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95 Table 5.34. Benefit/cost analysis, 3% discount rate. Category 20072009 (Millions of Dollars) 20072030 (Millions of Dollars) Total Benefit $165.8 $4,710.2 Total Cost $407.0 $1,797.8 B/C Ratio 0.41 2.62 Net B-C ($241.2) $2,912.4 resulting from the current economic downturn. Therefore, development. To complement this growth pattern, the incorporating risk assessment is a key element in conducting county is restricting residential development in prime these analyses. freight development areas and working with TxDOT to ensure that the newly constructed Grand Parkway remains untolled to encourage truck usage. Other Performance Measures Other important components of the project include costs Risk Assessment and performance measures that describe the estimates and assumptions that went into the project analysis. Summaries The element of risk is included in 2030 analysis due to the of these categories are listed in Table 5.35, and they include uncertainty of cargo volumes in the future. Uncertainty can the following: come from several factors, including general economic cli- mate, natural disasters, community resistance, global trends, Jobs at the port--The 2002 economic study (28) per- and random risks. Table 5.36 provides the upper and lower formed by Martin Associates projects an increase of 2,017 bounds of risk assessment in reference to the mean based on jobs at the port at the opening of Bayport Phase 1 (2007), cargo growth ranges of 4% to 9%. The ranges of growth are and 29,255 at full build-out (2030). based on historical growth patterns of containerized cargo TEU capacity--At full project build-out, Bayport is expected and are consistent with North American trends from the to add 2.3 million TEUs of capacity to the Port of Houston. 1990s to early 2000s. The ranges are also in line with recent Business revenue and costs--At the opening of Phase 1, cargo growth forecasts for North American ports. business revenue was expected to increase by $82.2 million, with an additional $1.1 billion by full build-out. 5.3 Case Study Lessons Learned Land development--The region and especially Chambers County anticipates additional land development to occur The completion of these six case studies provided a num- as the region attracts warehousing and distribution opera- ber of lessons about the ability of the Freight Evaluation tions tied to the new container terminal and the opening of Framework to evaluate the interrelationships among freight the Panama Canal. Wal-Mart, Home Depot, and Seapak all benefit types, determine whether there are significant differ- located within the county prior to the opening of Bayport. ences in the Framework's application across different types Since construction began on Bayport, developers have and scales of freight investments, and assess the overall assembled nearly 20,000 acres of land for future industrial strengths and weaknesses of the Framework. In general, the Table 5.35. Other performance measures. Performance Measures 2007 Full Build-Out Projected Increase in Cargo Jobs at Port 2,017 29,255 Projected Increase in TEU Capacity 600,000 2,300,000 Projected Increase in Business Revenue $82.2 M $1.1 B Projected Increase in State/Local Tax $8.3 M $121.3 M (from Port Activities) Land Development 4,000 acres 20,000 acres

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96 Table 5.36. Risk analysis results for total benefits for 20072030 (millions of dollars). 10% Lower Mean 10% Upper Total Net Benefit (7%) $1,874.5 $3,325 $5,946.2 Total Net Benefit (3%) $2,248.2 $4,544.8 $6,375.0 Framework appeared to perform adequately across the set of General Methods Work Better six case studies. However, there are a number lessons learned for High-Level Problems from the case study testing process, and these are summarized in the following sections. The six case studies used to test the Freight Evaluation Framework represented a mix of system-level solutions (e.g., Heartland Corridor) that had costs and benefits that often Need for Clearly Defined Project crossed jurisdictional boundaries and very localized projects and Alternative Cases (e.g., Tchoupitoulas Corridor Improvements) whose costs The six case studies all involve capital investment, although and benefits were limited. The Freight Evaluation Framework they vary in the following four dimensions: showed that broad measures and assumptions, such as vehicle- miles traveled, vehicle-hours traveled, and general emissions Modes affected--Various combinations of truck, rail, air, and safety assumptions, appear defensible for quantifying and marine transport; systems-level benefits. Types of facilities--Routes (e.g., road or rail corridors), However, methods become challenging at more localized vehicle access (e.g., docks, runways, yards, or terminals) levels, where broad measures might not completely reflect the and/or freight handling facilities (e.g., intermodal transfer costs and benefits of site-specific projects. In some cases, or transload facilities, warehouses, etc.); problems can be isolated to very specific locations, possibly Types of improvement--To enhance the performance of with different results than yielded by more generalized meth- a facility, expand the range of use that it can serve, and/or ods. Examples include reducing crashes at rail-grade cross- expand its capacity; and ings, mitigating noise pollution, or eliminating localized Functional status--Currently facing capacity, use, or per- safety hot spots. In these cases, the researchers found it formance limitations, or currently functioning well, but absolutely critical to supplement quantifiable data and infor- facing the prospect of demand growth or changes leading mation with input and information from local experts and to expected future capacity/use/performance limitations. stakeholders, who can often add value to site-specific or neigh- borhood impacts and benefits. In the cases presented here, some of the projects have been completed while others are still being implemented. Thus, It Is Appropriate to Offer Slightly Different some describe the project (build) and alternative (no-build) Forms of the Overall Structure for Projects scenarios in the past tense, while others describe them in the of Different Scales expected future tense. In yet other cases, the projects were built but demand patterns and business conditions changed The Freight Evaluation Framework is (and should be) flex- from original