U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

98–012 PDF 2016

S. HRG. 114–132 

KEEPING GOODS MOVING 

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 FOURTEENTH CONGRESS 

FIRST SESSION 

FEBRUARY 10, 2015 

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

( 

(II) 

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JOHN THUNE, South Dakota, Chairman 

ROGER F. WICKER, Mississippi 

ROY BLUNT, Missouri 

MARCO RUBIO, Florida 

KELLY AYOTTE, New Hampshire 

TED CRUZ, Texas 

DEB FISCHER, Nebraska 

JERRY MORAN, Kansas 

DAN SULLIVAN, Alaska 

RON JOHNSON, Wisconsin 

DEAN HELLER, Nevada 

CORY GARDNER, Colorado 

STEVE DAINES, Montana 

BILL NELSON, Florida, Ranking 

MARIA CANTWELL, Washington 

CLAIRE MCCASKILL, Missouri 

AMY KLOBUCHAR, Minnesota 

RICHARD BLUMENTHAL, Connecticut 

BRIAN SCHATZ, Hawaii 

EDWARD MARKEY, Massachusetts 

CORY BOOKER, New Jersey 

TOM UDALL, New Mexico 

JOE MANCHIN III, West Virginia 

GARY PETERS, Michigan 

DAVID SCHWIETERT, Staff Director 

NICK ROSSI, Deputy Staff Director 

REBECCA SEIDEL, General Counsel 

JASON VAN BEEK, Deputy General Counsel 

KIM LIPSKY, Democratic Staff Director 

CHRIS DAY, Democratic Deputy Staff Director 

CLINT ODOM, Democratic General Counsel and Policy Director 

SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT 

MARINE INFRASTRUCTURE, SAFETY AND SECURITY 1

DEB FISCHER, Nebraska, Chairman 

ROGER F. WICKER, Mississippi 

ROY BLUNT, Missouri 

KELLY AYOTTE, New Hampshire 

JERRY MORAN, Kansas 

DAN SULLIVAN, Alaska 

RON JOHNSON, Wisconsin 

DEAN HELLER, Nevada 

STEVE DAINES, Montana 

CORY BOOKER, New Jersey, Ranking 

MARIA CANTWELL, Washington 

CLAIRE MCCASKILL, Missouri 

AMY KLOBUCHAR, Minnesota 

RICHARD BLUMENTHAL, Connecticut 

BRIAN SCHATZ, Hawaii 

EDWARD MARKEY, Massachusetts 

TOM UDALL, New Mexico 

1On March 3, 2015 the Committee finalized Member assignments for its subcommittees. The 

list below reflects March 3, 2015 assignments. When this hearing was held, on February 10, 

2015, formal assignments had not yet been made. 

(III) 

C O N T E N T S 

Page 

Hearing held on February 10, 2015 ....................................................................... 1 

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

Statement of Senator Blumenthal .......................................................................... 2 

Statement of Senator Daines .................................................................................. 28 

Statement of Senator Klobuchar ............................................................................ 29 

Statement of Senator Cantwell .............................................................................. 31 

Statement of Senator Thune ................................................................................... 37 

Statement of Senator Blunt .................................................................................... 39 

WITNESSES

Norman Bessac, Vice President, International Sales, Cargill Pork .................... 3 

Prepared statement .......................................................................................... 5 

Katie Farmer, Group Vice President, Consumer Products, BNSF Railway 

Company ............................................................................................................... 7 

Prepared statement .......................................................................................... 9 

Dr. Walter Kemmsies, Chief Economist, Moffatt & Nichol .................................. 13 

Prepared statement .......................................................................................... 14 

John E. Greuling, President and CEO, Will County Center for Economic 

Development, and Board Member, Coalition for America’s Gateways and 

Trade Corridors .................................................................................................... 20 

Prepared statement .......................................................................................... 21 

APPENDIX

Comments submitted by William J. Rase III, Executive Director, Lake 

Charles Harbor And Terminal District .............................................................. 41 

Response to written questions submitted by Hon. Richard Blumenthal to: 

Norman Bessac ................................................................................................. 45 

Katie Farmer .................................................................................................... 46 

Dr. Walter Kemmsies ....................................................................................... 47 

John E. Greuling .............................................................................................. 48 

(1) 

KEEPING GOODS MOVING 

TUESDAY, FEBRUARY 10, 2015 

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 10:01 a.m. in room 

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

Present: Senators Fischer [presiding], Thune, Blunt, Daines, 

Blumenthal, Cantwell, and Klobuchar. 

OPENING STATEMENT OF HON. DEB FISCHER, 

U.S. SENATOR FROM NEBRASKA 

Senator FISCHER. The hearing will come to order. Good morning. 

I am pleased to convene the Senate Subcommittee on Surface 

Transportation and Merchant Marine Infrastructure, Safety, and 

Security for our second hearing, which is entitled ‘‘Keeping Goods 

Moving.’’ 

To grow the economy and create new jobs, we need an efficient 

and reliable intermodal transportation network. Today’s hearing allows us to explore this issue with a particular focus on infrastructure and maintaining operations at our Nation’s ports. 

America’s intermodal transportation network is the foundation 

upon which U.S. businesses along all segments of the supply chain 

produce goods and get them to market. 

At our last hearing, Cabela’s outlined how disruptions or inefficiencies along our Nation’s just-in-time shipping network cost companies through lost sales, increased costs, and poor customer service. 

Deepwater ports represent a key element of the U.S. transportation network, and are vital to our economic growth. In fact, 

America’s seaports often serve as the key connection point for all 

modes of transportation. 

Our West Coast ports alone move 12.5 percent of U.S. GDP per 

year. A shutdown of America’s West Coast ports even for a short 

period of time would have devastating economic consequences. According to a recent report by the National Retail Federation and 

the National Association of Manufacturers, in the most severe case, 

a 20 day West Coast ports’ closure would disrupt 405,000 jobs, reduce U.S. GDP by almost $50 billion, and cost the U.S. economy 

$2.5 billion per day. 

2 

I have heard from businesses and consumers in my state expressing grave concerns about service disruptions at West Coast 

ports. Just last week, my office heard from an Omaha based company that manufactures electric conductors with inputs from Asia. 

This company is seeing its import time frame double and costs triple because of current slowdowns. 

For many businesses, changing shipping routes or modes is cost 

prohibitive. Unfortunately, whether they export agricultural goods 

or import retail, businesses are being forced to opt for air freight 

or are re-routing products to avoid losing market share due to 

missed shipments. Port congestion also impacts truckers and 

freight rail, as well as the competitiveness of the ports themselves. 

Everyone has a stake in seeing the ongoing negotiations between 

PMA and ILWU resolved quickly. Members of Congress and the 

Administration must pay close attention to these ongoing negotiations and the economic impact of service disruption at our ports. 

This is particularly important as we face the potential for ports 

on both coasts to be negotiating simultaneously in 2018, which is 

when the current East Coast labor contract expires. 

I am pleased that today’s panel will represent a wide array of 

perspectives on the effect of recent disruptions in our Nation’s supply chain. I am eager to hear further details from our panelists on 

the challenges that slowdowns at our Nation’s West Coast ports 

have posed to their industries and their consumers. 

I am also looking forward to hearing about opportunities for Congress, state and local governments, and the private sector to work 

toward modernizing and enhancing our Nation’s ports’ infrastructure for businesses, workers, and consumers. 

We need to explore the policy options to support port growth and 

future volumes of freight to keep goods moving. 

I would like to now invite my colleague, Senator Blumenthal, to 

make any opening remarks. Senator? 

STATEMENT OF HON. RICHARD BLUMENTHAL, 

U.S. SENATOR FROM CONNECTICUT 

Senator BLUMENTHAL. Thank you, Madam Chairwoman, Senator 

Fischer. Thanks to our witnesses for being here today, coming long 

distances, and contributing your insights to one of the critical challenges that our country faces, not always the most glamorous or 

noticed, but one of the most profoundly important to our economy, 

to jobs, and to our quality of life. We thank you for being here. 

In the remainder of this decade, the Department of Transportation estimates that freight will grow at least 10 percent in volume, not to mention the value of that volume to our economy. 

Far from diminishing the importance of moving goods, the topic 

which brings us here today will only increase dramatically, and 

that estimate in my view is a conservative one. 

No individual part of the country, no city or town and certainly 

no region is an island. All depend on transportation working together to move goods. We tend to focus on passengers as we did 

last week in a tragic collision in Valhalla, New York, a tragedy that 

was preventable and avoidable with proper safety procedures. 

The same is true in moving goods and moving freight. Safety has 

to be made the number one priority, but we are all dependent on 

3 

freight transportation just as we are on moving people, moving 

goods is equally important. We all depend on all of the modes of 

transportation, all the types of transit, whether it is roads and 

bridges, rail, water, all working together and all fulfilling their 

vital functions. 

I join in the hope that the parties to the West Coast ports’ dispute can find a reasonable, mutually agreeable solution as fast as 

possible, time is not on our side, and that the businesses impacted 

by the slowdown, including many in Connecticut, are able to 

weather this and the impact economically. 

Looking beyond this immediate issue are the broader challenges 

of investing and making sure that we build the infrastructure that 

is vital to moving goods and people. 

As one example, Connecticut has a freight infrastructure that is 

very much in need of that investment, upgrading certain sections 

of our freight rail network, so they can accommodate 286,000 

pound weights in moving goods and services by rail, which is the 

North American Rail Network standard, very, very important. 

Most freight railroads in the country are able to sustain freight 

cars weighing 286,000 pounds, and this weight limit includes the 

weight of the car plus about 110 tons of cargo or 220,000 pounds. 

If Connecticut does not upgrade its weight limits, then our state 

could become a freight island, but of course, if we are a freight island, the rest of America cannot reach us moving goods. That is 

just one example of how clogged arteries can stymie economic 

progress and job creation. 

I am very much looking forward to the testimony that we are 

going to hear today and to hopefully the initiatives that it will enable us to take in the interest for all America. 

Thank you again for being here. 

Senator FISCHER. Thank you, Senator Blumenthal. Welcome to 

the panel today. I appreciate you taking time out of your schedules 

to be here at this hearing and to provide the Senators with more 

information on this very important topic. 

I would like to get right to it. Our first witness is Mr. Norman 

Bessac. Mr. Bessac is the Vice President of International Sales of 

Cargill. Welcome. 

STATEMENT OF NORMAN BESSAC, VICE PRESIDENT, 

INTERNATIONAL SALES, CARGILL PORK 

Mr. BESSAC. Thank you, Chairman Fischer and members of the 

Committee, the Subcommittee, for inviting me to testify. 

Trade maximizes the value of products U.S. farmers and ranchers produce and our employees process because we are able to sell 

them to the domestic and international markets where they have 

the most value. This creates the best opportunities for Cargill, our 

customers, our farmer and rancher suppliers, our hard working employees, and the communities where we operate. 

Ports are an integral part of a dependable supply chain. Let me 

outline the beef and pork supply chain I work with every day and 

detail the challenges that occur when there are problems with 

product flow through the ports. 

Cargill procures livestock from farmers and ranchers to be processed into fresh beef and pork in our plants located predominately 

4 

in Nebraska, Kansas, Texas, Iowa, Pennsylvania, Illinois, Colorado, 

and California. Customers from around the world depend on high 

quality fresh U.S. beef and pork to sell in supermarkets, restaurants, and food processing plants. 

Fresh meat has a relatively short shelf life. It must be quickly 

packaged and shipped in temperature controlled trucks, rail cars or 

containers to ensure product integrity and safety, and to allow 

enough shelf life to sell or process once the product arrives. 

Under normal circumstances, a container of fresh pork destined 

for Asia usually arrives with more than 25 days shelf life. The industry is currently experiencing delays of two to 3 weeks on chilled 

product due to the congestion in West Coast ports. 

With this delay, our Asian customers cannot count on a dependable supply of U.S. beef and pork, so they are canceling orders and 

are looking to suppliers in Chile, Australia, and the European 

Union to meet their needs. 

Yesterday, Japanese customers canceled next week’s chilled pork 

shipments. I assume many of our competitors are facing similar 

cancellations. 

Needless to say, the current situation has created a tremendous 

amount of uncertainty. Today, the industry is faced with three 

choices. First, continue to ship product despite the current uncertainty. This can result in shorter shelf life and increased risk of potential spoilage and even complete product loss. 

Second, we can air freight the product at a tremendous expense, 

often three to five times the normal cost. Third, do not manufacture export products and adjust operations and procurement accordingly. 

If you take nothing else away from my testimony today, understand that any of these choices result in negative effects to everyone in the chain, in particular, farmers, ranchers, customers, and 

plant employees. 

Today, about 10 percent of U.S. beef and 25 percent of U.S. pork 

is exported. The U.S. Meat Export Federation estimates that the 

global demand for U.S. beef and pork will reach 17.6 billion pounds 

in 2024. 

That is up 50 percent for beef and 42 percent for pork, with most 

of that growth coming from the Pacific Rim. Future growth to serve 

these markets depends on an effective, efficient, and reliable supply 

chain capable of moving 162,000 incremental containers per year. 

For reference, this is enough to provide 29.2 billion more four 

ounce servings of beef or pork. 

Our nation’s advantage has always been having a fair, robust, 

competitive transportation system that ensures we can compete in 

the global market. We must look at our situation not simply as 

manufacturers, shippers, labor, and capital, but through the lens of 

global competition. We ignore it at our collective peril. 

Ports where the goods we make are loaded and exported for the 

world’s consumers—functioning ports are imperative from both a 

labor and operational perspective. When ports do not operate, the 

supply chain backs up causing long term problems for us, our industry, our farmer and rancher suppliers, our customers, and our 

employees. 

5 

We ask you to take the steps needed to address the challenges 

I have outlined today so that we can continue helping the world 

thrive by meeting the needs of consumers around the globe. 

I look forward to your questions. Thank you. 

[The prepared statement of Mr. Bessac follows:] 

PREPARED STATEMENT OF NORMAN BESSAC, VICE PRESIDENT, INTERNATIONAL SALES, 

CARGILL PORK

Thank you, Senator Fischer and Members of the Committee and Subcommittee, 

for inviting me to testify. 

Cargill provides food, agriculture, financial and industrial products and services 

to the world. Together with farmers, customers, governments and communities, we 

help people thrive by applying our insights and 150 years of experience. We have 

143,000 employees in 67 countries committed to feeding the world in a responsible 

way, reducing environmental impact and improving the communities where we live 

and work. 

At Cargill, we believe the world will always raise the most food the most economically if farmers plant the right crop for their soil and climate, and then engages in 

trade with others. In essence, grow and produce what you are good at and export 

the surplus. Honoring comparative advantage and trade is fundamental to ensuring 

abundant and secure food for the growing world’s consumers. 

This is also the way to maximize value for the products U.S. farmers and ranchers produce and our employees make. We sell the food and food ingredients that we 

produce to the domestic and international markets where they are most valued. 

This creates the best long-term opportunities for Cargill, our customers, our farmer 

and rancher suppliers, our hard working employees, and the communities where we 

operate. 

It takes infrastructure and a complex supply chain to achieve this. Ports are an 

integral part of this supply chain. Let me outline the beef and pork supply chain 

I work with every day and detail the challenges that occur when there are problems 

with port operations. 

Cargill procures livestock from farmers and ranchers to be processed into fresh 

beef and pork in our plants located predominately in Nebraska, Kansas, Texas, 

Iowa, Pennsylvania, Illinois, Colorado and California. Customers from around the 

world depend on high quality fresh U.S. beef and pork to sell in supermarkets, restaurants, and food processing plants. Fresh beef and pork have a relatively short 

shelf life (60 days for fresh beef and 45 days for fresh pork) and must be quickly 

packaged and shipped in temperature controlled trucks, railcars and/or containers 

to ensure product integrity and safety and to allow enough shelf life to sell or process the product once it arrives. Under normal circumstances, a container of fresh 

pork destined for Asia is usually trucked to the west coast (2–3 days), loaded onto 

a container ship (3–6 days), in transit on the water (15–18 days), unloaded/clears 

customs (1–2 days) and then delivered to customer’s warehouse for distribution. In 

this case, our customer would have approximately 25 days shelf life left on the product. 

Recently, the industry has been experiencing delays of 2–3 weeks on chilled product as ships and product have backed up in the West Coast Ports. With this delay, 

our Asian customers cannot count on a dependable supply of U.S. beef and pork, 

so they have started to cancel orders and are looking to suppliers in Chile, Australia 

and the European Union to meet their needs. 

Customers usually have a month’s supply of product in inventory and another 

month’s supply in the distribution pipeline. Delays or temperature changes in the 

distribution chain devalue the product and can easily make it worthless to customers. A timely supply chain is critical to our business. 

Today, about 10 percent of U.S. Beef is exported and 25 percent of U.S. Pork is 

exported. These exports increase the market value of U.S. farmers’ and ranchers’ 

products. Additionally, the revenue added by many exported items—such as hides 

and skins which are processed abroad and some variety meats which do not have 

a high-valued market in the US—increase the value to farmers and ranchers while 

helping hold down the cost of beef and pork to U.S. consumers. 

The North American Meat Institute estimates that the current West Coast Port 

situation has had the following impact upon the meat and poultry industry as a 

whole: 

6 

• The cost to meat and poultry companies losing sales or facing unanticipated 

port charges is in excess of $40 million per week on top of initial losses which 

exceeded $50 million. 

» These estimates are on the low side because of limited industry-wide data. 

» Also, lost hides and skins export sales alone are estimated at an additional 

$40–45 million per week. 

• Increase in transportation and port-related charges include: 

» Removing chilled product containers from terminals and sending by air increases shipping costs dramatically and reduces profit margins. 

