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S. HRG. 110–1165 

KEEPING AMERICA MOVING: 

A REVIEW OF NATIONAL STRATEGIES 

FOR EFFICIENT FREIGHT MOVEMENT 

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 TENTH CONGRESS 

SECOND SESSION 

JUNE 10, 2008 

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

( 

(II) 

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

DANIEL K. INOUYE, Hawaii, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

JOHN F. KERRY, Massachusetts 

BYRON L. DORGAN, North Dakota 

BARBARA BOXER, California 

BILL NELSON, Florida 

MARIA CANTWELL, Washington 

FRANK R. LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

AMY KLOBUCHAR, Minnesota 

TED STEVENS, Alaska, Vice Chairman 

JOHN MCCAIN, Arizona 

KAY BAILEY HUTCHISON, Texas 

OLYMPIA J. SNOWE, Maine 

GORDON H. SMITH, Oregon 

JOHN ENSIGN, Nevada 

JOHN E. SUNUNU, New Hampshire 

JIM DEMINT, South Carolina 

DAVID VITTER, Louisiana 

JOHN THUNE, South Dakota 

ROGER F. WICKER, Mississippi 

MARGARET L. CUMMISKY, Democratic Staff Director and Chief Counsel 

LILA HARPER HELMS, Democratic Deputy Staff Director and Policy Director 

CHRISTINE D. KURTH, Republican Staff Director and General Counsel 

PAUL NAGLE, Republican Chief Counsel 

SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT 

MARINE INFRASTRUCTURE, SAFETY, AND SECURITY 

FRANK R. LAUTENBERG, New Jersey, 

Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

JOHN F. KERRY, Massachusetts 

BYRON L. DORGAN, North Dakota 

MARIA CANTWELL, Washington 

MARK PRYOR, Arkansas 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

AMY KLOBUCHAR, Minnesota 

GORDON H. SMITH, Oregon, Ranking 

JOHN MCCAIN, Arizona 

KAY BAILEY HUTCHISON, Texas 

OLYMPIA J. SNOWE, Maine 

JIM DEMINT, South Carolina 

DAVID VITTER, Louisiana 

JOHN THUNE, South Dakota 

ROGER F. WICKER, Mississippi 

(III) 

C O N T E N T S 

Page 

Hearing held on June 10, 2008 ............................................................................... 1 

Statement of Senator Carper .................................................................................. 59 

Statement of Senator Klobuchar ............................................................................ 3 

Statement of Senator Lautenberg .......................................................................... 1 

Statement of Senator Smith ................................................................................... 57 

WITNESSES

Brubaker, Hon. Paul R., Administrator, Research and Innovative Technology 

Administration, U.S. Department of Transportation ........................................ 5 

Prepared statement .......................................................................................... 7 

Glynn, Hon. Astrid C., Commissioner, Department of Transportation, State 

of New York; and Chair, Standing Committee on Rail Transportation, 

American Association of State Highway and Transportation Officials ........... 11 

Prepared statement .......................................................................................... 12 

Hamberger, Edward R., President and CEO, Association of American Railroads ...................................................................................................................... 24 

Prepared statement .......................................................................................... 26 

Larrabee, Rear Admiral Richard M., (Ret.), Port Commerce Director, Port 

Authority of New York and New Jersey ............................................................ 44 

Prepared statement .......................................................................................... 46 

Vanselow, Glenn, Executive Director, Pacific Northwest Waterways Association ........................................................................................................................ 48

Prepared statement .......................................................................................... 50 

APPENDIX

Collins, Hon. Susan M., U.S. Senator from Maine, prepared statement ............ 69 

Response to written question submitted by Hon. Frank R. Lautenberg to 

Hon. Paul R. Brubaker ........................................................................................ 69 

(1) 

KEEPING AMERICA MOVING: 

A REVIEW OF NATIONAL STRATEGIES 

FOR EFFICIENT FREIGHT MOVEMENT 

TUESDAY, JUNE 10, 2008 

U.S. SENATE, 

SUBCOMMITTEE ON SURFACE TRANSPORTATION AND

MERCHANT MARINE INFRASTRUCTURE, SAFETY, AND SECURITY,

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:33 p.m. in room 

SR–253, Russell Senate Office Building, Hon. Frank R. Lautenberg, 

Chairman of the Subcommittee, presiding. 

OPENING STATEMENT OF HON. FRANK R. LAUTENBERG, 

U.S. SENATOR FROM NEW JERSEY 

Senator LAUTENBERG. We know that railroads can be more 

prompt than I was and we’re working toward on-time performance 

with freight as well as passenger railroads. So anyway, we thank 

all of you here. Today we’re going to take a closer look at how our 

Nation moves its freight by ship, truck, train, and barge, and the 

challenges that we must overcome to keep that freight and our 

economy moving in the future. 

Our country has one of the best freight transportation systems 

in the world. It’s the backbone of our economy. It carries the products that Americans rely on, such as food, clothing, toys, things 

that go on store shelves. Raw materials like coal, lumber, fuel and 

iron required to manufacture all kinds of goods are also moved as 

freight. Just-in-time delivery and real-time tracking of shipments 

have greatly reduced the need for companies to hold huge inventories because we can count on goods being there when needed. 

Jobs are at stake also. In my home state of New Jersey, 11 percent of our 4.4 million workers are involved in the movement of 

goods. 

But our economy is threatened by the current state of the transportation infrastructure and its inability to meet future demands. 

The Minneapolis bridge collapse was the Nation’s wake-up call for 

the current state of our infrastructure. In fact, 25 percent of our 

Nation’s bridges are still functionally deficient. Even when these 

bridges are repaired, our highways along with our ports and railroads will be overwhelmed. 

Congestion on our roads already costs our country nearly $80 billion a year. On the rails, some trains take—have I been doing that, 

just talking to myself? 

2 

Senator KLOBUCHAR. It was charming. 

[Laughter.] 

Senator LAUTENBERG. Somebody was listening. 

On the rails, some trains take a day to just cross the City of Chicago. 

Total freight traffic is expected to double in the next 20 years. 

To keep getting the goods we need in the future, we’ve got to invest 

in our transportation infrastructure right now. Building roads will 

not solve all of our problems and in some places it’s not even possible. Trains and barges can reduce highway congestion and wear 

and tear on our roads and bridges. They’re also more energy efficient than trucks, which will aid our fight against global warming, 

and help us become more energy independent. 

We need to encourage these efficiencies to the maximum extent 

possible. The Federal Government has to step up and play a leadership role in planning our future transportation network, one 

which takes these benefits into account. In New Jersey we know 

that we’ve got to actively plan freight transportation solutions in 

order to keep our region’s economy moving, and in 2007 the New 

Jersey Department of Transportation published its first comprehensive statewide freight plan. It’s time for the Federal Government to look to the New Jersey program for ideas to build a freight 

transportation network that is ready for the future needs. 

Congress is going to consider these challenges in the next year 

as we reauthorize our surface transportation programs. I look forward to hearing from our witnesses how we can meet that challenge. I ask now that my colleague from Minnesota, Senator 

Klobuchar, have a chance to make her opening remarks. 

Before that, I attract your attention to what we see in display 

form. Trains and barges are more fuel efficient. Look at this. One 

gallon of diesel can carry a ton of freight if it goes by truck 155 

miles, by rail 413 miles, and by barge 576 miles. This tells you 

about the significant part of what we’ve got to do and the problem 

that we have if we don’t take advantage of these time-saving and 

value-saving changes. 

3 

Senator LAUTENBERG. Now, please, Senator Klobuchar. 

STATEMENT OF HON. AMY KLOBUCHAR, 

U.S. SENATOR FROM MINNESOTA 

Senator KLOBUCHAR. Well, thank you very much, Senator Lautenberg, for holding this hearing, and thank you to our panelists, 

witnesses, for being here today. 

I believe that most people involved in freight transport agree 

that our infrastructure and our funding for infrastructure is outdated and that we need new thinking for how we’re going to maintain and expand our infrastructure. Senator Lautenberg mentioned 

the bridge collapse in Minnesota. That certainly is something that 

makes our state particularly focused on it, six blocks from my 

home. But I’ve also seen it when I visit all 87 counties in our state 

every year. I’ve stood in Renville County as they came out in zero 

degree weather with rail ties that had fallen apart, and I’ve seen 

the tremendous potential for biofuels in our state, but then see that 

we have a transportation system that’s actually worn down from 

the increase in biofuels and from the weight of these new products, 

and yet we aren’t keeping up. 

You only have to look at the rest of the world to see the fact that 

the U.S. transportation system is starting to fall behind. China is 

building a 53,000-mile national highway system set to rival or exceed the one we created half a century ago. India is similarly building thousands of miles of new highways, and the European Union 

is continuing to devote significant public resources to the development and upgrade of its highways, railways, ports, and waterways. 

To compete with these economies, maintain economic prominence, and sustain economic growth, we will need to modernize and 


610LAUT1.eps
4 

integrate our freight transportation systems, including our waterways, our highways, and our railroads. When I get around my 

State, the things that are most mentioned about the transportation 

system is, first of all, the need for more, particularly rail lines, with 

our new rural economy that is revitalizing so much of our rural 

area. 

Second is the expense, especially for trains, and the issue of how 

the rail companies are pricing some of the routes. That’s very hard 

for our captive shippers. Senator Dorgan and I have a bill to try 

to fix that. 

