Framework and Tools for Estimating Benefits of Specific Freight Network Investments (2011) / Chapter Skim
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Pages 59-100
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From page 59... ...
Denver International Airport WorldPort, which included one-half million square feet of building and warehouse space, a new taxiway, and an aircraft ramp; 3. Tchoupitoulas Corridor Improvements, a series of highway capacity improvements and rail rehabilitations to improve access to the Port of New Orleans, Louisiana; 4.
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From page 60... ...
Heartland Corridor Clearance Project 10. Strauss Intermodal Yard 11.
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From page 61... ...
Tchoupitoulas Corridor Improvements (New Orleans, Louisiana) Heartland Corridor Clearance Initiative (Columbus, Ohio)
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From page 62... ...
The ReTRAC Project consisted of two depressed mainline tracks, a temporary single line "shoo-fly" track adja62 Case Study Rail Benefits Port Benefits Cargo Handling Benefits Asset Utilization Capacity Enhancement Supply Chain Benefits Congestion Reduction Trade Attraction and Time to Market Change in Employment and Port Volumes Change in Cargo Volumes Change in Employment Measures of Regional Competitiveness Reno Transportation Rail Access Corridor (Nevada) Denver International Airport WorldPort (Colorado)
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From page 63... ...
These grade crossings are located on Keystone Avenue, Vine Street, Washington Street, Ralston Street, North Arlington Avenue, West Street, North Sierra Street, North Virginia Street, North Center Street, and Lake Street. Period of Analysis, Discount Rate, and Key Assumptions The benefit/cost analysis considers the performance of transportation facilities given forecast traffic.
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From page 64... ...
• Regional governments will have a direct financial stake in the project, because they will provide a portion of the funding for the construction and maintenance of the ReTRAC initiative. These governments include the State of Nevada, Washoe County, and the City of Reno.
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From page 65... ...
of safety benefits from the project are $4,004,490 using a 3% discount rate and $2,085,172 using a 7% discount rate. 65 Stakeholder Stakeholder Type Stakeholder Interest Union Pacific Railroad Asset Provider Service Provider Direct Financial Stake Washoe County Asset Provider Other Direct Financial Stake Indirect Stake State of Nevada Asset Provider Other Direct Financial Stake Indirect Stake City of Reno Asset Provider Other Direct Financial Stake Indirect Stake Regional Businesses End User Other Direct Business Stake Indirect Stake Businesses and Residents in Immediate Vicinity of Project Other Major Nonfinancial Stake Roadway Users End User Major Nonfinancial Stake The Region Other Direct Economic Stake The Nation Other Indirect Economic Stake Table 5.2.
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From page 66... ...
66 Benefit Affected Stakeholder Type Affected Stakeholder Benefits from Grade Crossing Removal Elimination of Accidents at Grade Crossing All Stakeholder Types All Stakeholders Travel Time Savings End User Other Businesses and Residents in Immediate Vicinity of Project and the Region Vehicle Operation Cost Savings End User Other Businesses and Residents in Immediate Vicinity of Project and the Region Emissions Savings All Stakeholder Types All Stakeholders Noise Reduction Other The Region and Businesses and Residents in Immediate Vicinity of Project Reduction in Emergency Medical Services (EMS) Response Time All Stakeholder Types Union Pacific Railroad, Washoe County, State of Nevada, City of Reno, Businesses and Residents in Immediate Vicinity of Project, and the Region Economic Benefits Reclaimed Land All Stakeholder Types Washoe County, State of Nevada, City of Reno, Businesses and Residents in Immediate Vicinity of Project, and the Region Higher Value Land Use All Stakeholder Types Washoe County, State of Nevada, City of Reno, Businesses and Residents in Immediate Vicinity of Project, and the Region Railroad Benefits Lower Shipping Cost Asset Provider Service Provider Union Pacific Railroad Reduced Liability Asset Provider Service Provider Union Pacific Railroad Table 5.3.
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From page 67... ...
The construction tasks include the depression of a 1.75-mile67 Benefit Metric Infrastructure Provider Users Service Provider Public 3% DR 7% DR 3% DR 7% DR 3% DR 7% DR 3% DR 7% DR Elim ination of Accidents at Grade Crossing – – $4,005 $2,085 – – – – Travel-Time Savings – – $75,521 $30,544 – – – – Vehicle Operation Cost Savings – – $8,114 $3,276 – – – – Emissions Savings – – – – – – $331 $134 Noise Reduction – – – – – – $14,636 $5,909 Reclaimed Land – – – – – – $11,500 $11,500 Higher Value Land Use – – – – – – $95,754 $38,656 Operating Cost Savings* – – – – $5,300 $2,140 – – Reduced Liability*
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From page 68... ...
The NPV of operation and maintenance costs for the period of analysis is $731,680 using a 3% discount rate and $485,927 using a 7% discount rate. Benefit/Cost Analysis and Other Performance Metrics Table 5.6 details the results of the team's analysis of the Reno ReTRAC Freight Infrastructure Investment using the Freight Evaluation Framework.
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From page 69... ...
