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26–597 PDF 2017

S. HRG. 115–65 

KEEPING GOODS MOVING: 

CONTINUING TO ENHANCE MULTIMODAL 

FREIGHT POLICY AND INFRASTRUCTURE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON SURFACE TRANSPORTATION 

AND MERCHANT MARINE INFRASTRUCTURE, 

SAFETY AND SECURITY 

OF THE

COMMITTEE ON COMMERCE, 

SCIENCE, AND TRANSPORTATION 

UNITED STATES SENATE 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

APRIL 4, 2017 

Printed for the use of the Committee on Commerce, Science, and Transportation 

( 

(II) 

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

JOHN THUNE, South Dakota, Chairman 

ROGER F. WICKER, Mississippi 

ROY BLUNT, Missouri 

TED CRUZ, Texas 

DEB FISCHER, Nebraska 

JERRY MORAN, Kansas 

DAN SULLIVAN, Alaska 

DEAN HELLER, Nevada 

JAMES INHOFE, Oklahoma 

MIKE LEE, Utah 

RON JOHNSON, Wisconsin 

SHELLEY MOORE CAPITO, West Virginia 

CORY GARDNER, Colorado 

TODD YOUNG, Indiana 

BILL NELSON, Florida, Ranking 

MARIA CANTWELL, Washington 

AMY KLOBUCHAR, Minnesota 

RICHARD BLUMENTHAL, Connecticut 

BRIAN SCHATZ, Hawaii 

EDWARD MARKEY, Massachusetts 

CORY BOOKER, New Jersey 

TOM UDALL, New Mexico 

GARY PETERS, Michigan 

TAMMY BALDWIN, Wisconsin 

TAMMY DUCKWORTH, Illinois 

MAGGIE HASSAN, New Hampshire 

CATHERINE CORTEZ MASTO, Nevada 

NICK ROSSI, Staff Director 

ADRIAN ARNAKIS, Deputy Staff Director 

JASON VAN BEEK, General Counsel 

KIM LIPSKY, Democratic Staff Director 

CHRIS DAY, Democratic Deputy Staff Director 

RENAE BLACK, Senior Counsel 

SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT 

MARINE INFRASTRUCTURE, SAFETY AND SECURITY 

DEB FISCHER, Nebraska, Chairman 

ROGER F. WICKER, Mississippi 

ROY BLUNT, Missouri 

DEAN HELLER, Nevada 

JAMES INHOFE, Oklahoma 

RON JOHNSON, Wisconsin 

SHELLEY MOORE CAPITO, West Virginia 

CORY GARDNER, Colorado 

TODD YOUNG, Indiana 

CORY BOOKER, New Jersey, Ranking 

MARIA CANTWELL, Washington 

AMY KLOBUCHAR, Minnesota 

RICHARD BLUMENTHAL, Connecticut 

TOM UDALL, New Mexico 

TAMMY BALDWIN, Wisconsin 

TAMMY DUCKWORTH, Illinois 

MAGGIE HASSAN, New Hampshire 

(III) 

C O N T E N T S 

Page 

Hearing held on April 4, 2017 ................................................................................ 1 

Statement of Senator Fischer ................................................................................. 1 

Statement of Senator Booker .................................................................................. 3 

Prepared statement .......................................................................................... 3 

Statement of Senator Hassan ................................................................................. 43 

Statement of Senator Wicker .................................................................................. 45 

Statement of Senator Inhofe ................................................................................... 47 

Statement of Senator Duckworth ........................................................................... 49 

Statement of Senator Udall .................................................................................... 51 

Statement of Senator Blunt .................................................................................... 53 

Statement of Senator Blumenthal .......................................................................... 55 

Statement of Senator Cantwell .............................................................................. 59 

WITNESSES

Derek J. Leathers, President and Chief Executive Officer, Werner Enterprises ..................................................................................................................... 4 

Prepared statement .......................................................................................... 6 

Lance M. Fritz, Chairman, President, and Chief Executive Officer, Union 

Pacific Corporation ............................................................................................... 15 

Prepared statement .......................................................................................... 16 

Michael L. Ducker, President and Chief Executive Officer, FedEx Freight 

Corporation ........................................................................................................... 30 

Prepared statement .......................................................................................... 32 

James Pelliccio, President and Chief Executive Officer, Port Newark Container Terminal; President, Atlantic Division, Ports America; and Member,Coalition for America’s Gateways and Trade Corridors ............................. 35 

Prepared statement .......................................................................................... 38 

APPENDIX

Response to written questions submitted to Derek J. Leathers by: 

Hon. Amy Klobuchar ........................................................................................ 63 

Hon. Richard Blumenthal ................................................................................ 64 

Response to written question submitted to Michael L. Ducker by: 

Hon. Todd Young .............................................................................................. 65 

Hon. Amy Klobuchar ........................................................................................ 66 

(1) 

KEEPING GOODS MOVING: 

CONTINUING TO ENHANCE MULTIMODAL 

FREIGHT POLICY AND INFRASTRUCTURE 

TUESDAY, APRIL 4, 2017 

U.S. SENATE, 

SUBCOMMITTEE ON SURFACE TRANSPORTATION AND

MERCHANT MARINE INFRASTRUCTURE, SAFETY AND SECURITY,

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:30 p.m. in room 

SR–253, Russell Senate Office Building, Hon. Deb Fischer, Chairman of the Subcommittee, presiding. 

Present: Senators Fischer [presiding], Booker, Wicker, Cantwell, 

Blunt, Klobuchar, Blumenthal, Udall, Inhofe, Duckworth, Capito, 

Hassan, Young, and Gardner. 

OPENING STATEMENT OF HON. DEB FISCHER, 

U.S. SENATOR FROM NEBRASKA 

The CHAIRMAN. Good afternoon. The hearing will come to order. 

I thank you all for being here today for our third hearing of the 

115th Congress. Today’s hearing is titled, ‘‘Keeping Goods Moving: 

Continuing to Enhance Multimodal Freight Policy and Infrastructure.’’ 

I am pleased to bring together a panel of leaders who work each 

and every day to strengthen America’s transportation system. I am 

particularly proud that we have representation from two of our Nation’s largest transportation companies: Werner trucking and 

Union Pacific railroad. Both happen to be headquartered in 

Omaha, Nebraska. 

Today’s topic is freight policy. This is an issue that’s important 

to every state, including urban and rural communities, and advances a wide array of transportation projects across the country. 

Enhancing the flow of commercial freight across our country 

grows our economy, reduces costs for families and businesses, and, 

most importantly, increases safety for all Americans. 

Everyone here today knows that the White House and Congress 

have been discussing a major infrastructure package. In fact, recent news reports suggest the Administration is considering a legislative strategy to pair tax reform and infrastructure together. Combining these objectives makes sense, and I support using a portion 

of tax reform revenues to fund our infrastructure investments. 

Infrastructure is a core duty of the Federal Government. These 

are investments, and investments in infrastructure strengthen our 

2 

economy, public safety, and national security. But as we think 

about an infrastructure package, we should avoid falling into the 

trap of a stimulus style spending just for its own sake. States know 

best their own transportation needs, not the Federal Government. 

And there is no need to create a new program that works for various transportation projects in urban and rural states. We already 

have one. 

In 2015, Congress passed the Fixing America’s Surface Transportation, or the FAST Act, and President Obama signed it into law. 

The FAST Act was the first long-term highway bill in more than 

a decade. In it, Congress established a formula freight program 

that provides every state with annual, guaranteed funding. 

Because of the freight program, states will have greater flexibility to work with key stakeholders and local officials to develop 

long-term strategic investments in transportation. The program 

funnels transportation funds to states, and allows them to decide 

on their terms how to use it. The only stipulation: projects must 

somehow be connected to enhancing freight transportation movements. Railway-highway grade separations, truck-only lanes, and 

highway or bridge projects are examples of possible uses. 

By dedicating funding for rural and urban freight corridors, the 

program enhances the flow of commercial traffic and increases safety on our Nation’s roads for all travelers. 

The true beauty of this program is it offers states the opportunity to make critical investments that best meet their specific geographic and infrastructure needs. For example, Nebraska can 

elect to invest in a rail-grade crossing, or a truck parking lot along 

a rural road. At the same time, California could choose to invest 

in on-dock rail projects at our Nation’s largest port complex, located 

just outside of Los Angeles. The national freight program works for 

all states without leaving any behind. 

The national freight policy also has robust bipartisan support. 

For example, I know my colleague and friend, Senator Cantwell, 

has been a strong proponent and advocate of the freight program. 

As Congress and the Trump administration work to address our 

Nation’s infrastructure needs with revenue from tax reform, expanding the national freight program should be an idea that is on 

the table. I believe it would be a wise investment in America’s future. 

Along with investing in infrastructure, Congress must keep in 

mind how unintended regulatory consequences can impact our 

freight network, whether it’s a delay to a critical highway project 

or a new requirement that negatively alters the supply chain, burdensome regulations can hinder progress. 

States need certainty, they need predictability, when initiating 

key transportation projects. Transportation stakeholders in the private sector are constantly innovating to enhance efficiencies along 

the supply chain using real-time data and novel technologies. 

There’s a real opportunity to work together and facilitate greater 

innovation across our nation’s transportation network. I look forward to today’s discussion and how we can bolster our Nation’s 

freight infrastructure. 

And I now turn to my colleague and Ranking Member, Senator 

Cory Booker, for his opening remarks. 

3 

STATEMENT OF HON. CORY BOOKER, 

U.S. SENATOR FROM NEW JERSEY 

Senator BOOKER. Madam Chairwoman, even though my colleagues relish in hearing me speak, especially Senator Inhofe, who 

likes my comments, I’m going to actually just submit my comments 

for the record. 

I just do want to say, in the hallway, I met Larry Liberatore. I 

just want to point him out. He is one of the many residents of our 

country that come here because of grief that drives them, and I can 

see the grief still in his eyes as they weld up, him telling me about 

his son. It has been 20 years since Nick’s death on our highways. 

He was actually going to New Jersey, going to Great Adventure, 

from where he lived in Maryland. 

Public safety is something I’m going to still continue at just 

about every hearing to talk about—40,000 motor vehicle deaths 

last year alone. It’s a number that’s actually increasing. We are a 

great nation. We can do better than this, and we cannot accept this 

level of carnage. So I just want to thank Larry for coming here. 

I’ll submit the rest of my testimony to the record. And I can pass 

this down to Senator Inhofe if you would like to read it now. 

Senator INHOFE. Sure. 

Senator BOOKER. OK. 

[Laughter.] 

[The prepared statement of Senator Booker follows:] 

PREPARED STATEMENT OF HON. CORY BOOKER, U.S. SENATOR FROM NEW JERSEY

Thank you, Chairman Fischer for holding this hearing. Thank you to the witnesses for being here today. 

Our country’s economic competitiveness depends on the movement of freight. 

Ports, rails, and roads all work together to move goods in and out of the country. 

This is critical in New Jersey, which is home to the Port of New York and New Jersey—the largest port on the East Coast of North America, and the third-largest in 

our Nation. And home to Port Newark Container Terminal, which is critical to moving goods through our region. 

In 2014, the Port of New York-New Jersey handled nearly 5.8 million twenty foot 

equivalent containers, which carried over 42 million tons of bulk cargo. The port 

supports more than 300,000 jobs representing more than $21 billion in annual 

wages and $7 billion in tax revenues. It’s a critical part of our economy. 

The same is true for the railroads, trucks, and waterways that move the goods 

from the port to their final destinations. Each of these transportation systems is 

critical to our Nation’s economy. That’s why I have been a strong supporter of investing in our freight system. 

But we have sadly not done enough. While our freight network is the true economic engine of our country, the Federal Government is woefully underinvesting in 

our infrastructure. The American Society of Civil Engineers (ASCE) released their 

2017 report card and again the United States received a grade of D+. Our infrastructure investments are at a 22-year low. Europe spends 5 percent of its economy 

on infrastructure. China spends 9 percent while the United States spends less than 

3 percent. For the United States to get a B grade overall, ASCE projects we need 

over four trillion dollars in investment over the next eight years. 

In 2014, the cost of Americans stuck in traffic alone was a staggering 160 billion 

dollars. On the other hand, every dollar invested in our national infrastructure, increases economic output by at least 2 dollars. We must drive investment toward key 

corridors that have a major impact on the national economy. 

FASTLANE and TIGER are critical parts of that effort. These grants allow ports 

to increase efficiency, help businesses move goods quicker, and reduce air pollution. 

It is critical that we increase funding for these popular programs that have received 

strong interest from our communities. 

Beyond investing in our infrastructure, it’s also critical that we improve safety. 

Whether that’s on our rails or roads, safety continues to be a serious problem. AcVerDate Nov 24 2008 13:41 Sep 06, 2017 Jkt 075679 PO 00000 Frm 00007 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\26597.TXT JACKIE
4 

cording to the National Safety Council, preliminary 2016 data estimates that as 

many as 40,000 people died in motor vehicle crashes last year. That marks a 6 percent increase over 2015, and a 14 percent increase over 2014—the most dramatic 

two-year escalation since 1964. This trend is heading in the wrong direction. We 

must do more to prevent these tragic crashes from happening. These are not just 

statistics. Each crash is a devastating tragedy for a family. 

I want to recognize Larry Liberatore who is here today. This year marks the 20th 

anniversary of the tragic accident involving a tired truck driver that took his son 

Nick’s life on his way to Great Adventure in New Jersey. Thank you Larry for your 

two decades of advocacy including your current work serving on the board of Parents Against Tired Truckers. I am concerned by any efforts to undermine safety and 

am hoping to find areas where we can work in a bipartisan manner to improve safety. 

The same is true on our railways, where we have seen accidents that have caused 

serious problems. Just yesterday, a New Jersey Transit train derailed in Penn Station. Luckily, according to reports, the derailment was relatively minor, but several 

individuals were injured and thousands more were severely delayed. This is the second derailment at New York Penn station in the last two weeks. This is an important reminder that we must invest in safety as well. 

I look forward to hearing from the panelists about how we can work together to 

improve our Nation’s economy and increase public safety. 

Thank you. 

The CHAIRMAN. Thank you, Senator Booker. Maybe light reading 

for tonight, Senator Inhofe. 

With that, I would like to start with our panel discussion. And 

our first witness today is Derek Leathers, who is President and 

Chief Executive Officer of Werner Enterprises. Werner is one of the 

largest truckload motor carriers in the United States, and as I said, 

it is headquartered in Omaha. 

Mr. Leathers has 25 years of experience in the transportation 

and logistics industry, having started his career as a dispatcher. 

His transportation experience has included roles covering multiple 

facets of the industry, including operations, safety, driver training, 

and intermodal. 

Welcome, Mr. Leathers. 

STATEMENT OF DEREK J. LEATHERS, PRESIDENT 

AND CHIEF EXECUTIVE OFFICER, WERNER ENTERPRISES 

Mr. LEATHERS. Thank you. Chairman Fischer, Ranking Member 

Booker, and members of the Subcommittee, thank you for the opportunity to testify on enhancing multimodal freight policy and infrastructure. 

My name is Derek Leathers. I am President and Chief Executive 

Officer of Werner Enterprises, proudly headquartered in Omaha, 

Nebraska. Werner is among the five largest truckload carriers in 

the United States, with 7,200 and 12,000 combined professional 

drivers and associates worldwide. 

I commend the Congress for recognizing the importance of the 

safe and efficient movement of freight in our nation’s economy. 

Congress and the Administration can utilize Werner as a resource 

on helping improve the freight system. It is essential the Federal 

Government supports a safe, uncongested, and reliable highway 

system as a fundamental element of an integrated global supply 

chain. Our nation’s vast network is critical to this effort, especially 

roads. 

Trucks move more than $10 trillion worth of freight each year, 

comprising more than 70 percent of the U.S. freight tonnage. 

Trucks and our professional drivers are tasked with the increasVerDate Nov 24 2008 13:41 Sep 06, 2017 Jkt 075679 PO 00000 Frm 00008 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\26597.TXT JACKIE
5 

ingly more complicated task of being the connectors between rails, 

ports, cities, and rural communities each day. Truck tonnage is 

projected to increase 28 percent from 2015 to 2027. 

To meet freight capacity challenges, it will take combined forces 

of multimodal coordination, strategic highway investments, and 

regulatory environment that allows for improved efficiencies to be 

successful. Congress should concentrate investment in major 

freight bottlenecks and congestion that hamper the efficient movement of both freight and passenger travel. 

The additional freight demand combined with increased congestion, insufficient parking, and a patchwork of state regulations only 

add needless stress to our driver workforce and distract from the 

focus on safely and efficiently delivering our Nation’s goods. 

It is essential we provide safe and structurally sound roads and 

bridges for our professional drivers, and the motoring public. Congress should explore all viable options to invest significant resources into our highway system. And we support a variety of revenue sources to avoid overreliance on just one single option. 

We commend Senator Fischer’s leadership in introducing the 

Build USA Infrastructure Act. The trucking industry supports 

higher user fees to provide better roads if the revenues are dedicated to projects and programs that benefit goods movement on the 

Nation’s highways. Increasing and indexing the Federal fuel tax is 

the most efficient revenue source, with no additional collection 

costs. It has the largest transport segment of the freight market. 

We believe surface transportation should receive a strong portion 

of this investment. 

In order to move the Nation’s freight, we also need to continue 

to invest in a strong workforce. Drivers keep America moving and 

our company moving forward every day, yet we and other trucking 

companies continue to struggle to find qualified, professional drivers, as the industry faces a significant driver shortage. These men 

and women are the backbone of our economy, delivering our Nation’s freight each and every day. 

Over the next 10 years, the trucking industry will need 890,000 

more drivers to keep pace with expected growth. Simply put, the 

trucking industry is hiring. An aging workforce and an inability to 

recruit younger drivers provides additional challenges to the industry. 

The industry and Congress need to collaborate to find workable 

solutions that connect individuals to jobs while improving safety, 

matching the growing freight demand, and addressing the significant shortage of drivers today. 

At Werner, we invest over $50 million annually on direct safety, 

technology, and training. Werner believes training, technology, and 

safety are vital to empowering drivers with the tools and culture 

to drive safely. 

We appreciate the Subcommittee’s work in moving the truck 

safety agenda forward and the provisions included in the FAST 

Act. Addressing deficiencies and reforming the regulatory development process of FMCSA improves coordination between government and business. We appreciate Congress’s efforts to prioritize 

critical rulemakings like hair testing guidelines, entry level driver 

training requirements, and electronic logging devices. 

6 

In the last 20 years, Werner drivers have driven over 17 billion 

miles using electronic logging devices in our trucks. This is done 

to make our roads safer for the motoring public. As new technologies are introduced, the trucking industry should have an active role in advancing market-driven automated vehicle technologies that improve the areas of safety, driver wellness, productivity, efficiency, and the environment. 

We encourage the Congress to engage the industry as the development of policy and regulatory framework that will govern these 

new technologies. Collectively, Werner drivers travel over 3 million 

miles a day. In order to guarantee that we deliver on the demands 

of the American economy, we must ensure a fair and uniform application of interstate commerce rules. We continue to see an increase 

in patchwork regulations, hampering our ability to efficiently and 

reliably move goods across our country while increasingly burdening the life of the driver. 

Thank you again for the opportunity to share the industry’s perspective. It is essential we continue to jointly address the challenges of the infrastructure investment, the driver shortage, and 

the development of safety technologies to enhance freight movement and the lives of our professional drivers. 

We look forward to working with the Subcommittee to provide 

the necessary tools to modernize America’s transportation network. 

Thank you. 

[The prepared statement of Mr. Leathers follows:] 

PREPARED STATEMENT OF DEREK J. LEATHERS, PRESIDENT

AND CHIEF EXECUTIVE OFFICER, WERNER ENTERPRISES

Introduction 

Chairman Fischer, Ranking Member Booker, and members of the Subcommittee, 

thank you for the opportunity to testify today about continuing to enhance 

multimodal freight policy and infrastructure. My name is Derek J. Leathers and I 

am the President and Chief Executive Officer of Werner Enterprises, headquartered 

in Omaha, Nebraska. 

Since 1956, Werner has grown from a one-truck operation to be among the five 

largest truckload carriers in the United States with more than 7,200 trucks and 

12,000 combined professional drivers and associates worldwide. Werner’s transportation and logistics portfolio includes freight management, truck brokerage, freight 

forwarding, intermodal, and international services throughout the world. 

I commend the Subcommittee for recognizing the importance freight plays in our 

Nation’s economy. A safe, efficient system of highways connecting America’s cities, 

towns, and rural areas is essential to our country’s economic well-being, national security, and overall quality of life. It is essential that the Federal Government craft 

policy that promotes the safe, clean and efficient movement of goods, and Werner 

stands ready to act as a resource to our congressional and agency partners on this 

front. 

Background 

A safe, uncongested, and reliable highway system is the key to a fluid global supply chain, which is a fundamental element of our growing and prosperous economy. 

Each day thousands of trailers and containers, carrying everything from food, fuel, 

raw materials, and finished products flow through our ports, across our borders, and 

on our highways, railroads, air, and waterway networks. The highway system connects these modes to manufacturing centers, assembly plants, warehouses, retail 

outlets, and homes. Our nation’s vast freight network is critical to this effort, especially roads. Trucks move $10.1 trillion worth of freight each year, which makes up 

7 

1 U.S. Census Bureau, 2012 Commodity Flow Survey, Dec. 9, 2014 2Global Insight, U.S. Freight Transportation Forecast to . . . 2027, 2016 3TRIP, Bumpy Roads Ahead: America’s Roughest Rides and Strategies to make our Roads 

Smoother, Nov. 2016. 4FHWA National Bridge Inventory. 

5 ATRI. Cost of Congestion to the Trucking Industry, April 2016. 

more than 70 percent of U.S. freight tonnage. Combined, this freight represents 56 

percent of the U.S. economy,1 and 81 percent of domestic freight revenue.2

This dynamic system of a complex goods movement network is made possible by 

the work of millions of Americans, utilizing trucks, trains, ships, barges, planes, and 

logistics operations. In fact, we all owe a debt of gratitude to the men and women 

who are professional truck drivers, who do a fantastic job, who do that job conscientiously and safely, and who are all too often taken for granted. Simply put, the work 

of the trucking industry and other aspects of the freight industry, make our way 

of life possible by providing consumer choices for a broad array of products in stores 

and online. Trucking employs millions of Americans, plus creates new and expanding markets for U.S. businesses. In order to ensure we deliver on the demands of 

the American economy, we must ensure a fair and uniform application of interstate 

commerce rules. In recent years, we have seen an increase in patchwork regulations 

hampering our ability to efficiently and reliably move goods across our country. We 

encourage Congress to take steps to eliminate this patchwork of regulations and 

preserve the efficient system on which the United States was built. 

Congress plays an important role in protecting interstate commerce, and most recently, supported the industry by including critical reforms and safety provisions in 

the Fixing America’s Surface Transportation (FAST) Act. Policymakers can continue 

to do this by supporting nationally uniform Federal rules and regulations that promote the safe, efficient, and competitive movement of freight throughout the country 

rather than a state-by-state patchwork that undermines these goals. As Congress 

looks to new opportunities to support the trucking industry, I offer the following 

proposals for the Subcommittee’s consideration: 

1. Invest in our Nation’s highway infrastructure. 

2. Develop the trucking workforce by addressing the driver shortage. 

3. Support efforts to improve highway safety. 

4. Support efforts to advance automated vehicle technologies. 

5. Support tax reform. 

6. Support the movement of multimodal freight. 

7. Support trade. 

Need For Increased Infrastructure Investment 

Our highways, bridges, and roads are the lifeblood of the trucking industry. Unfortunately, the current infrastructure system increasingly feels the strain of longterm underinvestment at all levels of government. Nearly one-third of major urban 

roadways are in substandard condition, and the average motorist in the United 

States is losing $523 annually—$112 billion nationally—in additional vehicle operating costs as a result of driving on roads that are in need of repair.3

As our highway system ages, many bridges, including those on the Interstate System, are beginning to deteriorate to the point where they need major repairs or replacement. For example, nearly 7,000 bridges in New Jersey—35 percent of the 

total—are structurally deficient or functionally obsolete. Approximately 4,000 state 

and local bridges in Mississippi are in need of repair or replacement. Without a significant increase in Federal funding, states will find it very difficult to undertake 

these projects. This is particularly concerning for the trucking industry. Sixty-seven 

thousand bridges are closed or posted.4 Poor bridge conditions force trucks to seek 

alternative routes because they cannot cross a bridge on the most direct route. This 

increases the cost of freight transportation, which impacts businesses and consumers. Re-routing traffic creates additional safety concerns due to increased mileage and additional congestion as traffic is concentrated on fewer routes. Moreover, 

the additional mileage and congestion unnecessarily add frustration for our country’s professional truck drivers, who already sacrifice so much to safely keep America moving. 

