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From page 53... ... 2Freight System Performance and Infrastructure Finance As Chapter 1 explained, the committee's charge arose from the concerns of public- and private-sector participants that present finance arrangements for freight infrastructure are inadequate and that the performance of the freight transportation system is suffering as a consequence. This chapter examines trends in system performance and evidence that performance is related to finance arrangements. Read the entire page →
From page 54... ... 44 Funding Options for Freight Transportation Projects VIEWS ON FINANCE PROBLEMS Arepresentative statement of the infrastructure problem (referring to passenger as well as freight facilities) is from a statement of the U.S. Read the entire page →
From page 55... ... Freight System Performance and Infrastructure Finance 45 The same concerns and diagnoses are expressed by public officials. A statement of the American Association of State Highway and TransportationOfficials, prepared to advise theNational Surface TransportationPolicy and Revenue Commission created in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, describes freight problems as follows (AASHTO 2007, 58) Read the entire page →
From page 56... ... than freight traffic that moves through the region") and that "[federal] Read the entire page →
From page 57... ... Freight System Performance and Infrastructure Finance 47 root causes" of the current (in 2005) freight congestion situation, government respondents ranked "lack of funding for freight infrastructure by the state governments" second and "lack of funding for freight infrastructure by the federal government" third; carriers ranked these two potential causes 11th and ninth, respectively; and shippers ranked them 14th and 10th. Read the entire page →
From page 58... ... 48 Funding Options for Freight Transportation Projects specific bottlenecks. The responses indicate that the shippers and carriers do not see chronic systemwide infrastructure underfunding as among the most important root causes of their congestion problems. Read the entire page →
From page 59... ... Freight System Performance and Infrastructure Finance 49 markets have self-correcting capabilities. Users will make numerous adjustments over time to accommodate or avoid congestion. Read the entire page →
From page 60... ... targeting of investment rather than a gap between spending and needs -- has been repeatedmore recently by other observers. For example, the Secretary of Transportation in 2007 described highway finance failings as follows (Peters 2007) Read the entire page →
From page 61... ... Freight System Performance and Infrastructure Finance 51 ing efficiency of facilities, and application of new technology, as well as on a variety of external factors. Finance proposals usually are prefaced with observations about inadequate performance at present or to be expected in the future. Read the entire page →
From page 62... ... 52 Funding Options for Freight Transportation Projects exceptions, the worst bottlenecks for highway passenger transportation are also major freight bottlenecks. Therefore, highway congestion is an important indicator of freight system performance. Read the entire page →
From page 63... ... Freight System Performance and Infrastructure Finance 53 relationships between AADT and peak volume and between volume and speed (TTI n.d., 6-11) Read the entire page →
From page 64... ... 54 Funding Options for Freight Transportation Projects The percentage changes appear different because of differences in the base from which each change is computed. TTI reports changes in excess travel time, starting from a year in which excess travel time is estimated to have been relatively small; the percentage change from the census data is the change in total travel time. Read the entire page →
From page 65... ... Freight System Performance and Infrastructure Finance 55 minor or no delays at Mobile, Montgomery, Birmingham, Nashville, Louisville, Indianapolis, and Gary. This observation is consistent with estimates of truck congestion costs by a TRB committee that studied the social costs of freight transportation. Read the entire page →
From page 66... ... 56 Funding Options for Freight Transportation Projects for the delay costs they impose on others, it would be possible, through better management, to reduce delay costs greatly without reducing total benefits to travelers. However, highway congestion is not systematically measured, and therefore the scope and costs of the problem, and how system users are coping with it, are poorly understood. Read the entire page →
From page 67... ... Freight System Performance and Infrastructure Finance 57 maintain the economically optimum balance between the value of speed and reliability to shippers and the cost to the carrier of providing the service. Highways do not maintain this balance because the market mechanism that regulates rail use does not function for highways, and nonmarket traffic management techniques do not work very well. Read the entire page →