expectations. In those cases, the case studies ible in its analysis methods in order to be useful to different describe both current short-term outcomes and projected types of projects as follows: long-term future outcomes. Regardless of the situation, these case studies demonstrate High-level/systems (i.e., Heartland Corridor Clearance that all uses of the Freight Evaluation Framework must define Initiative)--Generalized analysis methods based on large- both a project scenario and an alternative scenario (repre- scale VMT, VHT, or travel-time/emissions estimates are senting what would likely occur with or without the project appropriate; being implemented). All such scenarios should be sufficiently Regional or market-area (i.e., Huntsville Inland Port, defined to address all four of the above-referenced categories DIA WorldPort)--Specific drive times, competing routes, (mode affected, types of facilities, types of improvement, and facilities, or modes become relevant and may warrant spe- functional status). cific data and analysis; and

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97 Subarea/community-level projects (i.e., ReTRAC, represent the expected changes in freight demand patterns Tchoupitoulas)--A manageable set of specific bottle- and business responses to them. In addition, the risk analysis necks, noise receptors, intersections, and pathways to and method used in these cases shows how alternative assump- from locations can be mapped and analyzed. tions about key factors, such as freight demand growth, can be explored and represented in a report on benefit/cost findings. The supporting documentation for the Framework should be clear that this type of flexibility is important (and encour- The Framework Identifies Stakeholders aged) and, as noted earlier, users should be encouraged to con- fer with local technical and community experts when applying at the Outset, but Assigning Benefits the Framework to subarea or community-level projects. to Them Can Become Challenging As described earlier, the Freight Evaluation Framework has Solutions to Existing Problems Are developed a more nuanced understanding of the types of Easier to Measure and Assess freight stakeholders involved in freight investment decisions, Than "New Opportunities" as well as their concerns and interests. Understanding and evaluating the costs and benefits of, and to, these different The case studies showed that the Freight Evaluation Frame- stakeholder groups is a critical element of the Framework. work works well when there is a clearly defined problem to be However, the research team's testing process uncovered a solved. In these cases, there are clearly defined goals for the number of issues related to how freight stakeholders are project, clearly defined benefits that are expected, and clearly engaged throughout the application of the Framework, defined success elements or performance measures. For including the following: instance, the Framework is very easy to apply to projects such as the Heartland Corridor or the Tchoupitoulas Corridor Need for a feedback loop--The Freight Evaluation Frame- Improvements that were designed to solve a particular prob- work emphasizes the importance of identifying potential lem or issue (limited double-stack clearance and truck access stakeholders early in the process, but does not include a through local neighborhoods, respectively). In these cases, it method for reengaging the group during the evaluation is straightforward to identify the specific baseline conditions process. The study team found that reaching out to stake- and current costs or disbenefits to be resolved. holders throughout the testing process added significant Application of the framework becomes more challenging for value to the application of the Framework, particularly for projects that are designed to take advantage of new opportuni- local or site-specific projects whose benefits are not always ties, e.g., the DIA WorldPort or Huntsville Inland Port proj- completely captured using existing data and tools. It is crit- ects. In many cases, the primary benefit of these types of new ical to add such a feedback loop, not only to capture this (not expanded) capacity investments (where there are no exist- kind of information, but also to ensure that there is a clear ing users) is the ability to accommodate additional traffic. Ana- understanding of how different results might be inter- lytical models used to support the original market justification preted by different stakeholder groups. for such projects often were based on unconstrained forecasts Disaggregating benefits by stakeholder type--The and just assumed that operating conditions would worsen without the capital investment. In the real world, that is often Framework identifies and classifies stakeholders into dif- not a realistic assumption. For instance, as congestion rises ferent groups (asset providers, service providers, end users, under a no-build scenario, a variety of different outcomes may and other impacted parties) and then adds a table to assign occur and hence may be represented by an alternative scenario. or allocate the various elements of benefit and cost to spe- There could be cases where, without the new investment cific stakeholder groups. However, in carrying out the analysis, it can become a challenge to effectively assign var- Businesses will merely stay in place and endure continuing ious classes of benefits to specific stakeholders when there growth of congestion delays and costs; are dynamic interactions among them. This is illustrated Business activity shifts to other shipping modes, routes, or by the DIA WorldPort case, where freight transport firms facilities that can offer a second-best solution for remain- were projected to gain net revenue from expanded facility ing in place; or capacity, but their actual gain would be reduced to the Some businesses will just move out and relocate to some extent that they have to pay ground lease payments to the other place where costs are not as high as they would incur air freight facility operator, which in turn has to pay a share if they stayed in place. of its revenue to the property owner (airport authority). Tracking the string of payments can be challenging and The six case studies show that it is both necessary and pos- estimating their final allocations may require the type of sible to define project scenarios and alternative scenarios to risk analysis that is included in the Framework.

