Integrating Freight Considerations into the Highway Capacity Planning Process: Practitioner’s Guide (2013)

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21 INTRODUCTION HISTORY OF FREIGHT PLANNING The practice of freight transportation planning has evolved significantly over the last decade, catalyzed by the enhanced freight-planning requirements embodied in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users ( SAFETEA-LU) and a growing national concern about insufficient freight capacity. The U.S. Department of Transportation (U.S. DOT), state DOTs, and metropolitan planning organizations (MPO)—the entities largely responsible for planning, pro- gramming, and delivering transportation projects—have started to invest in personnel, training, data, and consulting expertise to build freight programs that take into ac- count the needs of freight stakeholders. This rise in freight planning reflects a broaden- ing recognition of the economic, social, and environmental benefits of efficient goods movement. More recently, freight planning acknowledges the risk of diminishing transportation infrastructure productivity without wise planning and reinvestment, especially in our national highway system. Legislation reauthorizing the national highway program, Moving Ahead for Progress in the 21st Century (MAP21), enacted in July 2012, enhances many of the concepts relating to freight from SAFETEA-LU, including the endorsement of freight advisory groups and development of statewide freight plans. As it is implemented, the law will help institutionalize many of the recent efforts to improve freight-planning practices by DOTs and MPOs and promote freight mobility and capacity as very critical issues for planners throughout the United States to consider (http://www.fhwa.dot.gov/map21/). Since the completion of the Interstate system in the 1970s, our nation’s highways have become our commercial lifeline. Even with the recent resurgence of freight-rail in the United States, the 2007 Commodity Flow Survey (CFS) shows that trucks con- tinue to move nearly one-half of all freight ton-miles (46%, the same proportion as

3INTEGRATING FREIGHT CONSIDERATIONS INTO THE HIGHWAY PLANNING PROCESS freight-rail). More important, the CFS indicates that U.S. highways carry the vast majority of commodity value—over $9.5 trillion in 2007, representing nearly 90% of national freight value and nearly 70% of 2007 gross domestic product (GDP). These statistics represent unprecedented growth of freight movement across all modes— especially highways—made possible by the capacity investments of previous decades, freight modal deregulation, technology, consumer affluence, and international trade. Interest in freight planning surged in the late 1990s as the freight industry and policy makers realized that productivity gains from earlier investments were beginning to diminish. Around that time, the national freight system, particularly the highway and road network, began to show signs of overload as freight and passenger growth outpaced capacity. This mismatch was most pronounced in major urban areas that suffered from heavy congestion and highway bottlenecks, slowing the movement of trucks and adding to the cost of transportation. The pace of growth also began to overwhelm some rural Interstate highways and other U.S. and state arterials as both freight and passenger traffic increased without commensurate investment in new lane- mile capacity. Moreover, it became increasingly apparent that highway system redun- dancy was lacking, forcing vehicles to travel, for example, on a single, critical corridor1 and endure congestion because no reasonable alternate route was available. To address these concerns, leading transportation organizations have developed a growing body of resources to inform and direct freight-planning practice. The Trans- portation Research Board (TRB), the American Association of State Highway Transpor- tation Officials (AASHTO), the Federal Highway Administration (FHWA), and other organizations have developed training materials, studies, and guides to foster expertise and to weave freight considerations into established planning processes. In addition, some states, MPOs, and other transportation planning and programming organizations have started to develop and implement sophisticated mechanisms to systematically and comprehensively address a broad spectrum of goods movement-related issues through their planning activities. While much progress has been made, there remains room for improvement as agencies place greater emphasis on the freight aspects of transporta- tion planning in the future. This project—to synthesize and disseminate best practices of collaborative market-based highway-freight planning—comes at an important point in the country’s economic and transportation history as freight and passenger demand eclipse land system capacity. Within the guide, the term freight implies the transport of raw materials, produc- tion inputs, and finished goods by surface transportation and includes shipments by integrators, such as FedEx and UPS. It does not pertain to small trucks used in service industries, such as plumbers and electricians, since policy makers generally count those trucks as passenger vehicles. DEVELOPING MARKET-BASED GUIDANCE While the significant and growing body of work provides important insight and in- struction, the freight stakeholders with whom the research team spoke indicated they would appreciate a comprehensive guide to integrating freight considerations into the