» Cold storage while the backlog continues also adds costs. 

» Exporters are facing container plug in charges, truck waiting time, truck dry 

runs, truck detention, and chassis usage charges. 

» Exporters are additionally charged ‘‘demurrage’’ or rent for every day a container sits, unshipped, at the terminal. 

» Steamship line costs are at a premium due to ‘‘congestion surcharges’’ imposed at the present time. 

• Chilled meat/poultry is most at risk. More than 10,000 MT of U.S. beef and 

16,000 MT of U.S. pork is exported as chilled to Asia each month. Product sales 

are stalling under the current situation. 

» Some U.S. exporters report they have containers held up that were there at 

Christmas. The short shelf life of chilled beef and pork make timely delivery 

critical. 

Unfortunately, despite strong and growing export demand for U.S. meat protein, 

the long-term negative impact of these delays falls on the producers who supply the 

livestock and the employees who process the livestock into meat. 

The U.S. Meat Export Federation (USMEF) estimates that the global demand for 

U.S. beef and pork will reach 17.6 billion pounds in 2024, up 50 percent for beef 

and 42 percent for pork, with most of that growth coming from the Pacific Rim. Future growth to serve these markets depends on an effective, efficient and reliable 

supply chain capable of moving an incremental 162,000 containers per year (3,115/ 

week). 

Cargill exports many other products that have also been recently delayed. These 

products include cotton, canola meal, soybean meal, whole grains, syrups, sweeteners, distillers dried grain, food ingredients and others. The impact has been significant. We ship in excess of 1,000 containers per month through the West Coast 

depending on the season, market conditions and other factors. 

It is important for policymakers to understand the decisions and decision making 

process that a firm confronts during disruptions to a supply chain. The more protracted a transportation disruption, for any reason, the more prolonged and extensive the damage may be. Commerce does not automatically go back to normal as 

soon as the disruption ends. That is because the disruption likely caused impacts 

throughout the domestic and international supply chain during its duration. Individuals likely changed their behavior to account for the disruption. Truckers that had 

hauled goods to the port may have changed their routes to avoid long wait times 

and to ensure a more reliable income. Railroads may have adjusted their schedules 

to keep their cars from getting stuck in port. Companies that manufacture goods 

may have changed how they ship and to whom they sell. Most importantly, buyers 

may have changed to suppliers with more predictable logistics. Ship owners may 

avoid certain ports altogether. The longer the disruption lasts, the more behavior 

and patterns of shipments change and the longer it takes for normalcy to return. 

This makes it hard for one to be a long-term reliable supplier to customers when 

confronted with uncertain supply chains, particularly for perishable products. 

This has severe implications for companies desiring to make long-term sales to 

customers whose contracts are normally predicated on shipping in the most efficient 

means possible but now are facing expensive and extensive congestion and disruption. Consider the following: When will the ports return to normal? Will the situation get worse before it gets better? Can the buyer count on the product arriving 

on time? In the case of uncertainty, the customer may choose to purchase from a 

competitor or a supplier in a competing country who has a more reliable supply 

chain. 

Shipping through alternative ports may not be a viable option either. A Washington state supplier cannot easily nor cost effectively ship product to the Gulf Coast 

of Texas for shipping through the Panama Canal when the normal best option is 

direct from Washington to Asia. In this case, the business may simply be lost. AddiVerDate Nov 24 2008 11:25 Jan 04, 2016 Jkt 075679 PO 00000 Frm 00010 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\98012.TXT JACKIE
7 

tionally, there are not enough days to allow perishable product like meat to be 

shipped to Asia via East Coast or Gulf Coast ports. These are simply not options. 

For all these reasons, we urge Congress to do what it can to resolve the current 

dispute affecting West Coast Ports. 

It takes infrastructure to gets our nations’ goods to market. If we want to continue moving the bounty of America from the cornfields of Nebraska or Iowa, from 

the ranches of South Dakota, or the manufacturing plants of the Northeast, we need 

to continue focusing on infrastructure. If we do not, our international competitors 

will serve our global consumers faster and more efficiently. 

The U.S. has challenges when it comes to the quality and longevity of our infrastructure. We are appreciative of the bold step taken by Congress last year to pass 

the Water Resources Development Act and the user fee for the Inland Waterways 

Trust fund. Nonetheless, the inland waterways system is living on borrowed time. 

It needs investment to ensure it can serve the needs of our country for the rest of 

this century. With the now completed expansion of the Panama Canal, ports must 

be dredged so that the larger ships that transit the canal can dock at many of our 

Gulf Coast and Atlantic ports. The impact of the Panama Canal is not the only challenge at our ports. Maersk has a new ship called the ‘‘Triple-E’’ that routinely travels between China and Europe, but because of its draft reportedly cannot dock at 

a single U.S. port. This is a huge advantage to Asia and Europe who have access 

to such efficient transportation. Efficient highways are also critical and some countries have addressed these in unique ways. For example, Changdong province in 

China is building interstate quality truck-only lanes that have weight limits of 

200,000 pounds. 

Our nation’s advantage has always been having a fair, robust, competitive transportation system with access to truck, rail, waterways, air, and inter-modal options 

with a connection to well-functioning ports. This ensures we can compete in global 

markets. We must look at our situation not simply as manufacturers, shippers, 

labor and capital, but through the lens of global competition. We ignore it at our 

collective peril. 

Ports are where the goods we make are loaded and exported for the world’s consumers. Functioning ports are imperative from both a labor and operational perspective. When ports don’t operate, the supply chain backs up causing long-term 

problems for us, our industry, our farmer and rancher suppliers, our customers, and 

our employees. We ask you to take the steps needed to address the challenges I 

have outlined today so that we can continue helping the world thrive by meeting 

the needs of consumers around the globe. I look forward to your questions. 

Senator FISCHER. Thank you, Mr. Bessac. Ms. Katie Farmer. Ms. 

Farmer is the Vice President of Consumer Products at BNSF. Welcome. 

STATEMENT OF KATIE FARMER, GROUP VICE PRESIDENT, 

CONSUMER PRODUCTS, BNSF RAILWAY COMPANY 

Ms. FARMER. Thank you. Good morning, Chairman Fischer and 

members of the Subcommittee. Thank you for the opportunity to be 

here to discuss BNSF’s perspective on the importance of our Nation’s ports to the U.S. supply chain. 

I would like to begin by explaining rail’s role in the international 

supply chain. Intermodal is the movement of shipping containers 

and trucks by rail, combined with the shorter truck movement at 

one or both ends. Growth over the last decade is attributable to a 

number of factors, including fuel efficiency, highway congestion, 

trade growth, and truck driver shortages. 

There are two kinds of intermodal movements on a freight railroad. The first is domestic intermodal, which is the movement of 

53 foot long containers or trailers within the U.S. The second is 

international intermodal, in which goods manufactured overseas 

are shipped in 20 and 40 foot long containers. 

These containers arrive on a container ship at a port and those 

that are not distributed locally are loaded onto trains on dock or 

trucked a short distance to an off dock or near dock intermodal 

8 

yard, where they are sorted and loaded for movement to markets 

in the interior of the country. 

The containers are owned by the steamship lines and we work 

together to balance the flows of eastbound traffic and match back 

the empties with full loads of U.S. goods westbound to a ship destined for Asia or other international markets. 

Last year on our railroad, we handled post-recession record volume levels of freight. Our service was challenged and we did not 

deliver the service that customers have come to expect from BNSF. 

We have moved quickly to add capacity and implemented a record $4 billion capital program in 2013, followed by a $5.5. billion 

program in 2014, and we have announced a $6 billion capital budget this year. 

With this investment, we have permanently expanded the capacity of our network, which we believe will continue to maintain the 

U.S. supply chain advantage. 

The San Pedro Bay port complex, comprised of the ports of Los 

Angeles and Long Beach, is the busiest container port complex in 

the western hemisphere and a top gateway for U.S. trade with 

Asia. 

BNSF transports more than half the international shipments 

that go by rail out of these ports, and about 75 percent of these 

units carried by BNSF are loaded on dock. The remaining are handled off dock at BNSF’s Hobart Yard in East Los Angeles. The facility is 24 miles by highway from the ports. 

BNSF has been working for well over a decade to build a near 

dock facility only four miles from the ports called the Southern 

California International Gateway or SCIG, which would be the 

greenest intermodal rail facility ever constructed and eliminate 

millions of truck miles on the I–710 Freeway between the ports 

and downtown Los Angeles. 

Our efforts to permit and build this facility have been challenged 

for years by local opposition groups and the permit is currently tied 

up in the courts. 

We think this project will create operational efficiencies for the 

ports. West Coast ports are facing challenges due to congestion. 

Growing freight volumes are not the whole story, however, since 

overall freight levels to the West Coast ports have not returned to 

levels seen before the recession. 

There are several factors that are contributing to growing congestion at these ports including inadequate port infrastructure needed 

to handle the larger ships, limited infrastructure adjacent to the 

ports, operating restrictions from local communities, as well as operating inefficiencies. 

By far and away, the most disruptive aspect to the supply chain 

over the last several months has been the reduction in port productivity as a result of the ongoing negotiations between the PMA and 

the ILWU. Port productivity has declined by as much as 50 percent 

during this period. The result is year over year reductions in 

BNSF’s eastbound weekly train counts of as much as 20 to 30 

trains per week carrying a minimum of 250 containers that are not 

being processed through the supply chain. 

This also impacts the return movement of freight westbound for 

exports. This is causing significant delays and increased costs for 

9 

our customers. BNSF has taken numerous actions to serve its customers and ensure the fluidity of our network in the face of these 

challenges, including establishing controls at our intermodal facilities and equipment management. 

During the 11 day shutdown of port operations that occurred in 

2002, freight permanently migrated away from the West Coast. 

This is certainly a potential long-term consequence from the current situation. 

Congress can play a role in keeping goods moving through sound 

infrastructure policy and permitting reform. My written testimony 

details BNSF’s thoughts on those areas. 

Thank you, and I look forward to your questions. 

[The prepared statement of Ms. Farmer follows:] 

PREPARED STATEMENT OF KATIE FARMER, GROUP VICE PRESIDENT, 

CONSUMER PRODUCTS, BNSF RAILWAY COMPANY

Introduction 

Good Morning Senator Fischer and members of the Subcommittee. My name is 

Katie Farmer and I am Group Vice President for the Consumer Products business 

unit of BNSF Railway Company (BNSF). I want to thank you for inviting me to be 

here with you today to discuss BNSF’s perspective on the importance of our Nation’s 

ports to the U.S. supply chain. 

BNSF is a wholly-owned subsidiary of Berkshire Hathaway, Inc. BNSF serves 28 

states in the western two-thirds of the United States and employs approximately 

48,000 people. In 2014, BNSF handled more than 10 million units, each representing one carload. BNSF moves more freight, and carries more rail shipments 

in international trade, than any other railroad. 

BNSF’s role in the international supply chain spans all our business sectors–coal, 

agricultural products, industrial products and consumer products, encompassing 

both imports and exports. My remarks on port operations will be from the company’s perspective on intermodal. And since the largest share of the Nation’s and 

BNSF’s trade-related intermodal business comes from the West Coast ports, my 

focus today is there and on the challenges they face. I would like to explain rail’s 

role in the international intermodal supply chain and emphasize the nationwide economic impact of port operations and infrastructure. Finally, I will offer some suggestions on ways that policy makers can support the port growth that will be necessary 

to handle future volumes and keep freight moving. 

Overview of the International Intermodal Freight Supply Chain 

In my role at BNSF, I have responsibility for leading all of BNSF’s sales and marketing efforts for consumer products—the domestic and international intermodal 

segments as well as our automotive business. Consumer Products is the largest 

market segment within BNSF. In 2014, it accounted for about half of BNSF’s 10.3 

million total annual units. 

What is commonly referred to as ‘‘intermodal’’ is the movement of shipping containers and truck trailers by rail, often combined with a shorter truck movement 

at one or both ends (a ‘‘dray’’). Intermodal movements capture the inherent efficiency of freight rail and are ideal for containerized freight moving several hundred 

miles or more between markets with large concentrated volumes and delivers service equivalent to or better than single-driver all truck transportation. Intermodal 

has been growing rapidly for more than 25 years, and demonstrates a strong partnership with the trucking industry. The U.S. rail industry originated a record 12.3 

million intermodal units in 2006 but volumes fell sharply during the recession, rebounding to 13.5 million units in 2014. Intermodal is the railroad industry’s largest 

business segment. Its growth is attributable to a number of factors, including fuel 

efficiency, highway congestion and truck driver shortages. 

There are two kinds of intermodal movements on a freight railroad. The first market segment is ‘‘domestic intermodal,’’ which is the movement of 53 foot long containers or trailers within the U.S. It may surprise you to know that domestic intermodal, which is BNSF’s largest volume growth area since 2006. The second is 

‘‘international intermodal,’’ in which goods manufactured overseas are shipped in 20 

and 40 foot long containers and move from ports to inland destinations. It is international intermodal which we are discussing here today. 

10 

Inbound international container shipments arrive on a container ship at a port 

and those that are not distributed locally are loaded onto a train headed for the interior of the country. Containers may be loaded onto trains ‘‘on dock’’ or trucked a 

short distance to an ‘‘off-dock’’ or ‘‘near-dock’’ intermodal yard where they are sorted 

and loaded onto trains. The containers are owned by the steamship lines and every 

effort is made to balance the flows of east and west bound traffic to ‘‘match back’’ 

the empties with full loads of U.S. goods headed back to a ship destined for Asia 

or another international market. U.S. industries from agriculture to manufacturing 

take advantage of the full cycle of intermodal containers in the intermodal supply 

chain. 

The Critical Economic Impact of Ports in the Supply Chain 

In 2014, nearly a third of the U.S. economy was tied to international trade. The 

consumer economy, which is about 70 percent of Gross Domestic Product (GDP), is 

heavily dependent on the international trade-based intermodal supply chain. So 

while many of the products U.S. consumers rely upon depend on the international 

intermodal supply chain, the biggest impact of this trade-based activity is on the 

overall health of the Nation’s economy. The international supply chain is also an 

important element of U.S. competitiveness. The U.S. has historically had the lowest 

relative supply chain costs versus our global competitors. Along with low energy 

prices, our supply chain provides U.S. manufacturers, agricultural producers and 

miners with a competitive advantage in world markets. 

We at BNSF know first-hand the importance of efficiently meeting growing freight 

demand. Although last year we carried record levels of freight since the recession, 

our service was challenged and we did not deliver the level of service that our customers have come to expect from BNSF. We have moved quickly to add capacity and 

efficiency, and implemented a record $4 billion capital budget in 2013, followed by 

$5.5 billion in 2014, and an announced $6 billion capital budget this year. With this 

investment, we have permanently expanded the capacity of our network, which we 

believe will contribute to maintaining the U.S.’s supply chain advantage. 

Ensuring that U.S. ports also are able to meet growing freight demand is a national economic imperative. BNSF serves 40 U.S. ports—which includes every major 

port along both the West Coast and Gulf of Mexico—however, the West Coast ports 

are our largest port partners. From the West Coast, BNSF has key transcontinental 

routes between Southern California (PSW) and Chicago, the PNW and Chicago and 

beyond. More than 15 million loaded Twenty foot Equivalent Units or TEUs move 

through West Coast ports each year. West Coast ports support more than 9 million 

U.S. jobs, with a domestic business impact of $2.1 trillion. Almost 13 percent of U.S. 

GDP is tied to goods moving through West Coast ports. The success of these ports 

is critical to the Nation’s economy; they need to be able to meet demand and remain 

competitive. 

The Pacific Southwest (PSW) and Pacific Northwest (PNW) ports each serve different market segments and geographies and have different challenges, but fundamentally each port region is subject to competition from their NAFTA neighbors 

to the north and south. They are also subject to competition from East and Gulf 

coast ports through the Panama and Suez canals as shippers and retailers continually seek less expensive and more efficient access to key markets in the U.S. To 

the extent that West Coast freight is displaced to NAFTA ports, the regional and 

national economic value that goes with that traffic is permanently lost. And to the 

extent that West Coast port traffic is diverted from these ports to ports in other domestic geographies that require expansion or mitigation, public and private sector 

costs increase. 

The San Pedro Bay port complex—comprised of the ports of Los Angeles and Long 

Beach—is the busiest container port complex in the western hemisphere and the top 

gateway for U.S. trade with Asia. BNSF is a key part of the logistics network in 

the San Pedro Bay ports—we transport more than half the international shipments 

that go by rail out of these San Pedro ports. At the San Pedro Bay ports, about 75 

percent of the units carried by BNSF are loaded on-dock. The remaining are handled off-dock at BNSF’s Hobart Yard in East Los Angeles. Hobart Yard is the largest inland intermodal facility in the world capable of handling over 1 million units 

in 2014. The facility is 24 miles by highway from the ports. 

BNSF has been working for well over a decade to build a ‘‘near-dock’’ facility only 

four miles from the ports, called the Southern California International Gateway, or 

SCIG, which would be the greenest intermodal rail facility ever constructed and 

eliminate millions of truck miles annually on the freeway between the ports and 

downtown Los Angeles, the I–710. Our efforts to permit and build this facility have 

been challenged for years by local opposition groups and the permit is currently tied 

up in Court. 

11 

Our PNW port service is divided among a number of ports in Washington and Oregon, including Seattle, Tacoma, Vancouver, Portland and a number of smaller 

ports, and facilitates bulk imports and exports, automotive imports and container 

traffic. 

