coal. Inland the high-value container goods that have grown dispro- waterway ports tend to be commodity specific to serve local portionately important in the global economy; and industries such as steel production, mining, grain produc- The inland waterway system carries disproportionate tion, or mineral extraction. The size and scale of ports differ amounts of the nation's heavy commodities such as considerably, as do the ports' connections to local highways, chemicals, aggregates, and agricultural products. It is railroads, and pipelines. The geographic locations of ports an aging system, with more than 45 percent of inland vary considerably, with some of them on the coasts and locks and dams more than 50 years old. others miles inland on river channels. These variations com- From a national security standpoint, the water ports are pound the differences in issues such as port throughput, port invaluable for large-scale military deployments; connectivity, port efficiency, and port costs per unit shipped. The security of imports has become an increasing concern in an era focused upon chemical and nuclear terrorism threats; Port and Waterway Performance In recent years, the environmental effects of the marine Measurement trade have become a source of increasing focus. The air-quality impacts of idling ships, trains, and While many individual stakeholders regularly apply per- trucks have created air-quality concerns surrounding formance metrics to their particular function within the ports; MTS, to date there has been no successful effort to charac- The inadvertent transfer of invasive species from ships' terize or measure the performance of the system as a whole. ballast water into inland lakes and waterways has been a For example, a report by MARAD concluded that the federal concern; and agency could not apprise Congress of the nation's ports' abil-

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162 ity to handle a large military deployment because of a lack ever, since ports can be compared in many different ways--by of common measures.6 It noted that the significant diversity volume or value of trade, number of cruise passengers, revenues, and storage capacity, as examples. Moreover, sheer size of a in ports, the types of cargo they handle, their inland connec- port, in terms of traffic flow, says nothing about productivity, tions, and the geographic configuration of their harbors and efficiency, or responsiveness to customers. These are just some channels all created great diversity. The ports as an industry of the criteria that a shipper might consider in evaluating port have a few common denominators but none that are uni- performance. formly monitored or reported, MARAD observed: As mentioned, periodic studies and reports have attempted In preparing this report, MARAD reviewed articles and studies from the academic and scientific communities that set to identify potential port and marine measures. forth methodologies for measuring port efficiency. The liter- NCHRP Web Document 26 (Project B8-32(2)A): Multi- ature reviewed supported MARAD's finding that there is no modal Transportation: Development of a Performance-Based widespread agreement on an approach to measuring the effi- Planning Process (by Cambridge Systematics, December ciency of a port as a link in the logistics chain. A 2004 a rticle 1999), recommended the following as potential marine per- in Maritime Policy & Management states: "Measures of port formance measures: efficiency or performance indicators use a diverse range of techniques for assessment and analysis, but although many analytical tools and instruments exist, a problem arises when Number of ports with railroad connections one tries to apply them to a range of ports and terminals. Ports Lift capacity of ports, in annual volume are very dissimilar and even within a single port the current or Number of dockage days per ship potential activities can be broad in scope and nature, so that the Accidents or injuries caused by waterborne transportation choice of an appropriate tool of analysis is difficult. Organiza- tional dissimilarity constitutes a serious limitation to enquiry, Shipping accidents occurring on waterways not only concerning what to measure but also how to measure. Transfer time between modes Furthermore, the concept of efficiency is vague and proves dif- Number of users of intermodal facilities ficult to apply in a typical port organization extending across production, trading and service industries. Measures of overall volume through ports are captured or estimated from several sources such as the U.S. Department MARAD concluded in its Congressional report: of Commerce, the USACE, and USDOT's Freight Analysis MARAD was unable to provide the requested comparison (to Framework (FAF). Potential measures from FAF or USACE Congress) of the most congested ports in terms of operational volume data could include: efficiency due to a lack of consistent national port efficiency data. Given the diverse characteristics of U.S. ports, comparing port Water ton-miles shipped annually efficiency would require the creation of new methodologies and Value of water freight shipped annually the collection of data that were not available for this report. Value of waterborne exports, imports Forecast demand for waterborne freight, both inland and Internally, port operations have generated some standards maritime measures, but these are mainly of interest to the internal, busi- ness operations of the port. They tend to regard how efficient port crews operate, whether labor rules restrict efficiency in Throughout the United States, but particularly in southern loading and unloading, and whether internal configuration California, environmental concerns about ports have become of ports, parking lots, cranes, and storage areas are efficient.7 significant. There are concerns that local populations are These measures are unlikely to be appropriate for a national exposed to significant air pollution from idling ships, trucks, set of performance measures because they tend to be pro- and trains congregating at ports. The ports of Long Beach prietary, would be difficult to collect, and may not influence and Los Angeles have adopted air-quality goals that are some- public policy but rather internal port and terminal opera- what like performance measures. Using cleaner fuels, less tions. Each port is a unique business, operating over unique idling, and cleaner vehicles, they proposed to reduce, by 2010, infrastructure, and a measure appropriate for one may not be particulates by 47 percent; NOx by 45 percent; and sulphur relevant to another. Ultimately, ports are providers of trans- oxides by 52 percent. Other environmental measures could portation services, and the fundamental common metric is address issues such as release of contaminated ballast water "customer satisfaction." The American Association of Port (this has led to zebra mussels and other invasive species in Authorities addresses this issue on its website. the Great Lakes) and localized water-quality concerns due to petroleum and chemical releases near ports. No doubt, such AAPA continuously receives requests on how ports rank environmental measures would be difficult to measure and nationally and internationally. The question is ambiguous, how- would require significant localized testing.

