Freight Data Cost Elements (2013)

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N A T I O N A L C O O P E R A T I V E F R E I G H T R E S E A R C H P R O G R A M NCFRP REPORT 22 Subscriber Categories Administration and Management • Economics • Freight Transportation Freight Data Cost Elements José Holguín-Veras Jeffrey Wojtowicz Carlos González-Calderón RensselaeR Polytechnic institute Troy, NY Michael Lawrence Jonathan Skolnik Michael Brooks Shanshan Zhang Jack Faucett associates, inc. Bethesda, MD Anne Strauss-Wieder a. stRauss-WiedeR, inc. Westfield, NJ Lóri Tavasszy tno Delft, Netherlands TRANSPORTAT ION RESEARCH BOARD WASHINGTON, D.C. 2013 www.TRB.org Research sponsored by the Research and Innovative Technology Administration

NATIONAL COOPERATIVE FREIGHT RESEARCH PROGRAM America’s freight transportation system makes critical contributions to the nation’s economy, security, and quality of life. The freight transportation system in the United States is a complex, decentralized, and dynamic network of private and public entities, involving all modes of transportation—trucking, rail, waterways, air, and pipelines. 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 inadequacies of current infrastructure and operations to meet the growing demand for freight. Strategic operational and investment decisions by governments at all levels will be necessary to maintain freight system performance, and will in turn require sound technical guidance based on research. The National Cooperative Freight Research Program (NCFRP) is a cooperative research program sponsored by the Research and Innovative Technology Administration (RITA) under Grant No. 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 begin work was executed between RITA and The National Academies. The NCFRP will carry out applied research on problems facing the freight industry that are not being adequately addressed by existing research programs. Program guidance is provided by an Oversight Committee comprised of a representative cross section of freight stakeholders appointed by the National Research Council of The National Academies. The NCFRP Oversight Committee meets annually to formulate the research program by identifying the highest priority projects and defining funding levels and expected products. Research problem statements recommending research needs for consideration by the Oversight Committee are solicited annually, but may be submitted to TRB at any time. Each selected project is assigned to a panel, appointed by TRB, 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 NCFRP REPORT 22 Project NCFRP 26 ISSN 1947-5659 ISBN 978-0-309-25899-9 Library of Congress Control Number 2013934583 © 2013 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this 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, FMCSA, FTA, RITA, or PHMSA endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not- 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. NOTICE The project that is the subject of this report was a part of the National Cooperative Freight Research Program, conducted by the Transportation Research Board with the approval of the Governing Board of the National Research Council. The members of the technical panel selected to monitor this project and to review this report were chosen for their special competencies and with regard for appropriate balance. The report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the Governing Board of the National Research Council. 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 Research Board, the National Research Council, or the program sponsors. The Transportation Research Board of the National Academies, the National Research Council, and the sponsors of the National Cooperative Freight Research Program do not endorse products or manufacturers. Trade or manufacturers’ names appear herein solely because they are considered essential to the object of the report.

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

C O O P E R A T I V E R E S E A R C H P R O G R A M S CRP STAFF FOR NCFRP REPORT 22 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 Sharon Lamberton, Assistant Editor NCFRP PROJECT 26 PANEL Freight Research Projects Daniel C. Murray, American Transportation Research Institute, St. Paul, MN (Chair) Christopher G. Caplice, Massachusetts Institute of Technology, Cambridge, MA John T. Gray, Association of American Railroads, Washington, DC Donald H. Lotz, Yardley, PA Douglas MacIvor, California DOT, Sacramento, CA Alan E. Pisarski, Falls Church, VA Daniel S. Smith, The Tioga Group, Inc., Moraga, CA George C. Xu, Zhi Xu Consulting, Olympia, WA M. J. Fiocco, RITA Liaison Deborah Freund, FMCSA Liaison Rolf R. Schmitt, FHWA Liaison Thomas Palmerlee, TRB Liaison

F O R E W O R D By William C. Rogers Staff Officer Transportation Research Board NCFRP Report 22: Freight Data Cost Elements identifies the specific types of direct freight transportation cost data elements required for public investment, policy, and regulatory decisionmaking and describes and assesses different strategies for identifying and obtaining the needed cost data elements. Accurate freight transportation cost data are required for cost-benefit comparisons, impact and systems analyses, and modal optimization. Measures previously used have included freight bill costs and cargo value, or shipper costs which may include indirect broker costs and other supply chain profit margins. These measures may have little con- nection to the direct and discrete marginal costs of users of a given facility. Transporta- tion decisionmakers have two methods for obtaining freight cost data: either from primary sources or indirectly through ad hoc estimation. However, many primary sources of freight transportation cost data disappeared with deregulation or because of budget constraints. Estimated freight transportation cost data used today typically derive from secondary data, aggregated piecemeal data, facility-specific surveys, or broad cost indices. While freight transportation cost data can fluctuate dramatically, the relevant cost data elements are rela- tively stable across modes and time. Consequently, research and guidance are needed on the freight cost data elements required for different transportation planning objectives and the sources of those data elements. Under NCFRP Project 26, Rensselaer Polytechnic Institute was asked to (1) identify and describe the state of the practice for current multimodal freight transportation cost data uses, sources, methods, collection strategies, and data elements for public-sector planning and decisionmaking; (2) identify current and evolving public-sector freight transportation planning and decision-making functions and the cost data currently used, or that might be used, to support those functions; (3) describe the key freight transportation cost data elements required for public-sector planning and decisionmaking and identify primary and secondary cost data sources and assess their applicability to the key requirements; (4) discuss data issues and limitations, including data accuracy, privacy, anti-trust issues, and other constraints, as well as conceptual collection strategies; and (5) identify available cost estimation tools, methods, and procedures, and their applicability to the key requirements, discuss their strengths and weaknesses, and identify methods for closing any gaps.

C O N T E N T S 1 Summary 3 Chapter 1 Introduction 4 Chapter 2 Fundamentals of Freight Cost Estimation and Its Use 4 2.1 Freight Costs and External Factors that Impact Them 5 2.2 Freight Cost Estimation Techniques 6 2.3 State of the Practice 9 Chapter 3 Public-Sector Functions and Current Cost Data Needs 9 3.1 Public-Sector Functions 13 3.2 Freight Cost Data Needs 27 Chapter 4 Public-Sector Future Cost Data Needs 27 4.1 Potential Policy Scenarios 33 4.2 Looking Ahead: Cost Data for Assessing Future Freight Scenarios 38 Chapter 5 Identification and Assessment of Data Sources 39 5.1 Assessment of Data Sources for the Various Modes of Freight 47 5.2 Gaps and Limitations in Freight Cost Data 52 Chapter 6 Addressing Freight Cost Data Gaps 52 6.1 Means for Addressing Limitations and Gaps 52 6.2 Methods and Procedures 53 6.3 Suggested Approaches to Close Data Gaps 56 Chapter 7 Conclusions 58 References A-1 Appendix A Basic Cost Concepts, Definitions, and Glossary B-1 Appendix B Cost Data Elements C-1 Appendix C Data Collection Techniques