Traffic congestion is further increased by underinvestment and creates additional 

costs to the country. Congestion on the Interstate System alone cost the trucking 

industry nearly $50 billion in 2014 and wasted more than 728 million hours.5 This 

was equivalent to 265,000 drivers sitting idle for a full working year. It is important 

to note that 88 percent of National Highway System congestion occurred on only 18 

8 

6 American Society of Civil Engineers, 2013 Report Card for America’s Infrastructure, 2016. 

percent of the network. Therefore, we should focus our attention on addressing the 

bottlenecks. 

Unfortunately, very little is being done to address these problems. The latest report card from the American Society of Civil Engineers (ASCE) found that the 

United States is projected to spend $941 billion on surface transportation infrastructure over the next decade, which is less than half of what is needed to address 

maintenance and capacity investment requirements.6 ASCE estimates by 2025 this funding gap will result in gross domestic product losses of nearly $1.2 trillion, more 

than a million lost jobs and $2.2 trillion in lost business sales. While funding must 

continue to come from federal, state and local governments, approximately half of 

the capital investment in the highway system is provided by the federal-aid highway program. Without a significant infusion of additional Federal revenue, the safety and efficiency of our surface transportation system will continue to deteriorate. 

The Administration’s renewed focus on improving the Nation’s infrastructure systems presents an exciting opportunity to make an investment in our country’s economic future, prevent thousands of needless accidents and injuries, and improve 

human health through a reduction in emissions. Congress should explore all viable 

options to significantly invest resources into our highway system. As the largest 

transport segment of the freight market, we believe surface transportation should 

receive a strong portion of this investment. Congress’ first priority should be to ensure the solvency of the Highway Trust Fund (HTF), which is projected to have insufficient revenue to cover likely authorized spending levels beginning in Fiscal 

Year 2020. 

Highway User Fees 

Federal investment in the highway system is essential, and while state and local 

governments, as well as the private sector, must assume a degree of fiscal responsibility for its upkeep, the Federal role is both indispensable and a responsibility that 

is delineated by the Constitution. We support Federal investment in highways 

through, primarily, user fees on the beneficiaries of the system. The sources of revenue should: 

• Be efficient and inexpensive to pay and collect; 

• Have a low evasion rate; 

• Be tied directly to highway use; and 

• Avoid creating impediments to interstate commerce. 

Werner believes fuel taxes meet all of these criteria and we support an increase 

in, and indexation of, the Federal fuel tax. The fuel tax is the most efficient revenue 

source, and increasing it will produce no additional collection costs and minimal 

evasion. Indexing can limit the negative revenue impacts of inflation and improved 

vehicle fuel efficiency. 

The trucking industry will consider support for any funding proposals that are 

likely to induce investment in highway infrastructure, and we support a broad mix 

of revenue sources in order to avoid over-reliance on a single option. 

Werner strongly opposes tolls on existing lanes of the Interstate System. Tolls 

cause diversion of traffic to alternative routes that were not built to handle the additional traffic, and this diversion poses a threat to safety. Compared with fuel taxes 

and other user fees in common use, a significant share of toll revenue is diverted 

from infrastructure investment and is wasted on administrative costs. While just 

one to two percent of fuel tax revenue goes toward collection costs, for example, even 

on toll roads using the most advanced systems, approximately 12 percent of revenue 

is spent on collection, enforcement and capital expenses. This is highly inefficient 

and a waste of taxpayer money. We urge Congress to oppose and eliminate provisions that provide tolling authority for existing Interstate Highways, including the 

existing pilot programs, and to refrain from authorizing additional tolling flexibility. 

Finally, we have concerns about mileage-based user fees, which would be inefficient and difficult to administer. While we recognize that in the future a replacement for the fuel tax as the primary source of revenue for highway funding will be 

necessary due to changes in vehicle technology that future is likely at least two decades away. Currently available options for implementing vehicle miles traveled 

(VMT) fees are limited. These options have extremely high collection costs and could 

experience a very high level of evasion. 

The fuel tax is collected from a few hundred fuel supplier taxpayers, while the 

VMT fee would have to be collected from tens of millions of individual taxpayers. 

In 2015, there were nearly 264 million registered vehicles in the United States. 

9 

7Texas Department of Transportation. Vehicle Mileage Fee Primer, p. 16. Dec. 2009. 8 ATRI. The Nation’s Top 100 Bottlenecks 2017. 

Therefore, a bureaucracy would have to be established to deal with the same number of individual accounts. Compare this with the Internal Revenue Service (IRS), 

which processes approximately 150 million individual income tax returns each year. 

The physical and bureaucratic infrastructure necessary to effectively collect a VMT 

fee would have to be massive and the unproductive collection and administrative 

cost to both government and taxpayer would be enormous. Furthermore, because a 

VMT fee would have to rely on technology for monitoring and collection, significant 

enforcement challenges resulting from system tampering and equipment malfunction should be expected.7 The challenges facing fuel tax revenue over the next 20 

years can be addressed by indexing the rate. Substituting an untested, highly inefficient revenue collection mechanism for an efficient revenue mechanism that is already in place would be illogical and irresponsible, and would receive significant resistance from the trucking industry and other highway users. 

Strategic Highway Investment 

Federal investment in infrastructure for the Interstate System, the larger National Highway System (NHS), and the National Highway Freight Network must be 

the top priorities. The NHS contains only 5 percent of the Nation’s total route mileage, but carries 55 percent of all vehicle miles traveled and 93 percent of truck 

VMT. Federal resources should be focused primarily on these systems. In addition, 

Congress should concentrate investment in major freight bottlenecks. Significant 

steps were taken in the FAST Act toward ensuring that federal-aid dollars are invested wisely through the creation of the National Highway Freight Program and 

Nationally Significant Freight and Highway Projects program. In addition, Congress 

in recent years established requirements for national and state freight plans and 

performance measurement. These actions will significantly improve the ability of 

transportation agencies to better focus investment. 

A future authorization bill, or infrastructure investment legislation such as the 

initiative supported by the Administration, should provide the sufficient, stable, 

long-term resources needed to fix the bottleneck projects that hamper the efficient 

movement of both freight and passenger travel. For example, the American Transportation Research Institute identified the top 100 freight bottlenecks in the country.8 These bottlenecks, which are located in 28 states and the District of Columbia, 

are an outsized source of freight transportation inefficiencies and should be a Federal priority. For example, the number one bottleneck is the I–85 at I–285 interchange in Atlanta. Fixing that bottleneck, and addressing other congestion problems 

on those two Interstates within the region could save nearly $42 million each year 

in congestion costs and prevent over 600,000 hours of delay annually. However, congestion is not limited to large metropolitan areas. Congestion is added expense even 

in a mostly rural state like my own state of Nebraska, where the trucking industry 

absorbed over $200 million in congestion costs in 2014. New Jersey has the second 

worst freight bottleneck in the country—I–95 at SR 4 in Fort Lee. Congestion in 

the Garden State cost the trucking industry nearly $3 billion in 2014. The bottom 

line is that the top 25 bottlenecks alone cause the trucking industry 5.6 million 

hours of delay annually at a cost of $382.5 million per year. Therefore, out of the 

$9.5 billion in annual congestion costs to the trucking industry, 25 projects out of 

the thousands that are funded each year nationwide could reduce highway freight 

congestion costs by four percent. 

Truck Parking 

Research and feedback from carriers and drivers suggests there is a significant 

shortage of available parking for truck drivers in certain parts of the country. Given 

the projected growth in demand for trucking services, this problem will likely worsen. Investing in truck parking results in significant safety benefits. Insufficient 

truck parking can add needless stress to the daily lives of our driver workforce, and 

can take away from their focus on safely and efficiently delivering our Nation’s 

goods. Funding for truck parking is available to states under the current federalaid highway program, but truck parking has not been a priority given a shortage 

of funds for essential highway projects. Therefore, we support efforts to address the 

truck parking shortage, including the creation of a new discretionary grant program 

with dedicated funding from the federal-aid highway program for truck parking capital projects. 

10 

9 American Trucking Associations, Truck Driver Shortage Analysis 2015. 

Support Efforts to End the Driver Shortage 

Werner and other motor carriers continue to struggle to find qualified, professional drivers. An ATA study found that 90 percent of for-hire truckload carriers 

reported difficulty in recruiting drivers capable of meeting Department of Transportation (DOT) driver qualification requirements. ATA estimates that in 2015 the industry experienced a shortage of 48,000 qualified drivers, and this figure could balloon to more than 175,000 by 2024.9 Over the next 10 years Werner anticipates it 

will need to hire well over 100,000 professional drivers to meet demand and grow 

the company. Furthermore, the trucking industry will need to hire 890,000 new 

drivers over the next decade. 

Two factors stand out as primary contributors to the shortage: driver demographics and the Federal requirement that a Commercial Motor Vehicle (CMV) driver must be at least 21 years old to drive a truck across state lines. The median age 

of an over-the-road truck driver is 49 and at Werner, our driver median age is 42. 

Unfortunately, recruiting younger drivers is challenging. Often candidates have already settled on a career when they reach the minimum age to drive a truck across 

state lines. Without a steady pool of new drivers, motor carriers’ growth will be restricted. The cost of employing a driver can increase as well, which impacts freight 

pricing. 

To ensure a stable flow of highly trained, professional drivers in a time when the 

entire industry is facing a significant driver shortage, Werner acquired two truck 

driving training schools, the American Institute of Trucking in 2013 and 

Roadmaster Driver Schools in 2014. These investments help further Werner’s longstanding commitment to securing the success and safety of the next generation of 

professional drivers. Werner and the schools have a vested interest in putting safe, 

professional drivers on the road. We believe incorporating the most modern strategies, techniques, and technologies through specialized training for commercial truck 

drivers is needed to improve overall safety on America’s highways. It is equally important to have a legislative and regulatory environment that allows workforce development and job placement opportunities. 

Werner has made additional efforts to invest and grow the workforce by 

partnering with the Department of Labor and the Department of Veterans Affairs 

in 2006 to start the industry’s first Professional Truck Driver Apprenticeship program to further invest in the development and training of professional drivers. Civilian and veteran drivers under 24 months of experience can enroll into our program. 

Earlier this year, Werner was proud to hire its 25,000th military veteran driver. 

Our veteran hiring has increased significantly over the past few years, and veterans 

now comprise about 20 percent of Werner’s driver workforce. 

There are numerous ways to help alleviate the driver shortage, including: (1) decrease significant CDL skills testing delays and wait times; (2) provide additional 

Federal funds for driver training programs and removing barriers to students seeking Federal aid to attend truck driving schools; (3) direct the Department of Labor 

to establish truck driving as a national in-demand occupation, which would free up 

resources devoted to filling vacant truck driving jobs; (4) implement the Entry-Level 

Driver Training rule; and (5) require DOT to conduct a comprehensive study of efforts to streamline the licensing requirements between DOT and the Department of 

Defense. 

The FAST Act took a step in the right direction by encouraging DOT to conduct 

a pilot program to study the safety of allowing younger drivers to operate in interstate commerce. However, this provision restricted participation in the pilot to military personnel under the age of 21 whose military occupation classification is driving a truck. This pilot should be expanded to allow civilian drivers under the age 

of 21 to participate, which will provide a significantly improved understanding of 

the benefits of allowing drivers between the ages of 18 to 21 to drive in interstate 

commerce. In addition, Federal law should be changed to establish graduated Commercial Driver’s License standards to allow commercial motor vehicle drivers ages 

18 to 20 to engage in both intrastate and interstate commerce in a safe, controlled 

manner. 

Support Efforts to Improve Highway Safety 

Safety is the trucking industry’s top priority. Werner along with the approximately five hundred thousand carriers, vehicle manufacturers, and other suppliers 

who comprise the industry invest nearly $10 billion in safety initiatives annually. 

These investments in safety have yielded impressive dividends for the industry and 

our company. At Werner alone we spend approximately $53 million annually on 

11 

safety, some of it to meet a myriad of regulatory requirements, but much of it on 

voluntary, progressive safety initiatives. This includes driver training, compliance 

initiatives (e.g., hair testing), and the adoption of emerging accident prevention technology such as forward collision warning and lane departure devices. 

Over the past decade, the number of truck-related fatalities has decreased by 22 

percent despite steady growth in the overall number of trucks and truck-miles traveled. Furthermore, we have improved the fatality- and injury crash-rates over this 

period. While the number of industry crashes and the crash rate increased in the 

most recent reporting period (2014–2015) it is too early to determine whether this 

indicates a trend. 

Much of this improvement is due to progressive safety initiatives supported by 

Werner and our fellow industry members. It is the motor carrier’s responsibility to 

put the professional driver in the best position to be as safe as possible. Technology, 

training, and placing safety as a company core value are vital to providing the driver with the tools and culture to drive safely. 

We appreciate the Subcommittee’s work in moving the truck safety agenda forward in provisions included in the FAST Act. Some of the critical improvements included: 

• Addressing deficiencies with the Federal Motor Carrier Safety Administration’s 

(FMCSA) Compliance, Safety, Accountability (CSA) Program. 

• Reforming FMCSA’s regulatory development process to ensure new regulations 

are based on sound science. 

• Prioritizing the establishment of critical hair testing standards. 

• A pilot program to test the safety of allowing military drivers between the ages 

of 18 and 21 to operate in interstate commerce. 

Additionally, we are grateful that the FAST Act instructed FMCSA to expedite 

completion of several important rulemakings required under MAP–21, including: 

• Creation of a national drug and alcohol clearinghouse. 

• Mandatory adoption and use of electronic logging devices (ELDs). 

• Establishing entry-level driver training requirements. 

Furthermore, following passage of the FAST Act, Congress adopted a requirement 

that FMCSA demonstrate the effectiveness of the existing hours-of-service (HOS) restart rule or revert to the previous requirements. FMCSA recently found that it 

could not demonstrate the safety of the restart provision and reinstated the previous 

restart rule, eliminating concerns about putting a significant number of trucks on 

the road during peak congestion periods. 

Congress can build upon these successes by supporting implementation of the following: 

Hair Testing 

As mentioned above, Congress mandated that hair testing be developed as an alternative to urinalysis for Federal drug testing requirements in the FAST Act. However, this mandate has not been completed. Federal law requires trucking companies to drug test new drivers and randomly test existing drivers using methods established by the Department of Health and Human Services’ (HHS) Substance 

Abuse and Mental Health Services Administration (SAMHSA). Section 5402 of the 

FAST Act requires HHS ‘‘to issue scientific and technical guidelines for hair testing 

as a method of detecting the use of controlled substances for purpose of section 

31306 of Title 49, United States Code’’ by December 4, 2016. Completion of this 

mandate will unlock tremendous safety benefits by providing employers a longer detection window, ease of collection, and make it more difficult for testers to adulterate than urinalysis. 

SAMHSA has long expressed an interest in recognizing hair testing as a federallyaccepted drug testing method, but the lack of action is having real impacts on the 

industry. Werner is using the urinalysis test to meet the Federal requirements 

while also paying the additional cost to conduct hair testing. In 2016, hair testing 

identified 664 prospective Werner driver hires that tested positive for a controlled 

substance. Only 48 of those same prospective drivers also tested positive for controlled substances on their urine drug screen. While we were able to prevent 616 

controlled substance users from driving our trucks, the inability to share the results 

with other carriers leads to an undesirable situation where those disqualified drivers might gain employment elsewhere, while circumventing the return to work process. 

We are concerned that HHS failed to meet the statutory deadline, and we encourage the Subcommittee to take appropriate steps to ensure that the agency meets 

12 

its statutory obligations. Doing so will pave the way for trucking companies to more 

fully utilize this pro-safety testing method and identify a greater number of safetysensitive employees who violate Federal drug testing regulations. 

Electronic Logging Devices (ELDs) 

Werner is particularly thankful for the Subcommittee’s efforts on ELDs to manage 

compliance for HOS and encourage oversight of its implementation. Werner is the 

recognized industry leader in ELD systems and was the first carrier to utilize electronic logs. In 1996 Werner proactively developed and implemented ELD software 

using GPS technology installed in our trucks. In 1998 we received approval from 

FMCSA to utilize this proprietary system to electronically manage and monitor our 

drivers’ HOS, in accordance with Federal regulations. ELD regulations are now 

going into effect for virtually all trucking companies in December of this year. Werner drivers have already driven over 17 billion miles in the last 20 years with our 

ELD technology to make our roads, highways, and interstates safer for the motoring 

public. 

Safety Technologies 

Another area where Congress can support highway safety is incentivizing new vehicle safety technologies. Connected and automated vehicle technologies have the 

potential to dramatically impact nearly all aspects of the trucking industry. The potential of automation benefits to the trucking industry is significant. Research into 

the safety impacts of automated or assisted braking and steering will likely show 

significant improvements in mitigating crashes and injuries. As vehicles are able to 

communicate with one another and the surrounding infrastructure, safety is also expected to improve exponentially. We would like to look for opportunities to advance 

safety technologies through tax incentives or utilizing FMCSA’s pilot program authority to review the safety performance of new technologies. 

Support Efforts to Advance Automated Vehicle Technologies 

Werner believes the trucking industry should have an active role in advancing 

market driven automated vehicle technologies that improve safety and reduce environmental impacts. These technologies can bring benefits in the areas of safety, the 

environment, productivity, efficiency, and enhance driver health and wellness. While 

the widespread adoption of highly automated trucks is years away, development of 

the policy and regulatory framework that will govern this technology is already underway. 

A number of precursor systems like automatic emergency braking systems, automated manual transmissions, electronic stability control, lane departure warning 

and forward collision warning systems are working their way into the marketplace, 

both for commercial and passenger vehicles. Werner’s new equipment in the fleet 

is Level 2 driving automation, which integrates systems on the truck, including 

safety technologies. These technologies will provide real-world proof that not only 

can more comprehensive automated vehicle packages work, but they provide a return on the investment carriers make in the form of improved safety and efficiency. 

Vehicle connectivity to other vehicles and to infrastructure will enhance the benefits 

of automation, supplementing vehicle sensors with additional information about 

road conditions ahead and other vehicles outside sensor range. 

The DOT has taken the regulatory lead and issued the Federal Automated Vehicles Policy in September 2016. This Policy sets the framework for the safe and rapid 

deployment of automation technologies. However, the Policy was developed without 

the input of the trucking industry, including truck manufacturers. While DOT is expected to issue automated guidelines for trucks later this year, it is important for 

the trucking industry to continue to work with Congress and the appropriate regulatory agencies as policies are developed. One current issue at the forefront is preservation of spectrum for transportation. It is vitally important that the 5.9 GHz 

spectrum that has been reserved by the Federal Communications Commission exclusively for vehicle-to-vehicle and vehicle-to-infrastructure communications be preserved against encroachment from other uses such as Wi-Fi. If it is not, many of 

the important promises of automation will be lost. 

Support Tax Reform 

The current tax structure inhibits many trucking companies from investing in 

their drivers, equipment, safety technologies, and improvements in productivity. 

Since the trucking industry is responsible for moving a considerable amount of domestic freight, those tax burdens are passed along to consumers nationwide. Any 

tax reform package should encourage trucking companies to invest in new, safer, environmentally friendly equipment, critical safety technologies, their drivers, and promotion of the safe and efficient movement of our Nation’s goods. Werner supports 

13 

comprehensive tax reform and urges Congress to consider key tax provisions by simplifying the Tax Code, reducing corporate income tax, protecting interstate carriers 

from a patchwork of discriminatory state taxation, and retaining safe harbor for 

independent-contractor relationships in trucking. These goals can be achieved 

through several policies, including: 

• Lowering the Income Tax Rate on all Business Income: Many small carriers are 

organized for tax purposes as pass-throughs (that is, businesses whose profits 

are taxed directly to their owners). Tax reform should not result in the income 

of such businesses being taxed at a higher rate than that of traditional corporations. 

• Simplifying the Tax Code: The U.S. tax code is unacceptably lengthy and complex. Therefore, simplifying the tax code should be a key priority of any reform 

effort. 

• Retaining Section 1031 of the Internal Revenue Code or allowing immediate expensing of capital equipment (tractor and trailer) purchases: Section 1031 allows 

businesses to replace capital goods employed for business or investment with 

like-kind property without recognizing capital gains. This arrangement is critical to the trucking industry because it allows carriers to purchase newer and 

safer equipment and invest in critical facility improvements. Any limitation or 

repeal of this section would lead to slowing in U.S. economic growth, a decline 

in job creation, and less competition in the marketplace unless immediate expensing of capital equipment purchases replaced Section 1031. 

• Eliminate/Replace the Federal Excise Tax (FET) to Encourage Investment in 

Safe and Clean Technologies: Werner has made significant investments in new 

equipment (primarily trucks and trailers) of nearly $1 billion in the last 2 years. 

Werner prioritizes the deployment of cleaner and more fuel efficient trucks to 

be in compliance with the Environmental Protection Agency’s Phase I and 

Phase II emissions standards. The tax code should encourage trucking companies to invest in the newest equipment with the most advanced safety technologies, best fuel efficiency, and most up-to-date emissions systems. Eliminating the FET and replacing it with a comparable increase in the diesel fuel 

tax would encourage new truck and trailer sales, while creating much-needed, 

well-paying jobs for truck manufacturers, dealers, and suppliers. 

Multimodal Integration 

Werner encourages cooperation across transportation modes. Rail, ocean, air, and 

trucking industries serve different markets, and although at times we are competitors, we work together to ensure efficient delivery of goods. The industry continues 

to head towards logistics integration as customers and consumers demand a more 

simplified, single-user experience. The industry is adapting by adjusting to a different supply chain mode and prioritizing efficiencies by pairing goods to the right 

mode. 

All modes are likely to experience increases in demand. Truck tonnage is projected to increase 28 percent from 2015 to 2027. To meet freight capacity challenges, 

multimodal coordination, strategic investment in the highways that carry significant 

truck volumes, and a regulatory environment that allows for improved efficiencies 

must be a priority. Intermodal rail service volumes and truck traffic will continue 

to be virtually imperceptible. If rail volumes grow at twice the rate of projections 

over the next decade, the trucking industry’s market share would dip by only 1 percent. While the vast majority of truck freight does not move as part of an intermodal 

delivery, intermodal freight is an important and growing part of the supply chain. 

It is also where significant bottlenecks occur. 

Intermodal Connectors 

The trucking industry encourages dedicated funding of last-mile intermodal connectors: those parts of the highway system that link ports, rail intermodal terminals, and airports with the National Highway System. Many of these links have 

been described as ‘‘orphan roads’’ because while they are critical segments of the 

freight transportation system, they are often overlooked by the state or local governments responsible for them because many of the benefits accrue far beyond their 

borders. 

Intermodal Equipment Safety 

A barrier to the efficient movement of intermodal freight has to do with the condition and safety of chassis. Legislation enacted by Congress in 2005 established a 

statutory framework requiring intermodal chassis providers to ensure that their 

equipment (which is integral to the movement of millions of international freight 

14 

10 All data from Bureau of Transportation Statistics North American Transborder Freight 

Data 

containers transported in the intermodal sector each year) is in a safe ‘‘roadable’’ 

condition before it is used for transport. 

Unfortunately, implementation of the law has been slow, and overall compliance 

with the program’s key legal mandates has not yet reached a level where the chassis that are moving on the highway system can be considered to be systematically 

maintained and repaired, and are in a roadable condition, as the law requires. The 

lack of roadable equipment slows down the movement of intermodal freight when 

equipment is taken out of service or drivers are forced to find new roadable equipment when they fail a pre-trip inspection. 

