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10 Guidebook for Understanding Urban Goods Movement Exhibit 2-3. Modal services versus cost continuum. Cost The changes at work in the Ameri- can economy are profound. The agri- cultural and manu- facturing economy of the twentieth Source: Adapted from Lanigan, Zumerchik, and Rodrigue, "Automated Transfer century has Management Systems to Improve Intermodal Efficiency of Rail Freight Distribution." evolved. Services are now the fastest What Moves: Supplying Urban Populations growing sector of The 2007 Commodity Flow Survey (CFS) was summarized to examine information on goods the economy. Logis- moving to and from major urban areas across the U.S. CFS isolation of commodity types for tics and transporta- urban areas is limited to outbound (originated) traffic, whereas much of the complexity in urban activity is in the more fragmented inbound deliveries, which are heavily oriented to trucks. How- tion sectors are sec- ever, understanding this limitation, outbound commodities carried by truck were ranked by ond. The American weight and value and are presented in Exhibit 2-4. The data from the CFS is presented for com- modities grouped by Standard Classification of Transported Goods (SCTG) groupings. At the economy demands 2-digit level, there are 42 SCTG categories. increasing volumes Exhibit 2-4 shows that, by weight, the top 10 SCTG categories account for 75 percent of all of trade if it is to urban outbound truck volume. By value, a largely different top 10 account for 62 percent of all continue to grow. outbound truck volume. Gasoline, prepared foods, mixed goods, and semi-finished metals are commodity groups included in the top ten by both weight and value. Other important commod- The economic sec- ity groups include construction materials, electronics, vehicles, and pharmaceuticals. tors that remain Mixed freight includes shipments for grocery and convenience stores and supplies for restau- robust will require rants and other retail establishments that receive trucks containing a mix of goods from vari- far more trade and ous suppliers. Often, full lots of a particular good are delivered to a distribution center by train or truck, then broken and mixed with other goods to be delivered by truck to a specific retail travel per unit of destination. output than was required 30 years ago. Why Freight Moves: Supporting the New Economy --Transportation Invest- In recent decades, the make-up of the U.S. economy has undergone a significant structural shift: In the early 1980s, manufacturing was the leading sector of the U.S. economy. By 2007, ment in Our Future: manufacturing accounted for less than 20 percent of the economy, while the services sector America's Freight accounted for 79 percent. The ability to efficiently transport goods and services has played a sig- Challenge, AASHTO, nificant role in this transformation. The logistics revolution described earlier, combined with May 2007. public and private transportation investment, has allowed American business to reduce inven-

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Background: The Importance of Goods Movement in the Urban Environment 11 Exhibit 2-4. Top urban truck commodities--outbound by tonnage and value. Tons Cumulative % of Rank by Rank by SCTG Code Commodity Description Value ($ Mil) (000) Total Tons Value 12 Gravel and crushed stone 779,127 20% 1 $8,730 32 31 Nonmetallic mineral products 646,897 37% 2 $108,723 15 17 Gasoline and aviation turbine fuel 294,769 45% 3 $225,504 9 Other prepared foodstuffs and fats 7 227,273 51% 4 $249,878 7 and oils 43 Mixed freight 196,949 56% 5 $529,597 1 19 Coal and petroleum products 179,002 60% 6 $81,138 21 Base metal in primary or semi- 32 175,495 65% 7 $263,623 6 finished forms/shapes 18 Fuel oils 139,133 69% 8 $86,340 18 11 Natural sands 131,760 72% 9 $1,912 36 26 Wood products 104,701 75% 10 $82,378 20 Cumulative % of Rank by Rank by SCTG Code Commodity Description Value ($ Mil) Tons (000) Total Value Tons 43 Mixed freight $529,597 11% 1 196,949 5 Electronic & other electrical equip 35 $384,523 19% 2 23,358 27 & components & office equip Motorized and other vehicles 36 $365,873 26% 3 61,193 17 (including parts) 21 Pharmaceutical products $316,624 33% 4 6,790 34 34 Machinery $274,449 38% 5 26,188 25 Base metal in primary or semi- 32 $263,623 43% 6 175,495 7 finished forms/shapes Other prepared foodstuffs and fats 7 $249,878 49% 7 227,273 4 and oils 24 Plastics and rubber $235,417 53% 8 80,394 11 17 Gasoline and aviation turbine fuel $225,504 58% 9 294,769 3 33 Articles of base metal $196,247 62% 10 60,399 18 Source: 2007 Commodity Flow Survey. tories, while simultaneously achieving greater economies of scale in a global trade environment. These dual efficiency gains for American business have relied on efficient transportation ser- vices: Inventory reduction typically requires more frequent shipments to reduce the possibility of stock shortfalls, leading to more transportation services. Lower transportation costs also allow firms to consolidate production and distribution facilities from many to fewer, but consolida- tion implies a longer average length of shipment haul and the economies of scale are achieved only at the cost of more transportation services (Lakshmanan and Anderson 2002). Exhibit 2-5 displays the trend in average length of haul by mode from the past three Commod- ity Flow Surveys (CFS). Overall, more goods are traveling longer distances. According to the 2007