The original plans for development included eight buildings for a total of 495,000 square feet; however, the economic recession of 2000–2001 and the effects of September 11 significantly reduced demand and the subsequent need for additional capacity at DIA. After the recession, several high-tech firms that heavily relied on air shipments went out of business or were merged/consolidated with other companies outside of Colorado, which further decreased demand for air cargo.
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From page 70... ...
The tradeoff is between time/reliability and cost. Therefore, the study team included the benefit of additional cost of switching from passenger plane belly to dedicated air cargo.
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From page 71... ...
However, shipping out of DIA instead of trucking cargo to alternative airports provides a freight inventory and reliability savings measured using a freight logistics factor, which represents the business opportunity cost of freight delay, including inventory cost to shippers, carriers (dock handling) , and/or those caused by overall schedule disruption.
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From page 72... ...
Benefits The primary benefit measures due to the construction of WorldPort are the foregone costs that would have occurred, if cargo was required to be shipped to an alternative airport or transported via passenger cargo, instead of using dedicated cargo. The cost of shipment using an alternative airport includes the cost of trucking the cargo to the airport minus any difference in the air cargo rate.
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From page 73... ...
In 2000, air cargo volume at DIA reached its pinnacle at 519,000 tons. The total cargo/mail facility is estimated to be 381,000 square feet, which equates to 381,000 tons using the industry-accepted utilization ratio of one U.S.
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From page 74... ...
ton per square-foot of cargo building space was used and, according to a feasibility report, the existing air cargo space at DIA is 325,000 square feet.(18) The feasibility study outlines the original plans for a total of eight buildings that cover 495,200 square feet, which would have increased the total square footage to 876,444 or 1.2 million tons using a utilization factor of 1.36.
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From page 75... ...
However, DIA is well positioned to accommodate additional air cargo when the economy begins to recover. • Operating revenues and costs -- In the 2008 DIA financial report, operating costs and revenues are listed for the entire airport.
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From page 76... ...
76 Figure 5.7. Extent of Tchoupitoulas Corridor Improvements.
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From page 77... ...
Construction of the dedicated truckway started in 1994 and was completed in 2003. Project Stakeholders The study focuses on four primary stakeholders: the Port Authority of New Orleans, local/state governments, cargo carriers/freight forwarders, and regional businesses, all of which are classified by their respective roles in Table 5.13.
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From page 78... ...
The benefit from the time savings is provided by the dedicated truckway. • Regional businesses potentially may have additional volume because the dedicated truckway provides time savings and efficient goods movement, which translates into costs savings.
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From page 79... ...
Operations and maintenance costs of the dedicated truckway were estimated to be approximately $400,000 per year in 1996, growing at a rate of 3% per year. Benefit/Cost Analysis and Other Performance Metrics Using a discount rate of 3% or 7% and a time horizon of 25 years, the total discounted benefits are shown in Table 5.16.
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From page 80... ...
• Operating revenue and costs -- Operating revenues for cargo operations at the port totaled $41.2 million; and operating costs were $53.2 million in 2008. Risk Assessment The element of risk is included in the analysis due to uncertainty in the future port growth.
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From page 81... ...
Moreover, serious congestion on I-81 and other routes due to truck traffic growth was impeding regional travel. To increase truck-rail transfers and make freight transportation more efficient, the Heartland Corridor Double-Stack Initiative was created as a public-private partnership between local governments, the federal government, and NS Railroad.
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From page 82... ...
This qualifies NS as an asset provider through its capital and financial investment, and as a service provider. 82 Stakeholder Stakeholder Type Stakeholder Interest Norfolk Southern Asset Provider Service Provider Direct Financial Stake Indirect Stake The Nation Asset Provider Other Direct Financial Stake Indirect Economic Stake Virginia Department of Rail and Public Transportation Other Asset Provider Direct Financial Stake Ohio Rail Development Commission Other Asset Provider Direct Financial Stake Regional Businesses End Users Other Direct Business Stake Indirect Stake Direct Economic Stake The Region Other Major Nonfinancial Stake Direct Economic Stake Table 5.19.
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From page 83... ...
Figure 5.11 compares the Heartland Corridor route to two other competing routes from Norfolk, Virginia, to Columbus, Ohio. 83 Benefit Affected Stakeholder Type Affected Stakeholder Railroad Benefits Reduced Shipping Cost Asset Provider Service Provider Norfolk Southern Railway Reduced Inventory Carrying Cost Shippers End Users Regional Businesses and the Region Diversion Benefits Travel-Time Savings All Stakeholder Types The Nation, VDRPT, ORDC, Regional Businesses, and the Region Reduced Vehicle Operating Costs All Stakeholder Types The Nation, VDRPT, ORDC, Regional Businesses, and the Region Safety Benefits All Stakeholder Types All Stakeholders Emissions Savings All Stakeholder Types All Stakeholders Economic Impact Regional Economic Benefit All Stakeholder Types All Stakeholders Table 5.20.
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From page 84... ...
• Reduced vehicle operating costs -- The reduced congestion on highways adjacent to the Heartland Corridor leads to a decrease in consumption of fuel and other vehicle operating costs realized in the base case. All roadway users on the affected roadways experience this benefit.