Moreover, intermodal drivers are still being charged during roadside inspections 

with equipment violations on the chassis that we believe should instead be assigned 

to the equipment provider, who under law is now supposed to be the responsible 

party. As a result of these regulatory enforcement practices, intermodal motor carrier/driver CSA scores are negatively and unfairly inflated by chassis deficiencies. 

With rising scores, we are seeing drivers leave the intermodal transport side of the 

business in order to avoid having their scores elevated by chassis deficiencies. This 

is exacerbating the intermodal driver shortage problem. 

This failure to achieve the law’s mandates is in large part due to FMCSA’s decision to not require the driver’s mandated pre-trip chassis inspection to be documented and thereafter to not aggressively audit equipment provider operations, nor 

fine or shut down operators who do not have effective systematic maintenance and 

repair programs in place. The only way to generate data on whether an equipment 

providing facility has an effective systematic maintenance and repair system, as required by law, is to document the roadable condition of chassis prior to interchange 

with drivers. That is, does the provider have a ‘‘ready line’’ of chassis available at 

its facility that meet the law’s safety requirements before the equipment is interchanged with the trucker? Since that ‘‘ready-roadable’’ status is not routinely being 

identified and required, we believe the agency does not have the requisite equipment provider system performance records needed to perform the required Roadability audits to actually measure and evaluate program performance. This lack of 

measurable progress has gone on for far too long. We urge the Subcommittee to review the chassis Roadability program, and work with FMCSA to ensure that the 

statutory changes Congress put in place in 2005 are being implemented effectively. 

Support Trade 10

Werner supports free trade, including the North American Free Trade Agreement 

(NAFTA) and the DOT’s cross-border trucking program. Trade and trucking are synonymous, and the increased movement of freight yields good paying jobs and growth 

in American companies. Since 1995, the United States has been in a trade bloc 

agreement with Mexico and Canada through NAFTA. Data shows that the U.S. 

trucking industry is a large beneficiary of NAFTA. Since 1995, the value of goods 

traveling via truck across both the northern and southern borders jumped 168 percent and totaled nearly $712 billion in 2015. This increase in trade has created or 

supported tens of thousands of jobs in the United States. Total trade via truck has 

increased by 80 percent since the enactment of NAFTA. In 2015, truck transported 

exports to Canada, as measured by the value of the goods, was 56 percent of total 

truck transported trade with the country. U.S. truck transported exports to Mexico, 

as measured by the value of the goods, was 43 percent of total truck transported 

trade across the southern border. 

Furthermore, the value of goods traded with Canada transported by truck equaled 

$335 billion in 2015, 80 percent more than in 1995 when NAFTA was enacted. 

Today, trucks haul 70 percent of the value of goods moving across the Canadian border. Nearly 5.8 million truck trips were required to move these goods. In 2015, 

trucks moved $377 billion in merchandise across the Mexican border which equates 

to 337 percent more than in 1995. Today trucks haul 83 percent of the value of 

goods moving across the southern border. In 2015, it required 5.5 million truck 

movements across the U.S.-Mexican border to haul those goods. Any change in restricting trade between Mexico and Canada could be detrimental to the trucking industry. Furthermore, we will oppose any restrictions on the ability of Mexican carriers to cross the border and access U.S. highways, as agreed to by both parties 

under NAFTA, unless compelling and statistically significant evidence can be produced that demonstrates the current system presents a safety hazard to U.S. motorists. 

15 

Conclusion 

Thank you for the opportunity to testify today. Werner and the trucking industry 

look forward to working with this Subcommittee to provide the necessary tools to 

modernize America’s transportation network. Furthermore, we encourage the Subcommittee to invest in and promote a strong Federal highway program, including 

the provision of significant additional resources to address the challenges of moving 

freight on a poorly maintained and unreliable highway system. We look forward to 

collaborating with you to find solutions to alleviate the driver shortage. Finally, we 

encourage Subcommittee members to work with Senate colleagues to promote tax 

and trade policies that support freight transportation efficiency and economic 

growth. 

The CHAIRMAN. Thank you, Mr. Leathers. 

Also from my home state is Lance Fritz, President and Chief Operating Officer of Union Pacific railroad. UP celebrated its 150th 

anniversary in 2012. UP links 23 states in the western two-thirds 

of the country by rail, providing freight solutions and logistics expertise to the global supply chain. Mr. Fritz also serves as Chairman of the Board of Directors for the Association of American Railroads. 

Welcome. 

STATEMENT OF LANCE M. FRITZ, CHAIRMAN, 

PRESIDENT, AND CHIEF EXECUTIVE OFFICER, 

UNION PACIFIC CORPORATION 

Mr. FRITZ. Thank you. Good morning, or good afternoon, Chairwoman Fischer, Ranking Member Booker, and members of the Subcommittee. Thank you for the opportunity to testify today about 

freight programs and how to improve the performance of the transportation network. 

In just a few words, the best way to improve performance in the 

rail industry is to ensure we have policies that support investment, 

safety, service, and efficiency. These four things are foundational to 

one another. My written testimony goes into much more detail 

about how to achieve these goals, so in the limited time I have, I 

will be briefly touching on four key things that we believe will help 

us maintain and excel with the development of these core tenets. 

Fundamental to the rail industry’s ability to perform is the ability to invest in our network. For us to do this, we need an economic 

regulatory policy that recognizes we must have the opportunity to 

charge market-based rates and earn market-based returns to attract the private capital needed to make investments in our business. 

Railroad capital investments are risky because they are longterm and expensive, and even if successful, they may not generate 

positive returns for years. In the interim, markets can change in 

the ways that reduce the investment’s return. As physically—as 

publicly traded companies, we cannot justify the inherently risky 

investments required to grow our network and respond to ongoing 

transportation market changes unless the potential upside gain 

from those investments are high enough to offset the potential 

downside risk associated. 

As we compete for capital in the marketplace with other businesses, investors will only be willing to provide capital to us if they 

believe future returns will be as high as the investor can receive 

after accounting for risk from alternative opportunities. 

16 

As the Surface Transportation Board, our economic regulatory 

agency, and you, in Congress, contemplate our economic regulatory 

structure, this should be foremost in your thoughts. 

Second, we need to be able to take advantage of technology and 

innovation that allows us to improve safety and create efficiencies. 

As it stands today, we have a heavy command-and-control type of 

regulatory structure. It isn’t nimble, nor does it easily adapt to 

technology enhancements. We need to create regulatory process improvements that allow for performance-based approaches as well as 

a more robust waiver process that allows us to take advantage of 

the technologies that we are currently pursuing and those we will 

be pursuing in the future. 

Third, while I know it isn’t in your Subcommittee’s jurisdiction, 

we have to get our tax and trade policies right to ensure U.S. competitiveness. The U.S. has the highest corporate tax rate in the developed world. The disparity between the United States and the 

rest of the world has become even larger in recent years. Since capital moves freely across international borders, the higher U.S. rate 

makes it harder for firms to justify investing in the United States 

and harder for U.S. firms to attract capital. 

Getting trade policies correct is equally important. Trade plays 

a massive role in the U.S. economy. Exports and imports combined 

are equivalent to around 27 percent of U.S. GDP, which is up from 

around 17 percent 30 years ago. For railroads, at least 42 percent 

of carloads and more than 35 percent of our revenue is directly associated with international trade. 

Today, there’s a lot of talk about NAFTA. To bring NAFTA into 

the 21st century, we should work with our trading partners to 

strengthen it and its provisions on the environment and on labor, 

and update it to address e-commerce and cross-border data flows, 

things that didn’t exist when NAFTA was first written over 2 decades ago. But we should not withdraw from NAFTA. 

Finally, just a few words on public-private partnerships. Congress has done great work in developing and fostering public-private partnerships, whether it’s the FASTLANE program or TIGER 

grants, these are excellent programs that allow projects to move 

forward that otherwise would never get off the ground. They allow 

each party to participate commensurate with their benefits. 

As you debate what to do on an infrastructure package, I encourage you to continue these programs, as they’re a great way to leverage private investment. 

That concludes my testimony, and I’m looking forward to answer 

your questions. 

[The prepared statement of Mr. Fritz follows:] 

PREPARED STATEMENT OF LANCE M. FRITZ, CHAIRMAN, PRESIDENT, AND CHIEF EXECUTIVE OFFICER, UNION PACIFIC CORPORATION

Thank you for the opportunity to be here today. I am Lance M. Fritz, the Chairman, President, and Chief Executive Officer of Union Pacific Corporation, the parent company of Union Pacific Railroad. Officially, I’m testifying today on behalf of 

Union Pacific, but most of what I have to say is applicable to other U.S. freight railroads as well. 

Union Pacific Railroad was born when President Abraham Lincoln, who was a 

railroad attorney earlier in his career, signed the Pacific Railway Act of 1862. The 

main goal of the Act was to facilitate constructing a transcontinental rail line all 

the way to the Pacific, thereby allowing dispersed areas of a growing nation to be 

17 

bound together economically, socially, and politically. Today, Union Pacific directly 

serves approximately 10,000 customers in 23 states in the western two-thirds of the 

United States (see Figure 1), but through connections with our transportation partners, we deliver products in a safe, reliable, and environmentally responsible manner to consumers in every state and throughout the world. 

Railroads Are the Transportation Backbone of America 

Whenever Americans grow something, mine something, or make something; when 

they send goods overseas or import them from abroad; when they eat their meals 

or take a drive in the country, there’s an excellent chance that railroads helped 

make it possible. 

Approximately 600 freight railroads operate in the United States. Each of the 

seven ‘‘Class I’’ railroads, including Union Pacific, typically operates in many different states over thousands of miles of track. Class I railroads focus mainly (though 

not exclusively) on long-haul, high-density intercity traffic lanes. Meanwhile, hundreds of short line and regional railroads fill out our Nation’s rail network, often 

providing crucial first-mile and last-mile service to customers. Non-Class I railroads 

range in size from tiny operations handling a few carloads a month to multi-state 

operators not far from Class I size. 

Together, freight railroads operating in the United States form an integrated, 

nearly 140,000-mile system that provides the world’s safest, most productive, and 

lowest-cost freight rail service. This extensive network pays for itself since nearly 

all of America’s freight railroads are privately owned and operated. The U.S. freight 

railroad industry is the envy of the world, an irreplaceable national asset that enhances our Nation’s standard of living and our Nation’s competitiveness in the 

tough global economy. 

Unlike trucks, barges, and airlines, our freight railroads operate almost exclusively on infrastructure that they own, build, maintain, and pay for themselves, a 

crucial point I will return to later in this testimony. 

What Railroads Haul 

Union Pacific and America’s other freight railroads transport a huge variety of 

goods. Historically, coal has been the single largest commodity carried by rail. Costeffective electricity generated by coal delivered to power plants by railroads has 

been crucial to our Nation’s economic and industrial development. Railroads also 

carry enormous amounts of corn, wheat, soybeans, and other grains. We carry fertilizers, plastic resins, and a vast array of other chemicals. Cement, sand, and 

crushed stone to build our highways make the trip on rail, as does lumber and 

drywall to build our homes. We transport autos and auto parts, animal feed, canned 

goods, corn syrup, flour, frozen chickens, beer, countless other food products, and 

much more. 


404FRITZ1.eps
18 

Rail intermodal is moving shipping containers and truck trailers by rail. Just 

about everything you find on a retailer’s shelves may have traveled on an intermodal train. Intermodal now accounts for approximately 20 percent of revenue at 

Union Pacific and about 24 percent of the total industry’s revenue, more than any 

other rail revenue source. 

The Right Track for the Economy 

Since the industry’s founding more than 185 years ago, freight railroads have 

been indispensable to America’s economic development. America’s freight railroads 

connect producers and consumers across the country and the world, expanding existing markets and opening new ones. 

• A June 2016 study from Towson University’s Regional Economic Studies Institute found that, in 2014 alone, the operations and capital investment of America’s major freight railroads supported approximately 1.5 million jobs (1.1 percent of all U.S. workers—nearly nine jobs for every railroad job), nearly $274 

billion in economic output (1.6 percent of total U.S. output), and $88 billion in 

wages (1.3 percent of total U.S. wages). Railroads also generated nearly $33 billion in tax revenues. In addition, millions of Americans work in industries that 

are more competitive in the tough global economy thanks to the affordability 

and productivity of America’s freight railroads. 

• The approximately 170,000 U.S. freight railroad employees are among America’s most highly compensated workers. In 2015, the average U.S. Class I 

freight railroad employee earned wages of $86,300 and fringe benefits of 

$34,600, for total average compensation of $120,900. By contrast, according to 

the Bureau of Economic Analysis, the average wage per full-time equivalent 

U.S. employee in domestic industries in 2015 was $59,400 (just 69 percent of 

the comparable rail figure) and average total compensation was $73,300 (61 percent of the rail figure). 

• Average rail rates (measured by inflation-adjusted revenue per ton-mile) were 

45 percent lower in 2015 than in 1981 (see Figure 3). This means the average 

rail shipper can move close to twice as much freight for about the same price 

it paid more than 35 years ago. 


404FRITZ2.eps
19 

• Several years ago, the American Association of State Highway and Transportation Officials (AASHTO) estimated that if all freight rail traffic were shifted 

to trucks, rail customers would have to pay an additional $69 billion per year. 

Adjusted for increased freight volume and inflation, it’s probably close to $100 

billion today. 

Safe and Working Hard Every Day to Get Even Safer 

For Union Pacific—and I’m sure I can speak for other railroads here too—nothing 

is more important than safety. At Union Pacific, a commitment to world-class safety 

is the very first of six ‘‘value tracks’’ designed to guide us as we work through the 

daily challenges of operating our 32,000-mile rail network. 

We recognize we have not yet reached our goal of zero accidents and injuries, but 

we’re encouraged by the progress we’ve made. I’m pleased to report that Union Pacific had a record safety year in 2016, with our reportable employee injury rate improving 14 percent compared to 2015. 

For the rail industry as a whole, based on data from the Federal Railroad Administration (FRA), the overall train accident rate in 2016 was the lowest in history and 

down 44 percent from 2000; the employee injury rate in 2016 was down 47 percent 

from 2000; and the grade crossing collision rate in 2016 was down 39 percent from 

2000. By all of these measures, recent years have been the safest in rail history (see 

Figure 4). 


404FRITZ3.eps
20 

Railroads today have lower employee injury rates than most other major industries, including trucking, airlines, agriculture, mining, manufacturing, and construction—even lower than food retailers. 

Safety improvements extend to hazardous materials too—over 99.99 percent of 

rail hazmat shipments reach their destination without a release caused by a train 

accident. 

Essential to a Greener, Less-Congested Future 

Freight railroads are the environmentally friendly way to move freight. Consider: 

• In 2015, U.S. railroads moved a ton of freight an average of 473 miles per gallon of fuel. 

• On average, railroads are four times more fuel efficient than trucks. That also 

means that moving freight by rail instead of truck reduces greenhouse gas emissions by an average of 75 percent. 


404FRITZ4.eps 404FRITZ5.eps
21 

1The rail traffic line in Figure 5 does not include carloads of coal and grain because their 

traffic volumes tend to rise or fall for reasons that usually have little to do with the condition 

of the overall economy. That’s not the case for most other rail traffic categories. 

• Emissions of particulate matter and nitrogen oxides per unit of freight volume 

are significantly lower for railroads than for trucks. 

• Because a single train can replace several hundred trucks, railroads help reduce 

highway gridlock and the need to spend scarce taxpayer dollars on highway construction and maintenance. 

Changing Markets Present a Serious Challenge to Railroads 

In testimony to this committee in July of last year, my counterpart at Kansas City 

Southern, Patrick Ottensmeyer, explained that freight railroads are what economists call a ‘‘derived demand’’ industry. This means that demand for rail service is 

a function of demand elsewhere in the economy for the products railroads haul. Mr. 

Ottensmeyer used automobiles as an example: automakers’ demand for rail service 

rises when consumers are buying more cars, but dries up if consumers stop buying 

cars. 

Therefore, what affects the broad economy affects railroads too. It’s no secret that 

the economy has not been doing as well the past few years as we all hoped it would, 

and rail traffic has suffered accordingly. 

Moreover, while railroads obviously care about the state of the overall economy, 

demand for rail service is determined mainly by how well the goods-related sectors 

of the economy (as opposed to services-related sectors) are doing. If consumers are 

buying more services like travel, data plans, or health care, that doesn’t really impact our business. We want consumers to buy a house and fill it with appliances 

and furniture. We want manufacturers to expand their factories so they need more 

inputs delivered to them and have more finished goods heading out their doors. Unfortunately, in 2016 the goods side of the economy had its worst year since 2009 

(see the bars in Figure 5). Rail traffic followed suit (see the line in Figure 5).1

Railroads are also affected by what’s happening within specific industries. Electric 

utilities are a good example. Thanks to extremely difficult market conditions (due 

largely to cheap and plentiful natural gas) and increasingly stringent environmental 

restrictions, electricity generation from coal has been falling for several years. In 

2016, coal-based electricity generation was down 8 percent from the same period in 

2015, down 22 percent from 2014, and down 33 percent from 2010. Coal’s share of 

total U.S. electricity generation was 50 percent as recently as 2005, but it fell to 

45 percent in 2010, 39 percent in 2014, and just 30 percent in 2016 (see Figure 6). 


404FRITZ6.eps
22 

The effect on rail coal traffic has been predictable. In 2016, U.S. Class I railroads 

originated 4.2 million carloads of coal, down 1.1 million carloads (21 percent) from 

2015, down 1.9 million carloads (31 percent) from 2014, and down 3.5 million carloads (46 percent) from 2008, which was the peak year for U.S. rail carloads (see 

Figure 7). 

Likewise, recent slowdowns in crude oil production and other factors have led to 

reduced rail carloads of crude oil and associated products such as sand used in 

fracking, steel pipes used at drilling sites, and scrap iron and metallic ores used to 

create steel used in energy industries. 

On the other hand, Union Pacific and other railroads are benefiting right now 

from strong U.S. grain sales, and are working with chemical firms as they build and 


404FRITZ7.eps 404FRITZ8.eps
23 

expand petrochemical facilities in the Gulf Coast and elsewhere in the United States 

to take advantage of low-priced natural gas used as a raw material. As housing 

markets continue to improve and if there is a near-term boost in infrastructure 

spending, railroads should see construction markets firming up. Consumer and business confidence appear to be growing, potentially creating additional opportunities 

for Union Pacific and other railroads. 

The foregoing discussion about rail traffic illustrates—as Mr. Ottensmeyer noted 

in his testimony—that the U.S. and global economies are constantly evolving. Firms, 

even entire industries, can and do change rapidly and unexpectedly, and railroads 

must be able to deal with that flux. These broad, often unanticipated economic 

changes are reflected in changes not only in the volumes but also in the types and 

locations of the commodities railroads are asked to transport. When traffic changes 

occur in different areas—as is usually the case and has certainly been the pattern 

in recent years—the challenges to railroads become magnified. To successfully adapt 

to these challenges, railroads must be flexible and innovative while improving the 

efficiency and productivity needed to maintain their long-term financial health. Railroads may also have to invest in additional capacity to meet changing demand. Public policies that hamstring railroads by preventing or limiting this flexibility and innovation are sure to have a negative impact on railroads and on their ability to 

meet the transportation needs of our evolving economy. 

The Importance of Appropriate Public Policies 

Prior to passage of the Staggers Rail Act of 1980, excessive regulation put our Nation’s freight railroads in a huge financial and operational hole. By enacting Staggers, Congress recognized that regulation prevented railroads from earning adequate revenues and competing effectively. Survival of the railroad industry required 

a new regulatory scheme that allowed railroads to establish their own routes, tailor 

their rates to market conditions, and differentiate rates on the basis of demand. 

One of the fundamental principles of the Staggers Act was something that had 

been essentially ignored for decades prior to it: if our Nation is to have a viable, 

efficient, privately owned freight rail system, someone has to be willing to pay for 

it, and the market is far superior to the government in determining who should pay. 

By giving railroads the opportunity (the Staggers Act guaranteed railroads nothing) to earn revenues sufficient to sustain and grow the rail network, deregulation 

sparked an industry transformation. In the more than 35 years since Staggers, rail 

income has increased, and with that has come the ability to invest anew in rail infrastructure and equipment. Since Staggers was passed, U.S. freight railroads have 

spent more than $635 billion on their tracks, signals, bridges, tunnels, locomotives, 

freight cars, and other infrastructure and equipment. Higher rail spending has led, 


404FRITZ9.eps
24 

2Substituting one product for another in a production process—for example, generating electricity from natural gas (which is not carried by railroads) instead of coal (which is). 3The ability to obtain the same product from, or ship the same product to, a different geographic area. For example, clay is used for taconite pelletization in Minnesota. This clay is available from Wyoming mines served by one railroad and from Minnesota mines served by another. 

Iron ore producers can play one railroad against the other for clay deliveries. 4Government Accountability Office, Freight Railroads: Industry Health Has Improved, but 

Concerns About Competition and Capacity Should Be Addressed, October 2006, p. 56. 

in turn, to greater efficiency, improved safety, better service, and sharply lower average rates for rail customers. 

Importantly, the Staggers Act did not completely deregulate railroads. In addition 

to retaining authority over a variety of non-rate areas, the Interstate Commerce 

Committee, and now its successor, the Surface Transportation Board (STB), retained the authority to set maximum rates if a railroad is found to have ‘‘market 

dominance’’ and to take other actions if a railroad engages in anticompetitive behavior. 

Congress affirmed the appropriateness of the existing balanced regulatory structure when it passed the Surface Transportation Board Reauthorization Act of 2015. 

Members of this committee were instrumental in the development and ultimate passage of this legislation, and I thank and congratulate you for your efforts. This legislation provides common sense process improvements that will allow the STB to 

work more efficiently. At the same time, it recognizes the need for freight railroads 

to earn revenues that allow for billions of dollars in private spending each year to 

build, maintain and grow the nationwide rail network. 

Nevertheless, some rail shippers, under the misleading guise of calling for more 

‘‘competition,’’ support legislative and regulatory changes that would re-impose excessive and counterproductive regulation on railroads. It is beyond the scope of this 

testimony to discuss the various proposals in detail, but all of them would, in one 

way or another, force railroads, through what amounts to price controls, to lower 

their rates to a favored group of rail customers at the expense of all other rail customers, rail employees, and the public at large. 

Unlike trucks and barges, which travel on heavily subsidized highways and waterways, U.S. freight railroads must finance nearly all of their infrastructure and 

equipment spending themselves. If the existing balanced regulatory structure were 

overturned, rail earnings would necessarily fall. This would make it far more difficult for railroads to make the massive investments they need year after year to 

meet current and future freight transportation demand. 

It would be a mistake to let this happen. A fundamental tenet of the economics 

of competition says that where competition exists, there should be no regulatory 

intervention. Because the vast majority of rail freight movements are subject to 

strong competitive forces—including competition from trucks and barges, product 

competition 2, and geographic competition 3—the vast majority of rail movements 

should likewise be free of governmental oversight. Moreover, no amount of rhetoric 

about ‘‘competition’’ can change the fact that if Union Pacific or any other railroad 

cannot cover its costs, it cannot maintain, replace, or add to its infrastructure and 

equipment. Nor can it provide the services upon which its customers depend. Simply 

put, if the existing balanced regulatory structure were changed, either taxpayers 

would have to make up the difference or the industry’s physical plant would deteriorate, needed new capacity would not be added, and rail service would become slower, less responsive, and less reliable. 

Remember too that back in 2006, the Government Accountability Office noted 

that, ‘‘Rail investment involves private companies taking a substantial risk which 

becomes a fixed cost on their balance sheets, one on which they are accountable to 

stockholders and for which they must make capital charges year in and year out 

for the life of the investment. A railroad contemplating such an investment must 

be confident that the market demand for that infrastructure will hold up for 30 to 

50 years. This is in sharp contrast to other modes such as highway infrastructure, 

which is paid for largely by public funds.’’ 4 Accordingly, at Union Pacific, as at other 

railroads, new investments will be made only if they are expected to generate an 

adequate return over a long period of time. For this reason, adequate rail earnings—again, over the long term—are critical for capacity investment. 