Third is that as the expenses go up, the lack of stops, the fact 

that they can go back and forth across a small town and they’re 

not able to get the delivery that they need. Those are all things I’ve 

heard time and time again in our State. 

In Minnesota and throughout our country, as I mentioned, we’re 

at the beginning stage of a new energy and economic revolution. 

But one thing is clear. We will not be able to build a 21st century 

economy by relying on a 20th century infrastructure that is both 

rapidly deteriorating and inadequate for our growing needs. 

Our Nation has faced this challenge before, a half century ago, 

and we succeeded in building a new modern transportation system 

for our new modern economy. In his 1963 memoir, ‘‘Mandate for 

Change, 1953 to 1956,’’ President Eisenhower famously said that: 

‘‘More than any single action by the government since the end of 

the war, the building of the interstate highway system would 

change the face of America. Its impact on the American economy, 

the jobs that it would produce in manufacturing and construction, 

the rural areas it would open up, was beyond calculation.’’ 

He was right. It is now our responsibility to restore and update 

Eisenhower’s vision of a transportation infrastructure, including 

updating our waterways, railroads, and highways, so that the system works for all Americans. 

Thank you very much. 

Senator LAUTENBERG. Thank you, Senator Klobuchar. 

Now I want to formally welcome our panel of witnesses. They 

are: the Honorable Paul Brubaker, Administrator of the Research 

and Innovative Technology Administration at the U.S. Department 

of Transportation; the Honorable Astrid Glynn, who’s here as Chair 

of the American Association of State and Highway Transportation 

Officials Standing Committee on Rail Transportation, and I note 

also that Ms. Glynn is also the Commissioner of the New York 

State Department of Transportation, and we welcome you here as 

a neighbor as well as an important witness. 

Admiral Rick Larrabee, the Port Commerce Director of the Port 

Authority of New York and New Jersey. As a former Commissioner, which is what I was doing when I was elected to the Senate—it wasn’t my full-time job, but I learned a lot about transportation in the few years I was there—I appreciate the job that Rick 

Larrabee is doing. 

And Ed Hamberger, who serves as the President and CEO of the 

Association of American Railroads. Pleased to see you. 

And Mr. Glenn Vanselow, the Executive Director of the Pacific 

Northwest Waterways Association. 

5 

I’m glad that we have all of you here as witnesses before our 

Subcommittee and thanks for bringing the experiences that you 

and the issues that you have reviewed over these few years. We 

look forward to hearing your testimony. 

Administrator Brubaker, if you would start, please, honoring the 

5-minute rule, and we look forward to hearing you. 

STATEMENT OF HON. PAUL R. BRUBAKER, ADMINISTRATOR, 

RESEARCH AND INNOVATIVE TECHNOLOGY ADMINISTRATION, 

U.S. DEPARTMENT OF TRANSPORTATION 

Mr. BRUBAKER. Sure. Thank you. Chairman Lautenberg, Ranking Member Smith, Senator Klobuchar, and Members of the Subcommittee: I’m grateful for the opportunity to be here before you 

today to testify on national strategies for efficient freight movement. 

Today the United States is an integral part of an unprecedented 

global economy. We’ve seen significant increases in freight flow 

throughout our supply chain here as we look at the traffic that 

flows into the United States. These changes are funneling increasing volumes of freight through our major gateway ports and to and 

from our major metropolitan areas, concentrating in regions that 

are already some of the most congested in the Nation. 

Our Nation’s transportation network moves over 50 million tons of freight, worth $36 billion, over highways, roads, bridges, rails, 

ports, and pipelines every day, competing with passenger movement for network capacity, and the Department anticipates that 

this figure will almost double by 2035. This sheer volume of goods 

and services is straining the network’s capacity for supporting the 

efficient movement of freight, threatening America’s ability to remain competitive in the global economy. 

As a result the cost of moving freight is significantly increasing. After 17 years of decline, logistics costs grew by $156 billion for 

U.S. companies between 2004 and 2005, accounting for 8.8 percent 

of the gross domestic product, a figure that increased to 9.5 percent 

a year later. 

The Department must also take into consideration the rise in 

fuel prices and the potential impact those fuel price increases have 

on the performance of supply chains, as what was once a fairly stable expense is adding to the cost of transporting goods. 

These trends, if left unabated, will continue to drive up the cost 

of transporting goods, significantly impacting our economy and our 

quality of life. The Department believes the most effective strategy 

for addressing this challenge is to strengthen and diversify our efforts to collect and analyze freight movement data from an intermodal, holistic perspective. The Department must have a better 

understanding of the dynamics of freight movement in order to 

more effectively plan and allocate departmental resources. There is 

a need to expand our data collection capabilities to increase the intransit, intermodal visibility of freight flows so that effective performance measures can be assessed, bottlenecks identified, and 

models can be developed that will allow us to simulate scenarios 

and predict future system performance. 

Cutting edge technologies that are already on the market, such 

as RFID and differential GPS, can significantly improve capabiliVerDate Nov 24 2008 10:11 Aug 29, 2012 Jkt 075679 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 S:\GPO\DOCS\75682.TXT JACKIE
6 

ties in this effort by accurately tracking movements. These innovations even extend beyond transportation applications and into applications such as freight security that contribute to system inefficiencies. 

New freight transportation paradigms such as short-sea shipping, or the marine highway, intelligent transportation systems, 

and remote sensing show tremendous potential to reduce congestion and enhance freight planning and management. Cooperative 

research is needed to determine the viability and effectiveness of 

these new approaches. 

The multi-state international makeup of supply chains, coupled 

with the fact that much of the infrastructure is owned and operated by multiple public and private entities, will require the establishment of public-private partnerships, cooperations, and better institutional arrangements in order for the Department to achieve its 

goals. Departmental programs that invest in partnerships have 

grown, have shown great potential for freight management research and development. Many of these programs are the direct result of the mandate provided by SAFETEA–LU. 

One of the Department’s most significant freight data programs 

is the Commodity Flow Survey, or CFS. The CFS is the main data 

engine that supports the Federal Highway Administration’s Freight 

Analysis Framework, or FAF, a key resource for forecasting trends 

in freight movement and identifying changing supply and distribution patterns. 

The National Cooperative Freight Research Program, which is 

sponsored by my agency, RITA, brings together freight stakeholders from industry, government, academia, and other relevant 

entities to conduct applied research on problems facing the freight 

industry. This group’s work began in late 2006 and we’re anticipating significant results from their research later this year. 

The Department’s Congestion Initiative is a national blueprint 

that encompasses a broad array of congestion-reducing programs, 

including urban partnerships, to test intelligent transportation systems and congestion pricing innovations in several major cities. 

The Corridors of the Future program is fast-tracking major congestion-reducing projects and is looking to implement technology 

and operational improvements to measurably improve safety and 

system performance. 

Programs like University Transportation Centers seek to tap into 

the vast pool of expertise and existing research portfolios of our 

Nation’s academic community by funding specific transportation 

studies, including freight management and planning. 

These types of strategies, which focus on working with regional 

authorities and private sector stakeholders, are going a long way 

toward meeting the challenges of creating a resilient, secure infrastructure for the efficient movement of freight, but much more has 

to be done. 

The key to our national strategy is to have a broader, more indepth understanding of supply chains and the interstate and multinational dynamics that impact the flow of goods across our Nation’s 

transportation network. This will take greater cooperation between 

stakeholders, better institutional arrangements for sharing information, planning and implementing multiple State and public-priVerDate Nov 24 2008 10:11 Aug 29, 2012 Jkt 075679 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 S:\GPO\DOCS\75682.TXT JACKIE
7 

vate projects, effective performance measures, and operational improvements to the transportation system. 

Thank you. 

[The prepared statement of Mr. Brubaker follows:] 

PREPARED STATEMENT OF HON. PAUL R. BRUBAKER, ADMINISTRATOR, RESEARCH AND

INNOVATIVE TECHNOLOGY ADMINISTRATION, U.S. DEPARTMENT OF TRANSPORTATION

Introduction 

Chairman Lautenberg, Ranking Member Smith, and Members of the Subcommittee, I am grateful for the opportunity to come before you today to testify on 

National Strategies for Efficient Freight Movement. 

The United States (U.S.) freight transportation system is efficient, reliable, safe, 

and secure. The freight system underpins the Nation’s continued economic growth, 

and historically the U.S. has led the world in freight system design and management. Yet dramatically increasing freight flows have created congestion in some sectors of the transportation system, imposing costs on shippers, consumers, and the 

environment. This statement will focus on current and future challenges facing the 

efficient movement of freight throughout the Nation’s transportation system, including in ports, on railroads, and by commercial motor vehicles, and will also address 

new technological developments that could help improve the efficiency of freight 

transportation. 

The U.S. transportation system must not only be able to handle both growth in 

the volume of freight and passenger movement, but as new markets and trade 

routes emerge, it must enable increasingly complex supply chains to operate. The 

Interstate Highway System was a critical innovation that helped fuel the unprecedented growth of 20th century, post-war America, enabling the movement of freight 

arriving at our ports from overseas and goods manufactured in our large cities to 

small towns across the country. The Interstate Highway System provided an infrastructure that not only offered the interconnectivity for economic expansion, but 

acted as a catalyst for it. However, the highway system we are using today must 

handle very different dynamics. 