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98 Consistency among stakeholders and benefits--Main- Modal Differences taining consistency with how stakeholders are identified Another key aspect of the Freight Evaluation Framework and how they might benefit from particular projects will is the explicit recognition that many freight projects directly add value to the Freight Evaluation Framework. For involve (or indirectly affect) multiple transportation modes. instance, the results and findings from a study can look The tools that were used to capture these impacts within very different depending on the level of detail in which the case studies included a range of mode-specific and stakeholders are defined and the degree of depth to which multimodal simulation, forecasting and benefit/cost assess- their interactions are traced. Both detail and consistency ment products. For instance, the Reno (ReTRAC) case used are required to generate useful results. Accounting for sensitivity differences--Finally, there are GRADEDEC to assess grade crossings; the Heartland Corri- dor assessed truck/rail diversion, and the Denver case assessed potentially large differences in the sensitivity to cost, ben- air/truck diversion using the multimodal TREDIS model. efits, and risk among different stakeholder types that are None of the cases examined in this study involved only high- not all captured within the Framework. This becomes way impacts, but in such cases it would be possible to rely on important if the framework is used to help rank projects other highway-oriented tools (such as FHWA's BCA.Net). from the perspectives of various stakeholder groups. In In yet other cases, the broader range of tools may also be rel- some cases, there may be issues of such importance to a evant for use within the Framework. particular stakeholder group that they outweigh any and all other possible costs and benefits to that particular agent. In such cases, group preferences may include fac- Reliability and Connectivity tors that are not all captured in the current Framework. It Increasing congestion can affect not only average travel may be possible for the Framework to be expanded to times but also the size of market delivery areas and schedule account for, and incorporate, these types of preferences. reliability for intermodal connections. Among the cases Alternatively, it may be necessary to note cases where the examined here, the Tchoupitoulas case illustrated the impact Framework does not (or cannot) encompass other major of reducing congestion on a port access route, while the Den- considerations. ver case illustrated the potential for improved reliability by enabling greater local air freight capacity and avoiding truck- Data and Tools Need to Be Tailored ing to more distant airports (which bring greater variability to the Economics of Freight Industry in delivery times). Analysis for these cases made use of avail- Markets and Account for Reliability able tools for multimodal freight impact analysis. None of the and Supply Chain Benefits cases involved changes in market delivery areas. However, Industry Groups such impacts could occur in cases where access routes are improved for terminal or distribution facilities. In such cases, A critical element of the Freight Evaluation Framework the Framework can make use of existing tools that relate eco- involves assessing the potential benefits of freight invest- nomic development (business location/attraction) to changes ments to different stakeholder groups and, in some cases, in available market size. different industries. This can be a particularly difficult task since each industry has different supply chain management practices, tradeoffs, and appetites for risk and cost-sharing. Vehicles and Trip Lengths Among the cases examined here, the Huntsville and Tchoupi- The type of affected vehicles and trip lengths also can affect toulas cases illustrate how analysis can be tailored to show analysis findings using the Framework. For instance, error different transport cost, delay time, and reliability sensitivity can occur if tools used to capture travel-time savings for factors for specific classes of freight. In this case, Huntsville trucks are monetized using a single value for all truck trips. involved Asia-bound air freight for technology equipment After all, if the truck is long haul, earning revenue by the mile, products, while Tchoupitoulas involved marine shipments savings in travel time may have no out-of-pocket costs or of rubber, coffee, and wood materials. The valuation of benefit. If the truck trip is a drayage trip (paid per trip), the inventory, time delay, and reliability factors used for the case travel-time savings only generate savings (or revenue) if studies varied by commodity and were accordingly greater for enough time is saved throughout the course of a day to make the air freight shipments. These cases illustrate the impor- an additional trip. The case studies conducted for this study tance of identifying affected freight mode and commodity distinguished the types of trips and the sizes and types of vehi- classes, and then tailoring analysis (within the Framework) to cles involved, using available tools. For instance, the Heart- those freight classes. land Corridor case involved shifts between single-stack con-