Collectively, PNW ports face strong competition from Canada which is exacerbated by some policy challenges. For PNW container ports competing with Canada, 

the U.S. Harbor Maintenance Tax creates a competitive disadvantage. Not only are 

PNW ports disadvantaged because of the added cost of the tax, they receive little 

or no benefit from the authorized use of the tax. In addition, Canada has a longstanding successful national port infrastructure and corridor program that not only 

assists with port development but funds projects in the corridors connecting to the 

ports. At BNSF, we stand ready to work with Federal, State and local public policy 

makers to similarly support our PNW port partners. 

Nationwide Impact of Port Challenges 

I would like to now turn to the challenges faced by our ports and the impact of 

those challenges on our supply chain. 

In many ways, BNSF believes that in 2015, the biggest challenge facing ports in 

general, and West Coast ports in particular, is congestion. Growing freight volumes 

are an obvious source of congestion at ports but volume alone is not the whole story 

since overall freight levels through the West Coast ports have not returned to levels 

seen before the recession. There are several factors that are contributing to growing 

congestion at these ports, including the effect of inadequate port infrastructure 

needed to handle larger ships, growing commercial and residential development 

around the ports, limited infrastructure adjacent to the ports, port operating restrictions from local communities and operating inefficiencies. All of these factors, if they 

continue into the future, will cause congestion as West Coast ports grow faster than 

actual volumes. 

As you and other policy makers appropriately consider how to facilitate and pay 

for port growth and for ways to mitigate the impact of port operations, consideration 

must also be given to how ports can become more efficient as well. 

West Coast Port Situation and Port Productivity 

Modern port activity remains fundamentally dependent on skilled workers. And 

as you are aware, in recent months there has been an unprecedented decline in productivity at West Coast ports resulting from the negotiations between the Pacific 

Maritime Association (PMA) and the International Longshore and Warehouse Union 

(ILWU). Port productivity has declined by as much as 50 percent. And as you are 

also aware, this situation—which BNSF and its customers hopes is resolved soon— 

is having a significant economic impact across the country. 

Intermodal shippers are highly dependent on efficient movement of their cargo 

through the supply chain. Many of our customers in this market segment use ‘‘justin-time’’ inventory methods that require timely and dependable delivery of retail 

products and manufacturing parts to stock their stores and keep their manufacturing operations running efficiently. The congestion has resulted in a major disruption of goods movement from the West Coast causing significant delays and increased costs. 

As the largest intermodal carrier from the West Coast ports, BNSF’s operations 

have been negatively impacted by the port congestion. BNSF has taken numerous 

actions to serve its customers and ensure the fluidity of our network in the face of 

these challenges including establishing controls at our intermodal facilities and 

equipment management. We have had to restrict the flow of westbound containers 

to the ports. In some places, empty container availability for westbound shipments, 

once in oversupply, have become difficult to find and match back. As you can understand, this congestion is impacting many of BNSF’s intermodal customers. 

BNSF stands with the thousands of customers we serve through these ports in 

voicing our concern about the severe impact of the current situation. Shippers and 

rail carriers are directly impacted by the lack of productivity but it has the potential 

for longer-term negative economic consequences to the U.S. West Coast and the 

broader economy, and to the competitiveness of the ports themselves. More fundamentally, this strife related to collective bargaining at the ports is a recurring 

problem; history tells us that the current PMA–ILWU structure of negotiating labor 

contracts is disruptive and negatively impacts the U.S. economy. The 11-day shutdown of port operations in 2002 had a cumulative effect on the entire supply chain 

of the U.S. with an estimated cost of $15.6 billion. Freight permanently migrated 

away from the West Coast after this incident, a potential ongoing consequence from 

this vulnerability. 

12 

We are hopeful that the labor issues at the West Coast ports will be resolved in 

the short term, however in the long run, the issue of U.S. port efficiency remains 

to be addressed. Improving efficiency will be as important as infrastructure expansion, and certainly less costly, in achieving the throughput that the Nation requires 

from its ports. U.S. port efficiency is among the lowest of world trading powers. 

While the efficiency issues at each port are slightly different, in general the most 

significant operational factors contributing to inefficiency include chassis shortages, 

limited gate hours, and truck capacity. New alliances between ocean carriers have 

added complexity to port operations. For example, at the San Pedro Bay ports, these 

new partnerships are spreading out vessel calls over multiple terminals, adding 

complexity for truckers, marine terminals and the railroad’s operations. 

Surface Transportation Policy Discussion and Recommendations 

Infrastructure Policy 

Expected freight growth and congestion at the ports must be met with facility expansion, just as on the railroads. At BNSF, freight volumes continue to recover and 

by some measures, BNSF is already back to pre-recession levels of freight. If there 

is one thing that we are sure of at BNSF, it is that the demand for freight movements is only going to increase. At the ports, capacity expansion will be necessary 

to handle increased volume, bigger ships, and the trucks and trains that are essential to expedite that freight. The largest of these port projects have a national impact and in BNSF’s view will have to be permitted, financed and funded with the 

help of federal, state and port resources. Over the past few years, BNSF has supported its port partners in a variety of Federal TIGER Grant applications; however, 

as we look to the future, a more robust and sustainable program with port eligibility 

should be considered. 

Congress is currently considering how to assure the long-term solvency of the 

Highway Trust Fund. If Congress takes the Highway Trust Fund farther afield from 

the ‘‘user pays’’ paradigm and continues to fund it with revenues not generated by 

users, the call on Highway Trust Fund budget authority for a broader range of 

projects is unavoidable. BNSF supports strengthening the user pays concept because 

of its fairness; it allows users to pay more of their costs on the highway network. 

Whatever transportation funding framework Congress establishes in the next 

transportation bill, a Federal share of funding for nationally or regionally significant 

high-cost infrastructure projects, like port projects which facilitate international 

trade and relieve congestion, must be considered. 

We have developed strong public-private partnerships across our network—as 

have other railroads. The Alameda Corridor in Southern California, FAST Corridor 

in Washington State, Connect Oregon, Tower 55 in Texas and the CREATE program 

in Chicago have freight mobility benefits to which the railroad contributed its share, 

and publicly funded mitigation to address the impacts of freight movements, such 

as grade separations. We regularly work with communities across our network on 

grade separations. However, resources within U.S. DOT, State DOTs, local governments and railroad capital budgets are scarce for projects like these. We coordinate 

with states and local governments to ensure that road crossings at rail lines are 

safe. 

Permitting Reform 

Federal permitting reform is an important priority not just for BNSF, but the Nation as a whole. While we understand a permitting process is necessary, we have 

encountered increased costs associated with extended permitting timeframes for facility and track projects across our network. Our experience with the $500 million 

Southern California International Gateway project, in addition to roadblocks encountered with bulk export facilities elsewhere, tells us that Federal permitting 

challenges are only part of the problem. Organized local opposition, whether to increased freight traffic or to the content of the shipments, has had veto power on 

projects that serve important national objectives. We believe at BNSF that, through 

good faith discussion and mitigation negotiation, the reasonable concerns of citizens 

who are impacted by increasing freight volumes usually can be addressed. However, 

as the permitting process operates today, there is significant delay and cost which, 

multiplied throughout freight rail networks, quickly become noneconomic. We support efforts to improve the project permitting process. 

Railroad Investment 

This Subcommittee is very familiar with the important role of private capital investment in the freight rail network. I want to re-emphasize that the private capital 

being reinvested into the Nation’s freight rail network should not be taken for 

granted. Today’s rational regulatory model has allowed us not only to reinvest, but 

13 

also to expand our network so we can move the products our economy needs, while 

reducing the environmental impact of freight transportation. Our capital investment 

strategy depends upon reasonable earnings and a constructive regulatory environment that acknowledges the costs and capital intensity of our business and the ongoing need to maintain and expand our infrastructure. 

Conclusion 

In the short term, we believe that if the West Coast port situation can be resolved 

quickly, we can help the ports clear the backlogs and reset their operations. We urge 

Congress to adopt policies that support the growth and efficiency of U.S. ports, 

which are a critical part of the supply chain, the economy and our Nation’s longterm competitiveness. 

Senator FISCHER. Thank you, Ms. Farmer. Next we have Dr. 

Walter Kemmsies. Dr. Kemmsies is the Chief Economist at Moffatt 

& Nichol. Welcome. 

STATEMENT OF DR. WALTER KEMMSIES, CHIEF ECONOMIST, 

MOFFATT & NICHOL 

Dr. KEMMSIES. Good morning. It is well recognized that international trade is increasingly important to the U.S. economy and 

that this trade mostly utilizes ocean going vessels, particularly container vessels, due to the versatility of containers for handling a 

range of cargo, from dry goods to refrigerated goods, refrigerated 

perishables, to liquids and gases. 

Ports have an important role in the movement of overseas freight 

because they are major intermodal exchange points transferring 

cargo between ships, trucks, and rail. They are essentially the very 

embodiment of intermodalism. 

Ocean liners are adapting to growing trade volumes, and I would 

agree with Senator Blumenthal that the estimates for trade volume 

growth are probably low, and we should likely see much higher 

growth rates, provided that the infrastructure is there. 

The ocean liners are responding to this, to not only the larger 

trade volumes but also to rising fuel costs and to stricter environmental impact regulations by investing in larger vessels. The larger vessels mean more cargo on fewer ships and in fewer ports because the time it takes to load and unload the ships is time vessels 

do not earn revenues, and given the cost of these very large ships, 

it is important they minimize the time they spend stationary, particularly sitting in ports. 

The ports are adapting to this change in the global ocean vessel 

fleet. They are investing in dredging the access channels, investing 

in dredging the berths and removing air draft restrictions. They 

have been acquiring larger ship to shore cranes that have greater 

reach and much greater lift capacity. They are densifying their terminals so you can stack the containers higher, and also by automation. 

The investments made by the ocean liners at ports are often not 

matched by the land site investments outside the ports’ gates. 

Larger vessels and increasing cargo handling capacity at ports has 

created congestion problems in port gateways around the world and 

in some parts of the U.S., in locations where land site planning and 

investing is not exactly in line with what is happening on the 

water sites, being the ports, and what is happening in the access 

channels and the global fleet of vessels. 

14 

The shorter term issues such as the severe weather last year and 

the transition of ocean carriers moving away from providing chassis’ to their customers and allowing the financial sector to step in 

and lease these, has not been very smooth. To some extent, this 

has impacted the effect of the larger vessels on congestion issues. 

To that, we would include the productivity losses that have occurred at the ports during the contract negotiations, but from my 

perspective, we see the shorter term issues as masking some of 

these longer term trends driven by the larger vessels, and therefore, causing concern about the long-term congestion problems that 

we would expect to see in the U.S. supply chain. 

It is likely that foreign ports in locations where intermodalism 

characterizes freight movement and planning will be gaining at the 

expense of U.S. ports, and therefore, the U.S. logistics industry. 

To sum up, I believe that failure to cut costs across U.S. ports, 

by which I do not mean just cutting costs in ways that create competition between U.S. ports, but rather cutting costs for the entire 

port system is required. Otherwise, U.S. ports will not be the winners in competition with the foreign ports. 

The spotlight on this is on the inland segment of the product flow 

path, on railroad lines in order to improve service to markets close 

to the port, and truck freightways to improve access to markets 

further away. 

To defend our exports and imports, we need to focus our attention on the inland segments of the product flow path. On the railroad lines, the grade crossings, the container transfer facilities, and 

for trucks, we need to start thinking about dedicated freightways. 

These types of investments will make U.S. exports more competitive. 

Thank you. 

[The prepared statement of Dr. Kemmsies follows:] 

PREPARED STATEMENT OF DR. WALTER KEMMSIES, CHIEF ECONOMIST, 

MOFFATT & NICHOL

Author’s Background 

Dr. Walter Kemmsies is the Chief Economist at Moffatt & Nichol, a marine infrastructure engineering and advisory company founded in 1945 that currently has 

over 650 employees in offices located near major ports throughout the Americas, Europe and the Pacific Rim. Dr. Kemmsies directs market assessment studies, financial analyses and global trade forecasts for projects ranging from strategic development and capital improvement plans for ports through financial transactions involving leases and sales of marine terminals. He is an advisor to executives at various 

port authorities and major transportation and manufacturing companies. Prior to 

joining Moffatt & Nichol, he was the Head of European Strategy at JP Morgan and 

before that the Head of Global Strategy at UBS. 

1. Key Issues Related to ‘‘Keeping Goods Moving’’ 

The hearing is focused on the importance of a reliable and efficient supply chain, 

particularly shipments to and from U.S. ports, including opportunities and challenges in decreasing delays and congestion throughout the supply chain. To that end 

my focus is on four points described in the following subsections of this written testimony. 

1.1. Supply Chains or Product Flow Paths 

Supply chains are characterized by intermodalism in that they consist of the combination of highway and railway segments, as well as ports and marine trade lanes 

which are the routes and services operated by ocean carriers. For cargo that is traded internationally a flow path consists of truck drayage from manufacturing/processing/refining locations to ports or to railheads for intermodal transportation to 

15 

1 Based on information provided by Bob Sinner, CEO of SB&B Foods in Casselton, ND 

ports, transfer to ships at the ports, the ocean carrier routing to the foreign destination port and transfer to truck, barge or rail for delivery at the final destination. 

Although the same roadways, railways, barges and ports are used to handle a 

range of different cargo types, the equipment and infrastructure needed to handle 

types of cargo is varied. The infrastructure includes facilities such as warehouses, 

crossdock facilities for repackaging freight and storage facilities. Dry goods can be 

moved in variety of container types and sizes or in large bulk vessels as well as rail 

hopper cars. Liquid goods such as petroleum, gases, and chemicals are carried in 

different types of vessels, barges, rail cars and trucks. 

Since the type of products that the U.S. tends to import is different than the type 

of products it exports, different types of infrastructure are needed to support imports and exports. At or near ports the imported freight infrastructure is generally 

oriented towards deconsolidating cargo that arrives on tightly packed ships and airplanes while that for exports supports consolidation in order to be loaded on to ships 

and airplanes. 

It appears that most of the investment in infrastructure and equipment for freight 

movement in the U.S. in the last few decades has been more oriented towards imports than exports. Evidence to support this hypothesis includes the substantial 

goods trade deficit that the U.S. has developed as well as the nature of large scale 

freight movement projects that have been executed and those that have suffered 

from under-investment such as the Mississippi Inland River System. 

The types of equipment and consolidation/deconsolidation infrastructure are important elements of their respective supply chain(s) For example, the availability of 

empty international containers for U.S. agricultural exports is such a significant 

issue that the U.S. Department of Agriculture publishes a weekly report called 

Ocean Shipping Container Availability Report (OSCAR) based on its polling of ocean 

carriers. The report provides details of the types of containers that ocean borne 

freight and their locations. 

In 2014, for example, The U.S. imported an estimated 16.7 million TEU, mostly 

containing consumer goods and finished products. To keep the containers in circulation, the U.S. exported an estimated 11.5 million TEUs, mostly containing waste 

paper, agricultural products in both dry and refrigerated containers, and industrial 

goods. The U.S. exports empty dry containers but tends to import refrigerated containers so as to support agricultural exports. The containers are owned by the ocean carriers and cost $5,000 for a new dry con- tainer and $18,000 for a refrigerated container. Ocean carriers track their containers very carefully in an attempt to minimize the amount of time they are empty 

and therefore not generating revenue. These containers are generally not interchangeable between ocean carriers as they need to make sure that they can provide 

their customers with the needed equipment to ship their goods. 

Analysis of the OSCAR data indicates that the Midwest suffers from a consistent 

shortage of available containers to support containerized grain shipments. Most 

international containers imported into the U.S. carry consumer and industrial goods 

which are destined to urban locations. Therefore there is a mismatch between where 

containers are available and where they are needed for exports. Therefore, exporters 

have to pay a higher cost for containers that need to be repositioned. 

For example, a major exporter of non-genetically modified soybeans to Asia commands a price premium since they are most suitable for human consumption but 

need to be packaged in a way that preserves the ability to trace the product back 

to its geographical production location, which is referred to as identity preservation 

or more commonly referred to as ‘‘IP’’. To do this the product is packaged close to 

the farm and containerized. An upper Midwest producer has to pay trucking costs 

that exceed $900 for a single container to be brought to its packaging operations. 

In addition to the cost, the producer often has to wait, sometimes months, for containers to be delivered.1

The time delay is a serious issue because agricultural goods are traded sometimes 

under quota systems set up in free trade agreements. If a shipment does not arrive 

and clear customs in the foreign location during the current calendar year then it 

accrues to the following calendar year. Foreign importers are allowed to grow their 

import quantities at a set rate based on the previous year’s import levels. Therefore 

delayed shipments reduce their imports in the current calendar year and can ultimately reduce them in the following calendar year as well. More importantly, global 

food companies rely on ‘‘just-in-time’’ service and in the current environment soy producers can lose customers due to shipment delays. 

Almost all countries can produce agricultural commodities but only those that 

have efficient production and transportation can compete in the global market place. 

16 

Exporters have to allocate significant time, expense, and energy to manage these 

logistics issues which reduces the resources they need to consistently produce a 

high-quality product that is competitive in the global market. 

Import container rates are higher than export container rates, often by a factor 

of 3 or 4. Therefore ocean carriers prefer their containers to be emptied near the 

ports and immediately put on a ship to be returned to foreign import locations so 

as to minimize the time they spend empty and therefore not generating revenue. 

Recent congestion at U.S. ports is likely to have negatively impacted container yield 

management and exporters’ ability to obtain the containers they need to export their 

product. 

There do not appear to be the same level of congestion issues at port gateways 

that handle non-containerized cargoes such as grains shipped on bulk vessels, petroleum and refined products, and vehicles. However there are issues concerning the 

rail movement of those goods, as others will testify today. 