Major freight railroads face additional constraints because they are either publicly 

traded or are subsidiaries of publicly traded companies. As such, they must provide 

their shareholders a return commensurate with what those shareholders could obtain in other markets with comparable risk. No law or regulation can force investors 

to provide resources to an industry whose returns are lower than what the investors 

can obtain elsewhere. If railroads are viewed as returning less to shareholders, for 

25 

whatever reason, than comparable alternatives, then capital will flee the rail industry or will only be available at much higher costs than we see today. 

It is true that freight railroad financial performance in recent years has been better than it once was. At Union Pacific, we will continue to work very hard to see 

that those improvements continue so that we can return more value to our shareholders. However, policymakers should not view these improvements as a reason to 

cap rail earnings through price controls, artificial competitive constraints, or by 

other means, since it would cause capital to flee the industry and severely harm 

railroads’ ability to reinvest in their networks. 

Today, our Nation faces a number of serious transportation related problems, 

many of which this committee, to its credit, is working hard to address. It makes 

no sense to add to that list by trying to fix something that isn’t broken. The current 

rail regulatory system is working well. At a time when the pressure to reduce government spending on just about everything—including transportation infrastructure—is enormous, it makes no sense to enact public policies that would discourage 

private investments in rail infrastructure that would boost our economy and enhance our competitiveness. 

Technology and Process Streamlining 

New technologies are changing transportation. For example, widespread efforts 

are underway today—including extensive research subsidized by taxpayers—to develop autonomous motor vehicles, including autonomous trucks that would compete 

directly with railroads. Autonomous vehicle technologies and other technologies impacting transportation vary in their stage of development, but they are challenges 

that railroads must be prepared to confront. 

This means railroads must themselves look to new technologies to make their operations safer and more efficient. The use of technology to improve safety and efficiency is nothing new for railroads, but it’s taken on a new urgency as transportation markets have evolved and as technology has become more advanced. 

I’m proud to say that Union Pacific is at the forefront of the innovation-throughtechnology effort. I mentioned earlier that a commitment to world-class safety is the 

first of six ‘‘value tracks’’ that guide our company. ‘‘Innovation’’ is another of the 

value tracks. It can encompass small, incremental improvements that we call ‘‘Little 

I’’ innovations—an example might be something as seemingly simple as ensuring 

that signs at rail yards are located in the most advantageous positions for rail crews 

to notice and act on them. 

Innovation can also encompass larger innovation efforts—what we at Union Pacific call ‘‘Big I’’ innovations. The use of ‘‘machine vision’’ is a good example of a ‘‘Big 

I’’ innovation. 

Before a train departs, each rail car generally requires a 13-point inspection. 

Trains can be 100 or more cars long, so these inspections can take several hours. 

Union Pacific operates hundreds of trains per day, so the time adds up. 

Several years ago, our engineering teams realized that lasers could be used to inspect trains as they pass. The idea resulted in what’s now called machine vision— 

in essence, an MRI for a rail car. As a train passes through a machine vision imaging area, lasers and cameras quickly provide a three-dimensional model of each 

piece of train equipment, identifying actual and potential defects. The model and 

images can be viewed remotely from any Union Pacific computer, so that these ‘‘in 

advance’’ inspections can be conducted rain or shine, day or night, from the comfort 

of a desk chair. It allows our mechanical team to know what repairs are needed before a train arrives in the rail yard. This speeds the repair process, reduces the time 

trains have to spend in rail yards, reduces costly system delays, and improves our 

reliability and customer service. So far, our system can identify and measure 22 

components of a train, and it’s been successfully implemented near rail yards in Nebraska, Iowa, and Arkansas. 

26 

Many of UP’s technology initiatives are managed by our Technology Steering 

Group, comprised of leadership representatives from departments where innovative 

ideas are most likely to bubble up: operations, engineering, mechanical, safety, and 

information technologies. The group’s goal is to validate, or invalidate if appropriate, 

technology projects that could benefit our customers, shareholders, employees, and 

the communities we serve. Among other projects currently under review are the use 

of gaming simulators to train engineers, 3D printing to speed equipment repair and 

maintenance, and the use of drones to improve the speed and accuracy of track and 

bridge inspections. 

The efforts of Union Pacific and other railroads to harness the power of technology 

to improve their operations and drive innovation will not be as effective as they 

should be if legislative and regulatory processes and requirements fail to keep up, 

or are not well grounded in evidence-based, scientific understanding. 

The current debate over the number of crew members inside a freight train’s locomotive cab is a case in point. Legislation and regulations have been proposed that 

would mandate that all over-the-road freight trains must operate with a certified 

locomotive engineer and a certified conductor in the locomotive cab. 

Existing FRA regulations do not mandate minimum crew staffing requirements. 

Some non-Class I railroads have long operated with just one person in the locomotive cab, and thousands of Amtrak and commuter passenger trains, carrying hundreds of thousands of passengers, operate every day with just one person in the locomotive cab. On Union Pacific and other Class I railroads, the subject of crew size 

has typically been addressed as part of the collective bargaining process with rail 

labor. For Class I railroads, industry practice to date has been to have two-person 

crews for over-the-road mainline operations. That said, it is important for Class I 

railroads to retain the flexibility to seek agreement with labor, at the appropriate 

time, to operate over-the-road mainline trains with one crew member. 

The major reason offered by proponents of a two-person crew mandate is that it 

would enhance rail safety. Yet no one—not the FRA, not sponsors of the legislation 

in Congress, not rail labor—can point to hard data that support this contention: 

there is no evidence that trains with one-person crews have accidents at a higher 

rate than trains with two-person crews. The FRA itself, after its own review, stated 

in 2009 that it found no ‘‘factual evidence to support the prohibition against oneperson operations.’’ 

Railroads believe that the forthcoming implementation of positive train control 

(PTC) potentially presents an opportunity to move to one-person crews with no degradation of safety. PTC describes technologies designed to automatically stop a train 

before certain accidents caused by human error occur. As such, PTC advances rail 

safety through the use of advanced technology, while at the same time potentially 

eliminating the need for ‘‘a second set of eyes’’ in locomotive cabs. Neither Union 

Pacific nor other Class I railroads seek the ability to impose one-person crews unilaterally or haphazardly. Rather, we seek the flexibility to continue to work with 

rail labor under the existing collective bargaining framework to identify when the 

presence of PTC, or other technologies, allow a reduction in the number of crewmembers in a locomotive cab without jeopardizing rail safety. 


404FRITZ10.eps
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There are many other areas in which outdated regulations unnecessarily hinder 

rail innovation and progress. The use of machine vision discussed earlier is just one 

of many different technologies railroads use to improve their ability to identify defects in infrastructure and equipment. Many additional technologies are under development. 

As Matt Rose of BNSF explained to this committee back in February, new railroad technologies must be overlaid upon railroads’ existing regulatory compliance 

activities. As Mr. Rose explains, ‘‘Advances in locomotives, signal systems, gradecrossing warning devices, and track inspection made possible by technology in some 

ways are marginalized for purposes of regulatory compliance because they exist outside of the current regulatory construct, which recognizes only the safety value of 

prescribed practices. Existing [FRA] regulations which prescribe physical inspection 

at specific intervals for equipment and facilities now make less sense because of the 

advances in equipment, which is itself continuously self-diagnostic and self-reporting in the event of defects. Technology based inspection can also reduce the safety 

exposures related to frequently putting people in, under and between equipment or 

out on the line of road to perform physical inspections for the same conditions. Technology driven operational advancements, like electronic delivery of mandatory train 

orders and directives in lieu of required paper versions which will enable other technologies, should be incentivized.’’ 

Union Pacific agrees with Mr. Rose’s assessment. We also agree with Mr. Rose 

that a greater use of the FRA’s broad waiver authority represents a great opportunity to modify FRA regulatory directives in light of changed circumstances, while 

retaining appropriate regulatory oversight. Unfortunately, as Mr. Rose notes, the 

timeline for even the simplest waivers are measured in months or years, and often 

come with conditions that largely negate the value of the waiver or innovation being 

sought. 

More broadly, in light of the growing role of technology to enhance rail safety and 

operational efficiency, the FRA should shift its focus away from command-and-control design-based standards towards the use of performance based standards. Command and control standards specify the precise characteristics of workplace rules, 

while performance-based standards define the desired result rather than mandating 

the precise characteristics that a workplace must exhibit. The point of a performance based goal is to focus attention and effort on the outcome, not the method. 

For example, an FRA regulation mandates that locomotive brakes undergo a certain prescribed inspection every 1,000 miles. The 1,000-mile limit was last changed 

in the early 1980s, when it was updated from an earlier 500-mile standard that 

dated from the era of steam locomotives—an era that largely ended decades earlier. 

Since the early 1980s, there have been tremendous advances in locomotive, brake 

and defect detection technology, but railroads have not been able to persuade the 

FRA to update the 1,000-mile standard. 

There is little evidence that rigid design-based standards, such as the 1,000-mile 

locomotive standard, have a positive impact on railroad safety. They are, however, 

very costly for both railroads and the FRA to administer and maintain and tend to 

impede innovation because they ‘‘lock in’’ existing designs, technology, and ways of 

thinking. Reliance instead on a performance based approach would allow the FRA 

the best opportunity to ensure the attainment of desired safety rates at lower cost 

for the FRA as well as for railroads. 

Promoting Economic Growth Through Corporate Tax Reform 

Today more than ever, countries around the world are competing to attract new 

businesses and investments to help their economies grow and create jobs. One step 

many countries have taken—but not the United States—is reducing their corporate 

income tax rate. The United States should follow their example. 

• A lower rate would improve U.S. competitiveness. The U.S. rate of 35 percent 

is the highest statutory corporate income tax rate in the developed world. The 

disparity between the United States and the rest of the world has become even 

larger in recent years as dozens of countries have cut their corporate income 

tax rates. Since capital moves freely across international borders, the higher 

U.S. rate makes it harder for firms to justify investing in the United States and 

harder for U.S. firms to attract capital. 

28 

• A lower rate would encourage greater investment in the United States. By improving returns on investment and encouraging the repatriation of funds kept 

abroad by U.S. based firms, a lower rate would lead to more investment in the 

United States and increased domestic production. More investment means safer 

workplaces, more innovation, higher productivity, less pollution, and a higher 

standard of living. 

• A lower rate would enhance the prospects for long-term growth and job creation. Experts consider the corporate income tax to be among the most harmful 

for long-term economic growth. Moreover, because a major portion of corporate 

income taxes are ultimately borne by consumers through higher prices and by 

employees through lower wages, reforming corporate income taxes would benefit 

all Americans. 

• Tax reform would sharply reduce deadweight costs to the economy. Inefficiencies and misallocation of resources caused by the complex U.S. tax structure impose huge costs that all of us pay, but sensible reform would reduce these costs 

considerably. 

Promoting Economic Growth Through International Trade 

Virtually no one in the world today is self-sufficient. Put another way, we all 

trade. Our trading partners might be across the street or on the other side of the 

world, but the principle is the same: we trade because we produce some goods or 

services at costs lower than the costs our trading partners would incur to produce 

those same goods or services. By trading, we play to our strengths, leading to more 

goods and services to go around. Trade makes the world richer. 

Moreover, trade is not a zero-sum game in which one side ‘‘wins’’ and the other 

‘‘loses.’’ Instead, both sides benefit. Because trade is almost always voluntary, people 

and firms gain from it, or else they wouldn’t do it. The flip side is that increased 

barriers to trade prevent people from making exchanges they want to make and 

make people pay more for what they want. That helps explain why international 

trade plays a massive role in the U.S. economy. Exports and imports combined are 

equivalent to around 27 percent of U.S. GDP, up from around 17 percent 30 years 

ago. 

For railroads, international trade plays an even greater role: at least 42 percent 

of the carloads and intermodal units our Nation’s railroads carry, and more than 

35 percent of rail revenue, are directly associated with international trade (see Figure 8). 


404FRITZ11.eps
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Rail movements associated with international trade include virtually every type 

of commodity railroads carry and involve every region of the country—coal for export out of ports in Maryland, Virginia, the Gulf Coast, and the Great Lakes; paper 

and forest products imported from Canada to the Midwest; imports and exports of 

Canadian and Mexican automotive products to and from auto factories in dozens of 

U.S. states; plastics shipped by rail from Texas and Louisiana to the East and West 

Coasts for export to Europe and Asia; iron ore mined in Michigan and shipped by 

rail to Great Lakes ports; grain grown in the Midwest and carried by rail to the 

Pacific Northwest and the Gulf Coast for export to Asia. The list goes on and on. 

The fact is, railroads are inexorably tied to our Nation’s trading system. Without 

railroads, American firms and consumers would be unable to participate in the global economy anywhere near as fully as they do today. Conversely, without trade, 

America’s freight railroads would be a fraction of what they are today. 

To be sure, trade has always been a sensitive political issue in American politics 

because of its real and perceived impact on jobs. Policymakers should consider assisting those who have not shared in the gains from trade. Assistance might take 

the form of improved training and educational options that enhance domestic opportunity and social mobility. Even better, policymakers can implement pro-growth economic policies that lead to a robust economy where those who are displaced from 

a job for any reason are more likely to be able to find another one. Increased protectionism, on the other hand, is not the way to go because it would entail costs that 

greatly exceed the benefits. 

Robust international trade means more jobs for railroaders. Approximately 50,000 

rail jobs, worth over $5.5 billion in annual wages and benefits, depend directly on 

international trade. This does not include other significant job-related impacts including employees at ports who handle shipments moving by rail, jobs at firms that 

supply goods and services to railroads and others in support of trade-related rail 

movements, and secondary and tertiary job impacts derived from the expenditures 

of railroad employees, port employees, and their suppliers. 

Public-Private Partnerships 

Public-private partnerships—arrangements under which private freight railroads 

and government entities both contribute resources to a project—offer a mutually 

beneficial way to engage in infrastructure improvement projects where the fundamental purpose of the project is to provide public benefits or meet public needs. 

Without a partnership, many projects that promise substantial public benefits 

(such as reduced highway congestion by taking trucks off highways, or increased 

rail capacity for use by passenger trains) in addition to private benefits (such as enabling faster freight trains) are likely to be delayed or never started at all because 

neither side can justify the full investment needed to complete them. Cooperation 

makes these projects feasible. 


404FRITZ12.eps
30 

With public-private partnerships, the public entity devotes public dollars to a 

project equivalent to the public benefits that will accrue. Private railroads contribute resources commensurate with the private gains expected to accrue. As a result, the universe of projects that can be undertaken to the benefit of all parties 

is significantly expanded. 

Since railroads contribute funding commensurate with the benefits they receive, 

public-private partnerships are not ‘‘subsidies’’ to railroads. In some partnerships, 

public entities and private railroads both contribute to a project’s initial investment, 

but the railroads alone fund future maintenance to keep the project productive and 

in good repair. 

Perhaps the most well-known public-private partnership involving railroads is the 

Chicago Region Environmental and Transportation Efficiency Program (CREATE), 

which has been underway for several years. CREATE is a multi-billion dollar program of capital improvements aimed at increasing the efficiency of the region’s rail 

infrastructure. A partnership among various railroads, the City of Chicago, the state 

of Illinois, and the Federal Government, CREATE includes approximately 70 

projects, including 25 new roadway overpasses or underpasses; six new rail overpasses or underpasses to separate passenger and freight train tracks; 35 freight rail 

projects including extensive upgrades of tracks, switches and signal systems; viaduct 

improvement projects; grade crossing safety enhancements; and the integration of 

information from dispatch systems of all major railroads in the region into a single 

display. As of the end of January this year, 27 projects have been completed, 5 are 

under construction and 17 are in the design phase. 

Railroads are confident that, as CREATE proceeds, rail operations in Chicago will 

become more fluid and better able to withstand shocks such as those presented by 

extreme weather. 

Conclusion 

At Union Pacific, our goal is to provide a customer experience that is as safe, efficient, and cost effective as possible. I know that other railroads share these goals. 

We are always willing to work cooperatively with you, other policymakers, our employees, our customers and all other interested parties to advance our shared interests in moving our Nation forward with the help of our best-in-the-world freight 

railroads. 

The CHAIRMAN. Thank you, Mr. Fritz. 

Michael Ducker is President and Chief Executive Officer of 

FedEx Freight. He provides strategic direction for FedEx’s lessthan-truckload companies throughout North America as well as for 

FedEx Custom Critical, a leader character—carrier—probably character, too—of time-sensitive shipments. 

Mr. DUCKER. There are a few there. 

The CHAIRMAN. So welcome, Mr. Ducker. 

STATEMENT OF MICHAEL L. DUCKER, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, FEDEX FREIGHT CORPORATION 

Mr. DUCKER. Thank you very much, Chairwoman Fischer and 

Ranking Member Booker. I appreciate the opportunity before all 

you Subcommittee members to testify here today. 

I know you all understand how critical today’s freight transportation system is to this country’s economy. My colleagues have discussed it. And as you noted, my written statement is in the record, 

so I’ll focus on a few key points. 

At FedEx, we believe we’re uniquely positioned to comment on 

these matters. FedEx is an engine for job growth and economic 

growth. Through our group of transportation companies, we have 

450,000 team members worldwide. We utilize all major modes of 

transportation to serve our customers. We do that with four operating companies: FedEx Express, Ground, Freight, and FedEx 

Trade Networks. 

31 

Now, I’m here today to talk about surface transportation, so I 

want to quickly provide some additional background on FedEx 

Freight, our less-than-truckload operating company, of which I’m 

the CEO. 

We employ about 40,000 team members and operate 20,000 vehicles that collectively transport on average 100,000 daily shipments. 

FedEx Freight has long been on the leading edge of safety, innovation, and technology. We continue to deploy the most advanced 

safety systems available on our truck fleet, including collision mitigation, speed limiters, lane departure warning, roll stability, and 

the latest telematics, cameras, and electronic logging devices, the 

majority of which will be 100 percent deployed by the end of the 

year. 

FedEx Freight, along with other transportation and logistics 

companies, pumps the lifeblood of commerce through our transportation of goods across the Nation. Without improved surface infrastructure and wise policy decisions, we cannot continue to help 

grow the U.S. economy and increase jobs. The need for significant 

investment in our infrastructure has never been more critical. 

So let me mention three areas that I believe should be priorities 

for this committee: number one, enhancements to the national 

highway system and funding sources; number two, innovation; and 

number three, modernization. 

First, our interstate system is now over 60 years old and is in 

desperate need of repair. Along with the American Trucking Association, FedEx supports Federal investment in highways primarily 

funded by user fees. We must identify revenue sources for longterm funding for the Highway Trust Fund. 

In order to avoid overreliance on a single option, FedEx supports 

a broad mix of revenue sources, including increasing and indexing 

fuel taxes, a vehicle-miles-traveled or other direct user-based fee, 

a reduction in the U.S. corporate tax rate, and territorial system 

adoption and congestion pricing. 

Second, national uniformity in areas of innovation. Regarding 

this, emerging technologies such as vehicle-to-vehicle and vehicleto-infrastructure communications and autonomous vehicles would 

benefit from having an infrastructure that allows innovations that 

drive productivity. FedEx supports Federal efforts to encourage national uniformity with reasonable and flexible guidelines, as innovation offers solutions for our transportation needs. 

And, last, modernization. I want to mention three primary areas. 

The first is modernizing trucking equipment standards, which 

haven’t been changed in over 25 years. FedEx strongly supports a 

new Federal standard to change the twin-trailer limits from 28 feet 

to 33 feet with no—repeat no—change in the Federal weight limit. 

The highway networks are being overwhelmed with e-commerce. 

Twin 33-foot trailers will make more efficient use of our existing 

infrastructure because it takes fewer trucks to haul the same 

amount of freight. Twin 33s are currently allowed in 20 states, and 

we have been operating them for many years without a single accident. They are safer than the current Twin 28s. When widely 

adopted, Twin 33s will improve safety, reduce congestion, reduce 

wear and tear on highways and bridges, increase productivity, save 

millions of gallons of fuel, and reduce billions of pounds of carbon 

32 

emissions. That solution will result in near instant infrastructure 

benefits with zero Federal funding required. It’s a common sense 

policy solution. 

The second area of modernization consists of reducing unnecessary regulatory burdens while also ensuring that appropriate regulations keep pace with innovations. 

And, last, we need to ensure the broad adoption of the most modern and advanced safety systems on our vehicles. That is critical 

to ensure the safety of not only our employees, but also of the motoring public. 

In conclusion, we must upgrade our transportation infrastructure. It is long overdue. The private sector investment in updating 

safety and efficiency technologies needs to be complemented with 

government policies that support long-term funding and innovation. The time for us all to act is now. Thank you. 

[The prepared statement of Mr. Ducker follows:] 

PREPARED STATEMENT OF MICHAEL L. DUCKER, PRESIDENT

AND CHIEF EXECUTIVE OFFICER, FEDEX FREIGHT CORPORATION

Chairman Fischer, Ranking Member Booker, and members of the Subcommittee, 

thank you for inviting me to testify before you today. 

I know that you all understand the critical importance of the freight transportation system in today’s cost-and time-driven economy, particularly in this era of explosive e-commerce growth and increasing digital connectivity. Every day we are all 

reminded of the unfortunate state of disrepair of our Nation’s highways and bridges, 

as well as the lost productivity for businesses and individuals caused by traffic congestion. 

The nation’s freight network continues to experience strain. Our nation’s transportation system moved 18.1 billion tons of goods, worth $19.2 trillion in 2015, according to a Bureau of Transportation Statistics document titled ‘‘DOT Released 30- 

year Freight projection’’ (March 2016). The U.S. Department of Transportation 

projects that freight volume will increase by 45 percent by 2045. 

In order to address these challenges, we must work together on policy and solutions that will modernize our surface transportation system and drive our economy 

forward. Infrastructure investment cannot be limited to road and bridge improvements. A holistic modern transportation system needs to be established combining 

physical and digital infrastructure enhancements with sound transportation policies, 

including incentives for improved safety and fuel efficiency. And, of course, stable 

and sustainable sources of funding for the Highway Trust Fund will be essential for 

success. 

FedEx Operations 

At FedEx, we are an engine for job and economic growth. Through our group of 

transportation companies with more than 400,000 team members worldwide, we utilize all major modes of transportation to serve our customers. 

• Our FedEx Express air-ground system is a global network, offering time-definite 

air express, ground and freight shipping within the U.S. as well as linking the 

American economy to 99 percent of the world’s GDP. 

• Our FedEx Freight and FedEx Ground networks use both road and rail for our 

business-to-business as well as business-to-consumer services, which are essential in these days of Internet shopping. 

• Our FedEx Trade Networks business provides freight forwarding services 

around the world, combining ocean shipping options with air and ground tailored to meet the varying needs of our customers. 

Intermodality allows transportation services to be offered to American customers 

in the most efficient way, providing transport services that vary as to speed, price 

and mode. A critical component of intermodality is the Nation’s surface transportation system, which is our focus today. So, I want to give you a bit more perspective on the surface transportation company for which I am the CEO: FedEx Freight, 

our less-than-truckload operating company. 

33 

FedEx Freight includes 40,000 team members and operates more than 20,000 vehicles from 370 service center locations that collectively transport, on average, more 

than 100,000 daily shipments. To give you a few more numbers about the size and 

scope of our LTL operation: 

• FedEx Freight road and city operations, along with our purchased transportation motor and rail use, total more than 5 million average daily miles traveled. 

• This highly engineered network moves on average more than 250 million 

pounds in daily loaded weight. 

FedEx Freight, along with other transportation and logistics companies, pumps 

the lifeblood of commerce, transporting goods from manufacturers, warehouses and 

retailers to business end-users and consumers. Without improved surface infrastructure and wise policy decisions from Washington, FedEx and other companies cannot 

continue to help grow the U.S. economy and increase jobs. The need for significant 

investment in our infrastructure has never been more critical. 

