# Presentation: 885819

## Freight Trends/Issues, Multimodal System Flows and Forecasts, and Policy Implications  

*Freight Trends/Issues, Multimodal System Flows and Forecasts, and Policy Implications ** *

*EU/US Forum *
*April 2001 *
*Gary Maring, USDOT                   *

**Notes:**
Pleased to be able to present MFAF project--an important OneDOT effort  to better  u;nderstand industry trneds, emererging  freight demand, and implications for our nation’s intermodal sy;stem.

## Objectives...

- Highlight emerging freight and logistics trends/issues
- Present first approximation of current US domestic and international freight flows
- Discuss preliminary trade forecasts to 2020 (including US/European trade) and analysis of potential constraints in the intermodal system
- Identify some of the emerging policy issues toward transportation reauthorization in 2002-2003

## Freight Trends and Issues

**Markets/Logistics** *(demand)*
- From national markets to global markets
- From a manufacturing to a service economy
**Carriers/Transportation Systems** *(supply)*
- From modal fragmentation to cross-modal coordination
- From system construction to system optimization
**Public Policy**
- From economic deregulation to safety regulation
- From modal to multi-modal surface transportation policy
- Increased environmental accountability

**Notes:**
We have made a first cut at identifying trends and issues.    
The themes are grouped into three areas:
The first three themes deal with trends that are changing the demand for freight transportation – trends that are changing the market for freight transportation and logistics strategies: the shift from national to global markets; the transformation of the US economy from a manufacturing to a service economy; and the evolution of logistics from “push” systems to “pull” systems.
The second set of themes deal with trends that are affecting the supply of freight transportation – trends that describe how carriers and government are responding to changing demand and reorganizing the freight transportation system:  moving from fragmented, standalone services to more integrated and coordinated freight services;  moving to optimize the operation of the freight system – including better fleet and vehicle management as well as better highway traffic management,  and the reorganization of the military’s logistics system, which is leading to substantial integration of the military and commercial freight systems. 

## Implications of Changing Demand for Transportation Services

- Increasing demand for reliable, flexible, cost-effective, timely, and visible door-to-door freight services
- Lower inventory levels and less slack production capacity, creates greater dependence on transportation services
- Simultaneous increase in robustness and fragility of logistics and transportation systems
- Increasing freight traffic and congestion along trade corridors, metropolitan areas particularly in/around terminals, and border crossings.

**Notes:**
 Implications of demand
-increase demand for reliable, flexible door to door service

  – simultaneous increase in the robustness and fragility of our logistics and transportation systems,
...which puts a premium on our ability to manage service disruptions, e.g., spikes in the supply or demand for transportation services, or system failures

-increased traffic and congestion

## National Highway System Intermodal Connectors - Infrastructure	Constraints

**NHS Connectors**
- Poor physical condition
- Poor geometrics
- “orphan status”
- inadequate coordination of investment strategies

**Notes:**
 Connectors are one of those key components whidh can make a difference.  One of our intermodal connectors in Chicago; Chicago has more than any other city and many are inadequate; poor geometrics and pavement conditions, conflicts with residential communities, etc.

## Public Policy Implications for Freight

- Diminishing productivity returns from deregulation
- Pressure for improved safety
- More complex planning and investment environment; evolving public/private partnerships
- Use of highway trust funds for non-highway freight projects
- Increased local community and environmental concerns
- New multi-juristictional institutional arrangements may be needed
- Greater reliance upon technology for monitoring cargo/fleets and for system management

**Notes:**
While the private sector provides most of the nation’s freight service, the public sector – directly through its investment in highways, ports, and airports, and indirectly through tax policy, land use controls, etc. – shapes the freight transportation system.  
The current public transportation planning and project delivery processes are slow, inflexible, and disjointed.  Neither the public sector nor the private sector has time to fully engage the other, and both wish they had better and more timely data to support investment and policy decisions.  
How much productivity can be gained by better information and communications – pubic-to-public and public-to-private – in the investment and policymaking processes?  

## Freight Transportation PerspectivesState and MPO focus is regional and local; private sector focus is increasingly national and global

**Public Sector****(States, MPOs)**

**Private Sector****(Shippers, Carriers)**

***Global***

***National***

***Regional***

***Local***

*Freight Transportation Perspectives**State and MPO focus is regional and local; private sector focus is increasingly national and global*

**Notes:**
The common complaints today are: local government has neither the staff, expertise or resources to master regional and global freight issues; while the private sector has neither the staff, time, or resources to deal with each and every local government project and policy affecting their far-flung transportation operations.  The gap is especially noticeable at the regional (e.g., multistate level).  

