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NCFRP NATIONAL COOPERATIVE FREIGHT RESEARCH PROGRAM REPORT 12 Sponsored by the Research and Innovative Technology Framework and Tools Administration for Estimating Benefits of Specific Freight Network Investments

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TRANSPORTATION RESEARCH BOARD 2011 EXECUTIVE COMMITTEE* OFFICERS CHAIR: Neil J. Pedersen, Administrator, Maryland State Highway Administration, Baltimore VICE CHAIR: Sandra Rosenbloom, Professor of Planning, University of Arizona, Tucson EXECUTIVE DIRECTOR: Robert E. Skinner, Jr., Transportation Research Board MEMBERS J. Barry Barker, Executive Director, Transit Authority of River City, Louisville, KY Deborah H. Butler, Executive Vice President, Planning, and CIO, Norfolk Southern Corporation, Norfolk, VA William A.V. Clark, Professor, Department of Geography, University of California, Los Angeles Eugene A. Conti, Jr., Secretary of Transportation, North Carolina DOT, Raleigh James M. Crites, Executive Vice President of Operations, Dallas-Fort Worth International Airport, TX Paula J. Hammond, Secretary, Washington State DOT, Olympia Michael W. Hancock, Secretary, Kentucky Transportation Cabinet, Frankfort Adib K. Kanafani, Cahill Professor of Civil Engineering, University of California, Berkeley Michael P. Lewis, Director, Rhode Island DOT, Providence Susan Martinovich, Director, Nevada DOT, Carson City Michael R. Morris, Director of Transportation, North Central Texas Council of Governments, Arlington Tracy L. Rosser, Vice President, Regional General Manager, Wal-Mart Stores, Inc., Mandeville, LA Steven T. Scalzo, Chief Operating Officer, Marine Resources Group, Seattle, WA Henry G. (Gerry) Schwartz, Jr., Chairman (retired), Jacobs/Sverdrup Civil, Inc., St. Louis, MO Beverly A. Scott, General Manager and CEO, Metropolitan Atlanta Rapid Transit Authority, Atlanta, GA David Seltzer, Principal, Mercator Advisors LLC, Philadelphia, PA Lawrence A. Selzer, President and CEO, The Conservation Fund, Arlington, VA Kumares C. Sinha, Olson Distinguished Professor of Civil Engineering, Purdue University, West Lafayette, IN Thomas K. Sorel, Commissioner, Minnesota DOT, St. Paul Daniel Sperling, Professor of Civil Engineering and Environmental Science and Policy; Director, Institute of Transportation Studies; and Interim Director, Energy Efficiency Center, University of California, Davis Kirk T. Steudle, Director, Michigan DOT, Lansing Douglas W. Stotlar, President and CEO, Con-Way, Inc., Ann Arbor, MI C. Michael Walton, Ernest H. Cockrell Centennial Chair in Engineering, University of Texas, Austin EX OFFICIO MEMBERS Peter H. Appel, Administrator, Research and Innovative Technology Administration, U.S.DOT J. Randolph Babbitt, Administrator, Federal Aviation Administration, U.S.DOT Rebecca M. Brewster, President and COO, American Transportation Research Institute, Smyrna, GA Anne S. Ferro, Administrator, Federal Motor Carrier Safety Administration, U.S.DOT LeRoy Gishi, Chief, Division of Transportation, Bureau of Indian Affairs, U.S.DOT John T. Gray, Senior Vice President, Policy and Economics, Association of American Railroads, Washington, DC John C. Horsley, Executive Director, American Association of State Highway and Transportation Officials, Washington, DC David T. Matsuda, Deputy Administrator, Maritime Administration, U.S.DOT Victor M. Mendez, Administrator, Federal Highway Administration, U.S.DOT William W. Millar, President, American Public Transportation Association, Washington, DC Tara O'Toole, Under Secretary for Science and Technology, U.S. Department of Homeland Security, Washington, DC Robert J. Papp (Adm., U.S. Coast Guard), Commandant, U.S. Coast Guard, U.S. Department of Homeland Security, Washington, DC Cynthia L. Quarterman, Administrator, Pipeline and Hazardous Materials Safety Administration, U.S.DOT Peter M. Rogoff, Administrator, Federal Transit Administration, U.S.DOT David L. Strickland, Administrator, National Highway Traffic Safety Administration, U.S.DOT Joseph C. Szabo, Administrator, Federal Railroad Administration, U.S.DOT Polly Trottenberg, Assistant Secretary for Transportation Policy, U.S.DOT Robert L. Van Antwerp (Lt. Gen., U.S. Army), Chief of Engineers and Commanding General, U.S. Army Corps of Engineers, Washington, DC Barry R. Wallerstein, Executive Officer, South Coast Air Quality Management District, Diamond Bar, CA *Membership as of June 2011.