1.2. U.S. and International Port Gateway Congestion Issues 

To some extent the stevedore contract negotiations which began in 2014 on the 

West Coast have resulted in container handling delays that are masking some of 

the longer term issues that underlie the worsening congestion problems at ports. 

The underlying cause is increasing concentration of cargo on fewer but larger vessels 

and in fewer ports. However other short term factors have exacerbated the difficulties of adjusting to the industry’s shift towards larger and more concentrated freight 

shipments. 

It is worth reviewing the short term factors before considering the longer term 

issues. Short term factors include chassis supply issues, severe weather impacts and 

stevedore contract negotiations. 

Ocean carriers began announcing in 2009 that they would no longer include a 

chassis for the shipper to use when their container was delivered at a U.S. port. 

This was motivated by financial necessity but also brought industry practices in the 

U.S. in line with those in the rest of the world. The U.S. was the only market where 

ocean carriers provided chassis as part of the service they provided their customers 

The process of disengaging from provision of chassis by ocean carriers is ongoing. 

In some regions ports have been able to organize ‘‘grey’’ chassis pools operated by 

the private sector. The term ‘‘grey’’ refers to the concept of any chassis being used 

at any port or terminal covered by the chassis pool operator. In some areas, Southern California and New York, in particular, there were various chassis pool operators that supplied equipment to carry containers only for specific carriers or carrier 

alliances. (A carrier alliance is technically called a vessel sharing agreement, which 

comes about when some carriers agree to supply vessels to cover a trade route and 

that any carrier receiving a customer order can send the container on an alliance 

carrier’s ship.) 

The problem with non-grey pools is that a trucker may bring an empty container 

to a terminal for a certain carrier or alliance and have a request to pick up a container from another terminal for another carrier. Upon entering the port authority 

area, the trucker has to drop off the empty container at the terminal, then drop off 

the chassis, then pick up a chassis assigned to the other ocean carrier or alliance 

and finally pick up the loaded import container. Each of these steps takes time and 

can create congestion in the port area. 

Besides the grey chassis issue, some ports had to contend with a shortage of suitable chassis. In 2009 the Roadability rule was enacted by the Federal Motor Carrier 

Safety Administration. Each chassis had to be checked for safety issues such as 

working brake lights. During the economic downturn in 2009 container volumes declined by 12 percent and chassis that were not in working order were mostly cast 

aside. In 2014 container volumes handled at U.S. ports exceeded the 2007 peak level 

and many of the neglected chassis required either extensive repair or replacement. 

This contributed to the problems resulting from the transition from containers provided by ocean carriers to independent chassis providers. 

The severe winter weather that impacted the Northeast and Midwest created significant problems for the U.S. freight movement industry. Unusual cold weather and 

frequent snow storms made it difficult for the industry to recover. Inventories piled 

up in warehouses and in manufacturer facilities. On the West Coast the stevedore 

union contract negotiations are adding to the chassis issues and the slowing the recovery from the severe winter weather. 

As international and domestic freight movement continue to grow, the capacity of 

the system is challenged in two ways. The first is that a higher average daily volume of traffic on the roadways and railways will require more capacity. The second 

effect is a result of ocean carriers operating larger vessels. 

17 

It is worth noting that once the Panama Canal expansion is completed (recently 

announced for the first half of 2016), it will be able to handle vessels about 13,200 

to eventually 14,000 TEUs. 

In 2007 the largest container vessel was the Emma Maersk, which can carry approximately 13,500 TEUs. In 2013 Maersk began using the first of its EEE class 

vessels, Maersk McKinney M<ller, which can carry 18,000 TEUs. The EEE designation stood for ‘‘Economy of scale, Energy efficient and Environmentally improved’’. 

In the last few months other large ocean carriers have announced deliveries of 

19,000 TEU vessels and orders have been placed for even larger vessels. 

According to Alphaliner 19 percent of the global vessel fleet consists of vessels of 

10,000 or greater TEU capacity and 56 percent of the global vessel order book is 

for vessels of 10,000 or greater TEUs. At the end of 2012, 12 percent of the global 

vessel fleet consisted of vessels with 10,000 TEU or greater capacity. The larger vessels are really designed for the Asia to Europe trade which is substantially larger 

than Asia to North America trade. However, as larger vessels are deployed on Asia 

to Europe routes, the displaced vessels tend to cascade into the Asia to North America trades, which displaces smaller vessels. 

An 18,000 TEU vessel operating at an average annual rate of 90 percent container 

slot capacity utilization with six vessels on a string, each of which require a week 

in port for a full discharge and load, would require a terminal in the U.S. to handle 

1.6 million TEUs per year. Assuming that 30 percent of the containers move by rail 

to or from inland destinations and adjusting for the TEU to container ratio, this 

would mean that a single service using an 18,000 TEU vessel would generate about 

12,000 truck trips per week. It is likely that these truck trips would not be evenly 

distributed throughout the work week which could create severe congestion in some 

of our densest urban areas. 

It should also be noted that according to American Association of Port Authority 

data, the 12 largest gateway container ports in the U.S. handle between 80 percent 

and 85 percent of all containers (measured in TEUs), about 10 percent higher than 

during the 1980s and 1990s. Thus not only are container volumes concentrating on 

fewer vessels they are concentrating in fewer ports. 

Port congestion is a long term global issue. As the larger vessels were deployed 

on routes from Asia to Northern Europe last year, congestion problems flared up. 

Larger vessels also began calling at U.S. ports, likely displaced from Asia to Europe 

services, and this coincided with increased congestion in the US. Ports in Asia already suffer from well-known congestion problems in their gateway regions. Congestion in port areas is an old problem in Latin America, with trucks in Southern 

Brazil often waiting in lines over 100 kilometers long during the three soy harvest 

export seasons. The largest port in South America, Santos, has been trying to solve 

this issue for decades. 

According to the World Trade Organization, global trade in manufactured goods 

has grown at an average rate of 7.2 percent per year between 1950 and 2013. In 

recent years this has been slowing. It is likely that this is due to the weak global 

economic environment. As the global economy recovers it is likely that demand for 

freight services will increase and ocean carriers will turn in better financial performance, allowing them to continue to upgrade their vessel fleets. Considering that 

the substantial increase in large vessels operated by carriers during the last several 

years was achieved during a period of financial and economic weakness, one can 

only worry how strong the shift to larger vessels will be during better times. 

It is not clear that departments of transportation in most states and metropolitan 

planning organizations have factored in the impact of larger vessels calling at fewer 

ports. However they will have to adapt to this soon. The industry is reacting with 

container terminal operators and ports getting access channels and berths dredged, 

ordering larger cranes to handle the larger vessels, railroads have experimented 

with unit trains as long as four miles and the trucking industry is lobbying for heavier and longer trucks. 

There is still time to avoid the worst possible outcome but the planning for this 

has to begin now. 

1.3. Increasing U.S. Port and Economic Competitiveness 

At the national level, we worry about the balance of payments and we promote 

exports and export-related infrastructure, in part because these support ‘‘our’’ base 

industries. This is not as simple to figure out when it comes to infrastructure that 

would serve an economy with many base industries. Different types of commodities 

may not be compatible and investments in infrastructure to support one base industry may come at the expense of another base industry. Recent North American experience perfectly illustrates this conflict: supply chain providers have been unable to 

properly serve at least three base industries—energy, agriculture and chemicals. All 

18 

three industries serve global markets and meet the definition of a ‘‘base’’ industry. 

Yet transportation infrastructure cannot properly serve all three industries in the 

short term. 

Foreign ports and intermodal supply chains are stepping up where the U.S. is 

leaving off. U.S. closest trading partners have been very focused on freight movement infrastructure. Canadian ports on the Pacific coast have been gaining share 

of North American container volumes while ports in the U.S. Pacific Northwest have 

been losing share. Canada has had a coherent national transportation policy that 

relates to its economic policy since at least the early 1990s and updates its transportation policy on a somewhat regular basis. Mexico has increased its investments in 

ports, railways and highways over the last 10 years. Mexican ports did not see their 

volumes decline during the recent severe recession and are also gaining share of 

North American volumes. Brazil which as a recent USDA report pointed out has 

surpassed the U.S. in soy exports for the first time in 2013 is also investing in 

freight movement infrastructure both on the waterside and the inland side. 

Failure to cut costs across U.S. ports—not cost cutting actions that simply build 

competition between U.S. ports—means the loser is U.S. ports versus foreign ports 

serving alternative sources of exports and imports. If U.S. ports are losing then so 

is the U.S. economy. 

1.4. The Focus Must Be On Port Gateway Regions and Defending Import and Export 

Markets 

Ports, even large ones, do not individually serve all regions of the U.S. but rather 

geographies that include population and economic activity centers to which they are 

connected via roads, railways and inland waterways. These regions are the ones for 

which ports serve as a gateway to international and domestic trade. 

Ports have been proactive about getting their access channels and berths dredged, 

raising bridges where air draft is an issue, ordering larger cranes to service the 

larger vessels, improving intermodal container facilities so as to increase rail service 

capacity and to add more truck gates. When chassis have been a problem, port authorities have sponsored the development of grey pools and have been prepared to 

purchase chassis to make sure enough would be available during the peak seasons. 

Furthermore they have adjusted their properties to allow empty containers and 

chassis to be dropped off in lots near the entrance of the port in order to reduce 

congestion within its gates and allow truck drivers to do more turns per day. As 

the discussion above has indicated, larger problems lie outside the gate, and these 

are generally beyond the reach or resources of an individual port. 

Thus the policy spotlight should be on the inland segment of the product flow 

path: 

• On railroad lines in order to improve service to markets close to the port or extend service to more distant markets. Grade separations, major sidings to allow 

for longer unit trains, and leadership to resolve the tangle of rail operational 

issues surrounding every major port in the US, as well as major regional rail 

hubs such as Chicago or Atlanta. 

• On highways and bridges to increase capacity, reduce community conflicts, introduce innovations such as truck freight-ways to improve access to distant 

markets and allow the safe trucking of heavier goods to more distant markets. 

The introduction of LNG fuel to long-haul trucking routes could allow for a 

more robust domestic supply chain, allowing new industries to flourish in new 

locations. 

• On inland and intracoastal waterways that allow for the most efficient movement of the liquid and solid bulk building blocks of the U.S. economy. Whether 

supporting the movement of rock salt to the Northeast or highly refined petroleum products along the Gulf Coast, the economic value of inland and intracoastal waterway improvements can be fairly immediate and quickly amplified 

throughout the U.S. economy. 

19 


210WALT1.eps
20 

Senator FISCHER. Thank you, Dr. Kemmsies. Next, we have Mr. 

John Greuling. Mr. Greuling is a Board member of the Coalition 

for America’s Gateways and Trade Corridors. Welcome, sir. 

STATEMENT OF JOHN E. GREULING, PRESIDENT AND CEO, 

WILL COUNTY CENTER FOR ECONOMIC DEVELOPMENT, AND 

BOARD MEMBER, COALITION FOR AMERICA’S GATEWAYS 

AND TRADE CORRIDORS 

Mr. GREULING. Thank you, Madam Chairwoman, members of the 

Subcommittee. Thank you for this opportunity. Today, I am representing both the Will County Center for Economic Development 

and the Coalition for America’s Gateways and Trade Corridors, 

which is a diverse group of 60 public and private organizations 

dedicated to increasing Federal investment in America’s 

multimodal freight infrastructure. 

I am also here as the CEO of the Will County Center for Economic Development. Our responsibility today is marketing the largest inland international container port in North America. Will 

County is crossed by six Class I railroads, five interstate highways, 

and several commercial water ports on our Nation’s largest inland 

waterway. 

Last year, we processed over three million containers containing $65 billion worth of goods that are grown, manufactured, assembled, and delivered throughout the United States and the world. 

Our first and last mile infrastructure requirements today total $3.6 billion of new investment just in our county, and that does not 

include bringing our existing road infrastructure up to a state of 

good repair. 

Our needs extend far beyond roads. Increased utilization of 

freight by rail as we have heard is resulting in more at grade rail 

crossings and it is impacting commerce and public safety. 

We need at the local level more grade separation structures and 

first and last mile interstate connectors to accommodate the freight 

of the future. The growth of freight has been stated. We believe by 

2045 that increase will be about 45 percent, putting more pressure 

on both existing and future infrastructure for freight. 

Meanwhile, 95 percent of the international consumers are now 

outside of the United States, so being at the beginning and the end 

of a major global supply chain, U.S. companies have to understand 

and the Government needs to understand that we need good infrastructure to reach those markets. 

U.S. Government infrastructure investment as a percentage of 

GDP is currently less than 2 percent. Our trade partners, our biggest ones, Canada, China, Mexico, are spending two to five times 

more than that on their infrastructure, and it cannot be just one 

mode that we are focused on when we are talking about funding 

infrastructure. We have to look at all modes, and we need to make 

those modes work better together—rail, truck, air, and water are 

today the key components of the global supply chain. 

The global situation is getting worse in a lot of respects, but we 

have the opportunity to take advantage of what is going on internationally in the economy. 

The Coalition for America’s Gateways and Trade Corridors asks 

Congress to take the following steps in the upcoming surface transVerDate Nov 24 2008 11:25 Jan 04, 2016 Jkt 075679 PO 00000 Frm 00024 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\98012.TXT JACKIE
21 

portation authorization. First, we would like you to establish a 

freight program containing dedicated and flexible funding. 

Freight should not compete with other mobility needs. It is integral to other mobility needs. Freight movement occupies a special 

place in our transportation system as the element supporting commerce, competitiveness, and that all important word, ‘‘jobs.’’ 

We should have a dedicated funding such as a Freight Trust 

Fund, that is committed to stoking our economic engine by improving efficiency, safety, reliability, and speed at which goods are 

moved. 

Second, fund at a minimum level of $2 billion a year a competitive multimodal freight infrastructure grant program. Projects of 

national or regional significance or a similar freight specific competitive grant program is needed to prioritize Federal funding of 

projects that meet certain performance criteria to advance economic 

goals of this country. 

By prioritizing projects, we can identify important public benefits 

as well as non-Federal support. A $2 billion grant program could 

leverage many times that amount in private investment in infrastructure. 

Third, ensure robust public investment in all modes. Where public benefit is derived, public investment must be made. It is often 

when modes come together that public assistance is needed to close 

the funding gaps. 

Examples include highway rail grade crossings, rail spurs to access cargo, logistics or transfer facilities, tunnels and bridges for 

port access, and border crossing capacity enhancements. 

Finally, modify the national freight transportation policy to make 

it multimodal. Create an Office of Intermodalism in the USDOT 

Secretary’s Office, and give freight the significant attention it 

needs in this country to keep our economy healthy. 

Thank you. 

[The prepared statement of Mr. Greuling follows:] 

PREPARED STATEMENT OF JOHN E. GREULING, PRESIDENT AND CEO, WILL COUNTY

CENTER FOR ECONOMIC DEVELOPMENT AND BOARD MEMBER, COALITION FOR

AMERICA’S GATEWAYS AND TRADE CORRIDORS

It is my pleasure and honor 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 

Will County Center for Economic Development and 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 the Chairwoman, Ranking Member and 

Members of this Subcommittee for the opportunity to share my views with you. Our 

nation’s ability to move goods is tied to the success of our economy and I thank the 

Committee for holding a hearing on this critically important topic. 

The organization I work for, the Will County Center for Economic Development, 

is a private economic development corporation that today is responsible for marketing the largest inland international container port in North America. Located 30 

miles southwest of Chicago, Will County is crossed by six Class I railroads, five 

interstate highways, including I–80 and I–55, and several commercial ports served 

by our Nation’s largest inland waterway. You might say we are at Main and Main 

of the transportation, distribution and logistics hub of the country. Last year over 

three million twenty-foot equivalent containers moved through our port system carrying international and domestic products that are grown, manufactured, processed, 

assembled and delivered throughout the United States and the world. Over $65 billion in imports and exports utilize this intermodal transportation hub annually, arVerDate Nov 24 2008 11:25 Jan 04, 2016 Jkt 075679 PO 00000 Frm 00025 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\98012.TXT JACKIE
22 

1 U.S. Department of Transportation, Beyond Traffic, February 2015. <http://www.dot.gov/ 

sites/dot.gov/files/docs/DraftlBeyondlTrafficlFramework.pdf> 2 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> 3The White House, An Economic Analysis of Transportation Infrastructure Investment, July 

2014. <http://www.whitehouse.gov/sites/default/files/docs/economiclanalysislofltransporta 

tionlinvestments.pdf> 4Financial Times, US public investment falls to lowest level since war, November 2013. <http://www.ft.com/intl/cms/s/0/f0e71a16-4487-11e3-a751-00144feabdc0.html#slide0> 5 Canadian Chamber of Commerce, The Foundations of a Competitive Canada; The Need for 

Strategic Infrastructure Investment. December 2013. <http://www.chamber.ca/media/blog/ 

131218-The-Foundations-of-a-Competitive-Canada/131218lThelFoundationsloflalCompe 

titivelCanada.pdf> 6 Bloomberg, ICA CEO Sees Mexico Infrastructure Spending Rising 56 percent, September 

2012. http://www.bloomberg.com/news/articles/2012-09-17/ica-ceo-sees-mexico-infrastructurespending-rising-by-56- 7The Economist, Life in the Slow Lane, April 2011. <http://www.economist.com/node/ 

18620944> 8The Economist, The Half-Finished Revolution, July 2011. <http://www.economist.com/node/ 

18986387> 9The Economist, Life in the Slow Lane, April 2011. <http://www.economist.com/node/ 

18620944> 10 National Association of Manufacturers, Catching Up: Greater Focus Needed to Achieve a 

More Competitive Infrastructure, September 2014. <http://www.nam.org/Newsroom/Press-Releases/2014/09/New-Report-Shows-Status-Quo-on-Infrastructure-Hampers-Competitiveness/> 

riving by way of truck, train, plane, ship, and barge. To support this regionally and 

nationally significant freight movement, Will County Center for Economic Development has a state and Federal project list that adds up to over $3.6 billion—and 

that’s just road projects. 