ISSUES:
Slow, inflexible public planning and project delivery compared to private sector
Disjointed modal planning
Difficult to engage private sector freight interests in state and MPO planning processes; limited freight representation
Inadequate freight planning data and analysis tools

##  Multimodal Freight Data and Policy Analysis Framework

- Approximation of current national flows by mode, including domestic leg of international moves
- Economic trade forecasts to 2020 (domestic and international) and estimated modal components
- Assessment of capacity and investment implications
- Policy development tool for future legislation

**Notes:**
National view of system as well as ability to drill down to see how projected loads on the system are affecting subareas; regions, coorridors, gateways

## First Approximation of U.S. Freight Flows

- 1998 Annual Volumes
- County-level flows
- International and domestic flows
- STCC commodity groupings
- Modal components (truck, rail, air, water)
- Sources (**Bureau of Transportation Statistics**, Rail Waybill, PIERS, Reebie Transearch Database, Army Corps of Engr., other private data sources)

## Total Domestic Freight Tons and ValueFreight traffic moving into, out of, and within the U.S. totaled 9.8 billion tons and $9.1 trillion in 1998- 1st approximation

**Notes:**
National summary of freight by tons and value moved by each of the modes; international broken out separately.

## Truck Freight Flows, All CommoditiesAll truck types; highway freight density in tons

*Truck Freight Flows, All Commodities**All truck types; highway freight density in tons*

**Notes:**
Truck travel pretty ubiquitous on network; with obviously heavier densities in eastern seaboard and into the Midwest and Southeast corridors

## Truck Freight Flows, High-Service CommoditiesHigh-value and time-sensitive products, highway freight density in tons

**Notes:**
Pull out higher value, more time sensitive commodities; to focus on key corridors for which reliability will be increasingly important

## Rail Freight Flows, All CommoditiesRail freight density in tons

*Rail Freight Flows, All Commodities**Rail freight density in tons*

**Notes:**
Coal and grain movement dominant for rail.

## Rail Intermodal Flows, All CommoditiesRail freight density in tons

*Rail Intermodal Flows, All Commodities**Rail freight density in tons*

**Notes:**
Rail intermodal still western US focus to Chicago; eastern seaboard potential still to be realized.  Since this is 1998, any post Conrail restructuring wouldn’t show.

## Inland Waterway Freight Flows, All Commodities Waterway freight density in tons

*Inland Waterway Freight Flows, All Commodities **Waterway freight density in tons*

**Notes:**
Heavy Missippi River focus for inland water way system.

## Air-Freight Origins and DestinationsAll commodities, domestic airport-to-airport traffic, in tons

*Air-Freight Origins and Destinations**All commodities, domestic airport-to-airport traffic, in tons*

- Origins

- Destinations

**Notes:**
O&D more ubiqutous; for the most part air freight carried in bellies of passenger aircraft and therefore large frieght flows in in same airports that have large passenger volumes like JFK and LAX; except for freight oriented airports like Memphis.  Fast growing segment of freight travel. LAX forecasting nearl;y a four fold increase in air cargo volumes in next 20 years,

## Top Gateways for International Freight Exports and imports in tons

*Top Gateways for International Freight **Exports and imports in tons*

**Notes:**
Highlights our top gateways, land and water ports of entry; forecasts will help various Federal agencies in planning border facilities for future

## Port Example- Charleston

## Highway Flows of International Freight Moving into and From the Port of Charleston

**Notes:**
Can show national significnace of a gateway; will help in articulating economic benefits of a gateway to larger region and nation

## Railway Flows of International Freight Moving into and From the Port of Charleston

## Analyze  Economic Trade Forecasts and System Implications

- WEFA provided economic forecasts of International, National, and Regional Activity
- Assigned 2010 and 2020 modal freight flows
- Conduct systems analysis (e.g. capacity, investment implications) during coming year
- Support policy analysis toward reauthorization
- Case Studies with regional coalitions and industry to improve understanding of transport system implications

**Notes:**
Turned to independent forecasting entity; Wharton econometrics, to get a consistent set of national economic asumptions driving domestic and international freight growth.

## WEFA Economic Assumptions

- Assumes that level of economic output will approach potential GDP, the level of output that could be achieved if resources were fully utilized
- Assumes no exogenous shocks
- The long range outlook relies on supply factors such as: population growth, labor force, captial stock, productivity growth, fiscal policy, foreign developments, etc.
- A base trend forecast assumption was produced; also a high and low assumption

## Freight Forecast Growth Rates-Trend 

**US Domestic:**
- 1998-2020: **2.9% **(Cumulative:** 87%**)
- 1998-2010: **3.4%**
- 2010-2020: **2.4%**
**US International:**
- 1998-2020: **3.4% **(Cumulative: **107%**)
- 1998-2010: **4.0%**
- 2010-2020: **2.9%**
**International Sectors:**
- US/Canada 1998-2020: **3.1%**
- US/Mexico 1998-2020: **3.5%**
**US/Europe 1998-2020: 3.1% (US export 2.7%, US import 3.4%)**
- US/ROW 1998-2020:  **3.4%**

