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Suggested Citation:"Chapter 1 - Introduction." National Academies of Sciences, Engineering, and Medicine. 2011. Framework and Tools for Estimating Benefits of Specific Freight Network Investments. Washington, DC: The National Academies Press. doi: 10.17226/14600.
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Suggested Citation:"Chapter 1 - Introduction." National Academies of Sciences, Engineering, and Medicine. 2011. Framework and Tools for Estimating Benefits of Specific Freight Network Investments. Washington, DC: The National Academies Press. doi: 10.17226/14600.
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Page 18
Page 19
Suggested Citation:"Chapter 1 - Introduction." National Academies of Sciences, Engineering, and Medicine. 2011. Framework and Tools for Estimating Benefits of Specific Freight Network Investments. Washington, DC: The National Academies Press. doi: 10.17226/14600.
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Page 19

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17 Over the last several years, freight planning and investment activities have evolved considerably. During the past 15 years, transportation planners across North America have become aware of the changing nature of freight movements, as increas- ingly global economic markets and longer supply chains have caused freight traffic to grow at a faster rate than passenger traf- fic—a trend that has held for road, rail, air, and marine modes. During this same period, state departments of transportation (DOTs) and metropolitan planning organizations (MPOs) have undertaken efforts to more explicitly incorporate freight- related issues within existing transportation planning and pro- gramming activities, by learning about freight movements, identifying and engaging freight stakeholders, pinpointing locations of freight bottlenecks, and assessing the impacts of freight movements on statewide and regional economies. As a result, these public-sector agencies are now more aware of how freight movements impact the condition and performance of their systems, and how improving freight efficiency can impact business attraction and retention efforts, regional and state economies, and quality of life. Now, many states and MPOs have moved beyond the planning stage and are interested in how to address freight- specific needs and implement improvement projects. These agencies are focusing their attention on where and how it makes sense to invest public dollars in freight improvement projects, who should be involved, and how risks and rewards should be allocated. Attitudes and activities among private-sector freight investment decisionmakers have evolved as well. Rail- roads, for instance, have shown a willingness to partner with public-sector entities to make system investments that have demonstrable public and private benefits. Also, there is increas- ing interest by private infrastructure developers and conces- sionaires in making freight transportation investments that promise favorable returns to shareholders. These and other freight stakeholders have begun to realize that freight system investments must involve partnerships between the public sector and the private sector, among a variety of different private sector entities, and across public sector jurisdictions and agencies. Developing and sustaining these partnerships requires analytical tools that can provide insights into the nature and allocation of freight benefits and costs, and how they accrue across modal, jurisdictional, and interest (public-private) boundaries. Many previous efforts of the NCHRP, NCFRP, FHWA, and other research sponsors have helped advance the resources and techniques available to state DOTs, MPOs, multistate coalitions, and other stakeholders to identify and quantify the economic impacts of freight investments. Yet, those efforts have not fully distinguished among the various public and pri- vate stakeholders involved in investment decisions, the types of benefits and results that drive their decision processes, or how various benefits should be considered in freight invest- ment decisions. In addition, they do not address risk analysis nor do they address the different types of perspectives and tools needed to deal with decisions at different stages of freight planning, project selection, and project implementation. The results of this research begin to fill a critical gap in the resources available to freight planning and investment decisionmakers across these boundaries by providing an inte- grated analytical approach to supporting and evaluating com- plex freight investment decisions. The Freight Evaluation Framework developed as part of this effort defines a consis- tent approach to evaluating freight projects by defining a wide range of public and private benefits and impacts of freight infrastructure investments and identifying the tools and sup- porting data necessary to evaluate these benefits and impacts. This Framework is capable of handling projects that span all of the different freight modes and able to assess benefits from a variety of project types, including those that improve freight operations, as well as generate more capacity (both terminal and mainline) through infrastructure expansion. The Frame- work distinguishes how benefits and impacts are evaluated at the local, regional, state, and national level and, in so doing, recognizes the role that different public-sector entities play in C H A P T E R 1 Introduction