From page 68... ... 58 Funding Options for Freight Transportation Projects merchandise freight has been relatively unchanged formore than 30 years" (Martland and Alpert 2007, 53) Read the entire page →
From page 69... ... Freight System Performance and Infrastructure Finance 59 corridormileage is operating below capacity.He cautions that the 30-year projections in the AAR-sponsored study are highly uncertain because of their sensitivity to assumptions about future economic activity, technology, plant location decisions, and availability of other transportation modes (Laurits R Christensen Associates 2008, ES-28–ES-31) Read the entire page →
From page 70... ... 60 Funding Options for Freight Transportation Projects year) from 1991 to 2001 and 62 percent (8.4 percent per year) Read the entire page →
From page 71... ... Freight System Performance and Infrastructure Finance 61 (Ontario Chamber of Commerce 2007, 2) and identifies lack of cooperationbetweenU.S. Read the entire page →
From page 72... ... 62 Funding Options for Freight Transportation Projects from 2002 to 2007 (AAR 2008, 31) Read the entire page →
From page 73... ... Freight System Performance and Infrastructure Finance 63 spective, the available data on costs and performance do not reveal any critical deterioration in freight system performance. Severe congestion and service disruptions occur but for the most part have been episodic and localized. Read the entire page →
From page 74... ... 64 Funding Options for Freight Transportation Projects are derived from data on all past capital expenditures for infrastructure and estimates of the rates of depreciation of facilities. A capital stock measure combines the stocks of different kinds of facilities in a single index of capacity by weighting each facility according to the cost of providing it (TRB 2006, 55–56) Read the entire page →
From page 75... ... Freight System Performance and Infrastructure Finance 65 Industry and Ratio Change (%) Highways [annual VMT/(productive capital stock) Read the entire page →
From page 76... ... 66 Funding Options for Freight Transportation Projects rate, because of slower growth in population, in annual trips per person, and in other factors. The analysis does not consider fuel price explicitly. Read the entire page →
From page 77... ... Freight System Performance and Infrastructure Finance 67 of freight transportation investment needs. Accommodating the growth required expansion of the ports, major improvements in port access in the Los Angeles metropolitan area, and expansion of the transcontinental capacity of the railroads, which distribute a major share of the goods nationwide. Read the entire page →
From page 78... ... 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 19 67 19 69 19 71 19 73 19 75 19 77 19 79 19 81 19 83 19 85 19 87 19 89 19 91 19 93 19 95 19 97 19 99 20 01 20 03 20 05 20 07 Year Pe rc en t 0 200 400 600 800 1000 1200 1400 1600 1800 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 I Year Bi llio ns of 20 00 do lla rs (a) Read the entire page →
From page 79... ... Freight System Performance and Infrastructure Finance 69 the freight transportation sector has been instrumental in allowing the United States to become the world's largest integrated market and to participate successfully in global trade. The sector has in this way advanced economic welfare, and interruption of the historical trend of productivity improvement would be a substantial loss. Read the entire page →
From page 80... ... 70 Funding Options for Freight Transportation Projects RELATION OF FINANCE TO PERFORMANCE Finance arrangements in public infrastructure programs affect project selection decisions, the distribution of costs and benefits, and the operating efficiency of facilities. For example, the decision of Congress in the Federal-Aid Highway Act of 1956 to fund the federal highway program through dedicated revenue from taxes on users has influenced the development of the highway system (TRB 2006, 80–81) Read the entire page →
From page 81... ... Freight System Performance and Infrastructure Finance 71 subsidies to private-sector providers) , user charge funding of freight facilities is likely to lead to more disciplined investment decisions and therefore to a higher return on the investment program. Read the entire page →
From page 82... ... 72 Funding Options for Freight Transportation Projects Operating Efficiency Most publicly provided transportation facilities, including roads, the inland waterways, and airways and airports, experience excessive levels of congestion. That is, with better management of use, many of these facilities could carry more traffic than they do today with lower total operating and time delay costs, and the investment required to serve traffic growth would be reduced. Read the entire page →
