# Presentation: 209818

## Talking Freight Seminar Freight and Economic Development

**Glen Weisbrod**
- Economic Development Research Group, Inc.
- 2 Oliver Street, 9th Floor
- Boston, MA   02109 USA
***www. edrgroup.com***

## Three Themes

_**Freight Flows:**_**  ***changing due to National & Global Economic Markets.*
_**Economic Development:**_** ***depends on Market Access & Competitiveness.*
_**Infrastructure Investment:**_** ***directly affects Costs & Competitiveness.*

## Freight Growing Faster than Pop.

- Trends...

## Changing Freight Patterns

- Higher value/weight
- Higher time sensitivity
- Overnight delivery
- Small package delivery trucks
- Air & Marine port dependence on rail & hwy
- Rail & truck companies focus on long-hauls

- Trends...

## Overnight Delivery Services –earlier pickup deadlines, fewer deliveries per driver
Manufacturers –overtime for handling deliveries
Concrete mixer trucks –shrink delivery area (spoilage)

**Overnight Delivery Services** –earlier pickup deadlines, fewer deliveries per driver
**Manufacturers** –overtime for handling deliveries
**Concrete mixer trucks** –shrink delivery area (spoilage)

**Shippers, Air/Water Ports, Rail**** **– miss delivery deadlines or pad schedules

- Economic Development...

## Competitiveness & Productivity

*Effects on Business Location & Growth...*
- Breadth of Suppliers & Labor Inputs
- Size of Customer Delivery Markets
- Economies of Scale in Serving Markets
- Transportation Choice: Reliability, Modes

- Economic Development...

## Urban Freight Limitation

- Higher Cost to Serve Markets
- Reduced Schedule Reliability
- Reduced Access & Scale Economies

_*Smaller Market Area*_ can be served within  requirements for cost and service quality

- Economic Development...

*Reduced Opportunity for Attracting and Growing Business ...*

## Example: Vancouver BC International Trade Gateway

**Example: Vancouver BC International Trade Gateway**

- Urban Econ Development...

## Vancouver No Build Scenario

_**Ground Transport   **_
- Cars – increase in travel expense       *($134 million/yr)*
- Trucks – raise shipper costs; reduce business competitiveness & attraction               *($280 million/yr)*
- Rail – capacity limitation: businesses seek alternative routes at higher cost       *(1100 railcars/day)*
_**Ports **_
- Marine ports – higher cost, shift activity elsewhere
- Airport – raise costs for airport use

_*Diff: Build vs. Not*_

- Urban Econ Development...

## Vancouver Economic Implications

**Economic Value of Gateway**
** **30 Port Terminals, 22 Rail Yards, Airport, Border Crossings
-  On Site: 75,000 jobs,   W. Canada: 145,000 jobs
**Economic Impact of Constraint on Growth:**
- 7,300 to 16,300 jobs
- $ 475 million to $ 1.1 billion of GDP /year
**Economic Stakes for Cost Competitiveness:**
- Over 150,000 jobs in production industries produce over $30 billion of exports /yr that depend on Vancouver Gateway competitiveness

- Urban Econ Development...

## Vancouver...

***To Trans ***
***Can Hwy *********

***To US ***
***Border***

- Urban Econ Development...

## Strategies for Port/Gateway Areas

- Access Corridor
- 	– Los Angeles (Alameda Corridor)
- Satellite Ports
- – NY Port Inland Distribution Network
- Feeder System
- – Rotterdam (Inland Ports)

- Urban Economic Development...

## Example: Chicago Rail Yards

-  74 rail yards, 17 for intermodal (rail-truck)
-  delays at 600 grade crossings

-  congestion from 3200 daily truck trips  transferring cargo from yard to yard
- Abandoned & under-utilized rail yards

- Urban Econ Development...

## Chicago Scenario Impacts

_**Scenarios **__*(with & without reuse of abandoned rail yards)*_
- Base Case: existing facilities, adjust over time
- Shift Intermodal to Rim: periphery of region
- Rationalization: Consolidate w/upgraded infrastructure
- Minimal Rail Freight in City: Intermodal moves to periphery; loose-car business de-marketed
- Bypass Chicago: Reroute trains to bypass routes

- Urban Econ Development...

## NCHRP Study 8-42

**How Can We Use Rail Freight Solutions to Address Roadway Congestion **
- Converging interests of private sector transport carriers and public planning agencies
- Reducing Congestion and Road/Rail conflicts that adversely affect business profits, public safety and economic development opportunities
- Developing Framework for Decision-making

- Economic Development...

