Freight Capacity for the 21st Century Special Report 271 (2003) / Chapter Skim
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Pages 108-142
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From page 108... ...
Significant change in the public sector's approach to provision and management of freight capacity would require 108
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From page 109... ...
Prospects for Freight Capacity The committee organized its examination of freight capacity trends in seven topical areas: highway trends; railroad industry trends; problems related to congestion at freight terminals and border crossings; the long lead times and rising costs of infrastructure projects; trends in congestion in urban areas, especially on facilities shared by passengers and freight; trends in other freight modes; and underlying trends in productivity, finance, and technology. Taken together, the trends have indicated to many observers a pattern of unprecedented tight capacity in certain parts of the freight transporta tion system, expected continued growth of traffic, and slowing of the rate of addition of capacity in response to various external constraints.
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From page 110... ...
and state efforts. Overall, highway capital stock is being added faster than it is wearing out (although this circumstance does not demonstrate that the rate of growth is optimal)
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From page 111... ...
The growth of international trade may be exacerbating the bottleneck problem by concentrating freight traffic at a small number of nodes, including certain ports and border crossings, which are experi encing traffic growth rates much higher than those of the freight system as a whole. The development of freight transportation throughout the past century has been characterized by increasing efficiency coupled with increasing diversity and sophistication of service offerings to provide greater utility to customers.
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From page 112... ...
First, the available capacity will continue to be used poorly on those parts of the system where users do not pay prices that reflect costs and where operators lack incentives to be responsive to user costs and preferences. Second, obstacles exist to effective targeting of capital expenditures, par ticularly in the public sector.
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From page 113... ...
FAST Corridor; Florida Freight Task Force The FAST Corridor is a $470 million project of the Washington State Department of Transportation, the state's ports, the Puget Sound Regional Council, cities of the region, and the railroads to improve access to the ports and reduce freightpassenger conflicts, primarily through con struction of rail grade separations. The Florida Freight Stakeholders Task Force was a publicprivate body charged with advising the state depart ment of transportation on its intermodal facilities improvements pro gram.
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From page 114... ...
These studies have proposed that if local governments did the right kind of freight planning, incorporating formal arrangements for receiving opinions from local freight carriers and shippers, they would find the high-payoff freight projects they are now missing. FAST and the Florida task force both were experiments aimed at developing procedures and institutional arrangements to overcome these perceived problems in carrying out local freight projects.
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From page 115... ...
Reliance on public funding to mitigate spillovers means that railroads and ports do not fully take into account the public costs of their decisions to expand facilities. It is noteworthy that the Alameda Corridor rail port access project in Los Angeles plans, in contrast to FAST, to derive the majority of its funding from fees charged to the railroads and from port user fee revenues.
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From page 116... ...
The Virginia case highlights the question of the extent to which intermodal rail is an alternative to highway expansion to handle freight traffic growth. The only valid argument for a state policy directly pro moting rail intermodal development as an alternative to highway expan sion would be that truck user fees are less than the full cost of their use of I-81.
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From page 117... ...
Industry Interviews The committee solicited views of shippers, carriers, and port operators, through informal interviews or requests for written comments, as an additional method of identifying freight capacity problems. The inter views were not a systematically conducted survey, so inferences must be limited.
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From page 118... ...
Policy Alternatives The committee took advantage of several recent studies by nationally prominent groups that analyzed public policy problems related to pro vision of freight capacity and recommended changes in government pol icy. These include NRC studies on public policy for intermodal freight transportation, port landside access, and Mississippi River navigation; the 1994 congressionally mandated report of the National Commission on Intermodal Freight Transportation; and studies and statements of the U.S.
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From page 119... ...
The recommendations indicate some opportunities for evaluation and experimentation to provide a better factual basis for policy. RECOMMENDATIONS In the first two sections below, principles to guide decisions on govern ment programs affecting freight capacity are proposed, and the scope of the government policy agenda relevant to freight capacity is described.
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From page 120... ...
The important benefits of most public-sector freight transportationrelated investments are the direct benefits that users of the facilities receive in the form of reduced transportation and logistics costs. Although exceptions exist, as a general rule, if such a project could not be financed by any scheme of user fees, then the responsible agency should question whether the project's benefits are adequate to justify the investment.
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From page 121... ...
The present in efficient use of much existing transportation capacity should be regarded as a large hidden capacity reserve waiting to be tapped through improved management practices. Revenues from appropriate user fees in many circumstances would be the best indication of where capital expenditure to expand capacity would be most valuable.
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From page 122... ...
It includes federal programs that are likely to undergo legislative revisions in the next few years that will have far reaching influence on the adequacy of freight capacity. Decisions on these matters often appear to address narrow concerns and to be guided by short-run considerations.
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From page 123... ...
One example, described in Chapter 3, is proposed traffic management improvement as an alternative to physical expansion on the inland waterways. Examples of immediate finance issues whose outcomes can affect freight capacity include deciding on federal shares and revenue sources for port channel development, finding a new source of funding for har bor dredging, current efforts promoting toll funding and private-sector participation in development of highways, and proposals for commer cialization of air traffic control.
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From page 124... ...