From page 83... ... Freight System Performance and Infrastructure Finance 73 trips that are worth less to the traveler than the cost they impose on the road authority and other users. Excessive congestion is not the only inefficiency in road operation that could be ameliorated by better pricing. Read the entire page →
From page 84... ... 74 Funding Options for Freight Transportation Projects available funds on projects with low returns -- as a fault of present transportation infrastructure finance arrangements that could be repaired by reforms (TRB 2006, 186–187; TRB 2003, 112) Read the entire page →
From page 85... ... Freight System Performance and Infrastructure Finance 75 tering implementation of new transportation system technologies (TRB 2003, 40–41) Read the entire page →
From page 86... ... 76 Funding Options for Freight Transportation Projects lower transportation costs. Nonmarket benefits may include reduced pollution and congestion costs of freight transportation. Read the entire page →
From page 87... ... Freight System Performance and Infrastructure Finance 77 of dependence on revenue generated from users reduces the risk that overall spending will exceed economically justified limits. The committee also concluded, however, that the highway finance system does not provide a strong internal check that individual projects are economically justified (as would a system under which more projects had to rely on funds they generated themselves through tolls) Read the entire page →
From page 88... ... 78 Funding Options for Freight Transportation Projects the direction of the state legislature. The audit concluded that, although WSDOT is a national leader in measurement of congestion and in applying congestion management techniques, the goal of congestion reduction plays no explicit role in the state's capital programming practices. Read the entire page →
From page 89... ... Freight System Performance and Infrastructure Finance 79 be forgone in the absence of federal involvement, but the number of such projects appears to be limited. Read the entire page →
From page 90... ... 80 Funding Options for Freight Transportation Projects in the NRC committee's view, was the superficial consideration given to noncapital alternatives, that is, demand management to reduce congestion costs. The committee also noted that no consideration had been given to the consequences of alternative stagings of improvements (e.g., delaying some or all improvements until a portion of projected traffic growth had materialized) Read the entire page →
From page 91... ... Freight System Performance and Infrastructure Finance 81 been carried out (TRB 2003, 65–66, 116–117) Read the entire page →
From page 92... ... 82 Funding Options for Freight Transportation Projects that often directs capital spending according to noneconomic factors. Considerations related to the distribution of funds and project benefits among regions and constituencies will inevitably influence public-sector investment choices; nonetheless, this multiplicity of objectives weakens the effectiveness of public spending programs for promoting economic growth because available funds are not concentrated on the capital projects that would yield the highest returns. Read the entire page →
From page 93... ... Freight System Performance and Infrastructure Finance 83 REFERENCES Abbreviations AAPA American Association of Port Authorities AAR Association of American Railroads AASHTO American Association of State Highway and Transportation Officials BEA Bureau of Economic Analysis BLS Bureau of Labor Statistics CBO Congressional Budget Office ECMT European Conference of Ministers of Transport EIA Energy Information Administration FAA Federal Aviation Administration FHWA Federal Highway Administration GAO General Accounting Office; Government Accountability Office NRC National Research Council OECD Organisation for Economic Co-operation and Development OMB Office of Management and Budget TRB Transportation Research Board TTI Texas Transportation Institute USDOT U.S. Department of Transportation AAPA. Read the entire page →
From page 94... ... 84 Funding Options for Freight Transportation Projects Bureau of the Census. Read the entire page →
From page 95... ... Freight System Performance and Infrastructure Finance 85 Florian, M Read the entire page →
From page 96... ... 86 Funding Options for Freight Transportation Projects Ontario Chamber of Commerce. Read the entire page →
From page 97... ... Freight System Performance and Infrastructure Finance 87 TTI. Read the entire page →

From page 53...

... 2Freight System Performance and Infrastructure Finance As Chapter 1 explained, the committee's charge arose from the concerns of public- and private-sector participants that present finance arrangements for freight infrastructure are inadequate and that the performance of the freight transportation system is suffering as a consequence. This chapter examines trends in system performance and evidence that performance is related to finance arrangements.