4INTEGRATING FREIGHT CONSIDERATIONS INTO THE HIGHWAY PLANNING PROCESS highway planning process to enhance the work that already has been produced. In response, the Strategic Highway Research Program 2 (SHRP 2) commissioned the development of this guide specific to integrating freight considerations into highway planning. One critical element of this work is its recognition of the key role private- sector freight stakeholders should have in the collaborative planning and decision- making process. Obtaining input from freight system users in the highway planning process is critical for several reasons, including the following: • Economic impacts. Companies make decisions about cargo-handling facilities (e.g., distribution centers operated by beneficial cargo owners, or BCOs,2 and warehouses operated by third-party logistics service providers) based on current and future conditions and investments in transportation infrastructure, especially highways. In some cases, route selection is discretionary if alternate routes are available. These decisions affect the economic competitiveness and vitality of communities and regions. Highway planning—to sustain or help regional econo- mies grow—must take into account the freight decision-making process to realize full growth potential. • Market forces. Freight highway users are sensitive to dynamic market forces. To remain competitive, BCOs as well as motor carriers quickly alter supply chains and transportation patterns to adapt to changing trends, events, conditions, and costs (e.g., fuel prices, availability and cost of labor, sources of production inputs, oppor- tunities in new and existing sales markets, or changing requirements of customers). To make wise investment decisions, highway planners must understand how market forces influence the way BCOs and motor carriers use the highway system to ensure alignment of public investment in transportation with the needs of industry. • Infrastructure needs. By considering the perspectives of motor carriers and BCOs, states and MPOs may develop a more comprehensive approach to identifying highway needs, including critical commercial flows. Motor carriers can quickly identify system bottlenecks and needed investments based on the repeated experi- ence of their drivers. Soliciting direct input from truck drivers, not only motor carrier executives and dispatchers, can yield valuable information. The research team’s recent outreach with the freight community in Maryland suggests relative unanimity among motor carriers in identifying specific highway investment needs. • Forecasting flows. Because of sensitivities to market forces and highway condi- tions, freight movements are difficult to forecast, especially over the long term. To account for this uncertainty, highway planning efforts should engage knowledge- able logisticians to develop more plausible future scenarios that take into account potential shifts in supply chain strategies. • Multiple jurisdictions. Effective freight planning requires multijurisdictional coopera tion to coordinate public actions and to understand how industries use the system across local boundaries and state lines. When state, regional, and local policy makers cooperate and align their plans, programs, and outreach, better outcomes result.

5INTEGRATING FREIGHT CONSIDERATIONS INTO THE HIGHWAY PLANNING PROCESS • Environmental outcomes. Freight operations have a significant impact, both posi- tive and negative, on air quality, land use sustainability, and local environmental conditions (e.g., the National Environmental Policy Act, or NEPA) as motor car- rier fleets adapt to changing highway conditions, markets, and technologies (e.g., cleaner diesel, liquid natural gas, and idling reduction). Motor carriers and BCOs are becoming more aware and concerned about sustainability, and there is grow- ing commitment to modifying operations and equipment to improve the quality of the environment. • Safe operations. Similarly, truck fleet operating characteristics must be considered as a part of any sound and realistic strategy to provide a safe operating environ- ment for all kinds of vehicles. For example, public-sector transportation agencies should work with industry to identify highway segments that should be improved to enhance safety. Ameliorating safety issues results in improved freight mobility. GUIDE OBJECTIVE While many aspects of highway freight planning would benefit from improved methods and best practices guidance, this guide focuses specifically on one aspect. The objec- tive of this guide is to make highway capacity planning more effective through better engagement of the freight industry. This guide will help highway planners from state DOTs and MPOs and private industry stakeholders more effectively and collabora- tively plan and develop highway capacity improvements to improve goods movement. It identifies appropriate freight considerations and directs state DOTs, MPOs, stake- holders, and other decision makers on how and at which points to integrate these considerations within the transportation planning process—from the identification of strategies, policies, and projects for highway improvements within long-range plans to final environmental clearance through the NEPA process and permitting of specific highway improvements. The guide integrates market-based information into the plan- ning process to reduce the likelihood of the public sector making poor project choices (e.g., funding projects that do not align with freight needs or provide little benefit to freight stakeholders). Case studies and best practice examples illustrate successful methods for integrating freight considerations at all stages and phases of project plan- ning to sharpen decision making and lead to better investments that serve passenger and goods movement. Material from the guide, including case studies and major fi ndings, are inte- grated into the SHRP 2 Transportation for Communities—Advancing Projects through Partnerships/PlanWorks website for broader distribution. Transportation for Communities— Advancing Projects through Partnerships (TCAPP) has been renamed PlanWorks.