Changes in demographics, manufacturing, and warehousing, and a dramatic increase in imported manufactured goods and foods, have caused freight funneling at 

major gateway ports, leading to congestion on the highways and at the rail connections as containers are reloaded on trucks and rail cars. Private sector changes in 

inventory management and production operations are placing demands on the transportation system that go beyond connectivity to speed, reliability, and throughput. 

Logistics costs have been rising for some time. As reported by the Council of Supply 

Chain Management Professionals, logistics costs as a percent of gross domestic product have increased 63 percent since the beginning of 2004. In 2006, inventory carrying costs jumped 13.5 percent, while transportation costs were up 9.4 percent over 

2005 levels, and the trends are expected to continue. To make maximum use of the 

entire transportation system, it is imperative to develop better and smarter approaches to moving cargo and people through the entire intermodal system, from origin to destination. 

The United States is part of an unprecedented, global economy that transcends 

borders. Telecommunications and computing technology have evolved to meet the 

demands of consumers, industry, and government in a world that is vastly more 

connected on a daily basis than when the Interstate Highway System was built. 

Each day, an estimated 50 million tons of freight, worth $36 billion, moves over our 

highways, roads, bridges, rail, ports, coastal and inland waterways, or marine highways, ports and pipelines. Current analysis clearly shows the predominant corridors 

through which freight is moving, and the connection between freight flows and metropolitan areas. 

The Department estimates that the total tonnage of domestic and foreign freight 

traveling along the U.S. transportation system will almost double by 2035, with 

international shipments, most of which move by water, growing at a somewhat faster rate than domestic shipments. The U.S. freight system faces significant capacity 

constraints at key freight gateways, and it is straining to move the current volume 

of freight quickly, reliably, and economically in order to sustain growth. The difficulties posed by increased cargo volumes are compounded by environmental challenges, 

a limited supply of land on which to expand transportation facilities, congested road 

and rail linkages, and increasing fuel costs. Effective policy solutions will require 

coordinated and collaborative action by both public and private parties. To be credible and achievable, these solutions require input and buy-in from the broader 

8 

freight sector, including both public and private sector interests. The Department 

has begun the process of soliciting such input, and DOT looks forward to working 

with its partners to further develop the freight framework. 

It is clear that the public and private sectors will need to closely coordinate to 

address modern freight challenges. The private sector owns and operates the mobile 

assets, controlling when, where, and how goods are moved on public and private 

transportation facilities. Trucks, rail cars, and ships are privately owned. Maritime 

terminals are predominantly operated by private entities, with only a few publicly 

operated. 

This largely private-sector ownership of the components of the transportation network has been extremely effective in increasing transportation productivity and reducing transportation costs to shippers. From 1987 to 1999, productivity in rail 

freight transportation—the freight mode (other than pipelines) that is most completely in private hands—increased by 48 percent, and rail freight rates fell by 18 

percent. Trucking productivity rose by 15 percent during the same period, and airline productivity rose by 16 percent—all more than the overall 10-percent increase 

in U.S. private business productivity. Moreover, all the freight modes have responded effectively to shipper requirements, providing more frequent service of 

smaller shipments to accommodate their demands for Just-in-Time deliveries of 

freight that allow reductions in inventories and logistics costs. 

The Department of Transportation’s Framework for a National Freight Policy 

identifies seven objectives for addressing the congestion that has been created in the 

transportation system from dramatically increasing freight flows. With regard to capacity, these are to improve the operations of the existing freight transportation system, and add physical capacity to the freight transportation system in places where 

investment makes economic sense. A third objective is to use pricing to better align 

costs and benefits between users and owners of the freight system and to encourage 

deployment of productivity-enhancing technologies. It recommends actions be taken 

to reduce statutory, regulatory, and institutional barriers to improved freight transportation performance, and to proactively identify and address emerging transportation needs. The sixth objective is to maximize the safety and security of the 

freight transportation system. Last, the Framework recommends that actions should 

be taken to mitigate and better manage the environmental, health, energy, and community impacts of freight transportation. Effective policy solutions will require coordinated and collaborative action by both public and private parties. 

Solutions that unlock the constraints of these complex, interwoven networks must 

extend beyond the jurisdiction, or authority, of any one entity. Effective solutions 

to these challenges will necessitate coordinated and collaborative efforts of all transportation stakeholders. 

Here are some examples that exemplify this level of cooperation: 

The National Cooperative Freight Research Program (NCFRP) is a multi-modal 

freight research program, guided by an oversight committee of industry representatives, academics, and public officials. Current NCFRP projects now underway, or being initiated, include mobility constraints, measuring operational 

performance, identifying investment needs, and assessing the environmental 

and economic impacts of freight transportation. This program is indicative of 

the potential found in cooperation between stakeholders. 

Likewise, the University Transportation Centers (UTC) program is an investment, and cooperative endeavor, in our Nation’s institutions of higher education; to cultivate U.S. expertise in transportation research and technology 

transfer, offering a wealth of knowledge and innovation to the area of freight 

movement. Sixty UTC’s are currently active, including the Alan M. Voorhees 

Transportation Center at Rutgers University, which is exploring the establishment of a Freight Transportation Center for Excellence. 

The Freight Performance Measures program, another public-private effort, enables the Department to measure travel speeds and travel time reliability 

across two-thirds of the Interstate Highway System. This data is available 

through an arrangement with the trucking industry. Many long-distance trucking firms use GPS transponders on their cabs to track their assets; this allows 

businesses to maintain continual awareness of asset movement. Through a collaborative agreement with the American Transportation Research Institute, we 

can tap into GPS data from over 350,000 trucks that are traversing our Nation’s 

roadways on any given day. We hope to expand this data to include over 

400,000 trucks by 2009. We use this data to calculate travel speed and time reliability throughout twenty-five corridors across America. This helps the Department gain insight into system performance, so that we can better focus our efforts in increasing network capacity. 

9 

These system performance measures allow every entity involved in transportation, 

public and private, to better manage its resources. Performance measures are driven 

by data—data that are absolutely vital for the Department to conduct accurate analysis, simulation, and modeling. The Department’s Research and Innovative Technology Administration has several programs that have been critical to our efforts 

to collect data and assess our Nation’s freight movement performance and needs. 

The largest of these data programs, the Commodity Flow Survey (CFS), provides 

primary national and state-level data and forecasting on domestic freight shipments 

and exports by American establishments, with the latest data expected to be released at the end of the year. The CFS is also the main data engine that supports 

the Federal Highway Administration’s Freight Analysis Framework (FAF). The FAF 

commingles the CFS data with a broad array of publicly available freight data to 

create the complete picture of freight flows you see here. 

We are also supporting private sector investment in freight transportation 

through our Private Activity bond program, authorized by section 11143 of 

SAFETEA–LU. This provision allows private investors to benefit from tax-exempt 

financing of transportation infrastructure. We have received three applications for 

intermodal freight transfer facilities totaling $2.2 billion, and capable of handling 

more than 2 million containers per year. 

As noted earlier, the complexity of supply chains and the multi-jurisdictional nature of freight movement complicate our institutional ability to address stresses on 

the transportation system. As part of its Congestion Initiative, the Department announced the Corridors of the Future Program which will challenge agencies to work 

collaboratively to develop dynamic financial and operational mechanisms to improve 

the flow of goods and people. 

The PierPass program in Southern California is an excellent example of how congestion pricing can improve to the flow of goods at our Nation’s ports. The PierPass 

program charges a traffic mitigation fee of $50/TEU (this equals a $100 charge for 

an average 40-foot container) to encourage the pick-up of containers during off-peak 

hours (6 p.m. to 3 a.m.). The off-peak shift now handles about 65,000 truck trips 

a week, or 37 percent of the container moves at the two ports. Since its inception 

in July, 2005, over 8 million truck trips have shifted to off-peak hours. 

The independent evaluators of this program from the University of Southern California noted: ‘‘Like the handful of experiments with congestion pricing, it demonstrates that price incentives are powerful tools for managing the transportation 

system.’’ 

Pipelines are a transportation system that can be used to relieve congestion on 

the railroads. Seventy percent of oil and petroleum products and close to one hundred percent of natural gas is transported by privately owned pipelines. Large volumes of anhydrous ammonia, carbon dioxide, and other chemicals are moved by 

pipeline. It is expected that in the near future, large amounts of ethanol, which is 

currently carried by rail, may be moved by pipeline as well. 

Congestion pricing is an excellent example of how businesses can change their 

patterns to use existing capacity more efficiently. While we are on our way to addressing the challenge of maintaining a resilient, secure, and efficient transportation system for the movement of freight, more has to be done to use our existing 

resources, and to develop innovations that will enable America’s transportation system to support the growing demand for goods and services. 

One such example is America’s Marine highway, which includes our coastal waters, our inland waterway system and the Great Lakes. Although the United States 

already transports one billion tons of domestic cargo on our domestic waterways 

each year, this 25,000 mile network of navigable waters can help us expand our way 

out of landside congestion. The Energy Independence and Security Act of 2007 directed the Secretary of Transportation to establish a Marine Highway Program to 

encourage this transformation and identify the disincentives that keep the congestion on the highways and railroads. The Department of Transportation’s Maritime 

Administration is working with their many stakeholders to implement this promising program as quickly as possible. 