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NATIONAL COOPERATIVE FREIGHT RESEARCH PROGRAM NCFRP REPORT 12 Framework and Tools for Estimating Benefits of Specific Freight Network Investments CAMBRIDGE SYSTEMATICS, INC. Austin, TX WITH ECONOMIC DEVELOPMENT RESEARCH GROUP, INC. Boston, MA HALCROW, INC. New York, NY DECISIONTEK, LLC Rockville, MD BOSTON STRATEGIES INTERNATIONAL Wellesley, MA Subscriber Categories Finance Highways Marine Transportation Planning and Forecasting Railroads Research sponsored by the Research and Innovative Technology Administration TRANSPORTATION RESEARCH BOARD WASHINGTON, D.C. 2011 www.TRB.org

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NATIONAL COOPERATIVE FREIGHT NCFRP REPORT 12 RESEARCH PROGRAM America's freight transportation system makes critical contributions Project NCFRP-05 to the nation's economy, security, and quality of life. The freight ISSN 1947-5659 transportation system in the United States is a complex, decentralized, ISBN 978-0-309-21356-1 and dynamic network of private and public entities, involving all Library of Congress Control Number 2011938083 modes of transportation--trucking, rail, waterways, air, and pipelines. 2011 National Academy of Sciences. All rights reserved. In recent years, the demand for freight transportation service has been increasing fueled by growth in international trade; however, bottlenecks or congestion points in the system are exposing the COPYRIGHT INFORMATION inadequacies of current infrastructure and operations to meet the Authors herein are responsible for the authenticity of their materials and for obtaining growing demand for freight. Strategic operational and investment written permissions from publishers or persons who own the copyright to any previously decisions by governments at all levels will be necessary to maintain published or copyrighted material used herein. freight system performance, and will in turn require sound technical Cooperative Research Programs (CRP) grants permission to reproduce material in this guidance based on research. publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA, The National Cooperative Freight Research Program (NCFRP) is FMCSA, FTA, RITA, or PHMSA endorsement of a particular product, method, or practice. a cooperative research program sponsored by the Research and It is expected that those reproducing the material in this document for educational and not- Innovative Technology Administration (RITA) under Grant No. for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. DTOS59-06-G-00039 and administered by the Transportation Research Board (TRB). The program was authorized in 2005 with the passage of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU). On September 6, 2006, a contract to NOTICE begin work was executed between RITA and The National Academies. The project that is the subject of this report was a part of the National Cooperative Freight The NCFRP will carry out applied research on problems facing the Research Program, conducted by the Transportation Research Board with the approval of the Governing Board of the National Research Council. freight industry that are not being adequately addressed by existing The members of the technical panel selected to monitor this project and to review this research programs. report were chosen for their special competencies and with regard for appropriate balance. Program guidance is provided by an Oversight Committee comprised The report was reviewed by the technical panel and accepted for publication according to of a representative cross section of freight stakeholders appointed by procedures established and overseen by the Transportation Research Board and approved by the Governing Board of the National Research Council. the National Research Council of The National Academies. The NCFRP Oversight Committee meets annually to formulate the research The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation program by identifying the highest priority projects and defining Research Board, the National Research Council, or the program sponsors. funding levels and expected products. Research problem statements The Transportation Research Board of the National Academies, the National Research recommending research needs for consideration by the Oversight Council, and the sponsors of the National Cooperative Freight Research Program do not Committee are solicited annually, but may be submitted to TRB at any endorse products or manufacturers. Trade or manufacturers' names appear herein solely time. Each selected project is assigned to a panel, appointed by TRB, because they are considered essential to the object of the report. which provides technical guidance and counsel throughout the life of the project. Heavy emphasis is placed on including members representing the intended users of the research products. The NCFRP will produce a series of research reports and other products such as guidebooks for practitioners. Primary emphasis will be placed on disseminating NCFRP results to the intended end-users of the research: freight shippers and carriers, service providers, suppliers, and public officials. Published reports of the NATIONAL COOPERATIVE FREIGHT RESEARCH PROGRAM are available from: Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet at: http://www.national-academies.org/trb/bookstore Printed in the United States of America

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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. On the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, on its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. The Transportation Research Board is one of six major divisions of the National Research Council. The mission of the Transporta- tion Research Board is to provide leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisciplinary, and multimodal. The Board's varied activities annually engage about 7,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individu- als interested in the development of transportation. www.TRB.org www.national-academies.org