Interstate Road System 

The building of the U.S. interstate highways fundamentally changed our country 

and the way we work together as Americans. It took 17 years to create and fund 

the idea of the interstate, beginning with a 1939 Report to Congress and culminating with President Eisenhower signing the Federal-Aid Highway Act of 1956. 

Our interstate system is now over 60 years of age and it is in desperate need of 

updating. We need both short and long term investment. Short term, we must stop 

the deterioration in many interstate roads and bridges that have long suffered from 

neglect. Long term we need a plan to modernize, improve, and expand the entire 

system. 

Currently, more than 40 percent of major U.S. highways in urban areas are congested. On average, a typical American commuter loses 34 hours sitting in traffic 

each year. According to the American Society of Civil Engineers (ASCE), over 30 

percent of U.S. interstates are in poor or mediocre condition. These substandard 

roads result in drivers paying $67 billion, or $324 per motorist, annually in vehicle 

repairs and operating costs. The ASCE rates U.S. roads 19th in the world, behind 

Namibia. 

Left unaddressed, future demand will continue to challenge our bridges and roads 

for years to come. As previously mentioned, the U.S. Department of Transportation 

projects that by 2045 freight volume will increase by 45 percent and currently there 

are 20 new proposed interstate highway segments. The expected volume growth will 

add even more pressure on freight bottlenecks throughout the country and further 

hamper the performance of our highway system and the transportation industry 

alike by adding delays to truck freight. We must build this modern interstate highway system, as the current situation can no longer be tolerated. 

Along with the American Trucking Associations, FedEx supports Federal investment in highways primarily funded by user fees. The trucking industry—which currently pays more than 40 percent of Federal highway user fee revenue—supports 

an increase in highway user fee payments if they perceive value in the form of road 

and bridge improvements from the expenditures. The sources of revenue should: 

• be easy and inexpensive to pay and collect; 

• have a low evasion rate; 

• be tied to highway use; and 

• avoid creating impediments to interstate commerce. 

We must identify revenue sources that provide sufficient long-term funding for the 

Highway Trust Fund. We must recognize that due to changes in vehicle technologies, fuel taxes cannot alone fund the system. Alternative vehicles such as electric and natural gas need to also pay a user fee. This can now be easily done 

through technology. Consequently, FedEx supports a broad mix of revenue sources 

in order to avoid over-reliance on a single option. The recent, bipartisan effort to 

adequately fund the Inland Waterways Trust Fund can serve as an example. 

Increase Freight Program Funding 

The FAST Act created a new National Highway Freight Program to provide funds 

across all states for needed highway-specific freight improvements, but only funded 

it at about $1.24 billion a year. The legislation also created a new Nationally Significant Freight & Highway Projects Program, funded at $900 million per year distributed to every state by formula. Any infrastructure package moved through Congress 

going forward needs to significantly increase funding for FAST Act freight programs 

34 

so states will have sufficient funding to begin addressing their needs over the remaining years of that legislation. 

National Uniformity in Areas of Innovation 

With the explosive growth of e-commerce, the Nation’s supply chains are quickly 

adapting to American consumers’ expectation of fast and efficient delivery of consumer products. Supply-chain programs are moving from an inventory-based ‘‘manufacture-to-supply’’ model to a ‘‘manufacture-to-order’’ model. Emerging technologies 

such as vehicle-to-vehicle and vehicle-to-infrastructure communications and autonomous vehicles need to have a transportation and digital infrastructure able to allow 

innovations that drive productivity and results toward maximizing the efficiency of 

transportation networks. 

New technological advancements are changing the way we look and think about 

our transportation needs. These technological advancements must be factored into 

what kind of infrastructure we need now in the 21st Century. It is critical the U.S. 

have policies that encourage national uniformity in areas of innovation as we advance into the next century. A good example is in the area of autonomous vehicles. 

The National Highway Traffic Safety Administration (‘‘NHTSA’’) recently issued 

the Federal Automated Vehicles Policy, the first Federal policy on automated vehicles. Focused on ‘‘highly automated vehicles’’ (HAV), the guidelines show that the 

Federal Government sees automated car technology as a safer alternative to cars 

driven by humans. Importantly, the NHTSA establishes a Model state policy. The 

model policy seeks to promote consistency in state autonomous vehicle regulations. 

It allows a manufacturer to focus on developing a single HAV fleet, rather than 50 

different versions to meet individual state requirements. Because State regulations 

vary widely, a lack of national uniformity creates difficult issues for manufacturers 

and service providers. 

FedEx supports Federal efforts to encourage national uniformity as innovation offers solutions for our transportation needs However, Federal guidelines need to be 

reasonable and flexible with respect to technology developments, and not become 

overly restrictive, in order to allow technology to grow without hindering advances. 

If guidelines err too much on the side of caution, or are too broadly or indiscriminately applied, it could slow innovative solutions necessary to overcome the Nation’s 

transportation challenges. 

Modernization 

Given the state of our country’s current infrastructure and the projected growth 

in freight volumes, FedEx supports the modernization of trucking equipment standards. FedEx is part of Americans for Modern Transportation (AMT), a diverse group 

of American shippers, deliverers, and retailers working to improve transportation 

infrastructure and policy. Fast, safe, and reliable shipping needs to be a top priority 

in building an American economy geared for the future. We can make smarter, more 

effective use of existing infrastructure now, while also leveraging technologies and 

solutions that bring about greater safety and efficiency. 

Around 70 percent of all U.S. domestic freight tonnage moves by truck—that is 

10.5 billion tons of freight. As transportation demand has increased over the years, 

equipment standards for other transportation modes have adjusted to accommodate 

the increased capacity—such as rail utilizing double-stacked containers. 

Less-than-truckload (LTL) carriers, including FedEx Freight, rely primarily on 

twin trailers to haul freight. In 1982, Congress fixed a standard of 28 feet for twin 

trailers that States must allow on their highways. Capacity expansion has not been 

adjusted for over two and a half decades due to the Federal Government freeze on 

truck size and weight under the Intermodal Surface Transportation Efficiency Act 

of 1991 (ISTEA). 

FedEx and AMT strongly support increasing the national standard for twin trailers from 28 feet to 33 feet. The adoption of a 33-foot twin trailer standard would 

allow a carrier, on any given lane, to increase the volume carried up to 18.6 percent 

before having to add incremental trips. Importantly, 33-foot twin trailers would be 

subject to the same Federal law that applies to 28-foot twin trailers today, which 

limits their operation to the National Highway System (NHS) and gives states wide 

discretion to determine the appropriate segments of the NHS on which the equipment can safely operate. Additionally, this solution requires no increase in the Federal gross vehicle weight limit of 80,000 lbs., and therefore, it would not increase 

wear-and-tear on the highway system. In fact, with fewer truck trips, there would 

be less stress on the road system. According to a 2015 U.S. DOT study, if a national 

standard of 33-foot twin trailers had been widely adopted in 2014, it could have already resulted in over 3 billion fewer miles traveled, saved $2.6 billion in operVerDate Nov 24 2008 13:41 Sep 06, 2017 Jkt 075679 PO 00000 Frm 00038 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\26597.TXT JACKIE
35 

ational costs for the LTL industry and provided congestion-relief savings for all motorists of nearly $1 billion. 

Fewer trucks on the road also means significant saving on fuel and emissions. By 

increasing the length of twin trailers by just five feet, fuel consumption is reduced 

by 255 million gallons every year, with a concomitant annual reduction of 2.9 million tons of CO2 emissions. 

Most importantly, studies have shown 33-foot twin trailers are stable and safe. 

They perform equal to or better than current 28-foot trailer combinations in four 

critical safety measurements: static rollover threshold, rearward amplification, load 

transfer ratio, and high speed transient off tracking. FedEx and other trucking companies have been operating 33-foot twin trailers for years in states like Florida. Our 

drivers tell us repeatedly they find them to be more stable than 28s. In addition 

to improved stability with the 33-foot trailers, safety would be enhanced by simply 

reducing the number of truck trips and miles driven. 

FedEx Freight Safety Investment 

FedEx Freight has long been at the leading edge of safety innovation and technology in the LTL industry and has an industry-leading safety record. The following 

advanced safety systems are currently deployed on 80 percent of our road fleet: Collision Warning/Collision Mitigation, Lane Departure Warning, and Roll Stability. 

Our road fleet will be 100 percent equipped with these systems by June 2018. 

In addition, our entire fleet is equipped with electronic speed limiters, which limit 

our vehicles to speeds of 65 mph or less. Approximately 87 percent of our fleet now 

has the latest telematics, cameras and electronic logging device systems installed 

and operational. That number will soon be 100 percent, well ahead of the December 

2017 compliance date. FedEx Freight is leading the industry on implementation of 

these safety technologies, and we support an FMCSA rule mandating that proven 

safety systems be in all commercial motor vehicles. 

Conclusion 

The time is now to modernize our country’s transportation infrastructure. Freight 

volumes and roadway congestion are increasing. Continued private sector investment in updated safety and efficiency technologies should be complemented with 

Federal and state policies that support long-term transportation funding and innovation. Collaboration and sustained commitment to modernization will be vital to 

ensuring a reliable transportation system for American consumers, businesses and 

the growing e-commerce marketplace. 

The CHAIRMAN. Thank you, Mr. Ducker. 

Next we have Mr. James Pelliccio. 

Did I pronounce your name correctly? 

Mr. PELLICCIO. Yes, Chairman. 

The CHAIRMAN. And you are the President and CEO of Port Newark Container Terminal. That would be in New Jersey. 

Mr. PELLICCIO. Yes. 

[Laughter.] 

The CHAIRMAN. Mr. Pelliccio is also the President of East Coast 

Operations at Ports America. Port Newark Container Terminal is 

located in Port Newark, New Jersey, and handles over 700,000 containers annually. 

Welcome, sir. 

STATEMENT OF JAMES PELLICCIO, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, PORT NEWARK CONTAINER TERMINAL; 

PRESIDENT, ATLANTIC DIVISION, PORTS AMERICA; AND 

MEMBER, COALITION FOR AMERICA’S GATEWAYS 

AND TRADE CORRIDORS 

Mr. PELLICCIO. Thank you, Chairman Fischer, Ranking Member 

Booker, and distinguished members of the Subcommittee for inviting me to appear before you today and share my views on 

multimodal freight policy from a marine terminal perspective. I’m 

representing both Ports America and Port Newark Container TerVerDate Nov 24 2008 13:41 Sep 06, 2017 Jkt 075679 PO 00000 Frm 00039 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\26597.TXT JACKIE
36 

minal as well as the Coalition for America’s Gateways and Trade 

Corridors. The Coalition is a diverse group of more than 60 public 

and private organizations dedicated to increasing Federal investment in America’s multimodal freight infrastructure. 

Ports America is the largest marine terminal operator in North 

America. We manage operations in more than 42 ports and 80 locations. In a typical year, Ports America handles more than 13 million 20-foot equivalent units, 2.6 million vehicles, 10.5 million tons 

of general cargo, and 1.5 million cruise passengers. 

Ports America maintains focus in key areas, including terminal 

concessions, joint venture partnerships, infrastructure funding, 

public-private partnerships, labor management, and relationships 

with the world’s leading shipping lines. 

Above all is our commitment of a culture of safety. The health 

and safety of our employees are our single highest priority. Since 

the 17th century, our harbors and rivers have connected North 

America to the world. Ports, by their nature, are intermodal hubs 

and magnets for trade. 

Sixty years ago, the world’s first containership carrying 58 35- 

foot trailers from Port Newark, New Jersey, to Houston, Texas, 

launched a new era in cargo transportation. To create some perspective, last year, a vessel carrying 18,000 containers from Shanghai called on the Port of Long Beach, California. Changes in the 

global supply chain, including the widening of the Panama Canal, 

shifts in manufacturing, and increasing liner capacities associated 

with ultra-large container vessels add to the urgency of strengthening aged and inadequate infrastructure. 

The ability to move freight safely, reliably, and expeditiously provides a competitive advantage to U.S. exporters and importers in 

the global marketplace. I applaud the members of this committee 

for prioritizing freight infrastructure investment under the FAST 

Act. This landmark legislation is a down payment on our nation’s 

infrastructure needs and will begin making improvements necessary to keep pace with demands of a growing global economy and 

population. 

It’s not simply a matter of spending. Investment must be strategic and cut across traditional modal barriers. Some of freight infrastructure’s largest, most complex, and most desperately needed 

investments occur where multiple modes come together. These instances often require a partnership at the Federal level to help disentangle chokepoints, which place a multitude of burdens on our 

communities and inhibit commerce. 

The FAST Act contains criteria written into law that focuses on 

freight movement infrastructure. The goals of the program include 

increasing global economic competitiveness, improving connectivity 

between freight modes, and improving the safety, efficiency, and reliability of the movement of freight and people. 

Competitive grant programs, such as FASTLANE, assist in funding large-scale infrastructure projects. These programs span modes 

and jurisdictional borders, which are difficult, if not impossible, to 

fund through traditional distribution methods such as formula programs. These competitive grant programs foster public-private 

partnerships, which are required on critical multimodal infrastructure projects. 

37 

By way of example, as part of a restructured long-term leasing 

agreement with the Port Authority of New York and New Jersey, 

Port Newark is undergoing one of the largest privately funded 

transportation projects in the region. This project will complement 

improvements by the Port Authority and Federal investments in 

rail, road, channel, and bridge infrastructure. PNCT alone has 

spent over $200 million in upgrades since 2011 and will spend between $500 million and $600 million at completion of the project. 

Last December, Essex County, New Jersey, submitted a 

FASTLANE application for $29 million for its $112 million PNCT 

Wharf Revitalization project. If awarded, FASTLANE Funding 

would accelerate the reconstruction of an unusable 1,200-foot berth. 

In addition, the project will upgrade an adjoining substandard 

1,200-foot berth to enable ultra-large container vessels to call the 

port at Newark and support the expansion of PNCT’s Marine Highway barge service. Seventy-three percent of this project would be 

privately funded. 

FASTLANE, coupled with private capital investments, will fasttrack Port Newark’s development plans years ahead of schedule 

and will allow PNCT terminal operations to coincide with the raising of the Bayonne Bridge, the expansion of the Panama Canal, 

and the completion of the New York Harbor and Kill Van Kull 

deepening projects. 

In addition to FASTLANE, TIGER grants are critical for transportation projects that are difficult to fund through traditional distribution methods. Whereas the FASTLANE program was developed with freight-focused investment criteria, the TIGER program 

can address many types of mobility needs, including freight, mixedused infrastructure, and transit. 

While traditional formula programs invest to a standard 80 percent Federal, 20 percent non-Federal match, under competitive 

grant programs, such as TIGER and FASTLANE, states and localities are encouraged to bring their best deals to the table, driving 

innovation and creative funding and financing arrangements and 

frequently reducing the Federal funding share. 

This is exemplified in the Essex County, New Jersey, TIGER 

award at Port Newark Access Improvement, which flipped the traditional model, 80/20 formula model, on its head: thirty percent of 

the funding came from Federal Government, and 70 percent was 

from private industry. 

According to the USDOT, for every one dollar of Federal monies 

distributed through the TIGER program, $3.50 is leveraged 

through other sources, including private funds. The first round of 

FASTLANE yielded similar results. The grants, totaling $800 million, will be combined with other funding sources to support $3.6 

billion in investment. 

In closing, the Coalition for America’s Gateways and Trade Corridors recommends Congress take the following steps: develop a national strategy that guides long-term planning; provide dedicated, 

sustainable, and flexible funding, a minimum of $2 billion annually 

through multimodal, freight-specific competitive grant programs; 

implement a set of merit-based criteria for funding allocations; and 

encourage partnerships with the private sector. 

38 

1 New York Shipping Association, The Economic Impact of the New York-New Jersey Port Industry, July 2014. < http://nysanet.org/wp-content/uploads/NYSA_Economic_Impact_2014V2> 2 U.S. Department of Transportation, National Freight Strategic Plan, October 2015. <https:// 

www.transportation.gov/sites/dot.gov/files/docs/DRAFT_NFSP_for_Public_Comment_508_10% 

2015%2015%20v1.pdf> 

Chairman Fischer, Ranking Member Booker, and distinguished 

members of the Subcommittee, thank you for the opportunity to 

testify today. 

[The prepared statement of Mr. Pelliccio follows:] 

PREPARED STATEMENT OF JAMES PELLICCIO, PRESIDENT AND CHIEF EXECUTIVE

OFFICER, PORT NEWARK CONTAINER TERMINAL; PRESIDENT, ATLANTIC DIVISION, 

PORTS AMERICA; AND MEMBER, COALITION FOR AMERICA’S GATEWAYS AND TRADE

CORRIDORS

I would like to thank you for allowing me the opportunity to testify before the 

Senate Committee on Commerce, Science and Transportation’s Subcommittee on 

Surface Transportation and Merchant Marine Infrastructure, Safety, and Security. 

Today I am representing both Ports America/Port Newark Container Terminal as 

well as the Coalition for America’s Gateways and Trade Corridors (‘‘the Coalition’’), 

a diverse coalition of more than 60 public and private organizations dedicated to increasing Federal investment in America’s multimodal freight infrastructure. I thank 

Chairman Fischer, Ranking Member Booker and Members of this Subcommittee for 

the opportunity to share my views with you. It is a pleasure to sit before the Subcommittee’s Ranking Member, Senator Booker, and I thank him for his commitment 

to improving goods movement in our home state of New Jersey. 

At the turn of the Century in America, port cities fueled the growth of a new nation. Dockworkers built New York into the busiest harbor in the Western Hemisphere. Then on April 26, 1956, shipping and the supply chain changed forever, as 

the first containership set sail from Port Newark. In the 1960s, the first marine container terminals in the world were built on Newark Bay. 

Port Newark Container Terminal, or PNCT, is located at the heart of the Port 

of New York and New Jersey (‘‘PONYNJ’’), the largest port on the East Coast of 

North America and second largest port complex in the Nation. In 2016, the 

PONYNJ handled 6.3 million 20-foot equivalent units (TEUs) and captured approximately 30 percent of North American East Coast market share. PNCT has a substantial imprint in the region, occupying roughly 300 acres and handling over 1.2 

million TEUs or 20 percent of the container market share in the Port of New York 

and New Jersey. 

The Port of New York and New Jersey supports 190,100 direct jobs 336,000 total 

jobs; $21.2 billion in personal income; nearly $53.5 billion in business income; and 

almost $7.1 billion in federal, state and local tax revenue across a 31-county region.1

Moreover, for every job that Port Newark Container Terminal creates, another indirect job is created in Essex County, the county in which PNCT is located. 

The ability to move freight safely, reliably, and expeditiously provides a competitive advantage to both exports and imports in the global marketplace. I applaud the 

efforts made by the Members of this Committee in prioritizing freight infrastructure 

investment under the FAST Act. This landmark legislation is a downpayment on 

our Nation’s infrastructure needs. It is paramount that we acknowledge that much 

more is needed in order to maintain and improve aging and insufficient infrastructure in order to keep pace with the demands of a growing global economy and population. 

The multimodal freight network of the United States directly supports 44 million 

jobs and impacts every American’s quality of life. Moreover, it is a critical force in 

the world’s largest economy: the system moves 55 million tons of goods daily, worth 

more than $49 billion. That’s over 63 tons per capita annually; meanwhile, the U.S. 

population is expected to increase by 70 million by 2045.2 Such population growth 

presents both challenge and opportunity—to capitalize on a growing consumer base, 

our infrastructure network must be up for the task. 

Every sector of our economy depends on highly-efficient freight infrastructure in 

order to be competitive in the global marketplace, and businesses are taking note 

of deficiencies. According to a 2014 study by the National Association of Manufacturers, 65 percent of members surveyed do not believe that infrastructure, especially 

39 

3 Horst, Ronald and Jeffrey Werling, National Association of Manufacturers, ‘‘Catching Up: 

greater Focus Needed to Achieve a More Competitive Infrastructure,’’ September 2014. <http:// 

www.nam.org/Issues/Infrastructure/Surface-Infrastructure/Infrastructure-Full-Report-2014 

.pdf> 4 U.S. Department of Transportation, National Freight Strategic Plan, October 2015. <https:// 

www.transportation.gov/sites/dot.gov/files/docs/DRAFT_NFSP_for_Public_Comment_508_10% 

2015%2015%20v1.pdf> 

in their region, will be able to respond to the competitive demands of a growing 

economy over the next 10 to 15 years.3

According to the U.S. Department of Transportation, the annual cost of congestion, including passenger car delay on roads shared with trucks, is estimated at $1 

Trillion, roughly seven percent of U.S. economic output.4 To foster economic growth, 

retain U.S. businesses, and attract new industry, the U.S. needs freight infrastructure which provides a safe and competitive platform for the U.S. market. Unique 

from other types of infrastructure wide investment, investment in the Nation’s 

multimodal freight network is an economic multiplier. Not only are jobs created immediately in the construction phase, but an efficient goods movement system will 

attract and retain U.S. businesses, support exports, and benefit the economy for future generations. 

It’s not just a matter of spending. Investment must be strategic and cut across 

traditional modal barriers. Some of freight infrastructure’s largest, most complex, 

and most desperately needed improvements occur where multiple modes come together. These instances often require a partnership at the Federal level to help disentangle chokepoints which place a multitude of burdens on our communities and 

inhibit commerce. 

The FAST Act created a much-needed competitive grant program designed to target investments in large freight and highway projects. The Nationally Significant 

Freight and Highway Projects Program, or FASTLANE program, contains criteria 

written into law that focuses on goods movement infrastructure. The goals of the 

programs include, increasing global economic competitiveness, improving connectivity 

between freight modes, and improving the safety, efficiency and reliability of the 

movement of freight and people. Competitive grant programs, such as FASTLANE, 

assist in funding large-scale infrastructure projects, spanning modes and jurisdictional borders, which are difficult, if not impossible, to fund through traditional distribution methods such as formula programs. 

As part of a restructured long-term leasing agreement with the Port Authority of 

New York and New Jersey, PNCT is undergoing one of the largest privately funded 

transportation infrastructure projects in the state of New Jersey. Leveraging other 

multimodal transportation projects in the region, funded by the Port Authority and 

Federal investments in rail, road, channel and bridges infrastructure, PNCT has 

spent $200 million in upgrades since 2011 and will spend between $500 and $600 

million by 2030 to complete the project. These upgrades will double the capacity of 

the terminal allowing PNCT to adequately handle forecasted increased volumes 

while improving efficiency and resiliency. However, this progress would not be possible with private investment alone. 

The County of Essex, New Jersey submitted a FASTLANE application under the 

second round seeking $29.7 million for its $112 million PNCT Wharf Revitalization 

and Improvement Project. Of note, 73 percent of this project is privately funded. If 

awarded, FASTLANE funding will accelerate the reconstruction of a decommissioned and unusable 48-year old 1,200-foot berth. In addition, the project will upgrade an adjoining substandard 1,200-foot berth to enable Ultra Large Container 

Vessels (ULCVs) to call at Port Newark following the completion of the raising of 

the Bayonne Bridge. Additionally the upgrade will support the expansion of the Marine Highway barge service system. These projects are linked to support a more efficient marine transportation system in the region. 

These projects would not be completed in a timely manner using only traditional 

funding. While traditional formula funds complement a grant funding approach and 

provide state departments of transportation a funding stream to carry out construction, maintenance and preservation of the Nation’s highways, their ability to fund 

non-highway freight projects is severely limited. Freight mobility—on all modes— 

requires added capacity and improved efficiency to keep pace with growing demands. Connectivity among the modes is key to the efficient movement of goods. 

These large-scale infrastructure projects, spanning modes and jurisdictional borders 

are not funded via traditional methods; therefore, we must continue to support nontraditional methods of funding in order to ensure the implementation of these key 

multi-modal projects. 

40 

5 U.S. Department of Commerce, Build it Here, Sell it Everywhere: Why Exports Matter, May 

2012. <http://www.commerce.gov/news/fact-sheets/2012/05/17/fact-sheet-build-it-here-sell-iteverywhere-why-exports-matter> 6 International Chamber of Shipping. <http://www.ics-shipping.org/shipping-facts/shippingand-world-trade> 

In addition to the Nationally Significant Freight and Highway Projects program, 

TIGER grants, are critical for transportation projects that are difficult to fund 

through traditional distribution methods, however the two are not interchangeable. 