making funding decisions for freight investments. Finally, in addressing the private-sector component of the benefits analy- sis, it recognizes the variety of private-sector entities involved in freight investments, including recognition of the different performance requirements and perspectives of different types of modal carriers and logistics service providers (LSPs), carri- ers versus shippers, and different types of shippers. The Framework was developed, and is designed to be applied, with the following three main functions in mind: • To Enhance Public Planning and Decision-Making Processes Regarding Freight—State DOTs and MPOs are increasingly facing freight planning issues, which by their very nature involve a combination of public interests, private-operator interests, and shipper/industry interests. As a result, freight planners face a growing need to consider the roles and perspectives of these other parties in their public agency decision-making processes, but often are not equipped to do so. The Freight Evaluation Framework provides a common method to help planners understand the wide range of perspectives and interests in potential freight investments, and to more effectively integrate those interests within a decision-making process. • To Supplement Benefit/Cost Assessment with Distribu- tional Impact Measures—The traditional form of benefit/ cost analysis, which compares total benefits and total costs of alternatives, may work for projects that are publicly financed, built, owned, and operated. However, that form of analysis is not sufficient for freight project plans that require public-sector negotiation with private infrastruc- ture owners and freight service providers. In those situa- tions, there is a real need to consider the distribution of cost burdens and benefits among parties, particularly those that have a role in project funding and implementation. • To Advance Public-Private Cooperation—Often, freight projects can only be implemented if there is cooperation between public agencies and private parties in terms of responsibility for infrastructure facility financing, develop- ment, operation, and maintenance. That requires some degree of trust that neither party is taking advantage of the other. So, to craft appropriate financial and operating agreements, public agencies and private companies need a framework and process that both can accept to provide transparency and enable understanding of the concerns of the other. 1.1 Summary of the Technical Approach and Product This project report describes the development and appli- cation of a process and framework for evaluating alternative designs and proposals for freight transportation projects, in a format that portrays the magnitude and incidence of benefits, costs, and impacts. This Freight Evaluation Framework was developed specifically to address the three objectives described above. It is based on a recognition that freight transportation projects tend to be multilayered, in the sense that they have both public and private stakeholders responsible for different aspects of project planning, financing, and operation. The Framework itself is comprised of a practical set of formats for information collection and reporting of analysis findings, with guidance on their use. It is designed to support public- private agency discussions, to be applicable across different types of projects and different modes of transportation, and to build upon already available tools and data sources. The Freight Evaluation Framework was developed using a series of research efforts that are described in subsequent sec- tions of this report. The complete research plan is provided in Appendix A. First, the research team reviewed prior stud- ies, including research reports and guidebooks, that have documented freight planning and programming processes used by states and MPOs around North America. This was followed by a review of methods currently used to assess freight benefits or prioritize improvement projects, including state-specific planning processes and nationally available evaluation and planning guidelines for general transportation planning. Second, the research team assessed the differences among various public- and private-sector views of project benefits and costs. This effort focused on identifying the fundamental differences between local-scale freight projects, national net- work capacity projects, and international port or gateway projects, in terms of the parties involved and classes of bene- fits and costs. It also examined the complexities involved in assessing benefits and costs of systemwide improvements to highway networks, rail networks, port distribution systems, and multimodal projects that have effects on different types of stakeholders at different spatial scales. Third, the research team assessed available project evaluation and impact analysis tools that are available for specific modes, including both public- and private-sector benefit assessment tools. These various tools covered freight project impacts on freight carriers and transportation service providers, shippers and end users, and on broader income and economic growth. Fourth, the research team conducted a series of interviews with transportation planners representing a range of differ- ent agencies, to identify key issues of concern to them and to identify available examples of multimodal freight projects around the United States in which project benefits and costs have been examined. Based on those four lines of research, the research team developed the Freight Evaluation Framework for assessing benefits and costs of different types of freight projects, which was designed to cover a wide range of modal combinations, 18

project improvement types, project scales, and a mix of pub- lic and private parties involved in (and affected by) project planning and implementation activities. We presented this Framework to the NCFRP-05 Panel, made the necessary revisions, and presented it to a national workshop of trans- portation planning practitioners and experts for further review and discussion. Based on the outcome of that work- shop, the Framework was further refined and is presented in this report. 1.2 Organization of the Report The remaining sections of this report identify the key issues and challenges in evaluating freight investments, current prac- tices (both public and private) in evaluating freight investments, and the data and tools available to support these decisions. Subsequent sections include the following: • A description of key issues in freight planning and freight project evaluation—Chapter 2 lays out a systematic struc- ture for classifying project investments, stakeholders, out- come metrics, and benefit/cost factors. • A summary of current practices in freight investment decision making—Chapter 3 describes elements of the decision-making process, stakeholders involved, the strate- gic and tactical factors they consider in project assessment, and available assessment tools. • An overview of the Freight Evaluation Framework— Chapter 4 describes the guiding principles and key struc- tural elements for presenting project costs, benefits, and uncertainties within the Framework itself. • A description of the process for testing the Framework— Chapter 5 presents six detailed case studies that illustrate how the Freight Evaluation Framework can be applied to different types of freight projects. Findings from a work- shop of national freight transportation planning, financing, and implementation experts also are presented. • Detailed guidance for using the Framework—Building on previous findings, Chapter 6 lays out key steps required to apply the Framework to evaluate potential freight investments. • A discussion of lessons learned and suggested topics for future research—Chapter 7 identifies pitfalls to avoid and topics where there is need for research to further improve the use of the Framework. • Appendix E (to the contractors’ final report), Workshop Participants and Presentations, is available on the project webpage. 19

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TRB’s National Cooperative Freight Research Program (NCFRP) Report 12: Framework and Tools for Estimating Benefits of Specific Freight Network Investments provides a framework and tools designed to help estimate the private and public benefits of potential freight infrastructure investments.

The evaluation framework is intended to assist public planning and decision-making processes regarding freight; to supplement benefit/cost assessment with distributional impact measures; and to advance public-private cooperation.

The framework is capable of handling projects that span all of the different modes and able to assess benefits from a variety of project types, including those that are designed to improve freight operations, as well as those that would generate more capacity through infrastructure expansion.

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