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COOPERATIVE RESEARCH PROGRAMS CRP STAFF FOR NCFRP REPORT 12 Christopher W. Jenks, Director, Cooperative Research Programs Crawford F. Jencks, Deputy Director, Cooperative Research Programs William C. Rogers, Senior Program Officer Charlotte Thomas, Senior Program Assistant Eileen P. Delaney, Director of Publications Hilary Freer, Senior Editor NCFRP PROJECT 05 PANEL Freight Research Projects George E. Schoener, Celebration, FL (Chair) Christina S. Casgar, San Diego Association of Governments, San Diego, CA Wendy Franklin, Portland, ME Dan Mazur, Palmyra, PA Jennifer L. Moczygemba, Texas DOT, Austin, TX Lester M. Passa, CSX Corp., Jacksonville, FL George H. Tanner, Loudonville, NY Thomas Bolle, RITA Liaison Ronald J. Duych, RITA Liaison Tony Furst, FHWA Liaison Leo Penne, AASHTO Liaison Martine A. Micozzi, TRB Liaison Thomas Palmerlee, TRB Liaison Ann Purdue, TRB Liaison

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FOREWORD By William C. Rogers Staff Officer Transportation Research Board NCFRP Report 12: Framework and Tools for Estimating Benefits of Specific Freight Network Investments provides a comprehensive analytical framework and related tools that private- sector freight transportation modes and public-sector transportation interests can use to estimate private and public benefits to evaluate potential freight infrastructure investments. Using interviews with transportation planners and an extensive review of prior research and a review of current methods used to assess freight benefits or prioritize improvement projects, the research developed a freight evaluation framework with three main functions: (1) to enhance public planning and decision-making processes regarding freight; (2) to supplement benefit/cost assessment with distributional impact measures; and (3) 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 improve freight operations, as well as generate more capacity through infrastructure expansion. The research, by developing a practical set of formats for information collection, will support public-private agency discussions by helping all parties understand the wide range of perspectives and inter- ests in potential freight investments. The existing transportation network is straining under the volume of freight moving through it, and those volumes are predicted to keep growing. In addition, capital invest- ments, whether for timely maintenance or new constructions, have not kept pace with freight demand. Investment decisions affecting the future of efficient freight movement have been hindered by the absence of analytical frameworks, tools, and data of sufficient quality and detail to be credibly used to estimate benefits and impacts, and to assess atten- dant risks. In addition, significant capital investment is needed to improve the efficiency and productivity of freight movement. However, investment funds are scarce, and for many freight infrastructure investments, costs are borne and benefits are enjoyed locally and nationally by both the public and private sector. Because of this complex interrelationship, a new, consistent, and usable analytic framework is necessary to guide and focus these multi- dimensional investment decisions. Under NCFRP Project 5, Cambridge Systematics was asked to fill a critical gap in the resources available to freight planning and investment decisionmakers, both public and pri- vate, by providing an integrated analytical approach for supporting and evaluating complex freight investment decisions. The framework that was developed allows stakeholders to evaluate potential benefits of highway, rail, seaport, and intermodal connector projects on a common basis using existing data and analytical tools in a manner that is consistent with existing decision-making processes of different stakeholders.

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CONTENTS 1 Summary 1 Introduction and Background 2 Key Issues and Challenges in Evaluating Freight Projects 10 A Framework for Addressing These Challenges 12 Existing Data and Analytical Tools 13 Conclusions 17 Chapter 1 Introduction 18 1.1 Summary of the Technical Approach and Product 19 1.2 Organization of the Report 20 Chapter 2 Key Issues to Address in Evaluating Freight Projects 20 2.1 Addressing the Motivations of Different Types of Stakeholders 22 2.2 Evaluating Different Investment Types 22 2.3 Evaluating Projects of Differing Scales 23 2.4 Accounting for Different Costs, Benefits, and Impacts 25 2.5 Assessing Risk 27 Chapter 3 Current Practices in Freight Investment Decision Making 27 3.1 Case Study Approach 27 3.2 Decision Processes 37 3.3 Key Issues and Challenges of Existing Decision-Making Processes 38 3.4 Existing Data and Tools 48 3.5 Data and Tools Summary 52 Chapter 4 Development of the Freight Evaluation Framework 52 4.1 Developing the Framework 56 4.2 Incorporating Risk 59 Chapter 5 Testing the Framework 59 5.1 Case Study Testing 62 5.2 Case Study Results 95 5.3 Case Study Lessons Learned 99 5.4 Freight Investment Workshop 101 Chapter 6 Using the Framework 101 6.1 When and How the Framework Should Be Applied 107 6.2 Key Elements of the Framework with Examples of Use

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113 Chapter 7 Lessons Learned and Suggested Topics for Future Research 113 7.1 Critical Lessons Learned from Phase I Research 115 7.2 Proposed Phase II Research Approach [Unfunded] 118 References 119 Appendix A Traditional Benefit/Cost Tools Note: Many of the photographs, figures, and tables in this report have been converted from color to grayscale for printing. The electronic version of the report (posted on the Web at www.trb.org) retains the color versions.