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12 Guidebook for Understanding Urban Goods Movement Exhibit 2-5. Average length of haul of selected modes. Source: USDOT, Research and Innovative Technology Administration (RITA), Bureau of Transportation Statistics (BTS). Notes: The Commodity Flow Survey (CFS) is a partnership between BTS and the U.S. Census Bureau. (Data compiled by Wilbur Smith Associates.) CFS, the average length of haul in trucking has increased nearly 24 percent over 2002. Currently, the average truck shipment moves 206 miles. While long-haul trucking services skew this statis- tic, in many cases urban land-use decisions also have pushed motor carrier terminals and deliv- ery hubs further out on the urban fringe, increasing the distance required to supply businesses in the urban core. Transportation planners typically characterize how freight moves by the mode or modes used to get goods from a gateway or point of production to the point of consumption. Urban goods travel by air, water, pipeline, and rail, but most often by truck. Selecting the mode for how freight moves is a function of time requirements, network availability, and total logistics costs. To deter- mine total logistics cost, several factors come into play: length of haul, weight, packaging and product handling, number and size of shipments, customer preference, and shipment value. Much of the freight moving in urban areas is characterized by short lengths of haul. Opera- tionally, urban delivery services are challenged with making just-in-time (JIT) deliveries while navigating congested highways, parking restrictions, and route restrictions. To accommodate these operational challenges, many businesses and industries place warehouses or distribution facilities in or near urban areas in order to meet delivery schedules and employ smaller vehicles that can negotiate urban streets and docking sites. Zoning and land-use restrictions have signif- icant influence on the location of these facilities. Most freight transportation within urban areas is provided by trucks and vans, especially for the final stages of goods moving to consumption. Manufacturing plants and distribution facili- ties in metropolitan areas may receive large shipments by rail, ship, barge, jet, or pipeline, which are then delivered by truck for the so-called "last mile" of the delivery. Similarly, while down- town office buildings may be reached by package couriers using cars, bikes, or transit, these couriers are often operating from depots supplied by trucks. Urban truck traffic is composed of various movement types:

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Background: The Importance of Goods Movement in the Urban Environment 13 Long-haul trucks with both origins and destinations outside the urban area, that are simply passing through the urban highway network; Long-haul trucks with a pick-up or delivery in the region, to the opposing delivery or pick-up point outside the region; Truck drayage--the short-haul truck port of intermodal container movements to and from railroad intermodal yards and marine container ports; Local trucks moving goods among facilities on pick-up and delivery (P&D) runs within the region; Construction vehicles (e.g., cement mixers, dump trucks, construction cranes); Utility and other residential service vehicles (e.g., refuse trucks); Van lines delivering freight and goods with special requirements; and Package services. Generally, many of these movements are business-to-business activities involving the arterial route networks in the urban environment. However, there is an increasing trend toward home deliveries brought about by the rise in e-commerce. Home deliveries require trucks to access the smaller thoroughfares and neighborhood streets. Freight movements in urban areas also correlate directly to the type and level of economic activity in a region. Population density is one of the primary drivers of freight density and geog- raphy, plus connectivity drives many of the modal service options available to a community. Urban areas are characterized by high densities of residents and employment centers for service industries, warehouses, distribution centers, retail establishments, hospitals, and institutions. As urban areas grow, they tend to evolve from being producers of goods to being consumers of goods. Goods intended for personal consumption account for a large number of urban freight movements. Internal urban trade between warehouses, distribution centers, retail stores, and, ultimately, to residents who consume the goods also contributes heavily to traffic. Urban busi- nesses require office products and supplies, and they in turn send materials and products to local, domestic, and--sometimes--international markets. Originally, the primary east-west orientation of both the Interstate Highway System and Class I railroad network followed the pattern established by Manifest Destiny and the westward expansion of the U.S. population. In 1959, the first containerized cargo called on the Port of Los Angeles, marking the start of the containerized cargo revolution. During the 1960s, as con- tainerization grew and large ships were unable to pass through the Panama Canal, the San Pedro Ports of Los Angeles and Long Beach became the primary gateway for consumer goods being delivered to cities across America by train and truck. The highway and railroad "landbridge" from West Coast ports to the rest of the country further opened Asian economies to U.S. con- sumer markets. In 2001, the Panamanian government embarked on an expansion of the Panama Canal to remain competitively positioned to capture increased international trade between Asia and U.S. East Coast ports. Currently, container ships passing through the canal are classified as "Pana- max" and are limited to 965 feet in length, 106 feet in width, with a 40-foot draft. Panamax con- tainer ships carry approximately 4,500 to 5,000 twenty-foot equivalent unit (TEU) containers. The Panama Canal Expansion Project is estimated to cost $5.2 billion and is expected to be completed in 2014. Once finished, the new locks will accommodate ships up to 1,200 feet long, 160 feet wide, with a draft of 50 feet. Super post-Panamax container ships will be able to carry 13,000 TEUs. It is anticipated that the Panama Canal Expansion Project will be a game changer that will re-route significant volumes of container traffic from West Coast gateways to East Coast gateways.