As a nation, we’re rebounding from a recession that will remain in our minds for 

years to come. The economy is trying to grow—the North American manufacturing 

base is growing, folks are beginning to buy new cars and clothes, and our farmers 

are producing record-volume crops. As a result, U.S. freight volumes are expected 

to increase 45 percent by 2045.1 Meanwhile, 95 percent of the market for goods lies 

outside of U.S. boundaries.2 As demand grows, both within and outside of the 

United States, the pressure on our goods movement network significantly increases, 

this growth and the economic value it brings to our economy will be stunted if investment in our freight system is left to wither. Consumers’ ability to buy goods at 

a competitive cost is directly linked to a producer’s ability to move those goods 

across the country in a manner that is safe, efficient, reliable, and expedient. Supply 

chains will keep growing regardless of what we do as a nation—but they will not 

grow comparably within our country unless we maintain a world class infrastructure network to move commerce and attract business. 

Currently, U.S. government infrastructure investment as a percentage of GDP is 

less than 2 percent,3 the lowest level of infrastructure investment at any point since 

World War II 4. Our trading partners are doing much more: Canada invests 4 percent,5 Mexico 4.5 percent,6 Europe 5 percent,7 India 8 percent,8 and China 9 percent.9 Simply put, our largest trading partners and competitors are investing at 

twice to five times the rate we are. 

It’s not just a matter of investment, though. The investment needs to be strategic 

and it needs to 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 unsnarl a chokepoint that clogs our communities and commerce. 

An increase in targeted infrastructure investment from public and private sources 

over 15 years would pay dividends by growing jobs by almost 1.3 million at the 

onset and it would grow real GDP 1.3 percent by 2020 and 2.9 percent by 2030.10

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 

entirely by the private sector. 

23 

11Transportation for Illinois Coalition, State of Illinois’ Transportation and State Funding 

Challenges, January 2015. < http://www.transportation-for-illinois-coalition.com/publications/ 

other-transportation-reports/> 12 Illinois Section ASCE, 2014 Report Card for Illinois Infrastructure, April 2014. <http:// 

www.isasce.org/wp-content/uploads/2014/04/2014-Illinois-Navigable-Waterways-Final-Report.pdf> 

Will County holds the largest inland container port in North America, and while 

our residents contribute through traditional state and local taxes as well as through 

an additional Regional Transportation Authority sales tax, the state of Illinois and 

county residents cannot be the sole financial contributors for this nationally significant freight movement. 

The current condition of highways in Illinois is 82 percent acceptable; assuming 

the Federal contribution remains stagnant through 2020, conditions are expected to 

deteriorate making highways 61 percent acceptable.11 The Interstate System was 

designed to accommodate fleets of the 1950s, not the much larger trucks that occupy 

our highways today. Increased truck size paired with the growth in truck volume 

produces congestion at first and last mile connectors, where trucks have difficulty 

merging with traffic on under-sized ramps, resulting in freight bottlenecks and safety concerns. These intermodal connectors are critical in Will County—not only are 

they a necessity for truck freight movement, but they are also critical for rail intermodal operations. 

Continued growth of both passenger and freight traffic frequently combined on 

congested, old urban rail corridors will continue to produce chokepoints and problems for throughput of freight movement. While the Chicago CREATE program is 

working to deal with that in the Chicago area, there are many urban areas that 

are not able to develop mega-project approaches to alleviate this problem. 

As I mentioned, six Class I railroads move through Will County. There is an increased utilization of freight by rail, which means more at-grade rail closings, hurting road commerce and public safety. We need new grade separation structures to 

meet this demand. 

Most of the locks and dams along the Illinois, Mississippi and Ohio rivers were 

built in the 1930s with a 50-year design life. These locks and dams are now in desperate need of rehabilitation and repair. An analysis by the Illinois Farm Bureau 

contends that delays at navigation locks cost Midwestern farmers $500 an hour. Average delays at locks are estimated to be six hours, with some as long as 12 hours 

or more. In many places along our inland waterway system, modern fifteen barge 

1,200-foot long tows must split loads to pass through outdated 600-foot locks.12 This 

procedure requires uncoupling barges at midpoint, which triples the time needed to 

lock the 15-barge tow and increases accident rates among deckhands. 

Will County is a key intermodal logistical area for transfer of rail, port, and truck 

freight between modes, which adds substantial trucking demand throughout the region. As regional highway traffic volumes have increased, the associated congestion 

has resulted in travel delays with substantial economic impacts to industries that 

depend on the ability to efficiently move freight within and through the region. To 

alleviate this congestion, the Illinois and Indiana Departments of Transportation 

are working in concert to develop the Illiana Corridor, a new 50-mile access controlled highway that would allow traffic to bypass Chicago, thus taking 46 million 

miles of truck traffic off local roads. We are exploring public-private partnership 

(P3) opportunities, detailed project design, environmental permitting and land acquisition. The project will improve regional mobility and create thousands of shortterm and long-term jobs, amounting to over a billion dollars in wages over a 30- 

year period. It will serve as a major trucking corridor and boost the region’s longterm economic output by $4 billion. Given the national significance of this project, 

we need a partner at the Federal level to help our states, local governments, and 

private partners make this improvement. 

The upcoming surface transportation authorization presents an opportunity to 

begin making the type of strategic investments we urgently need. The Coalition for 

America’s Gateways and Trade Corridors asks Congress to take the following steps 

in the upcoming reauthorization: 

• Establish a freight program containing dedicated and flexible funding: Freight 

should no longer compete against other mobility needs and programs such as 

traffic and pedestrian safety. Freight movement occupies a special place in our 

transportation system as the element that supports and enables national commerce and global competitiveness. In recognition of this critical role, it should 

receive dedicated funding such as a Freight Trust Fund that is committed to 

stoking our economic engine by improving the efficiency, safety, reliability, and 

speed at which goods move. Recognizing that freight needs vary by state and 

24 

13 U.S. Department of Transportation, Beyond Traffic, February 2015. <http://www.dot.gov/ 

sites/dot.gov/files/docs/DraftlBeyondlTrafficlFramework.pdf> 

metro region, and there is no one-size-fits all approach to freight planning and 

investment, states and localities should be engaged and afforded flexibility in 

applying a certain amount of these funds on a regional basis. 

• Authorize dedicated funding at a minimum level of $2 billion per year for a 

multimodal competitive Federal freight infrastructure grant program with broad 

applicant and project eligibility: Dedicated, sustainable funding for a 

multimodal freight-specific Projects of National and Regional Significance 

(PNRS), or a similar freight-specific competitive grant program is needed to 

prioritize and fund projects that meet clear measurable criteria to advance economic goals. By prioritizing projects with demonstrably important public benefits and supported by non-federal funding, a $2 billion merit-based, competitive 

grant program could leverage many times itself in economic value. Established 

under SAFETEA–LU, PNRS assists 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 Highway 

Trust Fund formula programs. 

• Ensure robust public investment in all modes: Freight does not move on highways alone—where public benefit is derived, public investment must be made. 

In the case of highways, increased investment is necessary, particularly for National Highway System intermodal connectors, which bridge highway freight to 

ports, distribution centers and other modes and are the conduits for the ‘‘synergistic’’ use of combined modes. Intermodal freight is one of the fastest growing 

sectors of the freight market 13, and it is often in the places where various 

modes come together that need public assistance to close the funding and infrastructure gaps, which result in capacity inefficiencies and bottlenecks. Examples 

include highway-rail grade crossings, rail spurs to access cargo, logistics or 

transfer facilities, tunnels and bridges for port access, border crossing capacity 

enhancements, and air-freight connectors. 

• Modify the national freight transportation policy to make it multimodal and designate a national, multimodal freight network: Freight policy and planning 

should incorporate the many modes of transportation that move goods. Freight 

is a national priority and it is the Federal role to take a holistic look at our 

multimodal network when determining where public investment can yield the 

greatest return. A national ‘‘vision’’ and investment strategy that shapes and 

guides the Nation’s freight infrastructure system with active coordination 

among states, regions and localities is needed. The Office of Intermodalism, or 

a new office for multimodal freight should be reestablished within USDOT’s Office of the Secretary to administer the new freight mobility program with a particular focus on projects of national significance. Planning horizons should endeavor to anticipate freight needs extending over multiple decades and seek to 

smooth the path for economic growth, both domestically and internationally. 

We are not alone in making these recommendations; other transportation interest 

groups and even the House Transportation & Infrastructure Committee’s Special 

Panel on 21st Century Freight Transportation have come to the same conclusion: 

freight transportation needs dedicated funding. The planning groundwork for highway freight introduced in MAP–21 pointed us in the right direction, but it addresses 

only one slice of a much larger system. We follow this path at our peril—ignoring 

our complementary modes of transport is ignoring the essential services offered by 

multimodal and intermodal transportation. In so doing, we will fail our citizens’ 

needs both in terms of quality-of-life and economic competitiveness. 

I thank the Committee for its time and look forward to working with you on the 

surface transportation authorization. 

Senator FISCHER. Thank you very much. We will begin with a 

first round of questions, 5 minutes. I will start. 

Mr. Bessac, you talked about competing in a global market and 

the effect that has. Being with Cargill and the emphasis you have 

with pork, can you tell me what percentage of pork in this country 

goes for exports? 

25 

Mr. BESSAC. Certainly, Senator. Pork is much larger than beef, 

between 20 and 25 percent depending upon the year, and about 10 

percent of beef is exported. 

Senator FISCHER. When you are looking at delays at our ports 

and you see other countries stepping forward and being able to fulfill some of those orders, do you know what share of the market 

your company has lost and how you see that rippling effect 

throughout the industry? 

Mr. BESSAC. Well, I guess going to Cargill’s share gets to be a 

bit difficult, but if you look at the U.S. pork industry or the U.S. 

beef industry, we certainly have been the largest exporter around 

the globe. 

As we have dealt with the congestion in the ports, also issues 

like currency and other forces in play in the market, we have seen 

a substantial increase just in the past year to countries, the EU, 

Chile, and I think certainly in the last couple of months have seen 

a substantial decline in our volumes. 

Senator FISCHER. Do you think that will be a permanent decline? 

Will we be able to get that market back once these customers are 

used to having new trading partners? 

Mr. BESSAC. I think any time you disappoint a customer, it takes 

time to build trust back. As I referred to in my testimony, there 

is a tremendous amount of potential for both beef and port exports 

on the global scale. We have a product that the world is looking 

for in values. 

I certainly believe that growth potential remains, but there is no 

doubt that we have disappointed our customer base, primarily 

Japan, Korea, and China, over the last couple of months, and that 

will take some time to rebuild trust. 

Senator FISCHER. In disappointing our customer base, what has 

been the loss in dollars to pork producers and the economy here in 

this country? 

Mr. BESSAC. Well, I do not know that I would be the best one. 

I think the North American Meat Institute estimated $40 million 

to $50 million per week. I could probably give you a better example. 

Just this morning, we have about 15 containers of chilled pork 

product in route to Japan that our customers are either asking can 

you guarantee us it will arrive in an useful form with shelf life or 

not. For me, that is about $1 million, I have to decide whether I 

am going to put that into a port system and either slow down or 

potentially close, closing being a complete loss. I hope that gives 

you some perspective. 

Senator FISCHER. Yes, thank you. Ms. Farmer, with BNSF, I am 

sure you have to look at the possibilities of a shutdown, and a shutdown that would last for possibly an extended period of time. How 

does that affect the railroad in planning, and what impact does 

that have on your customers and the thousands of employees you 

have? 

Ms. FARMER. Sure. An example of this would be this weekend we 

were notified by the PMA that vessel gangs would not be working. 

The effect that has on our railroad is that in an average week during this period of year, we would be moving somewhere in the 

26 

neighborhood of 60 trains off our docks in Southern California. 

That number has been reduced to 30 trains per week. 

The impact that has is that we cannot move the freight that 

wants to move off the West Coast, so we will move a limited 

amount of that freight off the West Coast into the interior of the 

U.S. It will then limit the ability for us to accept freight at our inland hubs, so we will have to turn freight away at those inland 

hubs that wants to move back to the West Coast. 

In addition to this, I talked about our capital expenditures that 

we have made, we are now having to store locomotives and equipment that we have added to our fleet to be able to handle this 

country’s supply chain growth, store that across our railroad, because we can no longer continue to send this volume out to the 

port. 

When we do that, it sits on the main line and it causes ripple 

effects across our network which impacts other customers in addition to our intermodal customers. 

The impact for us really, Senator Fischer, is that we cannot move 

the freight through and we are not using the valuable resources 

that we have. 

Senator FISCHER. That impact when you see the freight migrate 

from the West Coast, what impact does that have on a local community? 

Ms. FARMER. Absolutely. I think when we look back at history 

and we know during 2002, freight has permanently migrated away 

from that, to Canada, to Mexico. We know that because of that, the 

local freight is not ending up in those communities, and additional 

expenditures need to be made somewhere else when a port is there 

that could be used for that freight to be moved through the country. 

Senator FISCHER. Thank you very much. Senator Blumenthal? 

Senator BLUMENTHAL. Thank you, Madam Chair. There seems to 

be no doubt among any of our panel members that solving this 

threatened impasse or crisis on the West Coast is necessary to 

America’s near term and longer term competitiveness; is that correct? 

Moving on to the broader issue. Let me go to Mr. Greuling’s really excellent testimony about our ongoing failure, and it is kind of 

a slow motion implosion of American competitiveness, the ongoing 

failure to spend more than 2 percent of our GDP on infrastructure 

investment, which is compared to 9 percent by China, 8 percent in 

India, 5 percent in Europe, even in Mexico, four percent. 

It extends not only to roads and bridge, which are crumbling, decaying and decrepit, but also to areas of our infrastructure as simple as rail grade crossings. 

In Valhalla, New York, just days ago, we saw the consequences 

of possibly—we do not know the causes yet—possibly a rail grade 

crossing that could have been made safer and could have prevented 

the deaths and injuries that occurred there. 

The fact of the matter is that there are more than 2,000 crashes 

and collisions every year at our rail grade crossings, causing more 

than 230 deaths and more than 700 injuries, not to mention the 

economic costs of those collisions, which are very difficult or imposVerDate Nov 24 2008 11:25 Jan 04, 2016 Jkt 075679 PO 00000 Frm 00030 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\98012.TXT JACKIE
27 

sible to calculate. That is just one example of our failure to invest 

in infrastructure. 

Let me ask you as to the $2 billion that you recommend as a 

fund for investment, would it make sense to do it through a public 

financing authority or infrastructure bank, such as has been proposed and advocated by myself and other members of this committee, a very bipartisan proposal, that would make available not 

just $2 billion, but very possibly more? 

Mr. GREULING. I think the concept of a set aside through a public 

infrastructure bank, broader utilization of public and private activity bonds and along with some other finance mechanisms. I think 

we need to bundle these together. 

I think anything that costs a lot of money these days is going to 

take more than one source or resource to make it happen. 

Back in Illinois, we do not like to talk about gas tax, but we 

think in Illinois to solve some of the state road and infrastructure 

problems, a gas tax is something we should be looking at. 

I do believe in loan guarantees, broader use of some of the existing bonding programs, TIFIA and RRIF, I think both would help 

in meeting this demand that we have, and I do believe multiple solutions are going to be necessary. 

Senator BLUMENTHAL. My understanding is that both TIFIA and 

RRIF are under utilized. In fact, billions of dollars have been left 

on the table in effect as a result of internal problems highlighted 

by the Inspector General of the Department of Transportation very 

recently. Would you agree? 

Mr. GREULING. I would agree with that. I think the time it takes 

to process, going through the pre-application, going through that 

review, the uncertainty, quite frankly, that comes about when 

there are long delays in public financing tools, all of a sudden, a 

hot project becomes not so hot a project and they start looking at 

other infrastructure pieces to accomplish. 

Expedited review, broadening of the utilization of those funds, 

and certainly making sure that we are using our full complement 

every year would go a long way to helping us. 

Creating new programs is fine, but I think better utilization of 

existing programs makes a lot of sense. 

Senator BLUMENTHAL. RRIF in fact is a multibillion opportunity 

that is lost literally every day to American intermodal transportation. I welcome the emphasis that all our panel has put on intermodal transportation. As you have well expressed, it is the transportation growth opportunity of the future. 

Mr. GREULING. That is right. 

Senator BLUMENTHAL. Do any of you have any differences with 

the points that Mr. Greuling has just made? 

Ms. FARMER. I would say from BNSF’s perspective, certainly as 

you well know, we are privately funded, but we certainly have a 

vested interest in making sure the supply chain runs efficiently. 

Therefore, we fully support a Federal focus on freight. We think 

that is a good thing. 

Senator BLUMENTHAL. Through an infrastructure bank? 

Ms. FARMER. Again, we do not necessarily want to drive that decision, but we certainly want to be part of the conversation. 

28 

Senator BLUMENTHAL. Thank you. My time has expired. Thank 

you all. 

Senator FISCHER. Thank you, Senator Blumenthal. Senator 

Daines? 