**Notes:**
Domestic slightly less than doubling and internatioanl more than doubling.  3..2% doubles in 20 years

## Growth by Region: US Inter & Intra-Regional Tonnage by 2020

**Notes:**
Domestic growth

## Modal Growth Rates to 2010 

*Modal Growth Rates to 2010 *

**Higher**

**Lower**

**Notes:**
Air largest growth in next 10 years

## Modal Share of Growth to 2020US Traffic, Constant Dollar Value Basis

**Distribution of Value by Major Mode**

**Distribution of Tonnage by Major Mode**

**Notes:**
Modal share of growth tons and value. Value measures shift focus to truck and air cargo.

## Modal Share of Growth to 2020US Traffic, Ton Mile Basis

**Distribution of Ton Miles by Major Mode**
**(Miles: County to County Highway)**

## Commodity Share of Growth to 2020US Tonnage

**Notes:**
Methodology is to forecast economic demand, commodity mix to future, then assign to modes based on traditional modes to handle those commodities.

## Truck Traffic Growth on Highways, 2020 Density of Incremental US Truck Tons

## Slide 30

## Highways 2020: Focus of GrowthRate of US Truck Growth on Top Tonnage Links

**Notes:**
Corridors with fastest rates of growth; doesn’t fully reflect internaitonal at this point

## NAFTA--US/Canada Truck Traffic on US Highway Network, 2020  (Tons)

**Notes:**
1 – 1534939
1534940 – 5252473
5252474 – 11338288
11338289 – 25911409
25911410 - 49247129

## NAFTA--US/Mexico Truck Traffic on US Highway Network, 2020  (Tons)

## Overseas Inland Trade Growth by Sector and Mode

*Overseas Inland Trade Growth by Sector and Mode*

## Overseas Inland Trade:  Truck Trafficon U.S. Highway Network, 2020  (Tons)

## Inland Truck Flows - 2020 US-European TradeNetwork Freight Density for All Commodities, in Tons

## 2020 US-European Trade by CommodityUS Imports versus Exports, Tonnage Basis

*2020 US-European Trade by Commodity**US Imports versus Exports, Tonnage Basis*

## 2020 US-European Trade by StateAll Commodities, Tonnage Basis

- Origins (Export)

- Destinations (Import)

- Low 3rd

- Middle 3rd

- High 3rd

**Notes:**
Dark states are the states with the most import and export tonnage, and collectively account for 31% for import and export tonnage. Medium states are next in rank and account for another 36% of tonnage.

## Next Steps--Capacity and Investment Analysis

- Assign future freight flows to modal networks
- Conduct highway system capacity analysis to understand the nature of emerging constraints, e.g. nodes, corridors, gateways, metropolitan congestion
- Develop illustrative multimodal case studies in selected regions of the country; e.g. Alameda, Chicago rail and intermodal access, Mid Atlantic rail, SE States Latin American Trade Study
- Conduct what-if analyses; e.g. intermodal, coastal shipping
- Assess future investment requirements for Biennial Report to Congress

## Conduct regional case studies, e.g. Southeastern States analysis of Latin American trade implications

*Conduct regional case studies, e.g. Southeastern States analysis of Latin American trade implications*

## The Policy Challenge 	

- Both passenger and freight demand upon the nation’s infrastructure will increase significantly
- Freight volumes will nearly double to 2020; with higher growth in some corridors and nodes
- Current planning and financing methods do not adequately address freight’s unique concerns
- Intermodal linkages not seamless; inefficient operational practices
- Increased focus on safety and environmental issues
- Economic competiveness issues

## U.S. National Outreach/Policy analysis

- Share freight analysis findings, forecasts, and system impacts with stakeholders and assess policy implications
- Hold a series of outreach forums on multimodal freight finance, planning and environment, operations & safety to assess current practice and formulate future policy options
- Develop a ‘Freight Story’ and conduct national freight summit Dec. 2001 to lay groundwork for policy initiatives
- Report to Congress on system condition, performance, and future investment requirements in 2002
- Develop surface, marine, air transportation reauthorization legislative strategies in 2002 that fully reflect the needs of freight and passenger considerations

## Freight National Policy Development and Outreach Workplan - 2001

## Toward Surface Transportation Reauthorization- Freight elements? 

- Efficiency

- Equity

- Effectiveness

- 1991  -  97

- 1998  -  03

- 2004  -  ??

*Toward Surface Transportation Reauthorization- Freight elements? *

**Notes:**
An Effective system is one that meets the challenges of freight movement associated with an integrated system that supports all U. S. and North American Transportation activities

Supporting Bi-national and regional state coalitions,
Optimizing performance on trade corridors,
Coordinating development of transportation and trade systems,
Engaging the freight community in the local and state planning processes

In short, to make the best use of public and private assets to strengthen America’s global competitive capability.

## FHWA Office of Freight Management and Operations, USDOT

- _[www.ops.fhwa.dot.gov/freight](http://www.ops.fhwa.dot.gov/freight)_
- _Gary Maring_
- gary.maring@fhwa.dot.gov