6INTEGRATING FREIGHT CONSIDERATIONS INTO THE HIGHWAY PLANNING PROCESS GENERAL APPROACH To fully account for the important market-driven behavior and interests of the private- sector freight community, the research team organized its actions around a proposed set of seven key freight considerations: 1. Economy; 2. Industry logistics patterns for transporting raw materials, components, and fin- ished products from point of origin to point of consumption; 3. Freight infrastructure; 4. Commodity flows; 5. Quality of service; 6. Environment; and 7. Safety. These considerations focus on market forces appropriate to freight planning but also take into account the six external processes established by the SHRP 2 program and outlined in TCAPP/PlanWorks. Those external processes are air quality confor- mity, land use, natural environment, human environment, capital improvement, and safety/security. Market-Based Freight Considerations Market-based freight considerations are organized hierarchically to demonstrate a chain of influence starting with the economic demand for goods and culminating with environmental and safety outcomes. Growing demand for goods can lead to higher volume of traffic flows on a regional transportation system by trucks, but not neces- sarily on a particular route, potentially affecting the performance of the entire system. Economic demand for goods also underpins the logistics and supply chain decisions by industry. BCOs use highway infrastructure in a way that maximizes profit by mini- mizing cost, transit time, and distance between producers and consumers. The way in which the freight industry uses the highway freight system manifests itself through commodity flows of raw materials, production inputs, and finished goods. BCOs and motor carriers react and adjust to the travel conditions (e.g., speed and transit time reliability) to maximize operating efficiency, profits, and quality of service. Their ulti- mate actions affect the environment and safety outcomes. The overall efficacy of a region’s or state’s freight infrastructure dictates how well, from an economic and efficiency standpoint, goods and services can flow across the system. With deficiencies in the freight transportation infrastructure on a systemic level, BCOs and motor carriers may seek out other sources of raw materials and pro- duction inputs or markets for finished goods, with rising transportation costs influenc- ing their location decisions. Environmental considerations also play a major role in accommodating freight transportation infrastructure. Issues such as air quality, noise,