STATEMENT OF HON. STEVE DAINES, 

U.S. SENATOR FROM MONTANA 

Senator DAINES. Thank you, Madam Chair. I represent the State 

of Montana, and in Montana, our number one industry is agriculture. It is about a $5 billion industry, just last year. As we know 

in ag, you have to be able to export. 

Like Senator Fischer, we do not have a lot of ocean front property in Montana. I do not think Nebraska does either. The supply 

chain becomes critically important. In fact, 80 percent of Montana’s 

wheat is exported. Nearly a billion dollars in 2013, and primarily 

through the West Coast ports. We are very proud of our ranchers 

and our farmers who not only feed America, but feed the world 

now. 

For Ms. Farmer, I heard concerns certainly from our producers 

in Montana about the backlog we had, I think, 3,400 cars past due 

in the region. Could you tell us what the current status of the rail 

backlog is now in Montana? 

Ms. FARMER. As I have responsibility for intermodal, I would be 

happy to follow up with specific statistics around the backlogs, but 

what I can tell you is that like any measurement on a year over 

year basis, because of the capital that we have invested, because 

of the milder winter that we have, by any metric that you look at, 

we are far improved from where we were last year. 

We are making significant progress toward delivering the service 

that your constituents in the State of Montana have come to expect 

from us, and we will continue to make progress along those lines. 

What I would say is concerning to us is that one of the ways agricultural products get to the West Coast, as we have discussed, is 

through the use of containers, it can move in hopper cars or containers, and what I can say is as we limit the inbound flow of containers into the interior of the country, it makes it more difficult 

for me to be able to move that product for export. That is certainly 

of concern to us. 

Senator DAINES. I can tell you, too, last summer, our Montana 

ag producers were not so concerned about the rail backlog, it was 

the issues going on at the West Coast ports. 

I used to be a supply chain guy myself. I worked for Procter & 

Gamble for 12 years and was in the supply chain. I have an appreciation that the chain is only as good as its weakest link. If we cannot get the harvest to market, then we really cannot realize the 

great potential of our ag industry. 

At the Port of Vancouver, the port and labor dispute we had 

going on there, that now we see going on in Long Beach and L.A., 

it is having a great impact and creating dwindling confidence, I 

think, on our global markets of the ability for us to deliver. 

In thinking about a global opportunity, as our competitors continue to improve in their products, the differentiator for us long 

term to win will be in excellent customer service, the ability to enVerDate Nov 24 2008 11:25 Jan 04, 2016 Jkt 075679 PO 00000 Frm 00032 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\98012.TXT JACKIE
29 

sure that when we say the product is going to be there, it will be 

there. 

As has been said, and as Senator Fischer mentioned, when we 

lose the ability to deliver, our customers will look elsewhere to find 

those same products. 

In fact, I just got a rather haunting e-mail from the president of 

an outdoor products company that manufactures in Montana, they 

have leading global market share, in fact, they are the only producer of some of these products that are still produce in the United 

States, the rest are producing over in China. 

This U.S. manufacturer, the president of the company e-mailed 

me about his concerns of what is going on as we speak today about 

the West Coast port slow downs, the International Longshore and 

Warehouse Unions are putting their interests, he said, not on their 

customers, and he said if something does not happen soon, we will 

have no choice but to reduce our current hiring plans and potentially lay off some of our current staff. 

In your view, what if anything can be done as we look at these 

challenges right now with these West Coast ports being virtually 

either slowed down or shut down? 

Ms. FARMER. Certainly, we are not party to the negotiations between the PMA and the ILWU, but it is clear to us there needs to 

be some speedy resolution of this. 

The biggest opportunity that I think is in front of us is it is going 

to take us several weeks to work off the backlogs that exist once 

some type of resolution comes to bear. 

We have an opportunity in front of us, and that is that Chinese 

New Year is upon us, and that will give us several weeks of reduced freight inbound to the West Coast that will allow us to catch 

up. 

I could not agree with you more that it is very concerning, we 

need to find a way to be able to resolve this, but again, we are not 

a party to those negotiations, and as such, the urgency is really 

where we are focused. 

Senator DAINES. Thank you. 

Senator FISCHER. Thank you, Senator Daines. 

Senator Klobuchar? 

STATEMENT OF HON. AMY KLOBUCHAR, 

U.S. SENATOR FROM MINNESOTA 

Senator KLOBUCHAR. Thank you very much. I am losing my voice 

here, but I want to thank everyone for coming, and especially Mr. 

Bessac from Target—from Cargill, which is a great Minnesota company, biggest private company in the country. We have worked extensively with them on these transportation issues, so thank you 

for being here. 

I am very glad that we were able to pass the user fee increase 

from the River Act, and I appreciate all the work that people who 

transport on the river did to get that bill done. As you know, it was 

part of the ABLE Act. 

Can you talk, please, about what the increased revenue will 

mean for upgrading locks and dams on our nation’s inland waterways system? 

30 

Mr. BESSAC. Senator, I am sorry. My area of expertise is in pork 

exports. I know Cargill is very interested in building a strong infrastructure so that we can compete on the global scale. I would be 

happy to get you a written answer from our Corporate Affairs’ staff 

so we can answer that. 

Senator KLOBUCHAR. But you are glad we passed the bill to see 

infrastructure improvements? 

Mr. BESSAC. I am, yes. 

Senator KLOBUCHAR. OK. That was supposed to be an easy question, but that is OK. 

[Laughter.] 

Senator KLOBUCHAR. Could you talk about how this works and 

why it is such a problem if you are able to get things out, as Mr. 

Daines points out, we are states that are not on an ocean. We are 

on Lake Superior, so the port matters a lot. 

I was once placed on the Oceans Subcommittee of the Commerce 

Committee. I remember Frank Lautenberg giving me a note when 

I told him I was the only Senator that did not have an ocean on 

the Oceans Subcommittee. He came back and said, ‘‘well, next year, 

just come back and ask for one.’’ 

In any case, could you talk about how inland states depend more 

on this river traffic? 

Mr. BESSAC. Absolutely. As you know, the demand for safe, 

wholesome food products around the world continues to increase as 

population increases. We need very effective, reliable modes of 

transportation, whether it be a river, a railroad, truck, or ocean 

vessel, to efficiently move those products to their best value consumer. 

Our farmer and rancher suppliers depend upon us to be able to 

take those crops and move them efficiently and get the best value 

so that we can in turn pay them a strong value for the hard work 

they do raisings those crops and livestock. 

Senator KLOBUCHAR. Thank you. Dr. Kemmsies, could you talk 

about the interrelationship with the ports—we do have the Lake 

Superior Port—rail and intermodal issue? 

Dr. KEMMSIES. Well, over the last 15–20 years, the number of 

hours of outage, unscheduled outage, at America’s locks and dams, 

particularly on the Mississippi waterway, has increased substantially. It has made large traffic less predictable, and agricultural 

shippers have been finding alternative routes. 

Perhaps the easiest way to see this is when you look at the Port 

of New Orleans’ share of U.S. agricultural exports. It used to be 

close to 65 percent about 10–15 years ago, and today, it is about 

45 percent. It is an impediment for farmers to get product down 

the river reliably and loaded onto the Handymax vessels. 

This does create permanent damage. Rather than look at threats 

of job cuts or not making investments, there are actual quantitative facts that can be assessed here. 

Under a free trade agreement, there are quotas for the trade of 

agricultural goods, corn, soy, and other grains and oil seed. If a 

shipment is delayed beyond the calendar year, then the quota for 

that year is not made. The importer on the other side of the trade 

is normally allowed some small growth rate, say two to 3 percent, 

but if they do not make their quota the year before, the two to 

31 

three percent growth rate is applied to a lower base rate. The excess amount is actually filled by other countries that do have reliable systems. 

Senator KLOBUCHAR. Exactly, and it is going to hurt us competitively internationally. Mr. Greuling, one last question on public/private partnerships. Exporting of the goods to our neighbors to the 

north and south and bringing goods in from Mexico and Canada is 

really important. Canada is the biggest trading partner that we 

have, and people do not seem to always realize that. 

We are having some huge problems at the borders with delays. 

In places like International Falls, Minnesota, there is an issue with 

a bridge that I am not going to get into, which we hope is soon 

solved, and the winds are from Michigan. I have been working on 

this as head of the Interparliamentary Group with the Canadians. 

On the Mexican border, our country has started to do a lot of 

public/private partnerships with building up the infrastructure at 

the ports of entry. Do you think this is a smart way to go? I want 

to get it rolled out on the northern border as well. 

Mr. GREULING. We definitely think it is a smart way to go. In 

our own case, we are looking at privately built bridges connecting 

modes of transportation, highway with rail, highway with water 

ports, knowing that the users will pay their way, their fair share, 

knowing that money is being invested into that specific infrastructure. 

We cannot afford to build $150 million bridges without some infusion of private equity. That is being used in North Africa. It is 

being used—— 

Senator KLOBUCHAR. Canada. 

Mr. GREULING.—in Canada. In the Middle East. We have a great 

example down on the Ohio River of a toll bridge that was built 

with private equity funding, and one of the construction companies 

actually paid part of the bill to keep their people employed. It is 

a good approach. 

Senator KLOBUCHAR. Thank you. Just to be clear, this project is 

more about the Customs, to try to speed up the back and forth between the countries with a new dawn in North America. Thank 

you. 

Mr. GREULING. Thank you. 

Senator FISCHER. Thank you, Senator Klobuchar. Senator Cantwell? 

STATEMENT OF HON. MARIA CANTWELL, 

U.S. SENATOR FROM WASHINGTON 

Senator CANTWELL. Thank you, Madam Chair, and thanks for 

having this important hearing on movement of freight. When I 

think of this issue, I think so much of Washington State and all 

the products that come through on their way to Asia. We have in 

a short period of time seen something like a doubling in the size 

of the ships over the last five years. Yes, we have a lot more capacity, and we obviously have a rising middle class in Asia, and they 

want more U.S. product. 

The question is, what are we going to do to meet that demand 

as it relates to improving our infrastructure? One of the things that 

has occurred is the recommendations of the Freight Mobility Board, 

32 

which was chaired by Mort Downey, somebody you are familiar 

with, I think, Mr. Greuling. I think, Ms. Farmer, somebody from 

the railroad association at least participated in that. 

The question is, how do we move forward on those recommendations and would you support a dedicated funding source to freight 

so we could raise the importance of why moving this product is so 

critical to our economy and infrastructure, and that TIGER alone 

just is not going to get it done? 

Ms. Farmer or Mr. Greuling, or anybody else who wants to jump 

in on that. 

Ms. FARMER. Certainly, we support anything to make our ports 

more competitive. We are excited about working together at Seattle 

and Tacoma. We will certainly stand together to work with them. 

We believe the TIGER grants were a good thing, but we need more 

funding around those kinds of issues. 

From our perspective, anything we can do to make them more 

competitive, we are certainly in favor of that as well. 

Mr. GREULING. Senator, certainly our four points with the Coalition, number one was to establish a fully funded dedicated freight 

program. We believe that needs to be at least $2 billion a year. 

This is not a program that is going to pick winners and losers 

in the transportation field. This money should be spent on what 

makes the most economic sense in terms of performance for the entire system. 

We believe setting priorities on a national scale for the projects 

of national and regional significance is one of the mechanisms to 

do that, and also the establishment of a separate freight office 

within USDOT, again, to strictly focus on these multimodal needs 

nationally. 

Senator CANTWELL. What do you think we need to do to get people to understand this from either an economic impact or some of 

the things your organization has done in studying the economic development associated with this? 

Mr. GREULING. A lot of what we do at the Center and through 

the Coalition is education. You may see this brochure that we recently produced through the Coalition, ‘‘Follow That Almond.’’ It 

shows the supply chain of an almond from a California grower to 

the Port of Hamburg in Germany delivering almond butter. We will 

have more of those in the future. 

I think that helps. I also think local and state jurisdictions need 

to understand and look at freight more on a national level and 

think in terms of interconnectivity, not just what is good for Elm 

Street or what is good for my river, but look at the whole national 

system, and make sure they are aware that what we do at the national level and the local level interconnect, and we really need to 

make sense of that when it comes to funding. 

Senator CANTWELL. Mr. Bessac, did you have something you 

wanted to add to that? 

Mr. BESSAC. I guess more of a comment, Senator. You hear lots of numbers talked about, $2 billion for infrastructure. I go back to 

the number Senator Fischer mentioned in if the ports were closed 

today, it would be $2.5 billion per day to the U.S. economy. 

I would submit we are very close, although they are not officially 

closed, I think we are very close to that at this moment. 

33 

I guess my comment is simply it seems like a very wise investment and an expense that the U.S. taxpayers and consumers are 

paying today daily, because we do not have the free flow of goods. 

Senator CANTWELL. I think we learned the lesson in Washington, 

because we are at the tip of the spear, so that congestion caused 

so many problems that we learned that if we were going to be competitive and not lose that business, that we had to make the improvements. 

Now we need the improvements made all along the system, not 

just right there. I think we just have to prioritize for people to understand that we will actually lose the economic impact, it is not 

just the up side, there is a huge up side, but there is a down side 

if we do not act as well, and that is that people will go to other 

ports or start buying product somewhere else just because they can 

get more predictable timeframes for delivery. 

We really do need to make an investment. Thank you, Madam 

Chair. 

Senator FISCHER. Thank you, Senator Cantwell. I believe we 

have some more time. I know members have more questions. We 

are going to do a second round. 

I am interested, Mr. Bessac and Ms. Farmer, when we look at 

freight transportation systems and we look at the Midwest and 

some of the challenges that we have with containers, how would 

you address those challenges where we have that lack of containers 

to move our product? Other members of the panel, if you would like 

to jump in on that as well. 

Ms. FARMER. Certainly. I will go ahead and start, Chairman 

Fischer. I think what you will see is that we have proven in normal 

times that we had sufficient containers to be able to move the product that wants to move export. In fact, last year we moved 236,000 

units of grain in a box back to the West Coast. 

We work very closely with the ocean carriers and the trucking 

companies, and they are able to scale relatively quickly to be able 

to meet the demands. 

What BNSF has been very focused on is improving our velocity. 

As you well know, when we look at the speed with which we can 

turn these assets, we can create more capacity for the supply chain 

and the market, if we invest in our infrastructure, if we have expansion in our infrastructure. 

We have a very thoughtful approach to investing so that we can 

get the velocity that we need which will generate the capacity for 

the Midwest to be able to have the containers that they need. 

Senator FISCHER. Anyone else? 

Dr. KEMMSIES. There is a structural deficiency in that for the exports, and our exports tend to be agriculture, large scale capital 

goods and energy products, and these come from places where not 

a lot of people live, and therefore, not a lot of containers arrive full 

of imported goods, so there is a structural gap that has to be addressed. 

From where I sit and what I have seen in the data, I do not 

think it will be addressed very simply by trying to match or reposition containers, because every time you have these congestion 

issues, things do get paralyzed. 

34 

It may be necessary to pursue an alternative solution such as 

using 53 foot domestic containers, and then doing cross dock operations, like we do with the imports, but in reverse so we can compress these onto the container ships. 

Senator FISCHER. Thank you. Mr. Greuling? 

Mr. GREULING. Senator, the demand is clearly there. Empty containers quite frankly are at a premium in certain locations. In our 

case, we are receiving grain, dry distillers’ grain, corn, and soybean 

meal from six different states that are being trucked in, trans-loaded into containers and then shipped out on the BNSF and UP to 

the West Coast. 

When you think about the cost of that transportation just to get 

to an empty container, it shows clearly that we have this very high 

demand, and really, we cannot afford to build more ports. We just 

need to use the existing ports as efficiently as we can. I think that 

applies to both inland ports and water ports. 

That is going to be the solution, and tie it altogether with highways and railroads, and then we have a winning situation. 

Senator FISCHER. That ties into what I want to ask Dr. 

Kemmsies with making our ports efficient, what role do you see for 

automation? Is that going to help make our ports more efficient, 

more competitive, and what success do you see us having in that 

regard? 

Dr. KEMMSIES. Well, I do not think it is possible to operate the 

ports with the larger vessels coming without some degree of automation, if not eventually full automation. 

These ships, as I mentioned in testimony earlier, they have to be 

on the water as much as possible, not sitting at ports. If you were 

to look at an 18,000 TU vessel, which is the largest size that is 

really currently operating, it takes four and a half days if you can 

do 35 gross moves an hour on a 24/7 basis. 

To maintain productivity like that without some form of automation, I think, is impossible. I have yet to see it demonstrated. We 

seem to have to move in that direction. 

If we do that, then I do see U.S. ports being able to maintain an 

ability to compete with foreign ports, particularly those to our 

north and to the south. 

Senator FISCHER. Thank you, Doctor. Senator Blumenthal? 

Senator BLUMENTHAL. Thank you. What is the cause of the 

shortage of container cars in this country? I will ask that question 

to whomever or all of you if you want to answer. 

Mr. GREULING. Senator, I think from our perspective, I am not 

sure there is a net shortage. I think the real issue is where the 

empty containers are versus where the demand for the containers 

is. 

Senator BLUMENTHAL. What accounts for that imbalance? 

Mr. GREULING. Well, a lot of it has to do with the system that 

we have set up, the intermodal system today. We can handle over 

three million containers at our yard, a million and a half coming 

in and a million and a half going out. Places in down state Illinois 

or in Minnesota or Indiana do not have that kind of inbound capacity. Therefore, they do not have the available containers to ship 

out. 

35 

It is a market balance to some degree. I am not sure that is fixable in the short term. Building more containers is not necessarily 

the answer, and I would defer to my rail colleague here to maybe 

respond to that. 

Senator BLUMENTHAL. Ms. Farmer? 