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163 Port Responses cult, rated as an 8 out of a complexity scale of 10. It reported that some aspects of port performance are relatively straight The Multimodal Transportation project distributed 19 ques- forward, such as trade statistics and port throughput. Difficul- tionnaires to port authorities and state DOT water officials. ties arise on the land side in terms of measuring the effects of Only four responses were received despite repeated follow-up the port on congestion compared with general congestion on efforts. The limited number of responses appears to be indica- the urban road networks. Measurement becomes even more tive of significant differences in interest regarding port-related complex when attempts are made to isolate and measure performance measures. The American Association of Port national and international aspects. The respondent stated, "If Authorities (AAPA) reported that it had never expressed a need we don't understand the value and net impacts of the system for freight-related performance measures, nor does it produce we hope to measure, we won't be able to measure it very well. any. AAPA reported that it believed the development of per- In sum, there are complexities in port-related supply chains formance measures related to ports would be very difficult that make measuring, managing and supporting its disparate because of the significant diversity among U.S. ports. It listed as elements for the achievement of national goals difficult." the most important measures for policy m akers to understand The port officials indicated that their concerns that to appreciate port performance would be: could arise from the development of port-related measures would be: Container lifts per hour; Container dwell time; Are the supporting data robust? Highwayrail congestion outside of gates; and Do they fairly allow port-to-port comparisons? Available land for expansion. Will they support an equitable distribution of federal aid? Will there be conflicts between national goals and local or It expressed concern, however, that if such measures were regional impacts? produced nationally they could be misused as a competi- Will they be used for political ends that don't ensure the tive marketing tool. AAPA officials indicated that the lack of safety, capacity, and environmental and economic devel- response from ports regarding the survey could be indicative opment needs of the ports? of port officials' skepticism that measures would be mean- ingful. Some port officials also have concerns that measures The port officials indicated that if national policy makers would be used and misused as marketing tools to portray are to understand the major issues facing the nation's ports, competitor ports as being costly or inefficient. the top measures that should be compiled would be: Two ports did respond to the survey, as did one state DOT water department planner and the AAPA. Measurement of individual and collective port terminal One major East Coast port authority reported that it tracks capacity; 22 performance measures and would be very interested in Volume-to-capacity ratios of major highways and rail- additional measures to help assess local, regional, national, roads serving marine terminals; and international freight performance. Among the measures The number of truck turns per day on trips between ports it produces for its own use are: and the first point of rest for imports and the last point of embarkation for exports; The number of crashes on marine terminal highways; Metrics for pollutants produced per container; and Injuries; The economic impact of port-related activities on the Reduction in crime; national, regional, and local economies. Facilities maintained as structurally sound; Number of containers handled; One of the West Coast ports also supported the devel- Cost savings of vessels using deepened channel; opment of port performance measures. Several of its cited Air emissions per ton of cargo; and reasons corresponded with those of its East Coast counter- Customer satisfaction. part but with some significant differences. The West Coast port recommended that, if national policy makers were to It reports it uses such measures to measure its corporate develop a few key, insightful measures, the most important goals, to advance safety and security, to improve economic should be to understand the difference between actual versus opportunity, and to improve customer service and the shortest-distance routes from domestic origins and destina- environment. tions to points of export or import. In other words, if the The port also indicated that developing a comparable set available capacity of ports were better understood, incen- of national port performance measures would be very diffi- tives could be provided to export or import from the closest