7INTEGRATING FREIGHT CONSIDERATIONS INTO THE HIGHWAY PLANNING PROCESS bright lights, malodorous smells and other affects can contribute to environmental impacts for neighbors in the vicinity of cargo-handling facilities. Paramount to the decision-making process for freight users, safety and security issues help to drive loca- tion decisions, routes, and other operational considerations. Figure 1.1 introduces examples of each of the market-based freight-planning con- siderations and describes how freight interests could be affected by the public planning or project development process. Figure 1.1. Examples of market-based freight-planning considerations. Market-Based Freight Considerations Examples of Planning Considerations How does the planning or project activity affect . . . Economy • Economic competitiveness (e.g., business retention or attraction) • Employment retention or expansion • Market composition (producer and consumer) • User costs (freight transportation and warehousing) • Passenger-related economic benefits Industry Logistics Patterns • Supply chain structure • Regional distribution networks (multistate and urban) • Mode share (highway, rail, water, air) Freight Infrastructure • Multimodal network connectivity • Access to existing/new markets (e.g., to a BCO or manufacturing cluster) • Physical capacity (e.g., lanes, bridges, road elevation or grade) • Operational capacity (e.g., freight throughput as a function of better speed, reliability, information, or changes in truck size and weight) • Corridor chokepoints Commodity Flows • Freight flows by route (long-distance, regional, and local deliveries) • Commodity movements • Mode choice by commodity (including intermodal movements which may utilize highway for a portion of the trip) Quality of Service • Improve speed • Enhance reliability (e.g., maintaining flow along key freight corridors) • Driving experience (for freight and passenger vehicles) • Enhance system redundancy (choice of routes) • Cost (tolls, etc.) Environment • Air quality conformity • Communities (e.g., human environment, urban deliveries, livability) • Land use decisions and vice versa (e.g., location, pattern, sustainable growth) • Climate change (e.g., carbon output or infrastructure adaptation) • Natural environment (e.g., water quality, soil, wildlife, NEPA) Safety and Security • Safety (e.g., crash rates, types of crashes, locations of crashes, severity of crashes) • Security of critical infrastructure • Hazardous materials movement • Safe movement of overdimensional cargo • Human factors – Truck parking

8INTEGRATING FREIGHT CONSIDERATIONS INTO THE HIGHWAY PLANNING PROCESS Current Planning Practice The guide links the considerations to the four phases of transportation decision mak- ing of the SHRP 2 program: long-range transportation planning (LRTP), program- ming with fiscal constraint (PRO), corridor planning studies (COR), and environmen- tal review merged with permitting (ENV). It includes guidance to help transportation agencies recognize when and how to integrate freight considerations into the deci- sion-making process, identifies appropriate freight stakeholders at the most opportune points of engagement, and highlights best practices for effective types of engagement. The basis for identifying the key decision points for freight is the SHRP 2 decision flow diagram, which includes 44 decision points taken by decision makers throughout these four phases of the planning process. These decision points are presented in Table 1.1 and in the TCAPP/PlanWorks website. The guide presents strategies for engagement of freight stakeholders during each of the 44 decision points during the planning, programming, and environmental review processes that can yield the greatest benefit. At each freight decision point, the Guide describes the information and techniques that planners can use at each decision point to integrate freight interests into the process.

9INTEGRATING FREIGHT CONSIDERATIONS INTO THE HIGHWAY PLANNING PROCESS TABLE 1.1. SHRP 2 DECISION FLOW DIAGRAM Decision Point Long-Range Transportation Planning (LRTP) Programming (PRO) Corridor Planning (COR) Environmental Review and Permitting (ENV and PER) 1 Approve scope of LRTP Approve revenue source Approve scope of corridor planning services Reach consensus scope of environmental review 2 Approve vision and goals Approve methodology for identifying project costs and criteria for allocating revenue Approve problem statements and opportunities Approve and publish the notice of intent 3 Approve evaluation criteria, methodology, and performance measures Approve project list drawn from adopted plan scenario or solution set Approve goals for the corridor Approve purpose and need/reach consensus on project purpose (PER-1) 4 Approve transportation deficiencies Approve project prioritization Reach consensus on scope of social, cultural, natural, and environmental review and analysis Approve public notice (PER-2); reach consensus on study area 5 Approve financial assumptions Reach consensus on draft TIP Approve evaluation criteria, methodology, and performance measures (potential solutions) Approve evaluation criteria, methodology, and performance measures 6 Approve strategies (projects) Adopt TIP by MPO Approve range of solution sets Approve full range of alternatives/approve resource agency public notice (PER-3) 7 Approve plan scenarios Approve TIP by Governor or his designee and incorporate into STIP Adopt preferred solution set Approve alternatives to be carried forward (Per-4) 8 Adopt preferred plan scenario (internal) Reach consensus on draft STIP Approve evaluation criteria and methodology for prioritization (implementation) Approve draft EIS/ reach consensus on jurisdictional determination (PER-5) 9 Adopt finding of conformity by MPO (air quality) Approve STIP with respect to conformity and fiscal constraint Adopt priorities for implementation Approve preferred alternative 10 Adopt LRTP by MPO Approve final NEPA document 11 Approve conformity analysis (federal conformity determination) Approve record of decision/render permit decision (PER-6) Note: Ssome decision points under ENV and PER that focused on government procedure were consolidated. TIP = transportation improvement program; STIP = state transportation improvement program; MPO = metropolitan planning organization; EIS = environmental impact statement; NEPA = National Environmental Policy Act. Source: Cambridge Systematics, Inc.