Ms. FARMER. Senator Blumenthal, what I would say is that I do 

not believe there is a net shortage of containers, but what we need 

to challenge ourselves with is how do we efficiently get them into 

the interior of the country. 

With that, what BNSF and the Western roads have done is that 

we have found ways to find the ability to load those containers, 

consolidate grain loading around our intermodal hubs in the interior of the country. 

Where there is a surplus of empty containers that is naturally 

made by the goods that come off the West Coast, for example, at 

our Logistics Park, Kansas City facility, the majority of grain that 

gets loaded out or a very large percentage of the grain that gets 

loaded out comes from the State of Kansas. 

As we can draw that closer to our Logistics Parks, we then have 

the empty containers there that can then be loaded out. In addition 

to that, we have to keep continuing to invest so that our velocity 

is good, so the containers are there. 

I do not think in total there is a net shortage. The issue is about 

how do we stay competitive through the ports over the railroads 

into the right places to be able to get those containers into the interior of the country. 

Senator BLUMENTHAL. The ports are just one key to a multimodal system? 

Ms. FARMER. Absolutely. 

Senator BLUMENTHAL. Where rail is obviously very important to 

moving a lot of those containers to the right places so they can be 

there at the right time. 

Ms. FARMER. Absolutely. 

Senator BLUMENTHAL. Let me ask you, going back to the infrastructure investment issue, Mr. Bessac mentioned this figure of $2 

billion, the possible loss of $2 billion if this impasse or crisis continues, which would be very, very, very unfortunate, but it strikes 

me as an example of how possibly there are costs to lack of recognizing the importance of investment and smart policy. 

What somewhat perplexes me is why the folks who run our 

transportation system, including your railroad and others who are 

here, have not been more vociferous or vehement advocates for specific solutions to these infrastructure problems in the way that 

maybe will move policymakers, including folks who are sitting on 

this panel, to take some action. 

In other words, we would welcome you to be more vigorous advocates for a system that is your responsibility and trust to run and 

ultimately your shareholders have very significant investments in. 

Ms. FARMER. Absolutely. As I mentioned earlier, Senator 

Blumenthal, we agree from the standpoint that we absolutely have 

to continue to manage our network, invest in capital expenditures 

that make sense going forward. We also want to—we have a vested 

interest in remaining engaged in that conversation. We believe that 

36 

a national transportation policy is a good thing with a focus on 

freight. 

I think we have been very active relative to those discussions 

and participation in national transportation policy planning. 

Senator BLUMENTHAL. Thank you. Thank you all for being here 

today. 

Senator FISCHER. Thank you, Senator Blumenthal. Senator 

Daines? 

Senator DAINES. Just a follow-up question, and thank you, 

Madam Chair, regarding infrastructure investment. Senator 

Blumenthal, I completely agree that we need to continue to invest 

if we are going to maintain our global competitiveness. 

I think, Ms. Farmer, you mentioned some of the roadblocks of the 

proposed export facilities on the West Coast. I was out at one of 

those proposed facilities last summer, the Gateway Pacific Terminal. I was standing there with a member of the Rail Union from 

Montana. I was standing there with a Tribal member from Montana that would benefit from expanded exports. 

We see both the jobs as well as the tax revenues that would be 

created by expanding exports, and yet, it is delay after delay after 

delay, trying to get this port built. It is literally right in between 

two existing ports, it is zoned properly. It is environmentally 

sound. 

Yet, there is great concern of how in the world are we ever going 

to move forward here on infrastructure investment with these endless delays and uncertainty. 

I am looking for help here around what we can do to try to—I 

am not suggesting there is not a thorough review process but one 

that provides some degree of certainty and reasonability in that 

process. 

Ms. Farmer, any comments on those thoughts? 

Ms. FARMER. I would say, Senator, we certainly agree. We are 

working very closely, as you know, with the State of Montana, to 

put together our export platform. We, like you, are anxious to have 

the ability to continue to grow, to be able to export. 

We believe there needs to be some improvement, whether it is 

around permitting reform. We have talked about that multiple 

times in the past. We believe that extending the environmental review position of MAP–21 to the railroads would be helpful, and further expediting the process, looking at these things concurrently, 

basically reducing the time line that these things take. 

In general, what I would say is we completely agree that we are 

anxious to export product to continue to grow, to improve the competitiveness of the U.S. supply chain, both through exports and 

what we have talked about here as well, imports as well. 

Senator DAINES. I think we talked about the need for state-ofthe-art productivity and automation and so forth. This proposed 

port would be exactly that. Mr. Greuling, what are your thoughts? 

I know you are somewhat of an expert on this issue. 

Mr. GREULING. Senator, I think much like we suffer from multiple ‘‘jurisdictionitis’’ with three, four, five or six governmental 

units controlling roads and infrastructure, the Federal Government 

has the same issue for these major projects, the number of agencies 

37 

that these projects have to touch, the time it takes to go through 

the NEPA process, the environmental review. 

In fact, I would comment that we have actually seen some improvement on that under leadership from Congress and the Administration. We applaud that. 

It should not take 10–12 years to do an EIS statement on a 

bridge. Clearly, that is an issue. 

Multiple agencies maybe working a little closer together on collaboration, and again, we think a national freight office could help 

sort of quarterback that initiative, especially for these major important freight projects. 

Senator DAINES. I think what is highlighted today in some of the 

testimony is what has happened with these choke points on our 

West Coast ports, allowing more optionality and so forth to resolve 

these issues when they come up. 

If we only have one way out, it is nice to have multiple choices 

here and so forth to ensure we protect our economic interests and 

are able to compete globally. 

Thank you. That is all the questions I have. 

Senator FISCHER. Thank you, Senator Daines. We have been 

joined by the Chair of the Committee, Senator Thune. Do you have 

questions, please? 

STATEMENT OF HON. JOHN THUNE, 

U.S. SENATOR FROM SOUTH DAKOTA 

The CHAIRMAN. Thank you, Madam Chair and Senator 

Blumenthal, thanks for holding this hearing. It is a very important 

subject. I appreciate the fact that your subcommittee is focused on 

this. 

A reliable and efficient supply chain is critical to our global competitiveness and to our economy, and the ports are an absolute 

vital link in that chain. 

What is frustrating is that some of these things are things sometimes you cannot control. These things, I guess, I would say are 

self-imposed problems. They are really kind of unforced errors. If 

you try to quantify this, it is having a profound impact on the economy. 

I know some of you on the panel have already testified to that 

effect, and Cargill, 40 million a week. I have talked with Tyson in 

my State of South Dakota, and they have shared with me that we 

have beef and pork sitting in freezers near the ports instead of 

heading to Asian markets, while we have all these large container 

ships sitting off the coast waiting to export our nation’s products. 

It affects jobs. Tyson employs 41,000 people. USDA estimates 

there are a million jobs associated with agricultural exports in this 

country. It has a profound impact on the economy, not just on the 

West Coast, but all across the country, workers in South Dakota 

and other places that are dependent upon, like I said, a reliable 

supply chain. 

Outdoor Gear, Inc., family owned business in South Dakota. 

They are a wholesaler. Receives 95 percent of its inventory from 

West Coast ports, has been forced to miss deadlines, pay for late 

delivery penalties, and pass up important sales opportunities, including in December, which of course is the holiday peak season. 

38 

This is an issue that just really needs our focus. It is a huge 

drain on the economy. I just urge all sides to come to a resolution 

in this dispute to find a solution as soon as possible. We just cannot afford to drag this on and have our economy pay this kind of 

a price. If we can get this behind us, we can start focusing our energy and creativity on a lot of the other long term infrastructure 

challenges that desperately need our attention as well. 

In that light, I wanted to ask a question. I think all of you have 

attempted to kind of quantify what some of the financial and economic impacts of this have been, but the question I would like to 

pose is once this is resolved, how long will it take to unwind this 

and to get those networks working in an efficient way again, and 

where things are sort of normalized. What are we talking about 

once we get hopefully—which will be very soon—a resolution to 

this issue? 

Mr. BESSAC. Senator, I would answer from our side as the exporter, I think it is an excellent question. Our best estimate is on 

chilled shipments, it will take at least a month to get back into a 

normal flow when we can get those products moving through to the 

high value markets in Japan and Korea, at least a month. 

If you move over to the frozen side, the products we would send 

to Japan, Korea, China, Mideast, all around the globe, our best estimate is three to four months before we are back to a normal flow, 

we have moved through the backlog of goods that we have. That 

number continues to increase every day. 

Ms. FARMER. Senator Thune, from our perspective at the railroad, we certainly stand ready to be able to help the backlog, but 

what I would say is because of the challenges that we face with not 

being able to move freight, we have had to store locomotives and 

equipment across our network. There will be some period of time 

it will take for us to be able to go and get those assets, reposition 

them at the ports, be able to be in a position to handle that. 

What I would tell you is that we are anxiously awaiting the ability to do that. We will be ready to do that. We have an unique opportunity, as I mentioned earlier before you stepped in, in that Chinese New Year is coming. When Chinese New Year hits, we will 

see less vessels that will be headed toward the West Coast. It 

would give us an opportunity if there was a speedy resolution to 

this current PMA/ILWU negotiations, that we could use that time 

then to work off the backlog that exists at the ports. 

The CHAIRMAN. I guess I would just reiterate, Madam Chair, and 

again thank you for having this hearing, that this is not something 

that is confined to the West Coast. This has a ripple effect throughout our entire economy. 

Having an efficient transportation system is really one of the 

keys to our advantage, our competitive advantage in the global 

economy. When you see this kind of thing happen and recognize 

the impacts that it has, I would just again encourage all the parties 

to create a new sense of urgency and build some intensity behind 

coming to a resolution. 

We just cannot continue to keep this going on and not expect 

that it is going to have some very, very detrimental and adverse 

impacts on a whole range of sectors of our economy and all the jobs 

that go with it. 

39 

Madam Chair, thank you, and thank the panel for your great testimony today. 

Senator FISCHER. Thank you, Chairman Thune. Senator Blunt? 

STATEMENT OF HON. ROY BLUNT, 

U.S. SENATOR FROM MISSOURI 

Senator BLUNT. Thank you, Senator Fischer, for holding this 

hearing, and you and Senator Blumenthal for drawing attention to 

this issue. 

I know a lot of questions have already been asked. Dr. 

Kemmsies, in your written testimony, you mentioned that the 

under investment in the Mississippi ports, the inland ports, indicates that we have been more import oriented than export oriented, 

expand for a few minutes on the significance of the inland ports, 

particularly with the Panama Canal development and agricultural 

opportunities and trade, as well as manufacturing. 

Dr. KEMMSIES. Most of the growth in trade was on the import 

side, and when we look at the various segments of the freight 

movement industry in the U.S., the larger projects that were done 

by rail, by highway, and at the port level, they were focused on 

being able to handle the imports more efficiently. 

A lot of the dredging, for instance, is not really done because we 

were trying to export more goods. Our goods are very heavy. They 

require deeper vessels. 

The motivation, when you read the economic analysis or the cost/ 

benefit analysis, was essentially focused on the import side. Maybe 

you can look at it from that side to say well, this is an import bias 

in our investments, but if we look at the projects or where we have 

not had funding for infrastructure, you get the same message. 

That is what I meant in the testimony about the Mississippi waterway. We have seen chronic and consistent under funding and we 

have seen a deterioration of the infrastructure there. 

Senator BLUNT. I think from the locks to the ports themselves, 

obviously, I would be very focused on the Mississippi River because 

of where I live and where I have grown up and where we are today, 

but the inland ports also serve a geographic area logically twice as 

big as the coastal ports. You serve a geographic area both ways. I 

hope we can begin to focus more on those ports. 

The other question I had, Chairman, for Ms. Farmer, I think you 

all have been trying at BNSF for a long time to do a California 

project, the California International Gateway. Permitting delays 

have been a big problem there. 

I am working on some legislation now to try to streamline permitting for railroad projects. Do you want to talk about how the 

kind of problems you have had trying to serve that market in a better way? 

Ms. FARMER. Absolutely. The Southern California International 

Gateway would be, as I mentioned, the greenest intermodal facility 

in the world when built. We have been working for a decade to try 

to do this. We have faced local opposition. 

What I would say is that is indicative of projects that we see 

across our network. It is not just the Southern California International Gateway project. 

40 

We really are in favor of permitting reform, and I know and I 

appreciate your leadership in this area. As I spoke to earlier, we 

really believe extending the environmental review position of 

MAP–21 to the railroads would be a great first step. We believe it 

is important to shorten the timeframes. 

We know we are not trying to eliminate the review process, we 

are just asking there be a reasonable time. We need to shorten the 

timeframes that the agencies could possibly look at the things concurrently as opposed to sequentially. 

It is just important for us that we are able to move forward the 

projects that will add capacity to the supply chain. 

Dr. KEMMSIES. May I make a comment on that? 

Senator BLUNT. Yes. 

Dr. KEMMSIES. We are the program managers for the Jasper 

Ocean Terminal on the Savannah River. In the report we gave the 

Board last year, we pointed out that if we were to start the application process then, it would be 13 years before the port could become 

actually turn key operational. 

We have to justify this on the basis of analysis, so I had the unfortunate position of having to forecast what volumes will go 

through a port that does not exist in 13 years. 

I think this is an example of how far the process has basically 

gotten off kilter. 

Senator BLUNT. Do either of you want to comment on that topic? 

Mr. Greuling? 

Mr. GREULING. Senator, thank you. What is interesting about 

this discussion about freight movement and the problems we have 

in this country, it is all about choke points, whether it be a problem 

at the ports, whether it be congestion on the highways, whether it 

be an at grade closing for a rail crossing, whether it be an extended 

period of time to get permitted for a project. Those are all choke 

points. 

What is unfortunate about that is America has a distinct and 

very unique advantage in this global marketplace, and to think 

that our transportation system is one of the primary reasons that 

we are being held back on imports, but more importantly on exports, it is almost criminal. It is a shame. 

I think there is a lot we can do better to help with that situation. 

Senator BLUNT. Thank you. Thank you, Chairman. 

Senator FISCHER. Thank you, Senator Blunt. Any other questions 

from the Senators? 

[No response.] 

Senator FISCHER. With that, I would say this hearing record will 

remain open for two weeks, and during this 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. 

With that, I conclude the hearing. I thank the witnesses for just 

great responses and the information you have provided us today. 

Thank you so much. The hearing is closed. 

[Whereupon, at 11:22 a.m., the hearing was adjourned.] 

(41) 

A P P E N D I X 

COMMENTS SUBMITTED BY WILLIAM J. RASE III, EXECUTIVE DIRECTOR, LAKE CHARLES HARBOR AND TERMINAL DISTRICT

The Port of Lake Charles is the 13th largest port in the country by tonnage, 80 percent of which is energy related. In the past several years, $68 billion in new facilities—most energy related—have been announced for the Calcasieu Ship Channel, 

which serves the Port. The construction on several facilities has begun. 

Despite its current and future importance to the national economy—more fully explained below—Congress and successive Administrations have ignored the dredging 

needs of the Port of Lake Charles and other vital ports around the country. 

Located on the U.S. Gulf along a 68 mile Federal channel on the Calcasieu River, 

the Port of Lake Charles extends 32 miles into the Gulf and 36 river miles inland 

from the Louisiana coast. The channel is located roughly half way between the ports 

of New Orleans and Houston. The channel’s present configuration was completed in 

1941. Since that time it has been widened and deepened to its present congressionally authorized dimensions of 400 feet wide by 40 feet deep on the inland reach and 

800 feet wide and 42 feet deep in the Gulf of Mexico. 

The Port of Lake Charles currently serves facilities engaged in international trade at which deep-draft ocean going vessels call. Some $68 BILLION in new development has been announced along the channel. Major energy developments and others 

chose southwest Louisiana because of the Port’s access to international markets, its 

access to domestic markets through the Gulf Intercostal Waterway and the area’s 

extensive pipeline infrastructure. 

Figure 1 below shows that the Port of Lake Charles is at the confluence of the 

U.S. natural gas pipeline infrastructure. Figure 2 shows a more detailed view and 

illustrates why a major liquefied natural gas facility chose to locate on the Calcasieu 

Ship Channel. 


210RASE1.eps
42 

The national infrastructure for crude oil and refined products is shown on Figure 

3. 

Please note that a product pipeline Figure 3 runs from Louisiana, through several 

southern states and into the northeastern part of the county. This is the Colonial 

Pipeline, shown in more detail in Figure 4. 


210RASE2.eps 210RASE3.eps
43 

Current and future facilities on the Calcasieu Ship Channel expect the Port’s Federal channel to be reliably maintained at its authorized width and depth as shown 

in the rendering in Figure 5. 

Otherwise operating costs increase dramatically. Because of shoaling, vessels on 

the main channel are currently limited to a 38 foot operating draft (rather than 40 

feet). A major link between the main channel and existing/planned energy facilities 

has a 34 foot operating draft. The difference between the channel maintained at 


210RASE4.eps 210RASE5.eps
44 

congressionally authorized dimensions and a channel impacted by the current severe shoaling is shown by a comparison of the renderings in Figures 5 and 6. 

Historically, the Presidents have not budgeted and Congress has not appropriated 

sufficient funds for the Corps of Engineers to reliably maintain the channel at federally authorized dimensions. The difference between funding needs and budgeted 

amounts are shown in Table 1. While the channel has received both emergency supplemental and Corps discretionary funds, these sources are not dependable in timing or amount. 

Nor is underfunding the Corps O&M budget unique to the Port of Lake Charles. 

Most U.S. ports are not funded sufficiently to reliably maintain their congressionally 

authorized channel dimensions. 