The key for our national freight strategy is to have a broader, more in-depth understanding of supply chains and the interstate and multi-national dynamics that 

impact the flow of goods across the transportation network. This will take greater 

cooperation between stakeholders, better institutional arrangements for planning 

and implementing multi-state projects, effective performance measures, and operational improvements to the transportation system. 

Thank you again for inviting me to testify. I would be happy to answer any questions that the Subcommittee members might have. 

10 

FREIGHT IN THE SAFE, ACCOUNTABLE, FLEXIBLE, EFFICIENT TRANSPORTATION EQUITY

ACT: LEGACY FOR USERS (SAFETEA–LU) P.L. 109–059 

Table 1.—Direct Expenditures for Freight Infrastructure in SAFETEA–LU 

Projects of National/Regional 

Significance 

$1.779 billion over 5 years Rulemaking to solicit and select 

new projects in review; 20 of 25 

originally identified projects underway or in review 

National Corridor Infrastructure 

Improvement 

$1.948 billion over 5 years 28 of 33 identified projects underway or in review 

Coordinated Border Infrastructure 

Program 

$833 million over 5 years Apportioned program to border 

states 

Freight Intermodal Distribution 

Pilot Grant Program 

$30 million over 5 years 3 of 6 identified projects underway 

or in review 

Truck Parking $25 million over 4 years Multiple year funding combined 

into one request for proposals and 

projects submitted through the 

Corridors of the Future initiative 

Total $4.615 billion 

Source: USDOT, 2006 Status of the Nation’s Highways, Bridges, and Transit: Conditions and Performance, 

page 14–7, at www.fhwa.dot.gov/policy/2006cpr/chap14.htm. 

Table 2.—Other Freight Provisions in SAFETEA–LU 

Transportation Infrastructure Finance and Innovation Act 

(TIFIA) Program 

Eligibility expanded for financing 

freight projects 

Examples include Reno rail project 

($51 million) and Louisiana highway access to water terminals 

($66 million) 

State Infrastructure Banks Program extended Example includes truck diesel retrofits on West Coast 

Private Activity Bonds Tax code modified to encourage up 

to $15 billion private investment 

in freight facilities 

Examples include 3 intermodal 

yards ($2.2 billion) and the Miami 

port tunnel ($900 million) 

Freight Professional Capacity 

Building 

$3.5 million over 4 years Several courses and distancebased learning programs initiated 

National Cooperative Freight Research Program $15 million over 4 years Current projects listed in table 3 

Hazardous Materials Cooperative 

Research Program 

$5 million over 4 years Current projects listed in table 3 

Source: USDOT, 2006 Status of the Nation’s Highways, Bridges, and Transit: Conditions and Performance, 

page 14–7, at www.fhwa.dot.gov/policy/2006cpr/chap14.htm. 

Table 3.—Cooperative Freight and Hazardous Materials Research Projects through 2008 

NCFRP 01 Review and Analysis of Freight Transportation Markets and Relationships 

NCFRP 02 Impacts of Public Policy on the Freight Transportation System 

NCFRP 03 Performance Measures for Freight Transportation 

NCFRP 04 Identifying and Using Low-Cost and Quickly Implementable Ways to Address Freight-System 

Mobility Constraints 

NCFRP 05 Framework and Tools for Estimating Benefits of Specific Freight Network Investment Needs 

NCFRP 06 Freight-Demand Modeling to Support Public-Sector Decision Making 

NCFRP 09 Institutional Arrangements in the Freight Transportation System 

NCFRP 10 Separation of Vehicles: Commercial Motor Vehicle Only Lanes 

NCFRP 11 Current and Future Contributions to Freight Demand in North America 

NCFRP 12 Specifications for Freight Transportation Data Architecture 

NCFRP 13 Developing High Productivity Truck Corridors 

NCFRP 14 Truck Drayage Practices 

NCFRP 15 Understanding Urban Goods Movements 

NCFRP 16 Representing Freight in Air Quality and Greenhouse Gas Models 

NCFRP 17 Synthesis of Short Sea Shipping in North America 

HMCRP 01 Hazardous Materials Commodity Flow Data and Analysis 

HMCRP 02 Hazardous Materials Transportation Incident Data for Root Cause Analysis 

HMCRP 03 A Guide for Assessing Emergency Response Needs and Capabilities for Hazardous Materials 

Releases 

HMCRP 04 Emerging Technologies Applicable to Hazardous Materials Transportation Safety and Security 

HMCRP 05 Evaluation of the Potential Benefits of Electronic Shipping Papers for Hazardous Materials 

Shipments 

HMCRP 06 Assessing Soil and Groundwater Environmental Hazards from Hazardous Materials Transportation Incidents 

Source: www.trb.org/CPR/NCFPR/NCFRPProjects.asp and www.trb.org/CPR/HMCPR/HMCRPProjects.asp. 

11 

Senator LAUTENBERG. Thank you very much, Mr. Brubaker. 

Ms. Glynn, please. 

STATEMENT OF HON. ASTRID C. GLYNN, COMMISSIONER, 

DEPARTMENT OF TRANSPORTATION, STATE OF NEW YORK; AND CHAIR, STANDING COMMITTEE ON RAIL TRANSPORTATION, AMERICAN ASSOCIATION OF STATE 

HIGHWAY AND TRANSPORTATION OFFICIALS 

Ms. GLYNN. Thank you, Senator. Thank you, Mr. Chairman and 

Senators. My name is Astrid Glynn and I want to thank you for 

the opportunity to be here today on behalf of AASHTO. I would 

like to describe the freight transportation problem as we see it, 

focus on the public sector’s role, particularly the Federal Government’s role, describe some of the states, and then close with a brief 

summary of AASHTO’s freight policy recommendations, all of 

which are set forth in greater detail in the written testimony. 

As you have said, the United States still has the most productive 

transportation system in the world. But that transportation system 

is starting to show its age and limitations. Later in this century, 

the U.S. economy will no longer be the world’s largest. Investment 

in a 21st century transportation system is one of the actions we 

need to undertake if we are to avert economic decline. 

Growth in trade and change in freight traffic, combined with limited growth in system capacity for all modes, mean more congestion, increased costs, and less reliable trip times. This in turn 

means added manufacturing costs, higher import prices, and a 

need for businesses to hold more inventory. Over time these costs 

add up to a higher cost of doing business and a higher cost of living 

for Americans. 

We are starting to see a disturbing rise in total logistics costs, 

the first in 25 years. In 1980 logistics costs were approximately 16 

percent of the GDP. They had dropped to less than 9 percent a few 

years ago, a significant spur to economic growth. Now we are headed in the opposite direction, with logistics costs at about 10 percent, and this estimate is prior to the recent and dramatic changes 

in fuel costs. 

Clearly the public sector has an immense social, economic, and 

environmental stake in our freight system. The performance of the 

network directly affects our jobs, our standard of living, our community, and our national security. We have tremendous responsibilities also because we as the public sector own, operate, regulate, or secure much of the system. 

The Federal Government must continue to lead the public sector 

in that role. At each of the transportation policy commission hearings held over the last couple of years, Vice Chair Jack 

Shannendorf asked each panel whether the Federal Government 

should continue to have a major role in transportation. The answer 

was a unanimous and unqualified yes, and this answer holds even 

more true for freight since America’s ability to compete in the global economy is directly tied to the health of our freight system. 

States have recognized the need for our action. Four of the most 

notable State initiatives are: the Chicago CREATE Program that 

will help address the transfer time that you alluded to, Mr. Chairman; the FAST Corridor in Washington State and the Alameda 

Corridor in California, both to provide improved port access; and 

12 

the I–95 Corridor Coalition that coordinates freight information for 

the East Coast. More information on these initiatives are in my 

written testimony. 

But I’d like to spend a couple of minutes if I may talking about 

some of New York’s initiatives, because we are also, like many 

States, working to address exponential growth in freight. I’d like to 

focus on two areas, transit and borders. Transit may not seem like 

it relates to freight, but it does. The greatest challenge for freight 

is the last mile. In areas such as Upstate New York, this could be 

a railhead or a bridge that, weight limits willing, allow a farm to 

ship his apples cost effectively or that allows a factory to invest in 

its workforce rather than in extra inventory. 

But the last mile is also a challenge to major metropolitan areas, 

where highway congestion threatens freight mobility. New York 

City is one of the most truck-dependent and transit-dependent cities in the Nation. The more we are able to move people by transit, 

the more scarce urban highway capacity can we make available for 

trucks. Unfortunately, we lack the rail connections that provide 

us—that might provide us with alternatives. 

The relationship between transit and efficient goods movement is 

not unique to New York City. It is a factor in every major metropolitan area in the country. 

More than ever, international trade drives demand. So I want to 

focus for a minute on land-side borders. Nearly one-quarter of all 

U.S.-Canadian trade, the largest bilateral trading relationship in 

the world, passes through New York State’s northern and western 

ports of entry and on to our road and rail systems. Nearly 80 percent of this trade either originates in or is destined for States outside of New York, and this is a story that my sister border States 

will tell you again and again. 

The Federal Government needs to share in the costs of maintaining and improving this international access. Localities cannot be 

primarily responsible for this infrastructure. It is unrealistic to 

think that they can bear that burden. We know that there is a Federal interest and we hope that that Federal interest will be translated into facilitation and support. 