10 INTEGRATING FREIGHT CONSIDERATIONS INTO THE HIGHWAY PLANNING PROCESS Guide Users This guide is intended for the use of DOT and MPO staff planners and managers and their collaborators, including consultants, partner organizations, and local jurisdic- tions. However, others may find the guide helpful. Each audience will likely use it in different ways. Table 1.2 provides some ideas on how the guide might inform and be useful to various parties. TABLE 1.2. GUIDE USES BY VARIOUS AUDIENCES Target Audience Guide Uses Transportation agencies: FHWA, state DOTs • To provide guidance on how and when to engage different types of stakeholders during the various phases of planning processes. • To help prioritize resources, staff, and actions to more effectively integrate freight into the planning process. Private sector • To understand the various phases of highway planning processes and at which stages input from private firms is most valuable. BCOs • To understand which points in the decision process affect shipments and to focus input to transportation agencies to improve supply chain efficiency. Logisticians • To allow third-party logistics service providers (3PL) and others involved in arranging freight to enrich their potential contributions to network planning. Motor carriers • To illustrate how their first-hand knowledge of the system can inform project designs and studies of bottlenecks and highway system impediments. Railroads • To show how critical “last mile” connectors are between rail yards and access roads. • To provide insight to railroads on when their input and involvement related to modal shifts is most important. Commercial real estate developers • To improve understanding of highway planning and better synchronize efforts of real estate and land use decision makers with transportation planning. Chambers of commerce and business groups • To know how the highway planning processes function and to inform members of how they might be involved at the most important points. Economic development agencies • To define at which points their involvement might be most beneficial for the economic stakeholders (and their regional economies). Port authorities and marine terminal operators (MTO) • To understand the various phases of the highway planning processes and at which stages their input is most valuable. • To show how critical “last mile” connectors are between seaports and access roads. Local governments • To improve regional and state coordination, including transportation and land use decisions affecting goods movement. Other stakeholders • To provide general information on the planning processes related to freight and the other stakeholders involved.

11 INTEGRATING FREIGHT CONSIDERATIONS INTO THE HIGHWAY PLANNING PROCESS Since this guide is focused around previous SHRP 2 research on collaborative decision making, a background in the use of the decision flow diagram and other tools is helpful but not necessary to maximize the effectiveness of the guide tools. Figure 1.2 displays the structure of the guide, which incorporates the market-based freight-planning considerations and national best practices to develop the decision flow diagram for engaging freight stakeholders in collaborative decision making and the critical decision points. Figure 1.2. Guide structure. NOTES 1. Depending on the project, the corridor under consideration can be relatively short (several miles) or quite long (hundreds of miles, possibly running through multiple states). In terms of freight stakeholder involvement, it is easier to engage representatives from the freight community on short corridors because of the relatively confined set of system users and the likelihood that their concerns are relatively homogeneous. Long corridors have a far greater number of stakeholders with more divergent views and needs. 2. Within the context of the guide, a BCO can be either the shipper/supplier/factory or the consignee/receiver/buyer, depending on when and where product ownership and liability transfers between the two parties according to the agreed-on sales terms. Sales terms dictate, among other things, the party responsible for determining the routing and mode of transport. International Chamber of Commerce (INCO) terms of sale are the most commonly used in international trade. Free on Board (FOB) and Free Alongside (FAS) are two common INCO terms.