Background Research Material for Freight Facility Location Selection: A Guide for Public Officials (NCFRP Report 13) (2011)

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1 Introduction 1.1 Background Public agencies involved with land use planning, economic development, and transportation are certainly aware of the importance freight plays in the American economy. All goods purchased and sold in the United States may be considered freight at some point in the value chain. Still, the process by which companies move this freight and how they select locations for key freight facilities is less understood. In many ways freight movement may be considered the lifeblood of our economy. Over 60 million tons of freight moves through the U.S. freight transportation system daily, representing roughly $40 billion in goods. Efficient movement of freight (i.e., mode selection, routing, intermodal transfer, travel time) is necessary to make the best use of our transportation facilities, protect the environment, and reduce energy requirements, while keeping up with the ever-increasing demand for goods. In addition, the freight environment continues to be a changing landscape. Trade is increasingly global, and manufacturing activity continues to expand offshore. Fuel prices fluctuate. Governments at all levels seek new ways of reducing carbon emissions, congestion, and pollution. These and other factors place increased importance on how we move raw materials and finished goods from place to place – from origin to ultimate destination. Increased emphasis on reliability and supply chain management increases the importance of efficient local and regional freight movement even if ultimate shipping destinations are across the nation or across the world. The choices made about where these activities take place, and the choices made by the carriers who serve them, drive how transportation infrastructure is used. In addition, the location of freight facilities can have both positive and negative economic and social effects on local communities, regions and states. Maximizing the benefits while minimizing the negative impacts are sensible goals for public decision-making. While public sector planners and policy-makers are vitally interested in balancing a wide range of public concerns, they also recognize that these kinds of “freight-intensive” facilities, in addition to their transportation role, can be important generators of economic activity for the community and region. 1.2 Purpose Public agencies need to understand what drives the demand for and success of freight facilities in order to best respond to siting requests and proactively create and preserve opportunities for freight-intensive uses. A limited understanding of site-selection criteria and the dynamic supply chain logistics context can lead public officials to expend time and resources on flawed business attraction strategies and to incorrectly respond to facility proposals. Likewise, inadequate knowledge of the community’s place in the supply chain can lead to unsatisfactory choices for transportation and land use planning as well as economic development policy. To adequately develop strategies for freight facilities, public sector decision-makers need a better understanding of drivers and impacts to ultimately understand the return on investment of public and public- private initiatives. This understanding also includes recognition of the different categories of freight facilities from inland ports and intermodal terminals to bulk and transload facilities, and warehouse and distribution center facilities. With this understanding of current trends and challenges, the objective of this research project is to develop a guide and research foundation that:

2  Informs public sector decision makers on the key drivers that private sector entities use in siting logistics facilities;  Informs the public sector about the complexity and interconnectedness of the various facility types and the role they play in goods movement and supply chain management; and  Enhances the potential for successful projects. 1.3 Approach This technical report and the accompanying guide were written with the goal of using the working knowledge of corporate real estate and supply chain executives as well as their service providers. This information provides the base of information needed to ensure that public officials can understand the issues, the process, and the drivers behind freight location decisions and to become more successful partners in the location process. Key elements of this research study included:  Review Existing Literature to Determine Current Environment – Industry and professional press cover location decisions from a variety of perspectives, and each gives a different window into the location process. Likewise, some academic research has already assessed the impacts resulting from freight location decisions.  Web-Based Surveys of Public and Private Sector Professionals – Baseline public sector knowledge varies from organization to organization. Likewise, the private sector’s perceptions of what the public sector understands are varied. A set of web-based surveys provided insight into the current state of knowledge.  Directed Interviews of Carriers, Shippers, and Other Freight Users – The direct interview of a broad array of freight users provided insights into the location process, the key drivers, and the changing landscape of freight facility location strategy. This also allowed for an investigation of the similarities and differences between various facility types and in-depth case studies of actual freight facilities.  Presentation to Formal Review Panels and to Conference Audiences – Providing the final guide to a geographically diverse set of economic development and regional planning officials allowed for an assessment of the usefulness of the information itself and how it was presented to the prospective audience. Panel members provided suggestions on how this information would be used by their organizations and how to improve overall distribution and effectiveness of the guide and its insights. 1.4 Organization As noted earlier, NCFRP Project 23 called for two publications to be produced: This technical report, and a guide for public officials. The Technical Report is organized as follows:  Section 2 – Literature Review, provides an overview of the academic and industry press covering freight facility location decisions, the process and drivers behind them, and the role of the public sector.  Section 3 – Survey of Public and Private Perspectives, contains both the survey instrument used and the results of the investigation into the current level of freight facility location knowledge of

3 various types of public officials. The private sector was also surveyed to ascertain perceptions of public sector knowledge.  Section 4 – Freight Logistics Facility Types, provides an explanation of different freight facilities, and their unique roles in serving global, regional, and local supply chain markets and commodities.  Section 5 – The Location Selection Process, describes the steps shippers and carriers take when they select locations for new or expanding freight facilities.  Section 6 – Key Criteria and Data Requirements for Facility Location Decisions, catalogs both the key data points used in the location selection process and shows how these can vary by freight facility type.  Section 7 – Current Dynamics Impacting Facility Location Decisions, explores how various global dynamics are affecting shipper and carrier location decisions.  Section 8 – Case Studies of Freight Logistics Facilities, provides an examination of actual freight facility location decisions as well as the impacts each had upon the affected community.  Section 9 – The Critical Roles of Groundwork and Collaboration, offers suggestions to the public sector on how to examine freight uses and how these interact with the community. Guidance is also provided on business attraction and planning strategies for freight facilities. The guide, Freight Facility Location Selection: A Guide for Public Officials is available separately from the Transportation Research Board.