I just want to close briefly by summarizing AASHTO’s policy recommendations, which focus on not just the need for funding, but 

also a strong Federal partnership and a request that the Federal 

Government help us find ways to address projects that have benefits for an area larger than a State and help us find ways to work 

together and address those regional needs that are so pressing. 

Thank you, Mr. Chairman. 

[The prepared statement of Ms. Glynn follows:] 

PREPARED STATEMENT OF HON. ASTRID C. GLYNN, COMMISSIONER, DEPARTMENT OF

TRANSPORTATION, STATE OF NEW YORK; AND CHAIR, STANDING COMMITTEE ON

RAIL TRANSPORTATION, AMERICAN ASSOCIATION OF STATE HIGHWAY AND

TRANSPORTATION OFFICIALS

Good afternoon, I am Astrid Glynn, Commissioner of the New York State Department of Transportation. Thank you for the invitation to speak today on an issue of 

critical importance to the nation—current and future challenges facing the efficient 

movement of freight throughout our Nation’s transportation system and national 

strategies to address these challenges. 

I am appearing on behalf of the American Association of State Highway and 

Transportation Officials (AASHTO). I chair AASHTO’s Standing Committee on Rail 

13 

Transportation and am a member of AASHTO Freight Transportation Authorization 

Policy Team. I will also touch on some New York State issues and the activities of 

the I–95 Corridor Coalition. 

Since the publication of the AASHTO Freight Rail Bottom Line Report in 2002, 

AASHTO and its members have worked hard to respond to the increasing freight 

sector demand for safe, reliable, efficient and affordable transportation. Despite 

these efforts, the condition and performance of the transportation system is not 

keeping up with the increasing demands of the freight sector. 

AASHTO has undertaken a number of freight transportation activities. Specifically, AASHTO has: 

• Published America’s Freight Challenge, a report with recommendations submitted to the National Surface Transportation Policy and Revenue Study Commission; 

• Organized a Transportation Vision Conference in Spring, 2007 which included 

substantial attention to freight transportation needs; and 

• Updated the Freight Rail Bottom Line Report to a comprehensive freight report, 

currently in final draft, which contains analyses of the major freight modes as 

well as an overview of freight demand and logistics. 

These and other materials will be provided to the Committee staff for use by the 

Committee. 

For the Spring, 2007 Vision Conference, AASHTO convened a predominantly private sector group to produce a report. That group’s report was titled ‘‘The U.S. 

Freight Transportation System in the Global Economy: Anchored in the Past—Adrift 

in the Future.’’ The conclusions and recommendations were on two dimensions—the 

improvements needed in the freight transportation system and, changes needed in 

politics and government to accomplish these improvements. 

In the first of these dimensions they recommended: 

• Expanded and targeted highway capacity; 

• Integration of private supply-chain management and public infrastructure; 

• Increased freight rail capacity; 

• More efficient port operations; 

• Improved intermodal connections; 

• Coordinated multimodal/multistate corridors; and 

• Strategically located intermodal facilities. 

But, they said, it will not be possible to achieve these objectives unless political 

and institutional obstacles are overcome, including: 

• Lack of national leadership; 

• A weak Federal role; 

• Absence of a clear consensus on a vision of the freight system and its performance; 

• Fragmented Congress; 

• U.S. DOT modal stove pipes; 

• A disconnect between business and government; 

• Lack of multi-state collaboration; 

• Projects which have a national benefit of transportation projects, but whose 

costs are borne locally; and 

• Local fragmentation and parochialism. 

Business has entered the 21st century, while the U.S. freight transportation system that supports it was built for the 18th, 19th, and 20th centuries. While the 

United States still has the most fully developed, efficient, and productive transportation system in the world, it is showing signs of age, over-use, obsolescence, and 

fragmentation. Although transportation and logistics are fundamental elements of 

the manufacturing and retail sectors, the transportation system is not well-integrated with contemporary supply-chain management practices. 

Emerging world economies are investing in transportation and intending to leap 

into the future while the United States patches up the past. Every mile of highway, 

railroad, and waterway, every acre of seaport is operating in the global economy 

and, depending on its condition and performance, either helps or hinders America’s 

global competitiveness. 

Some say that by the middle of this century, the U.S. economy will no longer be 

the world’s largest. Is America in decline? Investment in a 21st century transporVerDate Nov 24 2008 10:11 Aug 29, 2012 Jkt 075679 PO 00000 Frm 00017 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\75682.TXT JACKIE
14 

tation system is one of the actions needed to avert decline. The challenge now is 

to think differently and to execute that new way of thinking effectively and expeditiously. 

For nearly a decade we have been dwelling on the national freight transportation 

problem. By now, everything has been said and everyone has said it. We must 

translate the agreement that there is a problem into a commitment to action. Now 

is the time to solve it. If we don’t we will pay a high price. 

The demand for freight transportation to support economic growth will nearly 

double between 2005 and 2035 (see chart). Measured in tons, freight demand will 

grow from 15 billion tons today to 26 billion tons in 2035, an increase of 89 percent. 

Measured in ton miles (a ton of freight moved a mile counts as one ton-mile), freight 

demand will grow from 6 trillion ton-miles today to 11 trillion ton-miles in 2035, 

an increase of 92 percent. The table attached shows the freight tonnage forecast by 

mode for 2005 through 2035. 

The effects of rapid growth in demand and limited growth in system capacity for 

all modes are increased congestion, increased costs and less reliable trip times. This, 

in turn means increased costs for manufacturers, higher import prices, and a need 

for businesses to hold more expensive inventory to prevent stockouts. The effect on 

each individual shipment or transaction is usually modest, but over time these costs 

add up to a higher cost of doing business for firms, a higher cost of living for Americans. And it makes it more difficult for our Nation to compete in the global marketplace. 

Constraints on freight transportation infrastructure for all modes have contributed to a disturbing rise in total logistics costs—the first in 25 years. In 1980 these 

costs totaled about 16 percent of the gross domestic product (GDP). Infrastructure 

investment, deregulation, and advanced logistics practices combined to reduce logistics costs to less than 9 percent in the first years of this century, reflecting increases 

in efficiency and capital released for other investment that produced a significant 

spur to economic growth. Now we are headed in the opposite direction, with logistics 

costs now at about 10 percent—before the recent significant increase in the price 

of diesel fuel. 

The performance of the Nation’s freight transportation system is critically important. It directly affects: 

• Economic Development and Jobs—Cost-effective and reliable freight transportation gives industries and businesses a competitive advantage in the global 

economy by providing them the ability to deliver products at lower cost and 

reach larger markets. This translates into more jobs, greater profitability, and 

better growth prospects. Poor freight transportation performance means smaller 

markets, fewer jobs, and limited economic development opportunities. 

• Standard of Living—The freight transportation system delivers an immense 

range of food, clothing, tools, materials, and services to our homes and businesses. Consumers enjoy an unprecedented variety and quality of products because producers are able to manufacture, trade, and distribute across local, national, and global markets. Poor freight transportation performance means 

higher costs, less choice, and a lower standard of living for all citizens. 

• Communities—Freight transportation is heavy industry. A well-performing and 

innovative freight transportation industry means less congestion, fewer air pollutants and greenhouse gas emissions, quieter operations, and greater safety in 

our communities. Poor freight transportation performance leads to degradation 

of community health and safety. 

• Military Capability—The freight transportation system that supports the Nation’s civilian economy also supports the Nation’s military. It ensures a ready 

and reliable supply of material and gives the military the mobility to operate 

effectively at home and abroad. Poor freight transportation performance means 

less mobility, higher cost, and greater risk. 

The public sector has a major role in the freight transportation system: it owns 

and operates the highways; owns and manages most of the Nation’s ports, waterways, and airports; regulates the rail and pipeline systems; and oversees the security of all freight transportation facilities and freight carriers. It has an immense 

social, economic, and environmental stake in the condition and performance of the 

freight transportation system. 

The nation is entering the early stages of a freight transportation capacity crisis. 

But the public sector is poorly positioned to deal with the emerging crisis because 

there is: 

• No clear and consistent description of the national freight transportation system, its performance, and investment needs; 

15 

• Insufficient public sector knowledge of freight transportation and supply chain 

management and their importance to businesses and economic growth; 

• Lack of coordinated public and private actions on freight transportation policies, 

programs, and finance; and 

• Lack of public sector focus on transportation operations. 

As a Nation, we rely upon a legacy of 300 or more years of transportation investment to deliver the promise of an economy of the future. Our most recent major investment, the 50-year old interstate highway system, was laid on top of a 19th century rail system. As a direct result of that Federal investment, the rail system 

adapted and shrank, leaving thousands of modal disconnects that would be unjustifiable and inconceivable if the network were designed today. The reduction in rail 

track mileage, the increase in rail traffic (both passenger and freight), and changes 

in the operating strategy of the freight railroads have resulted in more and longer 

trains operating at reduced speeds, creating more conflicts with highway movement, 

increased safety risks, bifurcation of communities, and exacerbation the problems of 

urban traffic circulation. Some of the best-known freight projects or programs—the 

Alameda Corridor, CREATE, and the Seattle-Tacoma FAST Corridor—are largely 

grade separations and crossing upgrades that also benefit highway operations and 

safety. In areas fortunate enough to have robust commuter rail and inter-city passenger rail, the conflicts are between passenger and rail customers each trying to 

use the same constrained system. 