Environmental streamlining is a good illustration of a problem that can not be addressed within the boundaries of a single executive agency or public works program because of the breadth of government activities affecting freight capacity. Improving the cost-effectiveness of environ mental reviews of infrastructure projects will require examination of environmental laws and regulations as well as transportation agency practices.
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From page 125... ...
freight transportation expenditures and the federal government has a leading roll in national highway programs, no federal activity has greater significance for freight capacity than the federal-aid highway program. Highway services are essential to the functioning of the rail, air freight, port, and waterway systems.
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From page 126... ...
The most recent DOT highway cost allocation study concluded that user fee revenues from all vehicles nearly equal highway expenditures and that large trucks' user fees almost equal the highway expenditures for which they were allocated responsibility according to the study's assump tions (DOT 1997, ES-9)
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From page 127... ...
The user fee reforms recommended above would be a step in the direction of improved highway operation. In addition, Congress should act to strengthen oversight of state administration of federal motor vehicle size and weight regulations and to evaluate the effectiveness of enforce ment of federal motor carrier safety regulations.
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From page 128... ...
Government efforts to promote alternative freight transportation modes are unlikely to sig nificantly reduce the justified level of highway funding. At any level of funding, greater benefit could be obtained from the federal-aid highway program if highway pricing were reformed, best operating practices were generally applied, and economic evaluations were used more consistently to guide capital expenditure and mainte nance decisions.
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From page 129... ...
The research should include exami nation of how user fee policies on exclusive truck roads and competing unrestricted routes would affect feasibility. DOT, in cooperation with the states and the private sector, also should examine needs for additional ancillary highway facilities for trucks to reduce truckcar conflicts, including rest areas and parking and staging areas.
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From page 130... ...
It would be possible for Congress to provide incentives in federal assistance pro grams for multiport regions to make coordinated proposals for harbor projects. · Greater reliance on local cost-sharing and user fees.
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From page 131... ...
Revenue from the fee would be credited to a trust fund, appropriations from which would pay all federal costs of operations, maintenance, construction, and improvements. Capital expenditures are now funded from general revenues.
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From page 132... ...
and recommended that Congress direct USACE to explore traffic management options. In its authorizations and appropriations for USACE Civil Works activ ities, Congress should begin to rely on revenues from user fees to fund inland waterway operation and maintenance as well as capital expenditures.
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From page 133... ...
There is a need for government and industry to examine how to achieve a rea sonable user fee structure that assesses all users appropriately according to the costs each imposes. PUBLICPRIVATE JOINT FUNDING OF FREIGHT-RELATED PUBLIC WORKS PROJECTS State and local governments should routinely conduct evaluations to quanti tatively test the economic rationale for government involvement in their freight transportation infrastructure projects, prospectively for each new pro posal for government participation and retrospectively for each completed government project.
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From page 134... ...
· User fees on trucks do not cover the full cost of their use of roads, so shippers often choose truck when rail would be the cheaper option overall. If underpricing of trucking cannot be corrected, investment in rail by the highway agency is justified to attain efficient use of the two modes.
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From page 135... ...
Decision-Making Processes and Planning DOT DATA AND ANALYSIS PROGRAMS Congress should give continued support to the development of DOT capa bilities for economic analysis of the federal-aid highway program and fed eral highway user fees and to the application of this analysis in support of decisions. Congress should provide for joint statefederal efforts to transfer and adapt these federally developed policy guidance tools to state and local needs.
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From page 136... ...
In planning future highway cost allocation studies, DOT should review the 1996 recommendations of the TRB Committee for Review of the Federal Highway Cost Allocation Study concerning methods for analyzing whether changes in highway user fees could increase the net economic benefit the nation derives from its highway system. Fees affect efficiency (that is, the economic payoff from the highway system)
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From page 137... ...
Waterborne freight transportation data programs of USACE should also be continued, and further integration across other modal freight data collection efforts within DOT should be encouraged. The freight data programs within the federal government should be coordinated through the Bureau of Transportation Statistics, whose tasks should include data collection, auditing of all DOT freight transportation data programs, and publication of data and analytical summaries.
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From page 138... ...
They have recom mended actions to ensure conscientious evaluation in direct federal infra structure spending programs, DOT planning studies for advising Congress on federal-aid programs, and DOT review of proposals for discretionary grants for transportation infrastructure. In addition, DOT should actively promote state application of appropriate economic evaluation methods in state programs that receive federal aid, in particular, the highway programs.
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From page 139... ...
Second, DOT and the states should assess the impact of the review process on final project design, which is the ultimate test of the benefits of the process. In addition, Congress should direct DOT, in cooperation with the states, to conduct a program of research to identify and document best practices in state transportation programs and other federal and state infrastructure pro grams regarding innovative project development, design, and management aimed at reducing project delivery times.
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From page 140... ...
. A 2002 presidential executive order creates new procedures for federal agencies to follow to "promote environmental stewardship in the Nation's transportation system and expedite environmental reviews of high-priority transportation infrastructure projects" (Executive Office of the President 2002)
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From page 141... ...
Lower costs would lead to more air cargo, but the system would be better able to respond to growing demand. An alternative to the present system of regulation would be to govern international air cargo, as is trade in other international services, by a multilateral free trade agreement within the World Trade Organization structure.
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From page 142... ...
1997. 1997 Federal Highway Cost Allocation Study.
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