Whereas the Nationally Significant Freight and Highway Projects Program was developed with freight-focused investment criteria, the TIGER program can address 

many types of mobility needs—including freight, mixed use infrastructure, and transit. 

While formula programs invest through a standard 80 percent Federal to 20 percent non-federal match, under competitive grant programs, states and localities are 

encouraged to bring their best possible deal to the table, driving innovative and creative funding and financing arrangements. 

Competitive grant programs frequently drive down the Federal share through creative financing arrangements, private sector participation, and strong non-federal 

matching. This is exemplified through Essex County, New Jersey’s TIGER award 

for the Port Newark Terminal Access Improvement Project, which flipped the traditional 80/20 formula match on its head. Thirty (30) percent of funding came from 

the Federal Government, and 70 percent was from private industry. According to 

the U.S. Department of Transportation, for every $1 of Federal monies distributed 

through the TIGER program, $3.50 is leveraged through other sources, including 

private funds. The first round of Nationally Significant Freight and Highway 

Projects program yielded similar results: the grants, totaling nearly $800 million, 

will be combined with other funding from federal, state, local, and private sources 

to support $3.6 billion in infrastructure investment. 

As Congress contemplates its Fiscal Year 2017 budget, I urge you to retain and 

robustly fund the TIGER competitive grant program. It has been a critical program 

for freight infrastructure, including ports. 

It is important to note that 95 percent of the market for U.S. goods lies outside 

of U.S. boundaries,5 and more than 90 percent of global trade is waterborne.6 Ports 

are critical to moving goods produced in the U.S. to foreign markets. Decreasing investment in transportation and infrastructure is not a choice which supports economic growth. 

Federal Role for Freight Investment 

Freight congestion is more than a hindrance to economic growth—it is also a 

threat to public health and safety. Congestion from any mode of transport diminishes air quality and impacts essential community services such as police and EMS 

response times. In so many instances, local communities are bearing the environmental and social burden of nationally-significant freight movement, but they are 

unable to foot the bill on large-scale infrastructure projects that would alleviate negative impacts. 

The benefits of freight movement accrue nationally, and as such, there is a Federal responsibility to be a partner in making improvements, and in many instances, 

there is an opportunity for private sector contributions. State and local governments 

cannot shoulder the burden alone, nor can this lift be expected to be borne entirely 

by the private sector. 

Without a campaign of strategic investment to expand capacity and increase efficiency, U.S. productivity and global competitiveness will suffer, costs will increase 

and investment will lag. As Congress considers steps to meet these needs, perhaps 

through a large-scale infrastructure investment proposal, we respectfully ask that 

the following steps be considered: 

Develop a national strategy that guides long term planning: A national ‘‘vision’’ 

and investment strategy that shapes and guides the Nation’s freight infrastructure 

system with active coordination among states, regions, localities is needed. A focus 

on multimodal freight should be established within the U.S. Department of Transportation’s Office of the Secretary to guide freight mobility policy and programming 

with a particular focus on projects of national significance that aid in the movement 

of commerce. 

Project planning horizons for freight needs extend over multiple decades, therefore 

planning and financing approaches must be facilitated to support these long-term 

projects that enable economic growth, both domestically and internationally. 

A unique mix of public and private infrastructure and specialized knowledge at 

the Federal level is required to understand the operational and economic differences 

41 

between the various types of goods movement infrastructure. For example, port infrastructure development challenges will be different from challenges presented by 

highways and roads. This investment strategy should include innovative and flexible approaches to structuring Federal financial assistance in a manner that encourages private sector investment. 

Existing and undersubscribed programs such as TIFIA, which hold the potential 

to provide leverage to grant programs and private investment need to be retooled 

from a platform to support public entity partners to a platform of public-private 

partnerships. Over the past two years PNCT has continued to work with the Build 

America Bureau at the U.S. DOT to establish creative financing initiatives through 

the TIFIA program in support of infrastructure development in Port Newark. 

Provide dedicated, sustainable, and flexible funding: Federal funding should 

incentivize and reward state and local investment and leverage the widest array of 

public and private financing. In addition to current programming, a minimum annual investment of $2 billion dedicated to multimodal freight infrastructure, and 

distributed through a competitive grant program is needed. We encourage Congress 

to provide oversight for the existing Nationally Significant Freight and Highway 

Projects Program and the Freight Formula Program to ensure this funding is used 

to improve freight infrastructure. 

Implement A set of merit-based criteria for funding allocation: A goods movement 

funding program, such as the Nationally Significant Freight and Highway Projects 

Program grant program, should select projects through merit-based criteria that 

identify and prioritize projects with a demonstrable contribution to national freight 

efficiency. Long-term funding must be made available to ensure that, once a project 

is approved, funds will flow through to project completion. Funds would be available 

to support multi-jurisdictional and multi-state projects, regardless of mode, selected 

on the basis of objective measures designed to maximize and enhance system performance, while advancing related policy objectives. 

A partnership with the private sector: Private participation in the Nation’s freight 

infrastructure is vital to system expansion. Federal funding should leverage private 

participation and provide transportation planners with the largest toolbox of financing options possible to move freight projects forward quickly and efficiently. The establishment of an advisory council made up of freight industry members and system 

users could assist and partner with USDOT in order to foster such partnering with 

the private sector. 

Our nation’s ability to move goods is tied to the quality of our multi-modal infrastructure, a key component of U.S. economic growth. 

I would like to thank the Committee for their time and attention to this critically 

important topic. 

The CHAIRMAN. Thank you, sir. 

And thank you to the panel for your opening statements. With 

that, I will begin the first round of questioning. 

Mr. Fritz, you discussed the importance of a balanced regulatory 

structure for freight railroads which invest billions in their own infrastructure. Can you provide us with any details as to the consequences of an unbalanced or overreaching with Federal regulations for our nation’s railroads? 

Mr. FRITZ. Certainly, Chairwoman. As you recognized, it’s very 

important for us to be able to earn a return, and part of that is 

the regulatory environment. We invest something like $3 billion or 

$4 billion a year, and we own and maintain our own right-of-way. 

Our safety regulatory, the Federal Railroad Administration, has 

recently put forward a potential rule to, for instance, mandate two 

people in a cab of a locomotive. We just heard from several panels 

here exhorting this Committee to support autonomous vehicles, 

both a partner in some cases, and a competitive mode in others. It 

strikes the rail industry and me personally as extremely ironic that 

our primary safety regulator would mandate staying frozen in time 

for the railroads versus actively supporting our competitive mode 

in pursuing autonomous vehicles. 

42 

Our point is let technology take us where technology is going to 

take us. I think the regulatory environment that would make most 

sense is one where it’s performance-based as opposed to commandand-control based. It uses waivers as an excellent way to test technology and test out new regulation, and also would allow us to test 

technology with a little bit more encouragement as opposed to exhorting us to live in the past. 

The CHAIRMAN. If I can follow up with you in that you’re talking 

about moving away from the command-and-control style regulations, and you talked about performance-based and utilizing technology so that you can see even greater safety. Give me an example 

of how that would work exactly and why you think it would be 

safer. 

Mr. FRITZ. Sure. So right now we have—Union Pacific has three 

or four installations on our railroad where trains go through these 

installations. Think about them as a portal, a gantry, a portal of 

devices, and at 60 or 70 miles an hour, it takes 50,000 images per 

second of every car on the train. And it uses laser infrared imaging, 

high-speed digital imaging, and onsite, it crunches those 50,000 images to determine if that car or that intermodal box is in good operating condition. If it’s not, it identifies where the possible defect is 

and sends that image on to the terminal where the train is going 

to ultimately terminate so that the carmen working in that terminal can fix the defect as opposed to spend really unproductive 

time searching for defects. 

What that does is it helps us find more defects than the human 

eye can find, we get it fixed more rapidly, it enhances the customer 

experience, and it removes people from environments where there 

is significantly more risk to them, i.e., walking in and around 

equipment while in a terminal. That’s something that we would 

love to be able to advance as a methodology for inspecting cars as 

opposed to forcing our carmen to do it by eye. 

The CHAIRMAN. Thank you. 

And, Mr. Leathers, I share your concerns about addressing the 

commercial driver shortage. And you mentioned several potential 

ways to address the challenge, including decreasing testing delays 

or requiring the U.S. Department of Labor to designate truck driving as a national in-demand occupation. 

How do you believe that greater training or any kind of innovative technologies can help us to be able to address that shortage? 

Mr. LEATHERS. So I think, Senator, there’s a gamut of things 

that we could and should be doing. I think the first thing I’d like 

to start with is more of a statement. I think the men and women 

that drive, the professional drivers delivering our Nation’s freight 

every day, deliver over 70 percent of the tonnage, and they’re doing 

it in our nation’s service. And these folks out there work diligently 

every day to try to do it safely. 

What we have to do is find ways, innovative ways, as you’ve 

mentioned, to allow them to focus all of their efforts unfettered on 

safety and safely delivering of freight, and remove any obstacles 

that aren’t directly tied to that specific benefit. 

As it relates to driver testing, we’ve seen driver CDL delays. So 

we take a driver, a driver goes to a truck driving school, they graduate from that school, and they want to be tested. They have a job 

43 

waiting for them. So you talk about shovel-ready. This is wheelready, and we’re awaiting their employment. 

Well, they may take 2 to 4 weeks in some states before we can 

get them a test. By the time that test takes place, those skills have 

eroded. We need to be able to be quick on the draw, be able to 

eliminate bottlenecks where they exist, and get these folks tested. 

Once they test out, we and others like us, still put them in a finishing program. So they’re not done yet. They come to Werner, they 

go through 6 to 8 weeks of additional training. That’s necessary. 

That’s something we’re committed to, to make sure the driver we 

put on the road is truly professional and able to do it as safely as 

possible. 

But anything we can do, from arbitrary restrictions on CDL permitting, where we can’t cross state lines where a school may exist 

to be able to get your CDL permit, so you can engage in your education and get back to work sooner, those are things that we need 

to focus on. 

I want to correct the record a bit. We’re not one that’s proposing 

that autonomous trucks are going to solve this problem. I do believe that autonomous truck technology solves a different problem, 

which is it allows the driver to have a better way of life. 

If we can take the technologies that we’re gaining today already, 

what’s called Level 2 autonomy, which are integrated into trucks 

today—collision mitigation, integrated collision mitigation, forward 

braking, forward cameras, lane departure technology—we can 

eliminate or greatly reduce accidents on our Nation’s roadway. We 

want to see a focus on that type of investment, and that kind of 

investment be better rewarded for those people that are taking it. You know, I mentioned in my testimony $50 million of investment in safety technology, but that’s the cost of admission. To get 

that technology, we spent $980 million in the last 2 years in capital 

expenditures for a company that’s much, much smaller than some 

of my competitors up here, because to get the new technology, you 

need a new truck to go with it, and we’re buying those trucks in 

great volume to try to ensure a better lifestyle for our drivers. 

The CHAIRMAN. Thank you. Senator Booker and I are interested 

in working on partnerships when it comes to the use of technology, 

and I happen to think transportation is a really viable area where 

we’re going to be seeing that in the future. So thank you very 

much. 

Senator Booker. 

Senator BOOKER. With your permission, Chairman, I would like 

to pass my time on to Senator Hassan. 

The CHAIRMAN. OK. Senator Hassan. 

STATEMENT OF HON. MAGGIE HASSAN, 

U.S. SENATOR FROM NEW HAMPSHIRE 

Senator HASSAN. Thank you, Madam Chairman and Ranking 

Member Booker. And thank you for passing your time on to me. 

And good afternoon to all of our panelists. Thank you so much 

for being here. 

I wanted to start with you, Mr. Ducker. We know what a critical 

role the trucking industry plays in our economy and certainly in 

my home state of New Hampshire. And you referenced a little bit 

44 

the things that FedEx have done. You’ve really demonstrated exceptional leadership, as I understand it, in using new technology 

and promoting safety across your fleet. I know there is more work 

that needs to be done to ensure safety, and we’ve been talking 

about it, and Mr. Leathers was just speaking about it. But I’d like 

to give you an opportunity just to elaborate a little bit more on 

what FedEx is working on and what additional measures you hope 

to see taken in the future to improve safety on our highways. 

Mr. DUCKER. Well, thank you, Senator Hassan. And you’re absolutely right. And to Ranking Member Booker’s comment, any accident is one too many, so improving safety has always been a focus 

for us. That’s why we’ve always been at the top of the charts in 

terms of safety performance. 

So there are a lot of things that I think we could do. We are 

working right now and will have within the year 100 percent of our 

employee road fleets, we’re also incenting any of our independent 

service providers, to have the following technologies, and Derek 

mentioned some of them in his testimony: collision mitigation; lane 

departure mitigation; roll stability; telematic event recorders, 

which help inform you about the future; electronic logging devices. 

One hundred percent of our fleet is already speed limited at 65 

miles per hour and has been for many years. Our drivers go 

through extensive training, 100 to 200 hours of one-on-one instruction before they ever go out on the road on their own. 

We have a top-notch research and development division at FedEx 

where we look at every new safety technology that’s coming on the 

marketplace. If it’s out there, we’ve seen it. We take it in, we test 

it, we determine its viability for the operation, and then we seek 

driver feedback and employee feedback on all of those. And once 

approved, then, as Derek said, we spend the capital and we put it 

to work in all of our systems because nothing is really more important. 

I think we have to continue to look at all of those kinds of new 

innovations because the markets out there are changing rapidly, 

supply chains are, and we have to meet those challenges with technology where we can. Automated vehicles is just one example of 

that. 

Senator HASSAN. Thank you. 

Mr. Pelliccio, I wanted to touch on the Marine Highway project 

with you. Through the Maritime Administration, the Department 

of Transportation is working to better integrate our Marine Highway vessels and ports into the Nation’s surface transportation system. Better integration will help alleviate freight congestion and 

provide additional benefits, such as alleviating the impact of shipping on our environment. 

So what is your assessment of the need for this program and the 

feasibility of it? 

Mr. PELLICCIO. Thank you. We have spent a considerable amount 

of time studying the 23,000 miles of Marine Highway capability 

that exists in the United States and that are underutilized. I have 

worked closely with the Maritime Administration in these discussions, and we’re focused on areas of the country where we believe 

this is best served. One example is the Northeast Corridor. 

45 

We are currently—we were currently appointed a Marine Highway System and began running services on an ad hoc basis between Port Newark Container Terminal and Brooklyn Red Hook 

Terminal. If you look at that particular corridor, we refer to it as 

the Liberty Corridor, up through Massachusetts, there is a great 

opportunity to begin to consider through the supply chain how 

overweight hazardous material, refrigerated material, can be handled within that corridor. 

We’re looking now at different possibilities regarding placing of 

equipment chasses, potential locations, and we’re studying the feasibility from an economic standpoint on how that can compete. 

I see this as complementary to the other modes of transportation 

currently as a marine terminal. We’re an intermodal function 

where we turn cargo over to rail, truck, and now barge. We’re doing 

it throughout the country to different degrees, but in our most congested areas of the country, it follows considerable logic, it makes 

sense for us to think about what the future will look like with the 

change in container vessels that will approach many of the gateway 

cities in the United States. Today, we may handle a vessel that 

carries 9,000 containers, but will discharge 2,500 or 1,500 containers on a particular move. In tomorrow’s environment, we’ll handle ultra-large container vessels that will discharge as many as 

6,000 and 7,000 containers in that same window and will put further pressure on the supply chain. 

So the Marine Highway is, I think, a reality for the future of our 

industry. It’s certainly a reality relative to the roadway infrastructure that we feed today. The environmental impact is inarguable. 

It makes significant sense for us from an environmental perspective. We are working with Labor, we are working with the port authorities, and we’re working with the states to develop a schematic 

that will allow us to launch that program, and we’re in the midst 

of that now. 

Senator HASSAN. Well, thank you. And I see that I’ve gone over 

time. I appreciate very much your work on that, and we’ll follow 

up with you about what more could be done to move that initiative 

forward. 

Mr. PELLICCIO. Thank you. 

Senator HASSAN. Thank you all very much. 

The CHAIRMAN. Senator Wicker. 

STATEMENT OF HON. ROGER F. WICKER, 

U.S. SENATOR FROM MISSISSIPPI 

Senator WICKER. Thank you, Mr. Chairman. 

And thank you all. I appreciate what each of your companies is 

doing with regard to moving product around the country. I hope we 

get an infrastructure bill. I hope you’re all enormously successful 

because that will mean the economy is successful. 

As my colleagues know, I’ve taken a strong position, though, 

against the idea of forcing the Twin 33 trailers on states, on the 

30 states, that have opted out of this. And there are huge concerns, 

safety concerns, as expressed by sheriffs, by the AAA, and by safety 

advocates that have come to see me. 

But my question today, Mr. Fritz, is with regard to whether the 

large-scale implementation of Twin 33s would tilt the playing field 

46 

in terms of competition. Would large-scale implementation of Twin 

33s negatively affect the railways? 

Mr. FRITZ. Senator, we’re in the process of evaluating that exact 

question amongst other aspects of the Twin–33 initiative. Our historic position has been one where we have not taken a position; we 

have essentially been neutral on the topic. We’re in the process of 

reevaluating that, and I do not have a direct answer for you today. 

Senator WICKER. OK. You know, there have been a number of 

entities that have reevaluated. For example, the American Trucking Association last year lobbied extensively in favor of moving to 

a twin-33 mandate, and they announced in January of this year 

that they do not plan to push in this session for an extension 

length of twin trailers beyond their current legal limit. As a matter 

of fact, the ATA website says, ‘‘We support a reformed Federal 

truck size and weight regime that gives states more flexibility,’’ 

and of course, that’s what I support, ‘‘to authorize safer, cleaner, 

and more productive vehicles, and that retains Federal regulations 

designed to promote interstate commerce.’’ So this is the ATA reevaluating their position. 

Do you know, Mr. Fritz, if the Association of American Railroads 

has taken a position on twin-33 trailers or increases in truck 

length? 

Mr. FRITZ. The Association reflects its membership on the topic, 

which is largely neutral and also in the process of evaluating that 

position. 

Senator WICKER. OK. Well, let me shift briefly in the 2 minutes 

I have to this issue of on-dock railway access. And this is a concern 

to my state of Mississippi, because we are interested in multimodal 

and intermodal access with our ports. 

So to Mr. Pelliccio and Mr. Fritz, what suggestions do you have 

to improve transportation efficiency between the railways and the 

ports? And how much does on-dock railway access at ports increase 

the efficiency of intermodal transportation? 

And, Mr. Pelliccio, I’ll go to you first. 

Mr. PELLICCIO. Well, thank you. And it’s actually an excellent 

question. It’s critical. When you think about port infrastructure, 

you think, you have to recognize, that we are the entry point and 

the exit point. Our responsibilities to the Midwest and non-coastal 

cities outside of the immediate gateway is critical for the supply 

chain. 

In the case of—and I’ll give you one example: We recently connected on-dock rail in our Newark operations where we brought 

what was previously a rail yard less than a quarter mile from our 

operation with a rail flyover bridge. We took 1,000 truck moves a 

day off the busiest roadway connecting the ports of New York and 

New Jersey from the north end to the south end of the port. We 

took 1,000 truck movements a day through that intersection off and 

connected them directly to the rail. We’ve quadrupled productivity 

of containers, their ability to move containers to that rail yard. And 

we’ve increased the capacity of that rail yard, lowering the environmental footprint caused by moving trucks through a public roadway to access that rail yard. That’s one example. There are many, 

many examples. If you go to ports throughout the tri-coastal footprint, you will see opportunities to upgrade port infrastructure. 

47 

Another very good example is the on-dock rail in the port of 

Seagirt, Maryland, where we’re working with the Maryland DOT 

and the Maryland Port Authority and CSX to raise the Howard 

Street Tunnel to allow double stacking for rail from the port of 

Seagirt, which will again increase capacity in the North Atlantic 

and the northeastern United States. 

So I don’t think you can overstate the importance of bringing rail 

and ports together as the supply chain continues to grow. The requirement to feed rail from the ports efficiently is paramount. 

Senator WICKER. Madam Chair, I wonder if we could get a brief 

answer from Mr. Fritz on this issue. 

Mr. FRITZ. Thank you, Senator. I couldn’t agree more with Mr. 

Pelliccio. Likewise, adding in, in the intermodal products space, 

which generates I’ll call it 13.5 million units of volume annually for 

the railroad industry, there’s that critical connectivity between 

ports, trucks, and the railroads where the railroads are part of the 

solution to much of what we’ve been discussing here today as the 

potential problem, which is, how do you create more capacity in the 

states’ highway system and allow for more robust, safer transportation via highway? 

Intermodal product is great, and you hit it right on the head, 

Senator, from the standpoint of the connectivity of ports to rail to 

highway is critically important because ultimately the last mile or 

last 50 miles or sometimes the last 150 miles are executed by a 

truck. And so railroads very much support robust infrastructure investment. And we love it when you perceive that as being critically 

important in the connection points for intermodal product. 

Senator WICKER. Thank you. 

The CHAIRMAN. Senator Inhofe. 

STATEMENT OF HON. JIM INHOFE, 

U.S. SENATOR FROM OKLAHOMA 

Senator INHOFE. Thank you, Madam Chairman. 

It’s going to be interesting. This Committee and the Committee 

that I chair, and the Environment and Public Works Committee, 

the Transportation Committee, we’re all going to be working real 

close together and keeping pretty busy, I think. 

Mr. Ducker, first of all, let me thank you because you opened up 

a big station in Oklahoma City. In fact, you came out for the dedication, and I did, too. And I just think it’s—let me ask you one 

question about it. I know you have a hundred C&G trucks. Is this 

also, the station, going to be servicing the public, too, or just your 

trucks? 

Mr. DUCKER. Just our trucks. 

Senator INHOFE. OK, we’ll talk about that. 

Mr. DUCKER. Yes, sir. OK. 

[Laughter.] 

Senator INHOFE. All right. No, I was going to ask the same question that Senator Hassan asked about some of the innovative 

things that you have done, but you already answered hers. 

Let me, Mr. Leathers, mention one other thing having to do with 

CDLs. The way it used to be, and I know you know this, but some 

of the members of the Committee may not know this, that you 

could go ahead and get a learner’s permit or get a driver’s permit 

48 

in your home state or in another state, and then when you come 

back to your home state, that would be honored. Then the Federal 

Motor Carrier Administration implemented a rule that would prevent that from taking place. 

First of all, I don’t understand why they did that. And, second, 

is there a solution to that to accommodate people who want to go 

back to the old system? 

Mr. LEATHERS. Senator Inhofe, that’s a great question. And so 

from our perspective, if we are going to take driver training seriously and get best-in-class training out there for men and women 

entering this industry, we are better served with larger scale, centralized operations with the best in technology, driver simulators, 

all of the ability that we can to invest to make sure that we give 

them the highest quality training. If we were to have—— 

Senator INHOFE. Which you could not do with all of the 

states—— 

Mr. LEATHERS. Which you could not do—you could not do across 

50 states. And so realistically speaking, it is a far more cumbersome system we have today for somebody to have to get a CDL 

permit in their home state—— 

Senator INHOFE. All right. What is a solution? 

Mr. LEATHERS. I think we have to allow them to get CDL permitting in the state of their school, where they’re going to be taking 

their education, just like certification in other fields would take 

place the same way, some sort of Federal standard on a CDL learner’s permit so that they can go to school, be educated, and be prepared for a career where there are jobs waiting. 

Senator INHOFE. OK. Well, I will be helpful to you in that endeavor. 

Mr. LEATHERS. Thank you. 

Senator INHOFE. So stay in touch. 

The FAST Act, when we passed the FAST Act, I was Chairman 

of the Environment and Public Works Committee. It was the biggest thing that we have done since 1998, and the first time that 

we had a provision in there for a national freight program. And it 

also provided for FASTLANE grants. In fact, we, in Oklahoma, had 

a FASTLANE grant, Mr. Fritz, that was very helpful in accommodating people to get by the railroad crossings. And I think you 

probably had some pretty good results like we have in Oklahoma. 