Most of the Nation’s gateway seaports and other major modal and intermodal 

freight traffic generators established over the past three centuries are now embedded in densely populated urban areas. Most cannot be moved. Their efficiency has 

been compromised by the characteristics of their surroundings which present obstacles to linking with these important freight gateways with the national highway and 

rail systems. The lack of connectivity leads to substantial negative environmental 

impacts on local communities. Many of those negative impacts can be mitigated by 

improving the transportation connections between these freight gateways and the 

core national transportation system. Deficient intermodal connectors were identified 

at the time the National Highway System was designated in the mid-1990s. In the 

decade since there has not been a systematic, national strategy to address the local 

burden of transportation facilities which provide national benefits. 

Since the interstate highway system was originally envisioned and built in the 

1950s, the Nation’s population has increased, population growth has shifted, the 

number of vehicles and vehicle miles travelled (VMT) has increased disproportionately, and the trucking industry has grown and evolved in ways that no one did or 

could have predicted. Today, we have a number of interstate highway chokepoints, 

principally at the intersection of Interstate highways and in major metropolitan 

areas, which produce sizable costs to the economy in the form of delay and 

unreliability in freight shipments. The highway chokepoints also affect the movement of people. Individual states and localities cannot absorb the full burden of financing the maintenance, operations, and improvements to the highway system that 

is the foundation of interstate commerce. 

It is important to note that each of these examples involves both freight and passenger mobility. It is impossible to separate the freight and passenger transportation issues and our dual-use infrastructure compels us to seek solutions that are 

beneficial to both. That is why AASHTO made the following recommendation to the 

National Surface Transportation Policy and Revenue Study Commission: 

Establish a National Rail Transportation Policy. Intercity passenger and freight 

rail are critical components of the Nation’s surface transportation system. Current rail capacity is not sufficient to meet passenger or freight needs. It is imperative that a national rail policy be developed which addresses institutional 

roles, passenger and freight capacity, and new non-Highway Trust Fund funding and financing options. 

We are competing in the global economy, and the health of our national transportation network is critical for our competitiveness. 

Growth in trade volume has been substantial and is continuing (see chart). From 

a transportation perspective, however, what is equally important is the changing 

trade patterns which affect freight movement. Trade is not simply growing—it is 

coming from different origins, bound for different destinations, requiring a response 

to both the growth in volume and the shift in trade patterns. A look at the changes 

in the ranking of national economies around the world makes clear the challenge 

of investing in transportation infrastructure that will meet import and export needs 

in the future. (see chart) 

16 

One of the important drivers of the growth of the economies of other nations is 

infrastructure investment. China and Europe, our two largest competitors and with 

very different governmental/political systems are carrying out national programs of 

transportation infrastructure investment in support of their economic objectives. 

China, with a population of 1.3 billion, is building a 53,000-mile National Expressway System which, when complete in 2020, will rival the 47,000-mile U.S. Interstate 

Highway System. India, with a population of one billion, is building a 10,000-mile 

national expressway system. Europe, with a population of 450 million, is spending 

hundreds of billions of euros on a network of highways, bridges, tunnels, ports, and 

rail lines. 

The United States must significantly increase its financial commitment to her 

transportation system if we are to remain a world economic power. 

State Freight Initiatives 

State Departments of Transportation, local governments, and the freight transportation industry have collaborated on many important projects and programs to 

nudge the freight transportation system into the 21st century. Three of the most 

notable are the Chicago CREATE program, the FAST Corridor and the Alameda 

Corridor. 

Chicago’s CREATE Program—The seven Class I railroads, Amtrak, Metra, the 

City of Chicago and the State of Illinois are cooperatively planning and financing 

a program of projects including 15 new overpasses to separate motor vehicles from 

train tracks, six new overpasses to separate freight-rail trains from passenger-rail 

trains, and extensive upgrades to tracks, switches, and signals. The program, which 

costs $1.5 billion will greatly reduce the time needed to transfer freight between the 

eastern and western railroads and will address the freight and passenger transportation problems arising from 19th century infrastructure operating in the 21st century. 

The FAST Corridor—In the Seattle-Tacoma Washington region, the FAST corridor network seeks to tie together overcrowded port, highway, and rail connections 

at the Nation’s third busiest international freight portal. The Puget Sound ports 

serve the entire nation with up to 75 percent of the containers entering its ports 

moving to rail with destinations outside of Washington State. More than $60 billion 

in imports and $12 billion in American exports used the Washington State ports in 

2004. The Washington State DOT, the Puget Sound Regional Council, and the 

freight industry developed and are carrying out a multiyear, multimodal program 

of projects. Since 1998, the public-private coalition has invested $568 million of public and private funding for strategic freight mobility infrastructure improvements in 

the FAST Corridor. Another $300 million is needed to complete the remaining 16 

of the 25 of the priority Corridor projects. 

The Alameda Corridor—The Alameda Corridor is the grandmother of the intermodal connector projects. The ports of Long Beach and Los Angeles handle more 

than 64 percent of Asian container imports and nearly 25 percent of all U.S. imports. The Alameda Corridor project built a state-of-the art rail access network to 

the ports. It consists of a 20-mile long rail expressway—basically a large-grade separation project—linking the Ports of Long Beach and Los Angeles to the Nation’s rail 

network near downtown Los Angeles. It consolidated four branch line railroads and 

eliminated more than 200 at-grade crossings. The financing for the $2.4 billion 

project, which included a $400 million Federal loan, was backed by a fee on every 

container moved. Traffic exceeded the projections, making it possible to retire the 

original Federal loan 28 years early. Trains moving through Corridor in 2006 hauled 

about 5 million TEUs, up by 32 percent from 2005. 

New York State Freight Initiatives 

New York exemplifies a multi-modal approach to address to the projected exponential growth in freight. 

It is often said that the greatest challenge for freight is the last mile. This is particularly true in major metropolitan areas, where highway congestion is the greatest 

threat to freight mobility. New York City is one of the most truck dependant major 

cities in the Nation. This is directly attributable to its geography. New York City 

is an archipelago—a series of islands. Of the five boroughs, only the Bronx is on 

the mainland. Goods need to reach this huge consumer market through a very constrained highway, transit and rail network serving both the consumers and the 

goods that they want. The more we are able to move people by transit, the more 

scarce urban highway capacity we can make available for trucks. The interrelationship between transit and efficient goods movement is not unique to New York 

City—it is a factor in every major metropolitan area across the country. 

17 

New York is also working with Class I railroads and shortline railroads to improve rail freight service. In our draft statewide rail plan, New York is proposing 

the following goals for 2020: 

• Increase freight market share by 25 percent, reducing growth in truck traffic 

and energy consumption; 

• Increase state investment in intermodal facilities and in ‘‘last mile’’ connections; 

• Allow modern freight cars to access the New York metropolitan area and Long 

Island, eliminating 300,000 truck trips from the region’s highways each year; 

• Develop at least three new intermodal facilities/inland ports across the state 

serving the rapidly growing container segment of freight movement; 

• Increase the use of rail to transport hazardous commodities, taking advantage 

of the well-documented safety benefits of rail; and 

• Establish the first ‘‘green’’ shortline locomotive fleet in the nation, by deploying 

a fleet of Low Emission Locomotives. Low emission locomotives have been developed for light duty yard operations. Low Emissions Locomotives can reduce fuel 

usage by 25 to 35 percent and reduce emissions by up to 80 percent. 

New York has a strong commitment to transportation system operations to support the movement of freight. New York, working through the I–95 Corridor Coalition, is undertaking the first multi-agency permanent demonstration and deployment of Commercial Vehicle Infrastructure Integration (CVII) in the Nation. The 

Vehicle Infrastructure Integration (VII) Program is a cooperative effort between the 

USDOT, State governments and the automobile industry to develop and test an information technology that uses the most advanced communications technologies to 

exchange real-time information between the roadside and vehicles to improve safety 

and mobility. VII systems can warn a driver when it is not safe to enter an intersection, or when a vehicle is following too close behind another vehicle. Vehicles can 

serve as data collectors and anonymously transmit traffic and road condition information from major roads in the transportation network. Such information can help 

transportation agencies and emergency responders implement active strategies to 

reduce congestion and save lives. New York’s CVII project, developed under realworld conditions, will involve driver identification and verification using the Transportation Worker Identification Card (TWIC) and biometrics integrated with the operating system of the truck. It will demonstrate and test additional dashboard safety indicators with more direct vehicle safety data such as tire pressure and brake 

status. It will also provide real-time safety warning to the truck driver such as work 

zones and speed reduction zones. The New York State CVII will be features at the 

ITS World Congress in New York City this November. 

New York is committed to moving goods safely. Working closely with the New 

York Motor Truck Association, New York State DOT developed the One Stop 

Credentialing and Registration system, known as OSCAR, the gateway to New 

York’s motor carrier safety system. Five state agencies collaborated to design a onestop shopping website which allows the industry a single point of contact to apply, 

change, pay for, and receive operating credentials for Highway User Tax (HUT), 

International Fuel Tax Agreement (IFTA) , and International Registration Program 

(IRP). OSCAR is also the gateway for truckers to apply for oversize/overweight permits, and it provides a link to the Department of Motor Vehicles for commercial 

driver’s licenses. 