International trade through America’s deep-draft ports accounts for 30 percent of 

the U.S. economy, and growing. To support this important and expanding economic 

sector, the country’s deep-draft channel infrastructure must be a national priority 

with consistent, adequate funding. A national commitment to shipping, global trade 


210RASE6.eps 210RASE7.eps
45 

and navigation infrastructure is absolutely necessary as these factors are a key component of America’s transportation system and indispensable for the country’s energy development and job growth. Current O&M funding levels for deep draft channels are grossly inadequate. Congress and the Presidents must provide the necessary funds to maintain the Nation’s deep-draft maritime infrastructure, which includes fully using Harbor Maintenance Fund collections for their intended purpose. 

From a national perspective, the LNG developments planned for the Calcasieu 

Ship Channel support the Nation’s economy by providing export facilities for the 

country’s newfound natural gas resources. The export of LNG will reduce the Nation’s balance of payments, support job growth in other areas of the country, contribute to an increase in Gross Domestic Product and help reduce the national debt. 

However, without a reliable shipping channel, these facilities may not locate in 

southwest Louisiana. They were attracted to the area by the substantial energy infrastructure of pipelines, shallow water shipping routes, access to international 

trade routes, refineries and existing LNG import facilities. Despite the abundance 

of inexpensive U.S. natural gas, these facilities will not simply relocate to another 

U.S. port if the Administration and Congress does not adequately maintain the Nation’s deep-draft channels. The most likely candidate for relocation is Canada. 

But the issue goes well beyond the Port of Lake Charles. The American Association of Port Authorities reports that in 2010, long before the country’s natural gas 

boom, 7,579 oceangoing vessels made 62,747 calls at U.S. ports, of which 35 percent 

were by tankers carrying oil and gas used to power U.S. cars and heat U.S. homes. 

Those vessels calling at most U.S. ports transited Federal channel that were, and 

continue to be, inadequately maintained. 

An independent traffic study commissioned by the Lake Charles Harbor and Terminal District has determined that by 2023 the Port of Lake Charles alone will add 

another 1,000 deep draft ships to the vessel count cited above, the majority of which 

will be carrying U.S. natural gas for export. But without adequate, reliable funding 

to maintain the Nation’s strategic energy channels at authorized dimensions the 

promise of that growth may evaporate. 

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. RICHARD BLUMENTHAL TO

NORMAN BESSAC

Question 1. While the labor dispute at the Nation’s West Coast ports continues, 

the consistent movement of cargo from these ports has stalled and slowed down dramatically. This issue has created a serious problem for perishable items that will 

expire if an agreement isn’t soon reached. 

Commodities like liquid gases have a shelf life of forty days before they return 

to a gaseous state and can no longer be used. One example of a perishable gas, helium, has numerous and significant commercial applications, most notably for the 

biomedical industry; the gas being necessary for the operation of MRI machines. 

Any disruption in supply will have tremendously negative consequences. Companies 

that are a part of the liquid gas industry or the industry of any other perishable 

good are losing millions of dollars as delays continue. 

While this dispute continues, are there any procedures in place to identify perishable items and route them by the delays and onward through the supply chain? 

Answer. Thankfully, both sides reached agreement and we are starting to see 

goods flow at a more normal rate. Pork exporters certainly reviewed several options 

to serve our customers during the slowdown, but the only other alternative to serve 

Japan and S. Korea markets with chilled product was to air freight at significant 

premium that resulted in a loss. Mexico was able to take some of our chilled business by shipping from two Mexican ports that were not affected by the slowdown. 

So the only real alternative for the industry was to sell the product into the US, 

Mexico, or Canadian markets during the port slowdown, which increased available 

supply pushing prices for meat and hogs downward. 

Question 2. The National Freight Advisory Committee (NFAC) recognized the importance of security to the movement of freight. Too often, however, conversations 

about homeland security revolve around threats to the aviation space. While that’s 

certainly important—we can’t have a thorough conversation about homeland security without discussing our Nation’s surface transportation system as well—especially our railroads and our ports. These require our attention as much as any other 

form of movement. 

An attack on our freight network could injure tens of thousands and disrupt an 

economy depended upon by millions. 

Are there additional steps you suggest we take to ensure the security of goods 

moving across our country? 

46 

Answer. I believe the industry working with the railroads have come up with an 

appropriate level of measures to provide safe passage of cargo. The only suggestion 

I could make would be to have an independent safety audit group to review the railroad’s measures to provide security. I would have them key in on the most hazardous products and the protocols that are currently in place. I think the railroads 

have done a pretty good job of providing security to date. However, an independent 

review might highlight deficiencies. 

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. RICHARD BLUMENTHAL TO

KATIE FARMER

Question 1. While the labor dispute at the Nation’s West Coast ports continues, 

the consistent movement of cargo from these ports has stalled and slowed down dramatically. This issue has created a serious problem for perishable items that will 

expire if an agreement isn’t soon reached. 

Commodities like liquid gases have a shelf life of forty days before they return 

to a gaseous state and can no longer be used. One example of a perishable gas, helium, has numerous and significant commercial applications, most notably for the 

biomedical industry; the gas being necessary for the operation of MRI machines. 

Any disruption in supply will have tremendously negative consequences. Companies 

that are a part of the liquid gas industry or the industry of any other perishable 

good are losing millions of dollars as delays continue. 

While this dispute continues, are there any procedures in place to identify perishable items and route them by the delays and onward through the supply chain? 

Answer. The shipment of perishable gases on the BNSF network is negligible. The 

movement of perishable goods in intermodal service, for which I am responsible, is 

governed by the BNSF Intermodal Rules and Policies Guide found at http:// 

www.bnsf.com/customers/pdf/intermodal-r-and-pg.pdf. 

When confronted with challenges such as the recent West Coast port slowdown, 

BNSF’s first priority is to communicate and work closely with all potentially impacted customers, perishable or otherwise, along with terminal operators to minimize delays and keep resources and freight moving. As port congestion began impacting the BNSF network last year, we regularly reviewed our transportation service plans and established controls as necessary to better manage freight flows. 

These controls included exercising caution in originating or accepting westbound 

traffic that could not be processed in a timely manner at certain marine terminals. 

These actions helped to mitigate potential bottlenecks in the network that could 

have rippled throughout the system creating slowdowns for all traffic flows. Importantly, each significant action taken by BNSF during this challenging time was accompanied by clear communication with our customers. 

Question 2. The National Freight Advisory Committee (NFAC) recognized the importance of security to the movement of freight. Too often, however, conversations 

about homeland security revolve around threats to the aviation space. While that’s 

certainly important—we can’t have a thorough conversation about homeland security without discussing our Nation’s surface transportation system as well—especially our railroads and our ports. These require our attention as much as any other 

form of movement. 

An attack on our freight network could injure tens of thousands and disrupt an 

economy depended upon by millions. 

Are there additional steps you suggest we take to ensure the security of goods 

moving across our country? 

Answer. BNSF and the Nation’s freight railroads take safety and security extremely seriously and work cooperatively with various federal, state and local agencies to help ensure the safe and secure transport of goods across the rail network. 

At the Federal level this includes the Pipeline and Hazardous Materials Safety Administration (PHMSA), the Federal Railroad Administration (FRA), the Transportation Security Administration (TSA), the Federal Bureau of Investigation (FBI) and 

the Federal Emergency Management Agency (FEMA). 

BNSF employs a highly trained Resource Protection Team that is directly responsible for the security of BNSF personnel, property, and assets which include our customers’ lading. Resource Protection is comprised of several components including 

Homeland Security and Police. Protecting the railroad relies on a multi layered approach, including: 

• Collaboration with federal, state and local law enforcement agencies for intelligence and resource sharing. 

47 

• Community and employee security awareness programs to report crime and 

trespassing on railroad property. 

• A BNSF police force consisting of 200 fully certified state law enforcement officers who carry full police and arrest powers in 28 states and which includes 26 

K9 (police dog) teams. 

• Facility security supplemented by more than 100 contract personnel. 

• Automated gate systems, biometric fingerprint readers and site-specific security 

procedures, processes, and physical security deliver a high degree of protection 

at rail facilities. 

• BNSF has been C–TPAT certified for more than a decade and continues to build 

beyond these measures to protect our customers’ shipments. 

• BNSF provides consist specific information to first responders, who have the obligation to ensure that routing, consist and any other information related to key 

train operations does not compromise the public’s interest in homeland security. 

BNSF would ask for continued strong support from the various agencies with 

which we work closely on safety and security issues, including importantly in the 

area of threat analysis and information sharing. For further information and specific examples of rail industry cooperation with the Federal Government in the areas 

of safety and security, please see AAR President and CEO Ed Hamberger’s June 19, 

2013 testimony before the Committee (http://www.commerce.senate.gov/public/ 

?a=Files.Serve&File_id=fc4fe590–9862–4121–843c-4783f5a2fdc6). 

RESPONSE TO WRITTEN QUESTION SUBMITTED BY HON. RICHARD BLUMENTHAL TO

DR. WALTER KEMMSIES

Question. The National Freight Advisory Committee (NFAC) recognized the importance of security to the movement of freight. Too often, however, conversations 

about homeland security revolve around threats to the aviation space. While that’s 

certainly important—we can’t have a thorough conversation about homeland security without discussing our Nation’s surface transportation system as well—especially our railroads and our ports. These require our attention as much as any other 

form of movement. 

An attack on our freight network could injure tens of thousands and disrupt an 

economy depended upon by millions. 

Are there additional steps you suggest we take to ensure the security of goods 

moving across our country? 

Answer. Thank you for the opportunity to expand on the points I sought to make 

in my recent testimony to the Subcommittee. In response to your question, I recommend focusing on steps surrounding the following three themes: 

1. Continue and expand port security grants. In recent years there have been 

large cuts in the Federal Emergency Management Agency’s (FEMA) preparedness grant programs, and in particular to the Port Security Grant Program. 

Natural disasters, terrorist attacks, and other crises cause billions of dollars 

in infrastructure damage and lost economic activity when they hit seaports. 

Programs at DHS and other Federal agencies, that include information sharing 

and training, increase port and therefore economic security and resiliency, by 

helping them create effective disaster implementation plans for restoring normal operations. The importance of this is particularly evident in light of the 

hurricanes and severe winter weather conditions that have impacted ports in 

the Northeast. 

If ports have to impose additional fees to cover unfunded costs of these programs it will increase the cost of moving freight. If these programs are not sustained then the productivity of the freight movement industry, and therefore 

its ability to support economic activity will be diminished. 

2. Ensure sustained and expanded freight movement security. Proper infrastructure maintenance means periodic inspections and repairs and aids the cause 

of homeland security and risk reduction. So standards and adequate funding 

for maintenance of existing infrastructure is important. 

It is not clear if Customs and Border Protection and the Domestic Nuclear Detection Office do have a plan for continuing maintenance, replacement, or funding for these machines (e.g., Radiation Portal Monitors, Vehicle and Cargo Inspection System—VACIS, etc.). Ports should not be required to fund this security program, initiated by the Federal Government in order to secure international borders. 

48 

A policy is needed to clarify how the agency should pay for the future use of 

scanning equipment, when such equipment must be modified and moved due 

to port facility expansion or reconfiguration, and for disposition of current scanning machines reaching the ends of their useful lives. 

Additionally, a funded On-Dock Rail (ODR) radiation detection program, is also 

needed to efficiently scan containers moving directly from ships to rail. 

3. Export security must also be considered. At some point, as global freight security standards are developed, it is likely that other nations will require 100 

percent scanning of our exports. Scanning exports is also in our Nation’s best 

interest, not just for security but also to protect our increasingly important 

food exports from contamination. It is well established that the U.S. needs to 

increase exports in order to regain economic prosperity. Policies and funding 

for port securities should thus focus on more than imports, but include exports 

as well. However, further costs imposed on the shipper makes our exports less 

competitive and supporting them is in our general economic interest, so there 

is a critical balance between security and the amount we spend to provide it. 

RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. RICHARD BLUMENTHAL TO

JOHN E. GREULING

Question 1. While the labor dispute at the Nation’s West Coast ports continues, 

the consistent movement of cargo from these ports has stalled and slowed down dramatically. This issue has created a serious problem for perishable items that will 

expire if an agreement isn’t soon reached. 

Commodities like liquid gases have a shelf life of forty days before they return 

to a gaseous state and can no longer be used. One example of a perishable gas, helium, has numerous and significant commercial applications, most notably for the 

biomedical industry; the gas being necessary for the operation of MRI machines. 

Any disruption in supply will have tremendously negative consequences. Companies 

that are a part of the liquid gas industry or the industry of any other perishable 

good are losing millions of dollars as delays continue. 

While this dispute continues, are there any procedures in place to identify perishable items and route them by the delays and onward through the supply chain? 

Answer. The ripple of West Coast congestion is being felt, and will continue to 

be felt, across the supply chain and nation for many months as the backlog of delay 

is reduced over time. Thus, we will not know the full extent of the damage to various industries, including those involved with the movement of perishables, for a 

long time to come. 

As you wisely point out, perishable goods are particularly vulnerable to the negative impacts of congestion and the consequence of delay cannot be undone. These 

instances illustrate the need for a national freight system that is strategic, redundant, and equipped with the most advanced technologies available to enhance the 

flow of goods. 

While we are currently focused on West Coast ports, they are just a symptom of 

the larger congestion problem that we face in the United States in varying degrees 

as a result of insufficient and uncoordinated investment in our freight network. If 

left unaddressed, congestion will continue to worsen and spread across the country, 

while supply chain managers remain frustrated in the face of unnecessary risk and 

loss. 

Question 2. The National Freight Advisory Committee (NFAC) recognized the importance of security to the movement of freight. Too often, however, conversations 

about homeland security revolve around threats to the aviation space. While that’s 

certainly important—we can’t have a thorough conversation about homeland security without discussing our Nation’s surface transportation system as well—especially our railroads and our ports. These require our attention as much as any other 

form of movement. 

An attack on our freight network could injure tens of thousands and disrupt an 

economy depended upon by millions. 

Are there additional steps you suggest we take to ensure the security of goods 

moving across our country? 

Answer. A sound freight transportation system, with consistent steady-state capacity, is fundamental to the Nation’s security, economy, and prosperity. Both the 

threat of human attacks and natural disasters stand to disrupt the movement of 

American commerce. 

Our national freight network is ‘‘a system of systems’’ that allows the efficient 

flow of goods across modes and large geographic areas. Within these systems, infraVerDate Nov 24 2008 11:25 Jan 04, 2016 Jkt 075679 PO 00000 Frm 00052 Fmt 6601 Sfmt 6621 S:\GPO\DOCS\98012.TXT JACKIE
49 

structure is owned and operated by a variety of both public and private interests 

with varying degrees of protection and defense. Identifying and reinforcing vulnerable aspects of this network should be a Federal priority with particular concern for 

potential ‘‘single points of failure’’ where disruptive events can be particularly devastating. The Department of Homeland Security and the Department of Transportation should work together in this effort. 

However, it is clear from experience with recent events such as Superstorm 

Sandy, severe winter weather and the current West Coast congestion that our national freight transportation system lacks redundancy and is so thinly stretched 

that goods cannot pivot effectively in the event of disruption. To address this, we 

need a national, coordinated approach to build resiliency and redundancy into our 

transportation infrastructure. This resiliency principle—the ability to reduce the severity of disruptive impacts on service and allow rapid service recovery—should become a foundational precept in our planning, design, engineering and construction 

of new and rehabilitated transportation infrastructure. There is additional cost, a 

resiliency premium, so to speak, to this higher standard of design, but it is a very 

worthwhile investment compared with the cost of life, property and disruption of 

service during catastrophic events. This is particularly true for our multimodal 

freight infrastructure, whose interrelationship places entire supply chains at risk. 

The Coalition for America’s Gateways and Trade Corridors has long advocated for 

a well-funded Federal freight infrastructure investment program and we believe 

that the resiliency premium, in addition to capacity enhancement, is part of the 

Federal responsibility to keep our Nation’s commerce moving. 

Question 3. According to a 2010 study of the maritime industry in Connecticut, 

my state is one of just 12 states with three or more deepwater ports. Each of Connecticut’s ports handles tens of millions of dollars in trade and over 90 percent of 

shipping entering the Long Island Sound uses a Connecticut port as opposed to a 

New York port. But these Connecticut ports haven’t grown as much as there potential would allow. 

A lot of the discussion here and the Administration’s freight proposal has centered 

on the Nation’s largest ports. 

How can we ensure that some of the country’s smaller ports with very large regional economic benefits receive the attention and infrastructure investments they 

need? 

Answer. According to USDOT, over the next 25 years U.S. freight volume will 

grow by 45 percent in tonnage. As this occurs, ports will continue to be our most 

important international gateways. However, ever-larger container ships and consolidation in the shipping industry means that smaller ports may be challenged to 

maintain regular service. Cargo owners are looking for routes that provide reliable, 

efficient service at the lowest ‘‘landed cost’’—that is, the full cost of the trip, not just 

the maritime segment. Ports with good landside connections to final destinations 

will be most advantaged in future decades. 

Further, the advent of megaships is a producing a cascading effect, whereby all 

ports are receiving calls from bigger vessels than they were previously and the 

smallest ships are being retired from fleets. Strong landside infrastructure at all 

ports—regardless of size—is required to ensure these efficiencies are realized. Our 

largest seaports are typically located in highly urbanized areas with limited room 

for growth. 

Again, I would like to stress the importance of a freight network with built-in redundancy. We should recognize that ports that are smaller in size hold an important 

place in our transportation network. Even when the freight network is fully functional, smaller ports provide a relief valve for their larger counterparts. And, they 

provide alternative gateways to shippers and supplies in the event of disruption. 

Æ