It’s kind of a win-win situation because it helps the community 

with their congestion and it helps the railroads. Any comments 

about that? 

Mr. FRITZ. Yes. The kind of spending that you’ve just outlined, 

which in a pure sense is public-private partnership—— 

Senator INHOFE. Yes. 

Mr. FRITZ.—is a perfect way to target those freight dollars. We 

see the benefit when communities want to step into an investment 

with a freight railroad like Union Pacific that we couldn’t justify 

the project on our own, but we’ll receive some benefit from as well 

in terms of a more fluid network and a better service product for 

the customer base. Grade crossing separations are an example of 

that. So can be last-mile investment, like Senator Wicker mentioned. So we are very supportive of what you just talked about. 

49 

Senator INHOFE. Yes. Well, it’s worked out very well in my state 

of Oklahoma. In fact, you, Mr. Ducker, you cite the congestion in 

our Nation’s highways and in our cities as a major issue that you 

face daily. What are some of the proposals that you recommend out 

there that might reduce that congestion? 

Mr. DUCKER. Well, I think there are a number of things that can. 

I brought up one in my oral testimony, putting less trucks on the 

road by increasing the capacity of the trucks that are already on 

the road with Twin 33s as opposed to Twin-28 trailers, as one. Congestion pricing is another thing that could be considered. Perhaps 

new roads that are built around congestion areas paid for by tolls. 

That sometimes has a public-private partnership element to it. I 

think there are a number of things. 

Using the technology that my colleagues have talked about here 

early in terms of connecting customers with our vehicles and with 

the delivery schedules that we’re on is another example of that as 

well. So those are just a few thoughts that come to mind on that. 

Senator INHOFE. That’s good. 

Thank you, Madam Chairman. 

The CHAIRMAN. Thank you, Senator Inhofe. 

Senator Duckworth. 

STATEMENT OF HON. TAMMY DUCKWORTH, 

U.S. SENATOR FROM ILLINOIS 

Senator DUCKWORTH. I want to thank the Chair and Ranking 

Member for convening today’s hearing. And I want to thank our 

witnesses for participating in this very important conversation. 

Mr. Fritz, as Union Pacific knows, any serious effort to improve 

our Nation’s freight rail system must prioritize Illinois, the busiest 

rail hub in America. Can you remind us how much freight rail traffic passes through Illinois every year? 

Mr. FRITZ. Yes. So if I narrow that down to Chicago, it’s hard for 

me to speak to the full state, but roughly 25 percent of the Nation’s 

freight traffic wants to move through Chicago. 

Senator DUCKWORTH. I like how you say ‘‘wants to move through 

Chicago.’’ 

[Laughter.] 

Senator DUCKWORTH. We’re going to get to that part. 

In your testimony, you touched on the CREATE program, a first 

of its kind public-private partnership to improve our region’s rail 

network. In Illinois, we have already experienced benefits of the 

CREATE program. However, I strongly believe that CREATE could 

serve as a model to be copied throughout the Nation. 

As a CREATE participant, would you be able to elaborate on the 

program’s benefits and share your view on whether Congress 

should consider expanding this model for other important rail hubs 

around the country? 

Mr. FRITZ. Absolutely, Senator. And the short answer is I am 

very supportive, and we’ve had a very positive experience. For the 

rest of the Committee, CREATE was birthed in the early 2000s, 

call it about 2002, and it was a partnership between all of the 

freight railroads that serve Chicago, plus Amtrak, state and local 

government, and the Federal Government, and it was designed to 

leverage private dollars, railroad dollars, investment dollars, with 

50 

public spending to benefit both Chicago area residents and the Nation’s freight rail network. It’s had tremendous benefit. 

A couple of touch points. The time it takes for a car to get 

through Chicago has been reduced by about a third. That’s a big 

lift when you consider how much traffic is trying to make it 

through Chicago. And it’s also a big benefit when you consider how 

much traffic moves through Chicago. 

So we’ve also had an opportunity to reduce emissions in the city 

and in the state because now we have freight trains moving more 

fluidly through. And we’ve improved safety because what you don’t 

want to do is have freight traffic dwell and get a community lulled 

into thinking freight trains aren’t moving as opposed to moving 

through routinely. 

So it’s had many, many benefits, and we are very supportive of 

finding ways to expand that concept in other locations. And we are 

making small steps in that area in other metropolitan cities. 

Senator DUCKWORTH. Thank you. I think the data point that people are always astonished to hear—I’m speaking to your 25 percent 

trying to get through Chicago—is that it takes freight cargo 48 

hours to get from the Port of LA to Chicago, and then another 30 

hours just to get from one side of Chicago to the other. And so the 

75th Corridor Project, Improvement Project, which you talked 

about under CREATE, is critical not just to Chicago and Illinois, 

but the entire Nation’s freight supply system. So I thank you for 

your answer. 

Would you also concur that this project is a textbook example of 

the type of investments Congress intended to support when it created the FASTLANE program in late 2015? 

Mr. FRITZ. I would say certainly it is. It benefits the public, it 

benefits the Nation’s ability to move freight, and it benefits our 

economy by enhancing our ability to produce and ship goods. 

Senator DUCKWORTH. Thank you. I want to further expand on 

freight, Mr. Ducker. Would you agree with Mr. Fritz, that improving freight reliability benefits companies like FedEx? And also I 

would be interested in your perspective on the importance of improving freight efficiencies on the national economy and all the different modes of travel as well. 

Mr. DUCKER. Yes, I would absolutely agree. With the rapid 

growth of e-commerce in the country, it has really overtaken the 

networks that have been created for many, many years. And so 

we’re not modernizing these networks fast enough. Regulation is 

not keeping up with the pace of innovation and automation. And 

so I absolutely agree that it’s a crucial issue for our country as we 

go forward. 

I think by some estimates, we’ll have a 15 percent compounded 

annual growth rate in freight traffic over the next 5 to 6 years, and 

so a lot of that is driven by e-commerce. So investment in the infrastructure and also the technology that enables the infrastructure 

has to be a key part of our future. 

Senator DUCKWORTH. Thank you. Would you speak to aviation as 

well? We talked about rail here, but would you like to put in your 

two cents on things like the O’Hare Modernization effort? 

Mr. DUCKER. Well, absolutely. As one of the larger airlines in the 

world serving 220 countries with a fleet of 655 planes, this is near 

51 

and dear to our hearts. And we’ve done some pretty creative, innovative things with Federal Aviation, but we certainly are always 

looking for ways to innovate and improve the aviation sector. 

O’Hare is certainly one of the busiest airports in the world. We 

have a huge facility there with a large number of employees. So 

we’re supported. We’ve already moved our facility once in O’Hare 

to make it a much more smooth-flowing, productive, and efficient 

freight terminal. But certainly those projects are very important to 

us as well, and an updating of the architecture and the infrastructure of the Nation’s aviation system in total is very important to 

a company like ours, as it is to Chicago. 

Senator DUCKWORTH. Thank you. 

I yield back. And I thank the Chair. 

The CHAIRMAN. Thank you. 

Senator Udall. 

STATEMENT OF HON. TOM UDALL, 

U.S. SENATOR FROM NEW MEXICO 

Senator UDALL. Thank you, Madam Chairman, and thank you, 

Senator Booker, for this hearing. Very good panel. Good to see all 

of you here today. 

Mr. Fritz, we’ve heard a lot about the border from Candidate 

Trump, and now President Trump, about building a wall, about 

raising tariffs on products coming from Mexico. And this talk has 

caused a lot of major concerns in my home state of New Mexico, 

concerns about whether the President’s economic policies could 

hurt jobs and business opportunities. And I believe New Mexico 

could be one of the most hardest hit by a trade war. 

New Mexico, most people here probably don’t know it, but New Mexico exports $1.6 billion in goods to Mexico every year, so we 

have significant trade going on there. I’m headed down to the border in a few weeks to celebrate a new port of entry—we have several along the border—in Columbus and to highlight international 

trade in nearby Santa Teresa. And as you know, Mr. Fritz, you 

have a substantial operation down there that I’m going to talk 

about in a bit, but I hope maybe you’ll join us in that trade discussion down there. 

Union Pacific has invested more than $400 million in a Santa Teresa rail center. This multimodal complex is located along the border near Las Cruces, El Paso, and Ciudad Jua ́ rez. This center can 

move tremendous amounts of freight in both directions across the 

border. 

And this week we expect President Trump to formally start the 

process of renegotiating the North American Free Trade Agreement. Many folks are on edge wondering how disruptive any negotiation process or resulting agreement will be. And one thing I feel 

quite strongly about is that any updated NAFTA agreement should 

be submitted to Congress for approval. 

And so, Mr. Fritz, what does the renegotiation of NAFTA mean 

for Union Pacific, especially at the Santa Teresa facility there 

where you have made such significant investments? And what advice do you have for Congress and the Administration to ensure 

that any NAFTA renegotiation is as smooth as possible and avoid 

significant business disruption? 

52 

Mr. FRITZ. Thank you, Senator. 

Senator UDALL. You bet. 

Mr. FRITZ. As I mentioned in my testimony, international trade 

is critical to America’s freight railroads. It’s critical to the U.S. 

economy. 

Just a couple of touch points. One in three acres in the United 

States is grown for export. Exports supports, or international trade 

supports, something north of 14 million U.S. jobs. Our trade relationship with Canada and Mexico is really inextricably linked in 

the supply chains for most, if not all, of U.S. industry. 

When I look at the renegotiation of the NAFTA agreement, as I 

mentioned, there are some obvious opportunities for enhancement. 

We’ve made significant progress, as individual countries, on environmental law and regulation on labor law, on the development of 

e-commerce, on the development of complex data flows. Those are 

not reflected adequately in the current agreement. So those are all 

opportunities I think. 

I think there’s opportunity for enhanced language on border security. My admonition to the Administration, or suggestion, is that 

we tread deliberately and thoughtfully into the negotiation, that we 

do so—I think it would be most effective in a tripartite conversation as opposed to two bilateral conversations. And I think ultimately the administration talks a lot about helping the economy 

grow at 3 to 3.5 percent and to create great U.S. jobs, and NAFTA 

supports both. NAFTA and the trade that is enabled both helps the 

economy, and the jobs related to our international trade in the 

United States tend to pay 15 to 20 percent more than the average. 

So that’s how we speak to NAFTA when we talk about it publicly. 

Senator UDALL. Mr. Leathers, do you have any thoughts on kind 

of what’s swirling around here and how that might impact trade 

there on the border? 

Mr. LEATHERS. Yes. I mean, for us, it’s pretty straightforward. 

Trucking and trade are inseparable. I mean, we pay very close attention, Werner in particular. We’re the largest trucking—truckload company doing business to and from Mexico. I’ve lived and 

worked in Mexico, in the interior, prior in my life. I even ran a 

Mexican trucking company. 

I agree there are things with a 22-, 23-year-old agreement that 

the time has probably come to look at, but tread lightly and be 

careful and think about what’s at stake. This agreement has refutably brought a robust trade arrangement between ourself and our 

trading partners. And we’re all in the North American neighborhood. I mean, we are inextricably linked. 

I think we have to be careful of how we proceed. But we’re openminded to the idea of improvements that could be made, but look 

forward to continuing to serve our customers both in the U.S., as 

well as Mexico and Canada, which we do happily today at very 

large volume levels. 

Senator UDALL. Thank you both and thanks to the whole panel. 

Thank you, Madam Chair. 

The CHAIRMAN. Senator Blunt. 

53 

STATEMENT OF HON. ROY BLUNT, 

U.S. SENATOR FROM MISSOURI 

Senator BLUNT. Thank you, Chairman. 

Mr. Fritz, in the last Congress in the long-term transportation 

package we call the FAST Act, we had a provision in there that I 

wrote that streamlined the permitting process for railroads just 

like we had tried in an earlier version of the transportation bill to 

streamline permitting for highways. Do you have any sense of the 

implementation of that so far? Or if not, how important it is we’re 

able to get to the work that we need to do? 

Mr. FRITZ. Senator Blunt, I do not have a good answer for you 

as regards the current implementation of that. I can tell you that 

we applauded the inclusion of that language. When you’re trying 

to invest $3 billion or $4 billion a year as a company or tens of billions of dollars a year as an industry into your private network, it’s 

shockingly hard. 

I think the vast majority of the American public would not recognize how difficult it is to put a dollar in the ground in the United 

States if you’re a railroad. So being able to streamline that process 

and bring a little bit of sensibility to it helps us. It helps us because, as I mentioned in testimony, we make very large, very longterm dollar bets. And when that time-frame is extended on the 

front end, once you’ve made the decision that an investment makes 

sense, all you’re doing is enhancing the risk, most likely increasing 

the cost, and you probably haven’t done anything to increase the 

benefits. 

So it just makes a risky investment all the more risky. And the 

bottom line of those investments is so that we can provide a much 

better experience for our customer base, which is building America, 

which is essentially the fabric of the American economy. 

Senator BLUNT. Thank you for that. As we look down the road 

of what comes next, we’re seeing this great opportunity, and world 

food demand doubling in 35 years or so, world food need will double, and 10 years longer than that, we think the demand comes 

even quicker. You’ve got at the table people who really have a 

sense of the intermodal from air freight to truck to train. 

What do we need to be thinking about that makes that intermodal competition work better for us than it’s working now, and 

hopefully better for us than it works anywhere else? But give me 

a sense of how we maximize what we do and the ways we do it 

so that we maximize our competitive opportunity. 

Mr. Ducker, do you want to start? 

Mr. DUCKER. Certainly, Senator Blunt. Thank you for the question. And interestingly enough, we all three work together to deliver that today. We use each other’s networks. We’re each other’s 

partners and customers. And so it’s a very important concept for 

the growth of the transportation network long term. 

I think probably the most important thing that we have to do is 

to find a method of funding and get started. There are 20 or so 

projects. I have a list of them here with me today that are ready 

to go as soon as we can. They’ve been highlighted as real congestion and chokepoints. So I think that’s one thing. 

54 

And I think finding a sustainable source of funding, one that 

doesn’t run out year one. But how do we fund it for the future so 

that we can secure these networks for the long haul? 

And then, third, what kind of regulation do we create that allows 

for greater innovation, greater use of the technology, to connect 

those kinds of networks together? 

Senator BLUNT. And you’ve got the 20 places we ought to start? 

Is that what you’re telling me? 

Mr. DUCKER. Well, I’ve got a list. It’s not my personal list, but 

it is one that certainly has received some widespread attention. 

Senator BLUNT. If you haven’t offered it already, I would hope 

you’re sure to leave it with us before you leave. I would like to look 

at that. 

Mr. DUCKER. I will definitely leave it here. There are real 

chokepoints. 

Senator BLUNT. Mr. Leathers, same concept. 

Mr. LEATHERS. Well, I concur. I mean, I think when you think 

about a national highway system that represents 5 percent of the 

road miles in America but carries 93 percent of truck vehicle mile 

traveled, we’ve got some work to do on that infrastructure. But to 

the intermodal point, we do business and work with everybody at 

this table on a daily—or a monthly, if not daily, basis. 

I think what you will find is that freight transportation is becoming increasingly complex, people want everything tomorrow, and 

we can’t allow ourselves or our organizations to be petty about 

what mode it moves. Our expectation is to find and be mode-neutral, find a way to get it to them most efficiently. 

And so where the investment dollars are needed is in these intermodal connected facilities, these bottlenecks that have been identified clearly by the American Transportation Research Institute. 

And some of those are highway-specific. Some of those are truckcentric. Many are not. Many are intermodal hubs where we’re all 

interacting together. 

And so I think if we’re able to be mode-neutral on those investment dollars and put them where the pain is, we can go a long way 

in a short time with releasing some of this congestion that’s out 

there tearing up the American public’s cars. I mean, one of the estimates has average damage to a vehicle today at $523 a year in just 

road damage wear and tear. That’s avoidable expenses if we get 

after funding. 

And I agree with Mr. Ducker that it’s an ‘‘and’’ proposition. 

There’s not a single silver bullet. But we need to explore all options. We certainly have preferences of some over others. And simply stated, our preference for fuel tax is just that it has the highest 

percentage of dollars raised going to the actual fund versus being 

diverted to administration of the actual collection activity itself. 

Senator BLUNT. Thank you. I’m out of time. I may have a couple 

of questions to submit for the record, Mr. Pelliccio, to you and others on that same topic. So thank you. 

Mr. PELLICCIO. Thank you, Senator. 

The CHAIRMAN. Senator Blumenthal. 

55 

STATEMENT OF HON. RICHARD BLUMENTHAL, 

U.S. SENATOR FROM CONNECTICUT 

Senator BLUMENTHAL. Thank you, Madam Chair. 

I’d like to ask each of you, how far away do you think driverless 

trucks are? I assume that it’s in years, not months. 

Mr. LEATHERS. I guess I’ll start. Obviously, technology is evolving 

very rapidly. What we like about it is that we get the safety benefits in the short term. I think we’re a long, long way away from 

true driverless trucks going down America’s roadways and hauling 

80,000 pounds of gross vehicle weight without a driver in the cab. 

Planes have been able to take off and land for a long time. None 

of us got here today in a pilotless plane. I think these professional 

men and women do many other tasks other than just driving, and 

the anticipation and professionalism they bring to the job can’t be 

underestimated. 

Senator BLUMENTHAL. So maybe I misheard. A long ways away? 

Mr. LEATHERS. So I believe, and if you speak to some of the autonomous companies themself, there’s rhetoric around 5 to 10 years 

from being able to reliably go from exit to exit, which means you’d 

still have a driver in the cab even then. I believe those estimates 

may prove to be optimistic. But we need to embrace their endeavors because from their endeavors, we receive today collision mitigation technology, lane departure technology, lots of benefits that our 

drivers are able to enjoy, and more importantly, the motoring public is able to be made safer. 

Senator BLUMENTHAL. Mr. Fritz? 

Mr. FRITZ. Senator Blumenthal, I’ll leave the timing question to 

my trucking expert panelist partners. But one thing that I would 

add to the discussion is there is not a lot of conversation about the 

necessary infrastructure that’s not truck-based that would enable 

true autonomous vehicles traveling around the country. They need 

well-defined lanes. They need lots of communication infrastructure. 

And in your mind’s eye, you think about the roads that you travel on, that you see trucks on. Do all of them have excellent lane 

designation? Are they all uniform? Do they have excellent signage? 

Do they have excellent signal? So there’s a lot of infrastructure 

that goes into enabling a nationwide network of autonomous vehicles—— 

Senator BLUMENTHAL. And we’re nowhere near that. 

Mr. FRITZ. Not very close. 

Senator BLUMENTHAL. Mr. Drucker—Ducker, I’m sorry. 

Mr. DUCKER. Yes, sir, Senator. Thank you for the opportunity to 

comment. You said, is it months or is it years? And it is years away 

from that. But I do believe we should embrace the technology. 

These driver-assisted systems—— 

Senator BLUMENTHAL. But when you say ‘‘years’’—and I’m not 

holding you to your estimate—I don’t think you’re under oath. In 

the Judiciary Committee, we swear every witness in, but not here. 

Mr. DUCKER. Yes. 

[Laughter.] 

Senator BLUMENTHAL. So I’m looking for, as a complete layman 

in this area, 5 to 10 years. It’s not 5 to 10 decades, I assume. But 

I will just say as a layman and as a driver, I have some severe apVerDate Nov 24 2008 13:41 Sep 06, 2017 Jkt 075679 PO 00000 Frm 00059 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\26597.TXT JACKIE
56 

prehension about the idea of driverless trucks. And so I’m looking 

for just a general estimate. 

Mr. DUCKER. Well, I think Derek stated it quite well. We have 

one of the most modern fleet of aircraft available in the world 

today, and we still have a pilot behind the wheel of that airplane. 

And so I think total autonomy is years and years away. I think you 

can get to a situation where you have platooning, and that quite 

possibly is a driver-assisted system that would—is safer. The reaction time on those, one-tenth of a second compared to a second for 

human interaction. 

So I think you will progress over time, but I think we should embrace it in order to improve the overall freight transportation network. And certainly I think a driver’s job, to the shortage problem, 

would be enhanced greatly with these automated systems over the 

course of time, not, as some have stated, replace the driving job. 

I don’t believe that’s going to happen anytime soon. 

Senator BLUMENTHAL. Thank you. I’m happy to let you off the 

hook because I’m about to run out of time, Mr. Pelliccio, but please 

answer if you—— 

Mr. PELLICCIO. Senator, our paradigm is different. Four and five 

thousand mile networks as opposed to four and five hundred acres. 

Technology plays a very important part for safety and productivity 

in our operations, and automation in many cases is much closer to 

being a bigger part of our operation in the future. But it is a different paradigm, but it plays a critical role. 

Senator BLUMENTHAL. Well, I just want to make the point that 

last year the National Highway Traffic Safety Administration 

issued guidance, only guidance, for automated passenger vehicles, 

also known as driverless cars. Later this year, the Federal Motor 

Carrier Safety Administration, the agency that oversees the trucking industry, is expected to issue similar guidance as to driverless 

trucks. 

And I believe, going especially to Mr. Fritz’s point—and I agree 

wholeheartedly—that there is a need for real rules of the road, literally rules of the road, if we are ever to change the current model 

of how trucks are driven, in other words, without human beings 

driving them. Someone has to drive them. 

And even with drones—and we’re just developing the rules of the 

road for drones, and a lot of it’s being done at the state level, as 

I know from my own state of Connecticut—there still have to be 

drivers. They are automated to the extent they’re up in the air 

without someone actually in them, but someone is actually driving 

them in the sense of determining where they go. So I appreciate 

your answers because I think they illuminate the work still to be 

done apart from the technology because even with the best technology, you’re still going to need rules, and I hesitate to use that 

program regulation, but you’re going to need regulation. This is an 

area where regulation is going to be important. So thank you for 

your testimony. 

Thanks, Madam Chair. 

The CHAIRMAN. Thank you. 

Senator Booker. 

Senator BOOKER. Thank you very much, Chairman. 

57 

So, Mr. Pelliccio, thank you very much for being here and representing the great state of New Jersey. 

Mr. PELLICCIO. Thank you, Senator. 

Senator BOOKER. Do you feel some Jersey pride right now? 

Mr. PELLICCIO. I do. Thank you. 

Senator BOOKER. I’m grateful for that, sir. I’m really grateful for 

that. 

Mr. PELLICCIO. All right. Maybe we can have dinner in Newark. 

Senator BOOKER. And listen to some Bruce Springsteen at the 

same time. 

Mr. PELLICCIO. All right. We’ll do that. 

Senator BOOKER. Good. 

[Laughter.] 

Senator BOOKER. So you talked about the importance of these 

grants that we’ve been applying to really—I was pleased one of the 

first things we were able to get done as a Senator, was get a 

TIGER grant for the port area. But can you help me understand 

why these competitive grants are important as opposed to just giving money through the states in accordance to sort of the freight 

formula? Can you sort of—are there ways that we can improve 

these programs? Do you have any ideas or thoughts on that? 

Mr. PELLICCIO. You know, Senator, the competitive platform for 

TIGER and FASTLANE really provides an environment for individual projects, complex multimodal projects, in the case of supply 

chain, to be able to get on the table and combine both private sector capabilities and dollars with public grants to really accelerate 

projects, projects that are—we’ve spoken a lot today about the supply chain and the connectivity of the supply chain—projects that 

would otherwise be delayed or go unfunded. And you find that very 

much in the port network. 

We know that the FASTLANE grants and the TIGER grants 

have been oversubscribed significantly. And we understand that. 

But to me, it’s really a leading indicator relative to just how important they are and how many critical projects are out there, fully 

recognizing that you cannot solve every problem every day. 

But if you look at the traditional models, the 80/20 model for federally-funded projects, every project that I’ve engaged in or at least 

put on the table had a 70/30 share with private dollars coming in, 

and significantly reducing the Federal share of those grants. 

So I think it puts our best ideas forward. It allows us to rank 

projects. It’s a bottoms-up process that comes from the state and 

project level, and it’s a very, very effective platform. 

Senator BOOKER. And I will just emphasize what you said, it’s 

very effective, and, frankly, for those taxpayer dollars invested, 

there’s a huge multiplier effect in terms of economic growth, job opportunities, and the like. 