Finally, New York is working with other states, neighboring Canadian provinces, 

as well as Federal agencies to address the impacts of land border crossings on the 

movement of goods within our regional marketplace. We are particularly interested 

in making sure that the gains of faster travel and fewer tariffs are not lost to the 

needs of greater security. Transportation supports a global economy. Increased Federal support for infrastructure improvements at major ports of entry for trade and 

travel is critical to our Nation’s ability to compete in the global economy. This includes the major seaports, airports and international border crossings that carry 

global trade to/from the U.S. 

In New York City, the impact of global trade is evident. JFK International Airport ranked first in the Nation in a 2004 ranking of all U.S. freight gateways with $125 

billion in shipments. The Port Authority of New York and New Jersey (PANYNJ) 

handled 4.8 million TEUs (twenty foot equivalent units) in 2005—third-largest in 

the U.S. after Los Angeles and Long Beach. Of all the U.S. trade by vessel and air 

($1,773 billion), 16 percent ($283 billion) moves through the New York-New Jersey 

region. This trade does not stay within the New York City metropolitan area. It 

travels throughout the region, the country and around the world. About half of the 

international cargo at PANYNJ originates from or is destined for locations beyond 

the 26 county PANYNJ region. 

18 

Similarly, nearly one quarter of all U.S. Canadian trade (the largest bilateral 

trading relationship in the world) passes through New York State’s northern and 

western ports of entry. Nearly 80 percent of this trade either originates in or is destined for states outside of New York. 

The Federal Government needs to bear a share in the cost of maintaining and improving transportation access through these facilities in relation to the benefits that 

accrue to the national economy. Localities should not be solely responsible for the 

cost of infrastructure at these ports of entry. While the direct impacts are local, 

much of the benefit of this trade is received elsewhere. Gateway projects can cost 

hundreds of millions, even billions of dollars. To expect states to fund these improvements through existing resources is unrealistic. There is a national role in 

funding national benefits. 

Multi-State Freight Initiatives: The I–95 Corridor Coalition 

Freight has always been a multi-state enterprise and New York is fortunate to 

be able to collaborate with transportation agencies along the entire Eastern Seaboard on freight issues through the federally-funded I–95 Corridor Coalition. New 

York was a founding member of the I–95 Corridor Coalition, a coalition of transportation agencies from Maine to Florida plus the Canadian provinces of Quebec and 

New Brunswick. The 15 states on the I–95 corridor also contain 40,000 national 

highway system miles, 31,000 miles of rail lines, both freight and passenger, 46 

major seaports, and 103 commercial airports. 

Population growth and economic growth have put an increasingly heavy burden 

on all modes of transportation. In response the I–95 Corridor was formed, initially 

as a means of coordinating on intelligent transportation systems initiatives across 

states lines. It has evolved into an institution that ‘‘provides a forum for key decision and policymakers to address transportation management and operations issues 

of common interest,’’ with a high priority for relieving congestion on the region’s 

highways by enhancing the capability of other modes to shoulder a greater share 

of freight movements in the region. The I–95 Coalition has undertaken a number 

of studies to assess capacity and performance of its highway, rail, and maritime 

modes. The Coalition is an excellent example of a coordinated effort to address the 

transportation challenges arising from increasing congestion and constrained capacity in a large region. 

Under the auspices of the I–95 Corridor Coalition all modes of transportation 

within the Corridor have been analyzed. These analyses include the following: 

• Highway Bottlenecks Study—Analysis currently in progress will identify the 

passenger and freight highway bottlenecks that are most severely impacting regional, long-distance travel in the Coalition region. 

• Mid-Atlantic Truck Operations Study (MATOps)—Will provide a detailed analysis of truck movements through the Mid-Atlantic region and identify bottleneck/chokepoint locations that impede the flow of truck traffic through the MidAtlantic region. 

• Mid-Atlantic Rail Operations Study (MAROps)—An examination of rail system 

performance through the Mid-Atlantic Rail Operations Study (MAROps), involving five states (Delaware, Maryland, New Jersey, Pennsylvania, and Virginia), 

and three railroads (Amtrak, CSX Transportation, and Norfolk Southern). 

• Northeast Rail Operations Study (NEROps)—The Coalition is studying the rail 

network in New York and the New England states (Maine, New Hampshire, 

Vermont, Massachusetts, Connecticut, and Rhode Island). The NEROps study 

is describing the current and future demand for freight and passenger rail service in the region as well as examining the current and planned supply of freight 

and passenger rail service. 

• Southeast Rail Operations Study (SEROps)—The Southeast Rail Operations 

Study (SEROps) is completing the rail picture in the Coalition region by identifying and describing key rail issues, activities, and initiatives as well as the 

trends and issues affecting freight movements and freight and passenger rail 

transportation in the Southeastern states (North Carolina, South Carolina, 

Georgia, and Florida). 

• Short-Sea and Coastal Shipping Options Study—Provided to state DOTs and 

MPOs a better understanding of how short-sea shipping fits within local, statewide, and regional transportation systems. One of the key outcomes was a preliminary identification of commodity types and general traffic lanes that could 

be amenable to short-sea shipping operations. 

19 

• The most substantial and notable of these analyses has been the Mid-Atlantic 

Rail Operations Study (MAROps) The study identified over 70 major rail choke 

points within the Mid-Atlantic rail system. These included: 

» Antiquated and undersized bridges and tunnels. 

» Lack of capacity on critical segments of freight and passenger lines. 

» Inadequate vertical clearances for double-stack container traffic on freight 

mainlines. 

» Inadequate connections between rail lines. Congested grade crossings, stations, yards, and terminals. 

» Outmoded and inadequate information and control systems. 

The MAROps study defined a 20-year, $6.2 billion program of rail improvements aimed at improving north-south rail transportation for both passengers 

and freight in the Mid-Atlantic region and helping reduce truck traffic on the 

region’s overburdened highway system. In a follow-up study in 2004, the benefits from the MAROps program improvements were estimated at $12.8 billion— 

about a 2-to-1 benefit-cost ratio. The benefits included: 

» $2.9 billion in direct shipper benefits due to reduced freight transportation 

costs; 

» $6.3 billion in direct savings due to reduced highway congestion for vehicles 

still on the road—$0.8 billion for trucks, $0.7 billion for work-related auto 

trips, and $4.8 billion for non-work auto trips; and 

» $3.7 billion in indirect economic benefits generated throughout the economy 

by these transportation savings. 

Other State Freight Initiatives 

In addition to these well-known initiatives, virtually every state is actively planning, organizing, collaborating and investing to make the freight system more efficient and productive. States are planning, organizing, collaborating, and investing. 

Planning—States such as Minnesota, Washington, Ohio, Oregon, California, New 

Jersey, Vermont, and Virginia have completed or initiated freight transportation to 

plans as a basis for establishing investment priorities. 

Organizing—A number of states have established a unit within their departments 

of transportation through which to develop and carry out a freight transportation 

program. They include Louisiana, Maryland, Maine, Pennsylvania, Minnesota, 

Washington, and Oregon. 

Collaborating—Because freight transportation operations and much freight transportation infrastructure lie in the private sector, states are initiating freight advisory committees to strengthen the link with government. They are well-established 

in Oregon, Colorado, and Minnesota and in the early stages in a number of other 

states. 

Investing—Florida, New York, Virginia, Mississippi, Pennsylvania, Oregon, and 

California have recently created or expanded freight financing programs that either 

focus on rail or are available for investments in all freight modes. 

States are acting to address the challenges of moving freight more efficiently, economically, and reliably, but our efforts do not aggregate into a national strategy and 

our resources are not sufficient to meet the national need. 

AASHTO Policy Recommendations 

We need to move forward as a nation, but to do so with confidence we need a 

better map. The fact that we agree on the problem (i.e., that we have severe, costly, 

constraints on efficient freight movement) does not automatically yield a well-funded, strategic nationwide freight investment program. AASHTO’s Bottom Line work 

has produced maps that show the most serious chokepoints for highway, rail, and 

port landside connections and corridors (maps attached). We need to consolidate this 

and other analyses into a fully-funded nationwide investment strategy that identifies and stages the investments that will produce the maximum benefit for the national system. This is no small task, but it should be undertaken now. A national 

strategy, involving Federal, state, and local Governors and the private sector requires a common national understanding to guide investment. 

In closing, I want to outline several of AASHTO’s policy recommendations. 

Surface transportation investment needs to be increased to the levels required to 

keep the United States competitive in the global economy and meet America’s 21st 

century mobility needs. It means increasing highway and transit funding toward the 

‘‘cost-to-improve’’ goal estimated by the U.S. DOT. Expressed in ‘‘year of expenditure 

20 

dollars’’ the 2025 goal for highways would be $242 billion per year and transit would 

be $49 billion per year. 

The only way those levels of funding can be achieved, is for all levels of government—Federal, state, and local—to continue to fund their historical shares of what 

is needed. Over the past decade the Federal Government has provided approximately 45 percent of highway and transit capital funding, while 55 percent has been 

provided by state and local governments. A significant increase in Highway Trust 

Fund revenues will be required to avert a major cutback in highway and transit 

funding, restore the program’s purchasing power, and enable future improvements. 

AASHTO also supports an increase in Federal transportation funding assistance 

to states and their local governments through tax credit bonding. This mechanism 

could be particularly helpful new source of Federal revenue to allow states to make 

investments in rail passenger and freight improvements. 