## Higher Trucking Cost –due to “deadheading”
Lower Availability When Needed –reliability reduced by vehicle shortages, delays 
Higher Rail Cost –full line cost for rail service to/from intermediate locations

**Higher Trucking Cost** –due to “deadheading”
**Lower Availability When Needed **–reliability reduced by vehicle shortages, delays
**Higher Rail Cost **–full line cost for rail service to/from intermediate locations

- Rural Economic Development...

***Smaller Market Area*** can be served within  requirements for cost and service quality
***Lower Value Added*** of existing products

*Reduced Opportunity for Attracting and Growing Business ...*

## Example:  Appalachian Corridor T

- Rural Economic Development...

- NY-17, Now I-86, Southern Tier Expressway
- Mountain Region of Southwest NY State, Near Pennsylvania Line
- Area had been economically distressed and losing jobs
- I-86 designation brought new freight distribution, manufacturing, and traffic-serving businesses.

- FHWA Study compared it to a similar area with  no new highway connections

## Highway & Mfg Employment

- Rural Economic Development...

| Manufacturing | 1995 | 1997 | 2000 |
| --- | --- | --- | --- |
| Southern Tier West | 0.0% | -0.3% | 1.6% |
| North Country Central | 0.0% | -4.9% | -13.2% |
| NY State Total | 0.0% | -6.2% | -14.0% |

**Southern Tier West**

**N. Country Central**

## Example: Janesville, WI

- Auto Mfg – GM, Chrysler
- Parts Mfg –to S Carolina (BMW), Mexico & Mich. (Ford),  Ontario & Missouri (Chrysler)

**Regional automotive mfg cluster**

- Reliance on just-in-time *mfg**, increasing needs for air and reliable truck movements*
- Current facilities cannot meet this need, *reducing productivity and efficiency in mfg*
- Potential loss of jobs to Mexico or Canada

- Rural Economic Development...

## WisDOT: Multi-Modal Freight Access

- Rail Delay

- Road Delay

- Airport Constraints

**Airport Improvements ($9.1 million)**
**Highway Access & Rail Crossing Improvements ($13.5 million)**

- Rural Economic Development...

## ARC Export Transportation Study

**Overseas Exports are Intermodal**
- Truck to Air
-  Rail or Truck to Sea

- Rural Economic Development...

## Appalachian Development Highways

- Serve historically isolated areas; improve access
- Link to major markets and trade routes
- Motivated by econ development

- Rural Economic Development...

## ARC Export Export Study

- _Auto Parts, Upholstered Furniture_

- New York

- Florida

- Maryland

- Michigan

- Texas

- _Food Processing Machinery_

- Rural Economic Development...

## ARC Study Findings

- There are limited E-W freeways, rail lines &  inter-modal connections across Appalachia, raising costs & constraining export opportunities.
- States in eastern side export more to Europe because of easier access to east coast ports.
- States in the western side export more within North America because of better access to industrial parts of Canada and Mexico.

- Rural Economic Development...

## Freight Connections Alone Do Not Cause Economic Development

**Freight Connections Alone Do Not Cause Economic Development**

- Conclusions...

*ARC Guide: help planners identify opportunities related to new highways, and actions needed to pursue them.*

## Lost opportunity for economic growth, good-paying jobs, 
	new jobs for next generation.

- 	new jobs for next generation.

**Potential Benefits of Infrastructure Investment...**
- Opportunity for success is not lost.

**But Failure to Provide Freight Access Constrains Economic Development**

- Conclusions...

## ...On the Web

- FHWA Economic Development Studies (incl. I-86)
*            *_[www.fhwa.dot.gov/planning/econdev](http://www.fhwa.dot.gov/planning/econdev)_
- Vancouver Freight Gateway Study
- 	_[http://www.edrgroup.com/pages/n32.html](http://www.edrgroup.com/pages/n32.html)_*  *
- North Country Transportation Studies
*           *_[www.danc.org/ncts](http://www.danc.org/ncts)_* *
- Chicago Rail Freight Study
*	*_[www.edrgroup.com/pages/n25.html](http://www.edrgroup.com/pages/n25.html)_* *
- ARC Guide to Economic Opportunities from Highways
*	*_[www.edrgroup.com/pages/n11.html](http://www.edrgroup.com/pages/n11.html)_* *
- Library of Economic Impact Studies
*            *_[www.edrgroup.com](http://www.edrgroup.com/)_