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18 significant pieces of legislation that largely deregulated these New York and New Jersey on the East Coast, and the Port industries--the Staggers Rail Act of 1980 and the Motor of Houston on the Gulf Coast. The top air gateways are JFK Carrier Act of 1980. Intermodal shipments also are growing International Airport in New York, O'Hare International in importance, particularly truck and rail, in terms of ton-miles, Airport in Chicago, and Los Angeles International Airport. and truck and air for high-value and/or time-sensitive ship The top land gateways are Detroit, Michigan; Laredo, Texas; ments (e.g., UPS and FedEx). and Port Huron, Michigan. The U.S. Commodity Flow Survey (CFS), produced through A description of the various freight transportation modes a partnership of the Bureau of Transportation Statistics and some of the major conflicts and forms of encroachment and the Census Bureau, provides a comparison of the value they face can be found on the EnvisionFreight website at of shipments and the weight and distance of shipments (e.g., ton-miles) by various transportation modes. For example, while rail accounted for about 40 percent of CFS ton-miles, The Effects of Capacity and rail shipments composed only about 4 percent of CFS ship Congestion on Freight Transportation ment value in 2007. These figures reflect that rail shipments largely consist of lower-value commodities that are shipped The expected travel times of shipments and the variance of relatively longer distances (e.g., coal). In contrast, trucking these expected travel times (i.e., reliability) is a reflection of the accounted for 29 percent of CFS ton-miles but over 70 per transportation network's capacity and the degree of network cent of CFS shipment value in 2007. Intermodal shipments congestion. Both capacity and congestion can be affected by (not shown in Figure 2-6) accounted for about 12 percent of the conflicting land uses with freight-transportation-related CFS ton-miles and 16 percent of CFS shipment value in 2007 services, such as the degree of encroachment of freight cor (U.S. Department of Transportation RITA/BTS 2009a). ridors and facilities. If congestion increases the average travel Figure 2-7 illustrates the top gateways (by value) for time or its variance, the level of transportation service declines. U.S. foreign trade. The top water gateways are the Ports of The degree to which shippers respond to increased congestion Los Angeles and Long Beach on the West Coast, the Port of with changes in logistics choices is dependent upon the degree Figure 2-7. Top 25 foreign trade gateways by value, 2007 (U.S. Department of Transportation FHWA 2007).

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19 to which logistics inputs, including alternative transportation costs, truck traffic represents only 5 percent of total vehicle modes, can be substituted for each other. The responsiveness miles (U.S. General Accountability Office 2008, 1819). A study of transportation demand with respect to changes in conges by Winston and Shirley analyzed the impact of highway con tion is typically smaller in the short run than in the long run. gestion on shippers' inventory costs. These costs are related to For example, suppose that there is a reduction in congestion the importance of timeliness of the goods being shipped and levels for a particular rail corridor due to the resolution of the consequences of additional transit times. Congestion also encroachment issues, such as the elimination of grade cross forces a shipper to hold higher inventories, which increases ings. In the very short run, contractual commitments and inventory holding costs. The authors concluded that $7 billion production schedules may limit the degree to which the firm is the best estimate of inventory costs incurred by shippers for can take advantage of this reduced congestion. In a slightly delays of shipments due to highway con gestion (Winston and longer timeframe, the firm may be able to shift some of its Shirley 2004, 1). There are a number of indirect effects of freight highway transportation to this now less congested rail corridor. transportation congestion as well. Such indirect effects include In the longer run, firms may decide to relocate production the costs of congestion on passenger traffic and negative envi operations and warehouses to make further use of that rail ronmental effects, such as increased air pollution. corridor. This will lead to further shifts in transportation The effects of congestion on freight mobility, reliability, and utilization across modes and corridors. costs have future implications for supply chains and logistics. Given that most corridors are shared use, congestion is For example, the GAO study observes that current supply caused by a combination of both freight and passenger chain strategies may not be economically beneficial in the volumes. However, major contributions to congestion also future should freight mobility decline, and there are increas include insufficient transportation capacity and/or inability ing costs in the form of higher transportation costs, higher to expand capacity. These capacity constraints are often warehousing and operational costs, or missed opportunities for related to encroachment issues such as physical barriers and other investments of production (U.S. General Accountability incompatible adjacent land uses, particularly in densely Office 2008, 21). populated areas. The GAO study reports that areas surround The costs associated with encroachment can affect a ing critical freight infrastructure are increasingly dense with variety of producers and consumers distributed over wide development, making it more difficult and expensive to build geographic regions. The fact that these costs are dispersed or expand centrally located freight facilities. The GAO study and encroachment issues may not be particularly newsworthy notes that land near the Port of New York that was previously can create situations in which planners may not be aware of vacant or used for freight warehouses has recently been the full economic impact of encroachment. Furthermore, redeveloped into high-value commercial and residential prop because the importance of freight transportation in supply erty. As a result, freight distribution centers have moved away chains often spans broad geographic expanses, the widely from the urban core to the New Jersey suburbs and eastern dispersed benefits of preventing or relieving freight cor Pennsylvania where land values are comparatively low. How ridor encroachment also are difficult to assess from a more ever, access to ports is more difficult from these locations localized perspective. Costs and benefits of encroachment (U.S. General Accountability Office 2008, 1415). can be viewed from two perspectives--the costs and benefits Congestion that affects freight mobility has direct effects associated with the status quo, and the costs and benefits asso on users of freight transportation such as producers and end ciated with changes to the current situation (e.g., preventing or users of the products. Transportation costs and increases alleviating encroachment). It is these two perspectives that in these costs due to congestion are factored into the prices of provide the framework for properly assessing encroachment the goods being transported. The GAO study cites one study issues. Without the appropriate perspective and tools, there that estimates that roadway congestion delays cost shippers is a high probability of inadequately assessing both the costs of approximately $10 billion per year and notes that although encroachment and the economic benefits derived from freight the freight sector experiences about 27 percent of congestion corridors.