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From page 85... ...
A rising trend in the air cargo industry was the use of very large aircraft (e.g., the Boeing 747-400) that require long runways of at least 12,600 feet, 85 Benefit Metric Infrastructure Provider User Service Provider Public 3% DR 7% DR 3% DR 7% DR 3% DR 7% DR 3% DR 7% DR Reduced Shipping Cost – – – – $738,630 $376,820 – – Reduced Inventory Carrying Cost – – $468,439 $228,852 – – – – Travel-Time Savings – – $1,191,735 $614,626 – – – – Reduced Vehicle Operating Costs $16,631 $10,985 – – – – – – Safety Benefits – – – – – – $209 $ 91 Emissions Savings – – – – – – $1,996 $1,318 Note: DR denotes the discount rate.
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From page 86... ...
Tunnel modification costs. Category Discounted Sum 3% 7% Total Costs $203,809 $165,812 Total Benefits $2,417,639 $1,232,691 B/C Ratio 11.9 7.4 Net B-C $2,213,830 $1,066,879 Table 5.23.
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From page 87... ...
$263,273 $678,210 $904,766 6% Annual Intermodal Traffic Growth Total Benefits (3% discount rate) $661,931 $1,740,961 $2,310,995 Total Benefits (7% discount rate)
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From page 88... ...
88 Stakeholder Port of Huntsville Regional Governments Carrier/Freight Forwarders Regional Businesses Public Sector Asset Provider Service Provider Shipper/ End User Other Party Private Asset Provider Table 5.25. Stakeholder classifications.
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From page 89... ...
Both of these airplane models reflect the appropriate aircraft fleet mix since block hour operational costs vary by aircraft type. Freight inventory and reliability savings are measured using a freight logistics factor which represents the business opportunity cost of freight delay, including inventory cost to shippers, carriers (dock handling)
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From page 90... ...
Jobs specifically devoted to cargo were not highlighted. • Airport capacity -- In May 2009, an air cargo building measuring 92,000 square feet was opened, and this increased the air cargo capacity of the International Intermodal Center (IIC)
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From page 91... ...
• Operating revenue and costs -- Operating revenues for both passenger and air cargo operations at the airport totaled $22.9 million and operating costs were $11.7 million in 2008. Risk Assessment The element of risk is included in the analysis due to uncertainty in the future airport cargo growth.
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From page 92... ...
The remaining assumptions are based on data derived from realized benefits to date. Project Stakeholders The study identified five primary stakeholders: the Port of Houston Authority, local and regional governments, carriers and freight forwarders, and regional businesses (see Table 5.30)
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From page 93... ...
and berth congestion at 93 Stakeholder Port of Houston Authority Local and Regional Businesses Local and Regional Governments Carrier/Freight Forwarders Public Sector Asset Provider Provider Service Shipper/ End User Other Party Private Asset Provider Table 5.30. Stakeholder classifications.
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From page 94... ...
It also demonstrates that initial estimates of the benefits may be overstated due primarily to the fall in cargo levels 94 Benefit Metric Millions (2009 Dollars) Travel-Time Savings $565.4 Vehicle Operating Cost Savings $532.3 Logistics Cost Savings $498.87 State of Good Repair $16.6 Emission Benefits $109.8 Safety Benefits $282.7 Indirect and Induced Benefits $1,320.3 Total Benefits $3,325.8 Table 5.33.
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From page 95... ...
To complement this growth pattern, the county is restricting residential development in prime freight development areas and working with TxDOT to ensure that the newly constructed Grand Parkway remains untolled to encourage truck usage. Risk Assessment The element of risk is included in 2030 analysis due to the uncertainty of cargo volumes in the future.
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From page 96... ...
flexible in its analysis methods in order to be useful to different types of projects as follows: • High-level/systems (i.e., Heartland Corridor Clearance Initiative) -- Generalized analysis methods based on largescale VMT, VHT, or travel-time/emissions estimates are appropriate; • Regional or market-area (i.e., Huntsville Inland Port, DIA WorldPort)
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From page 97... ...
For instance, the Framework is very easy to apply to projects such as the Heartland Corridor or the Tchoupitoulas Corridor Improvements that were designed to solve a particular problem or issue (limited double-stack clearance and truck access through local neighborhoods, respectively)
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From page 98... ...
For instance, the Reno (ReTRAC) case used GRADEDEC to assess grade crossings; the Heartland Corridor assessed truck/rail diversion, and the Denver case assessed air/truck diversion using the multimodal TREDIS model.
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From page 99... ...
. These transport efficiency and business productivity enhancements typically lead to broader impacts on local economic growth.
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From page 100... ...
– Provision of a structure for models, providing feedback for benefits and costs; – Acts as an effective decision support tool, which helps inform the "smell test" by project evaluators/investors; and – Could be used to accelerate project development, if early benefits can be identified. • Concerns -- Participants also identified a number of concerns with the Framework and how it could be applied, as follows: – The Framework is a good first approximation of benefits and impacts, but might struggle when identifying pass-through benefits and potential inequities among parties.
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