Mr. Leathers or Mr. Ducker, can you just comment on the fact 

that we’re talking about a massive infrastructure investment in 

this country, and there are different philosophies, let’s say, about 

the ways to do it? Some folks want to do it just from tax breaks 

to the private sector, which I imagine would mean more tolls. As 

opposed to direct investment, just doing it through tax breaks, 

what effect would that have on your industry? 

Mr. LEATHERS. Do you want to go first? 

58 

Senator BOOKER. D comes before L, so let’s go with Ducker. 

[Laughter.] 

Mr. DUCKER. OK. I think it’s going to require a variety of methods, but we have said we believe the most direct method, the 

quickest method, the easiest to collect, has been the index of fuel 

tax or vehicle user fees. 

Senator BOOKER. Right. 

Mr. DUCKER. And so some of the other items that have been stated should be considered as alternatives. That’s the most direct—— 

Senator BOOKER. If I can cut you off, direct payments? 

What about you, Mr. Leathers? 

Mr. LEATHERS. Well, so similarly. I mean, the fuel tax we think 

is the easiest, most efficient, cleanest, in terms of administration 

to get funds into the private place. There’s a place for private-public partnerships at certain bottlenecks, but that’s a small—— 

Senator BOOKER. What would tolls do to your—— 

Mr. LEATHERS. Tolls, we are averse to tolls on existing highways 

in a very significant way. I mean, these roads are built. We would 

like to see them repaired and funded through alternative methods. 

Tolls, in the best case scenario, use 12 to 14 percent of the cost of 

the toll in the administration of the booth, you know, of the tolling 

process; worst case, 30 percent. That’s an inefficient use of funds. 

Just the administration of it alone. 

Senator BOOKER. They create bottlenecks, environmental 

issues—— 

Mr. LEATHERS. They create bottlenecks. They create environmental issues. 

Senator BOOKER. So real quick, you mentioned a lot about the 

technology from automated cars. 

Mr. LEATHERS. Yes. 

Senator BOOKER. This is one way that we should be pursuing for 

safety, right? Because there’s a lot of, let’s just say, electronic logging devices, crash-avoidance technologies. These are things that 

you realize that we should be deploying more in the industry, correct? 

Mr. LEATHERS. We are 100 percent supportive of electronic log- ging devices. We are placing, as I mentioned earlier, $980 million 

of CAPEX in the last 2 years in integrated safety technologies. We 

believe the dollar in the investments there—nothing we do is worth 

getting hurt or hurting others, obviously, but there’s an investment, there’s a return on investment in these safety dollars and 

these integrated systems. 

Senator BOOKER. OK. So speaking, Mr. Fritz—I didn’t want to 

leave you out here, and it’s good to see you here, I’m grateful that 

you are—when it comes to truck size and weight, we have a very 

complex intermodal industry. Every aspect, trucks, air, all of that 

is integrated into one. I just want to ask you, most people don’t 

think about what impact increasing truck size and weight would 

have on the rail industry. Can you tell me what impact it would 

have on your industry really quickly if you can? 

Mr. FRITZ. Yes. Potentially, it would take freight that’s traveling 

on trains and put it back on the highway potentially. Our perspective on increasing truck size and weight is, first, let’s make sure 

user pays for the consumption of what’s being consumed today beVerDate Nov 24 2008 13:41 Sep 06, 2017 Jkt 075679 PO 00000 Frm 00062 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\26597.TXT JACKIE
59 

fore we start growing beyond current consumption. And we’re agnostic as to exactly how user pays; fuel tax, weight fees, we really 

don’t care. 

Senator BOOKER. And then last question, Mr. Leathers, I’m going 

to treat you as a hostile witness, just yes or no, please. Is it true 

that you played football for Princeton University? 

Mr. LEATHERS. Yes. 

Senator BOOKER. And it is true that Princeton University is located in which state, sir? 

Mr. LEATHERS. New Jersey. 

Senator BOOKER. Thank you very much. 

[Laughter.] 

The CHAIRMAN. Do you all see what I have to put up with? 

[Laughter.] 

STATEMENT OF HON. MARIA CANTWELL, 

U.S. SENATOR FROM WASHINGTON 

Senator CANTWELL. Thank you, Madam Chair. And thank you 

and the Ranking Member for holding this important hearing. 

I think what I would like to do is see if I can get the witnesses 

on record about what we need to do to continue our investment in 

freight mobility and our port infrastructure. I notice that Canada 

is investing about $2 billion annually, and while we did a good job 

in the FAST Act, I don’t know that the ‘‘skinny budget’’ has any 

numbers or anything on this thus far. So I wanted to get a sense 

from you of what kind of—not a number, but the commitment to 

continue to make these investments and the notion that the ports 

aren’t really able to do all this landside investment to help us. 

Second, about the last mile, we obviously have lots of port railroad infrastructure that is just the last mile. What do we need to 

do to make sure that we are recognizing this as a key freight mobility issue as well? 

So any of the witnesses who want to—— 

Mr. FRITZ. I’ll start and then turn it over. Thank you, Senator 

Cantwell. 

So a two-part question. The first part is, are we investing enough 

and what should we be investing in our port facilities? I would encourage you all, I just had an opportunity about 3 months ago to 

go visit a facility in LA, it’s called—actually Long Beach—Long 

Beach Container Terminal, LBCT. The owner of that terminal is in 

Phase 2 of a three-phrase build-out. This particular installation in 

the port by itself is going to be capable of handling 2 million TEUs 

by the end of Phase 2 and up to 3 million if it goes through all 

three phrases. And it’s a completely automated terminal. That’s the 

kind of investment that the terminals of the future are going to 

have to be in order to compete globally to attract the freight that 

wants to move. 

Whatever we can do to encourage technology investment like 

that, automated vehicles onsite, all battery-powered, not much 

interaction from once the container ship is docked to when the container is on a dray chassis and heading out the dock. As a matter 

of fact, they’ve cut in half the amount of time it takes a drayman 

to pick up a box and leave. 

60 

So in the port facilities, there are examples, they do exist, and 

we can be globally competitive with that kind of investment. 

In terms of the last mile, again, we’ve talked about it several 

times today, investing in the connectivity between modes is a win 

for the United States. We are the envy of the world when it comes 

to our freight network. Anything we can do to help ease bottlenecks 

and lubricate the system—and that usually needs to happen at 

interchange points—is a win for the U.S. economy. 

Mr. LEATHERS. I would just like to echo some of Mr. Fritz’s comments. I think one of the misnomers out of hearings like this, and 

inevitably comments that come thereafter, are, you know, people 

thinking truckers, for instance, are looking to keep everything on 

the highway. The fact of the matter is when we get a bid in from 

a customer, the first thing we do is look to see what’s the best 

modal solution. And seldom do we touch freight that didn’t originate at a port or isn’t destined on the other end at a port. 

And so putting money into bottlenecks around the country is 

critically important. And again I’ll restate, on occasion, that may 

be a bottleneck in an urban market like Atlanta or Dallas or a metropolitan area that isn’t directly related to a major freight hub as 

it relates to intermodal. Other cases are clearly identifiably intermodal in nature. But if we focus our efforts on the 14 to 15 largest 

bottlenecks in this country and really put the medicine where the 

pain is, we can go a long way toward eliminating the congestion 

that this industry has been suffering from for a long time. 

Senator CANTWELL. So there isn’t any magic that says that Canada—that we can be so efficient that we can invest less than 

they’re investing, is there? 

Mr. LEATHERS. Not in the current conditions of our infrastructure. 

Mr. PELLICCIO. Senator, I would suggest from a port perspective, 

automation is certainly a critical part of our future, and we are investing in automation on a number of levels across the portfolio. 

But I think it’s an important question because we need to be sure 

that there are dollars secured for the physical infrastructure that 

has at times in many cases in our gateway cities has deteriorated. 

We are putting significant private dollars into these ports now. And 

we spoke quite a bit about FASTLANE and TIGER grants and 

other opportunities to work in partnership with the Federal Government to bring the physical infrastructure up. With the widening 

of the Panama Canal and the shift in manufacturing to Southeast 

Asia, you’ll see more and more—you’ll see larger vessels coming to 

our ports over the next couple of years, and the port infrastructure 

has to be prepared to handle that. 

I can say we’re making gains, but there is much more work to 

do. The fact that we’re having this hearing today and ports are at 

the table. Oftentimes we find ourself in a different room when 

we’re discussing transportation dollars because we’re somewhat isolated and our business is run separately from what the average citizen sees every day on the roads until something goes wrong. 

So be assured that technology is important, it is for our future. 

Available dollars for infrastructure investment in our key ports is 

critical. 

61 

Senator CANTWELL. Thank you. I couldn’t have said that better 

in the context of this is why we wanted the freight policy to begin 

with. And I think what you’re alluding to is that we actually could 

lose business if we don’t keep at this task. We definitely could get 

in a position where our delivery of products and services could be 

choosing different routes because of our level of congestion. 

Mr. PELLICCIO. Clearly. And I’ll leave you with this, Senator. Our 

exporters are most sensitive to costs in our transportation network 

and the supply chain for the markets that they will sell to and 

market to around the world. And our ports are the beginning of the 

first mile and the beginning of the final mile, and they’re in significant need of attention. And we’re working hard to get there. There 

are a lot of good news stories out there, but it’s a void that needs 

to be filled. 

Senator CANTWELL. Thank you. 

Senator BOOKER. Chairman, can I just—I want to reiterate that 

point because it was something I saw when I was Mayor, that literally we could be losing business to other countries because of the 

inadequacies of our ports as they stand today. 

Mr. PELLICCIO. No question. And quite honestly, Senator, the 

transportation logistics and distribution opportunities that exist in 

our urban cities that serve as gateways for many of these ports 

are—we haven’t spoken about that, but if you look at how cargo 

moves today and how the Internet has changed, how people buy, 

the goods, the final mile of goods, is moving closer to the actual 

consumer, and cargo in ports, consumers have wrapped themselves 

historically around ports. Our cities have grown from port cities. 

That infrastructure is critical to the development of the supply 

chain moving forward. 

Senator BOOKER. Thank you. Thank you. 

The CHAIRMAN. My thanks to everyone today. I appreciate the 

comments from the panel. 

The hearing record will remain open for 2 weeks, and during 

that time, Senators are asked to submit any questions for the 

record. Upon receipt, the witnesses are requested to submit their 

written answers to the Committee as soon as possible. 

Again, thank you to our panel. We are adjourned. 

[Whereupon, at 4:07 p.m., the hearing was adjourned.] 

(63) 

A P P E N D I X 

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. AMY KLOBUCHAR TO

DEREK J. LEATHERS

Question 1. Several of my colleagues noted before I had to leave the hearing that 

as we explore options for modernizing America’s infrastructure we will need multiple strategies. However, we cannot understate the critical role of direct Federal 

funding for infrastructure projects especially in rural communities. 

Mr. Leathers, you note in your testimony that freight bottlenecks create costly 

delays. These bottlenecks are located in both rural and urban areas. How could direct Federal investment in rural areas improve the flow of freight? 

Answer. The Department of Transportation (DOT) is projecting that congestion 

will worsen in both urban and rural areas if investment in highway capacity continues to fall short of needs. Investments in reducing bottlenecks and identifying 

key freight networks will improve all aspects of freight movement and the economies in rural and urban areas. For instance, the rural economy has a significant 

stake in an efficient freight transportation system because transportation accounts 

for a large share of the production costs for goods such as agriculture, mining, and 

energy products that are the economic foundation of many rural communities. Addressing the capacity needs of rural roads will prevent increases in the costs of 

freight transportation, making U.S. products more competitive in global markets, 

and lowering prices for American consumers throughout the Nation for essentials 

such as food, fuel, and home energy needs. It should be noted that rural highway 

investment challenges will not be solved by the private sector because the greater 

density of traffic in urban areas will always be more attractive to investors. Therefore, direct public investment by local, state, and Federal Government agencies is 

critical to improving the safety and efficiency of rural highways. Werner commends 

Congress for the significant steps taken in the Fixing America’s Surface Transportation (FAST) Act toward ensuring that federal-aid dollars are invested wisely 

through the creation of the National Highway Freight Program and Nationally Significant Freight and Highway Projects program. These actions and programs will 

significantly improve the ability of transportation agencies to better focus investment in rural and urban areas. 

Question 2. Apprenticeships provide workers an opportunity to stay in the labor 

market, earn a living wage and pursue a recognized credential. For employers, apprenticeships provide a custom-trained workforce and improved safety outcomes. 

That’s why I introduced the American Apprenticeship Act with Senator Susan Collins to provide funding for tuition assistance programs to help participants in preapprenticeship and Registered Apprenticeship programs. 

Mr. Leathers, Werner Enterprises started the industry’s first Professional Truck 

Driver Apprenticeship program. Has the apprenticeship program improved recruitment and retention of new drivers? What incentives could be helpful for other companies to start their own apprenticeship program? 

Answer. Thank you for placing a priority on introducing legislation with Senator 

Collins to improve opportunities for workforce development and connecting workers 

to jobs. Werner has made significant efforts to grow the driver workforce by 

partnering with the Department of Labor (DOL) and the Department of Veteran Affairs to start the industry’s first Professional Truck Driver Apprenticeship program 

to further invest in the development and training of professional drivers. Werner 

partners significantly with truck driving training schools to ensure a stable flow of 

highly trained, professional drivers in a time when the entire industry is facing a 

significant driver shortage. Werner has a student driver program that provides tuition reimbursement for professional drivers in truck driving training schools. Werner believes incentives should be considered for providing additional Federal funds 

for driver training programs and removing barriers to students seeking Federal aid 

to attend truck driving schools. The DOL should be directed to establish truck driving as a national in-demand occupation, which would free up resources devoted to 

64 

filling vacant truck driving jobs. It is important to have a legislative and regulatory 

environment that allows workforce development and job placement opportunities. 

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. RICHARD BLUMENTHAL TO

DEREK J. LEATHERS

I understand that excessive wait times during the loading and unloading process 

are a serious problem in the trucking industry, particularly for small companies who 

don’t have the negotiating power to charge for detention time, which is the time 

drivers must excessively wait during loading and unloading. Some argue that many 

truck drivers give away dozens of hours each week waiting for their truck to be 

loaded or unloaded. 

Question 1. Do you perceive excessive wait times during the loading and unloading process as being a problem for the industry? 

Answer. Yes, excessive wait times can adversely impact efficiency in trucking operations. Carriers cannot plan for unexpected delays at a customer facility, which 

means tying up capacity while waiting for the opportunity to load or unload. This 

has a negative impact on safety, is part of the reason why the industry experiences 

high driver turnover rates, and raises the cost of shipping goods for consumers as 

it lowers overall productivity. The trucking industry takes any type of wait time or 

delay on our ability to move freight in a serious manner. This is a concern that is 

felt across the entire industry, whether the company is large or small. Our industry 

aims to service our customers with consistent reliable service that the American 

economy demands. Due to the ongoing concern of wait times, Congress has instructed that DOT complete an audit of detention time issues through the FAST 

Act. The audit is currently underway, and the industry is awaiting its findings. It 

is our hope that the audit will be a catalyst for action, and Congress will have to 

determine what steps, if any, it should take to protect efficient good movement from 

excessive wait times. 

Question 2. Is the lengthy detention of drivers a problem for your company? 

Answer. It is definitely still a challenge for our drivers, however Werner has 

worked extremely hard to partner with our core base of shippers to create as many 

drop trailer opportunities as possible to limit and reduce wait times for our drivers. 

This is one of our top priorities from a freight characteristics perspective as we onboard new freight opportunities. Our goal is to move our customer’s goods in a safe 

and efficient manner. Certainly any lengthy times when our drivers are not moving 

goods is a concern, because that is an indicator of a lack of productivity. We closely 

monitor all aspects of our drivers’ productivity, whether that be detention time concerns or even delays caused by congestion on our Nation’s roadways. 

Question 3. Is this a problem in the industry? 

Answer. Yes, it is a challenging issue for the industry. 

Question 4. Is this a problem for independent drivers? 

Answer. Excessive wait times are a significant problem for all drivers of the industry, whether independent owner-operators or professional drivers of large companies like Werner Enterprises. 

Question 5. How should it be addressed? 

Answer. There is no easy answer on how to address wait times on a holistic level 

across the trucking industry due to the diverse nature of operations in the goods 

movement sector. For example, wait times at our Nation’s port facilities may have 

specific mitigation needs as compared to wait times that drivers experience at a 

warehouse or traditional shipper. However, the market demands efficiency and it 

is likely that market forces will eventually solve any obstacles standing in the way 

of the American consumer. Since this problem is not uniform in nature, we do not 

see any ‘‘one size fits all’’ solution. The industry will continue to address the problem through agreements between carriers and their customers. The implementation 

of Electronic Logging Devices will also have a vital impact illustrating the use of 

time by a driver and will be a tool for collaboration amongst the industry. As DOT 

continues its audit of detention time, the Agency will hopefully undercover some 

common trends that the industry and our government partners can address. The research will provide a better understanding of the magnitude and implications of the 

detention time problem, and any attempts to address it through legislation or regulation would be premature before that research is completed. 

65 

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. TODD YOUNG TO

MICHAEL L. DUCKER

Question 1. Mr. Ducker, revitalizing our Nation’s infrastructure is an important 

part of the agenda for this committee and this administration. As we build infrastructure, it is important that we consider future growth trends and the intermodal 

needs of tomorrow. I know FedEx spends a tremendous amount of time looking 

ahead. Indiana is home to one of the largest FedEx transit hubs that employs thousands of Hoosiers. Can you speak to where are you seeing future growth, not just 

in Indiana but more broadly? Where should Congress be investing not only to repair 

existing infrastructure needs, but also to efficiently invest in needs ten and twenty 

years from now? 

Answer. We must maximize our existing infrastructure. Our interstate system is 

now over 60 years of age, and it is in desperate need of updating. We need both 

short and long term investment. 

Short term, we must stop the deterioration of many interstate roads and bridges 

that have long suffered from neglect. There are over twenty interstate highway 

projects that are engineered and could move forward now if funding were available. 

Long term we need a plan to modernize, improve, and expand the entire system. 

Freight volumes are projected to increase 45 percent by 2045, and this increase 

will add pressure to existing freight bottlenecks across the country, further slowing 

the performance of our highway network and the transportation industry. 

One immediate solution to our current infrastructure issues is a Federal increase 

in the national standard for twin trailers from the current 28 feet to 33 feet. FedEx 

strongly supports this modernization of equipment standards, which would result in 

an 18 percent capacity gain without any change to the gross vehicle weight limit. 

Twin 33-foot trailers would reduce the number of trucks on the road, thereby enhancing safety, decreasing wear and tear on the highways, and reducing fuel consumption and carbon emissions. This common sense solution requires no Federal investment and has near immediate benefits. 

We must identify revenue sources for long-term funding for the Highway Trust 

Fund. As I said in my testimony, in order to avoid over-reliance on a single option, 

FedEx supports a broad mix of revenue sources, including: 

• increasing and indexing fuel taxes; 

• a vehicle-miles-driven fee or other direct user-based fee; 

• a reduction in the U.S. corporate tax rate; and 

• congestion pricing. 

In addition to infrastructure investment and equipment modernization, FedEx 

supports a reduction of unnecessary regulatory burdens, which make it hard for our 

small and medium-sized business customers to grow. We need appropriate and uniform national regulations that reflect advances in new technology, including the 

broad adoption of advanced driver assist safety systems for vehicles. 

Modernized infrastructure and policies that support innovation will drive efficiency, enhanced safety, technology upgrades, and sustainability improvements, all 

of which will jumpstart the American economy. The time to act on infrastructure 

is now. 

Question 2. Mr. Ducker, as consumers and businesses buy more and more goods 

via e-commerce, your resources will be strained. Could you tell me about the various 

technologies that FedEx and other logistics companies are utilizing to deliver goods 

to more efficiently and economically serve consumers? 

Answer. The boom in e-commerce has changed consumer behavior and increased 

demands on our Nation’s transportation infrastructure. Global growth in e-commerce has changed the retail landscape, and it has also highlighted the importance 

of a modern infrastructure to keep pace with consumer demand. 

We must work together on policy and solutions that will modernize our surface 

transportation system and drive our economy forward. Infrastructure investment 

must not be limited to road and bridge improvements. A holistic modern transportation system will combine physical and digital infrastructure enhancements with 

sound transportation policies, including incentives for improved safety and fuel efficiency. A broad mix of sustainable funding sources for the Highway Trust Fund is 

essential for long term success. 

We must also modernize our equipment standards, which haven’t been updated 

in over 25—35 years. FedEx strongly supports the proposal to increase the national 

standard for twin trailers from the existing 28 feet to 33 feet, which is a sensible 

and immediate solution with proven gains in safety, efficiency, capacity and sustainability. 

66 

Emerging technologies, such as vehicle-to-vehicle and vehicle-to-infrastructure 

communication platforms; autonomous vehicles; and platooning show great promise 

for increased efficiencies and sustainability, but most importantly for increased safety. 

FedEx supports more research into artificial intelligence and advanced autonomous technologies and just as important, uniform and reasonable regulatory guidelines to allow these technologies to continue improving efficiency and safety while 

also addressing our Nation’s transportation and infrastructure challenges. 

RESPONSE TO WRITTEN QUESTION SUBMITTED BY HON. AMY KLOBUCHAR TO

MICHAEL L. DUCKER

For the last five decades, traffic fatalities on our roads had been declining. However, data recently released by the National Highway Traffic Safety Administration 

(NHTSA) show that from 2014 to 2015 there was a seven percent increase in traffic 

fatalities. We know that distractions behind the wheel played a part in this rise. 

I included a provision in the FAST Act to help more states qualify for Federal 

grants to fight distracted driving. 

Question. Mr. Ducker, what does FedEx do to educate its drivers about the dangers of distracted driving? 

Answer. At FedEx, the safety of our employees, our customers and the public is 

always our first priority. A culture that values ‘‘Safety Above All’’ starts with our 

Chairman and is engrained throughout all FedEx operating companies and employees. Prior to any employee taking the wheel of FedEx Freight equipment, he/she must 

meet a number of minimum requirements, including possession of a current, valid 

commercial driver’s license as well as certain experience and physical requirements. 

FedEx Freight also conducts an extensive background check including a review of 

the individual’s driving safety record and experience through his/her Motor Vehicle 

Record and criminal background checks. Additionally, all drivers must successfully 

complete FedEx Freight’s Driver Development Course which involves 364 hours of 

education and training, including observation rides; video and computer-based education; yard skills development; and 160 hours of on-the-road/behind-the-wheel 

training. Even experienced commercial driver’s license holders hired by FedEx 

Freight as drivers must complete 156 hours of FedEx Freight’s Driver Development 

Course education and training. The Course includes education and training specifically directed at the dangers of distracted driving, and our company policy also prohibits use of wireless devices while the vehicle is in motion. 

All FedEx Freight over-the-road trucks are equipped with the following safety systems, which also assist in reducing the dangers of distracted driving: 

• Lane Departure Warning systems; 

• Collision Mitigation System with Adaptive Cruise Control; 

• Electronic Stability Control; and 

• Electronic Speed Limiters. 

FedEx Freight trucks are also equipped with telematics systems which include 

cameras for the detection of safety-related events in order to provide more effective 

ongoing training and education for our drivers. We advocate for the broad adoption 

of the most modern and advanced safety systems for the trucking industry. 

In our on-boarding and annual recurrent training, we review the dangers of distracted driving and reaffirm our commitment to driving distraction free. Items addressed include the following: 

• Cell Phone/Texting—prohibited use while vehicle is in motion 

• Eating—prohibited while vehicle is in motion 

• Drinking—awareness 

• Securement of items in cab—awareness 

• Construction zone—heightened awareness 

• Smith System 5 Keys—Safe Driver Training 

» Aim high in steering 

» Get the big picture 

» Keep your eyes moving 

» Leave your self an out 

» Make sure they see you 

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In addition, all company-provided electronic devices lock out while the vehicle is 

in motion. 

Please let me know if you need any additional information. 

Æ