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164 geographic port--the logic being that the more direct routes Private Port Performance Data could reduce miles traveled by truck and rail, reduce energy use, reduce emissions, and lessen surface congestion. IHS Global Insight produced the Port Tracker, which Related to that measure, the port official recommended used short-term econometric forecasting to predict volume measures to evaluate volume-to-capacity ratios for marine through the major U.S. ports. Its reports provided shippers terminals and airports and to provide: insight into possible congestion or delay at ports not only caused by freight volumes but also due to localized issues such The percentage of local versus discretionary cargo, to high- as trade disputes. It reported freight trends through ports on light how ports in gateway cities play a national role and a monthly basis for the preceding four years compared to pre- provide national benefits; dicted current volumes. The Port Tracker incorporated data The ratio of maintenance budgets to actual maintenance from both public and private sources. It provides forecast needs, or other forms of deferred investment measure- trade data by 77 commodity groups, value and volume and ment; and mode of transport for 54 countries and 16 global regions. Local system reliability and delay data, to highlight perfor- A similar service is Lloyds RegisterFairplay. It produces mance of the off-port service system as a first or last link in and sells a variety of ship travel data, including real-time ship the international supply chain. location and travel information. These data come from inter- nationally required on-board GIS transmitters. The data are This port official was slightly more optimistic about the similar to the ATRI travel-time data derived from GIS trans- complexity of developing a set of port performance measures missions from trucks. The difference is that the Lloyds data nationally and rated the complexity as a 5 out of a scale of 10. track individual ships, both at sea and at port. With such data The official suggested that such measures could be simplified the location of a ship and the cumulative on-time perfor- if they were stratified by the size and functions of ports. mance over time can be assessed. The company reports that One state port authority official rated the complexity of a its users include port authorities, ship agents, brokers, char- national set of port performance measures as being 7 out of ters, port service suppliers, ship owners, and civil authorities. 10. He also noted the dissimilarities between ports and termi- Its promotional information indicates that it provides real- nals that are designed to handle different types of freight and time information in more than 100 countries and 2,000 ports commodities. If national policy makers are to understand key and terminals internationally. It reports that it tracks and dis- issues related to the health of the nation's ports, he recom- plays the live position of 27,000 vessels a day and is updated mended measures that capture: every three minutes. Individual vessels can be tracked as to their location, course, speed, and next port. The volume of cargo moving through terminals currently; Another private source of voluminous shipping data is How much excess terminal capacity remains; and the Port Import Export Reporting Service (PIERS), which is What terminals handle commodities that are nationally owned by the Journal of Commerce. It captures import/export critical and in what condition are those terminals. data required to be reported by ships traveling to and from the United States. It synthesizes the data into reports that are He said that his concern over misuse of such measures purchased by more than 6,000 public- and private-sector would be in inaccurate interpretation of the data that could data users. It reports that its data not only can measure ship- adversely affect allocation of federal funds for needs such as ping volumes by commodity type but also can be used for a port dredging. variety of analytical and modeling purposes. Endnotes 4MARAD. An Assessment of the U.S. Marine Transportation System, 1999. 5RITA/BTS. Freight in America, 2006, p. 7. 1 Cambridge Systematics, Inc. NCHRP Web-Only Document 154: Target- 6MARAD Report to Congress on the Performance of Ports and the Intermodal Setting Methods and Data Management to Support Performance-Based System, 2005. Resource Allocation by Transportation Agencies Volume III: Case Studies. 7 Chung, Kek Choo. Port Performance Indicators, in Infrastructure Notes, Transportation Research Board of the National Academies, 2010, pp. 14, for the Transportation, Water and Urban Development Department of 59, 3542 (accessed Feb. 18, 2011). the World Bank, December 1993, http://siteresources.worldbank.org/ 2 AAR Statistics, http://www.aar.org/~/media/AAR/Industry%20Info/ INTTRANSPORT/Resources/336291-1119275973157/td-ps6.pdf (accessed Statistics.ashx (accessed Feb. 27, 2009). May 24, 2010). 3 Strategic Highway Research Program 2, Project R16, "Railroad-DOT Insti- tutional Mitigation Strategies," unpublished study.