AASHTO supports additional Federal Government financing for freight-related investments, including freight gateways, connectors, corridors, and border crossings. 

With state involvement, AASHTO also supports tax incentives for new investment 

in freight-rail infrastructure by rail companies, with state involvement, and funding 

to states for participation in public-benefit rail improvements. 

As a nation, we must ultimately transition to a diversified portfolio of Federal revenue sources. We must examine, analyze, and select alternative funding mechanisms to meet the financial needs of the Nation’s transportation systems into the 

foreseeable future. A comprehensive, sustainable, diversified portfolio of Federal revenue is needed to address the diverse investment needs of the Nation’s surface 

transportation system, i.e., its highways, transit systems, railroads, and ports. 

Because freight moves irrespective of local, state, and national borders the Federal Government should provide support for a multi-state/regional investment mechanism to fund and finance improvements to regionally and nationally significant 

freight projects, where costs are in a single state, but benefits accrue to several 

states. 

The Federal Government should encourage the private sector to invest in operational and capacity improvements that can relieve freight bottlenecks and improve 

the flow of goods and services. The Federal Government should also provide support 

for state efforts to relieve critical freight chokepoints through investment in projects 

such as truck lanes and intermodal connectors. 

AASHTO’s Board has also concluded that the states, in collaboration with the 

freight transportation industry and the Federal Government, should investigate the 

feasibility of regional adjustments in truck size and weight in particular corridors 

that demonstrate important economic benefits and meet safety, pavement/bridge impact and financing criteria. 

Given the realities of the current state of the Highway Trust Fund and the necessity to maintain and improve the existing infrastructure through the core programs 

currently authorized by SAFETEA–LU, revenues for major freight investments such 

as those identified above will necessarily be derived from sources other than the current fuel tax. We should calculate the value that freight transportation adds to the 

economy and devise means of tapping that value for the needed capital investment. 

Mr. Chairman, Members of the Committee, the importance of the subject you 

have under discussion today would be hard to exaggerate. It is in the interest of 

us all to take on the challenge as vigorously and effectively as we can. On behalf 

of the AASHTO member states, I promise that we will work with you in that effort. 

21 

CHARTS

Freight Demand by Tons and Ton-Miles 2005 to 2035 

2005 2015 2025 2035 

Freight Tons 

Air, truck, rail, and water 15.3 Billion 19.0 Billion 23.0 Billion 29.0 Billion 

Growth from 2005 23.5% 50.1% 88.9% 

Modal Shares of Tonnage 

Air 0.1% 0.1% 0.1% 0.1% 

Other (pipeline, multiple modes) 1.3% 1.3% 1.2% 1.1% 

Water 7.4% 7.0% 6.5% 6.0% 

Rail 14.2% 14.2% 13.5% 12.8% 

Truck 77.1% 77.4% 78.7% 80.1% 

Total 100.0% 100.0% 100.0% 100.0% 

Freight Ton-Miles a

Air, truck, rail, and water 5.84 Trillion 7.12 Trillion 8.70 Trillion 11.23 Trillion 

Growth from 2005 22% 49% 92% 

Modal Shares of Ton-Miles 

Air 0.3% 0.3% 0.3% 0.3% 

Other 2.7% 2.7% 2.4% 2.0% 

Water 11.4% 10.6% 9.6% 8.4% 

Rail 25.1% 25.7% 25.1% 24.1% 

Truck 60.6% 60.7% 62.6% 65.2% 

Total 100.0% 100.0% 100.0% 100.0% 

Source: Global Insight, Inc., TRANSEARCH 2004, with Global Insight economic forecasts. 


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AMERICAN ASSOCIATION OF STATE HIGHWAY AND TRANSPORTATION OFFICIALS

Freight Transportation Policy 

Basic Propositions 

• Efficient and reliable freight transportation is critical for global economic competitiveness and essential for domestic economic prosperity and an improving 

quality of life. 

• International trade as a percentage of the Nation’s GDP has doubled in the last 

two decades and will increase by at least another 50 percent by 2020, adding 

to the volume of freight, the distance of freight trips, and significant change and 

volatility in origins and destinations of freight traffic. 

• In recent years a number of ‘‘red flag’’ events have demonstrated that the Nation’s freight transportation system requires immediate, sustained, and significant action. 

• The infrastructure capacity—physical and operational—of all modes of transportation has not expanded with increasing demand and will fall far short of meeting future demands of freight transportation. 

• Substantial investment and improved operations by both private business and 

government will be required to avert even more severe capacity constraints. 

• State and local transportation officials are confronted with the challenge of providing infrastructure to address large and shifting traffic increases generated by 

ports, inland terminals and mega-distribution centers. 

• States are central to the effort to strengthen the national freight transportation 

system as a result of their ownership and management of the highway system 

that carries the largest portion of freight and makes the essential connections 

to the other modes. 

• States are increasingly engaged and active in response to the freight transportation challenge and their efforts should be strengthened and expanded. 

• SAFETEA–LU contains a number of authorizations important for freight transportation which should be implemented in a coordinated and energetic fashion. 

• Investment in the major elements of the freight transportation system—highway, rail, port, waterway, and air—through current programs must be increased, but these programs will not be sufficient to meet the need. 

• New sources of revenue and new forms of financing must be developed and deployed. 

• The Federal Government should be responsible for the ‘‘national’’ benefits share 

of investment resulting from trade agreements, international ports, border 

crossings, major national freight transportation gateways, and substantial security requirements mandated for freight facilities. 

• New forms of Public-Private and Public-Public Partnerships will be needed to 

address challenges that do not conform to government jurisdictions, geographic 

boundaries, or the traditional dividing line between government and business. 

• Plans and projects for freight transportation investments must fully incorporate 

environmental, community-impact, land use and energy considerations. 

Senator LAUTENBERG. Thank you very much, Ms. Glynn. 

Mr. Hamberger, your testimony, please. 

STATEMENT OF EDWARD R. HAMBERGER, PRESIDENT AND 

CEO, ASSOCIATION OF AMERICAN RAILROADS 

Mr. HAMBERGER. Mr. Chairman, thank you, and Members of the 

Subcommittee, thank you for the opportunity to be here on behalf 

of the Association of American Railroads and our member rail companies. 

Before I begin, I’d just like to make three points outside of my 

prepared remarks, Mr. Chairman. Number one is—and I do this 

with great sensitivity—I need to correct your chart. We just got in 

the 2007 numbers. In 2007 freight railroads averaged 436 miles per 

gallon. That is to say, we on average moved one ton of freight 436 

25 

miles on one gallon of fuel. So I hate to disagree with the Chairman, but I thought that we better update the data. 

Senator KLOBUCHAR. That’s always a good way to start. 

[Laughter.] 

Mr. HAMBERGER. Yes. I was sitting here pondering what to do. 

Senator LAUTENBERG. Correcting the record is not uncommon 

around here. 

Mr. HAMBERGER. Number two, I would like to point out for the 

subcommittee, if you haven’t gotten the news, that the UTU has 

notified me this morning that they did ratify the agreement with 

the freight railroads, so we now have over 95 percent of our employees with a contract and we’re very pleased that over 85 percent 

of UTU members have voted to ratify that contract. 

Third, while this is a hearing about freight, in my written testimony I touch on it, but I would be remiss with the House right now 

taking up the Amtrak authorization bill—at least I hope right now 

they’re taking it up—and your leadership of this Committee has led 

to the passage of the Amtrak authorization bill. 

At $135 a barrel, this country has to take advantage of the inherent efficiency of steel wheel on the steel rail. It’s efficient to get 436 

miles per gallon on the freight side, but it’s just as efficient on the 

passenger side. We need policies that provide enough capacity for 

both freight and passenger rail. I hope in the months and years to 

come we can talk more about that as well. But I’ve already used 

up half of my time. 

But anyway, if I can get back to the freight issue and the issue 

of this hearing. The National Surface Transportation Policy Commission did note in its recent report that congestion is affecting 

every mode of surface transportation for lengthy periods each day 

as a result of the mismatch between supply and demand of limited 

capacity. 

Freight railroads are not exempt from that assessment. 2006 was 

the best year on record, 2007 the second best year on record in 

terms of commodities flowing over the freight rail system. Today 

we carry twice as much freight per route mile as we did in 1990. 

This has led to capacity constraints along the rail network and all 

forecasts project increases in demand. The Department of Transportation forecast is 88 percent by the year 2035. 

To meet that demand, it is clear that we will have to invest in 

expanded capacity, we’re going to have to do a number of things, 

and we’ve already begun doing those. One is hiring new employees, 

11,000 more employees today than just 3 years ago. New technology has been deployed to increase capacity, including more sophisticated signaling systems, higher capacity freight cars, and 

more powerful locomotives. We’ve also entered into alliances with 

our customers and with each other to improve utilization and the 

efficiency of the freight flows. 

But ultimately, at the end of the day it all comes down to money. 

We are going to have to invest to expand capacity, and we’ve been 

doing that. Since 1980 the industry has spent $420 billion on infrastructure and equipment. That includes maintaining and expanding the infrastructure. That is 40 cents out of each revenue dollar 

goes into capital expenditures or maintenance expenditures. 

26 

To place that into perspective, each of the two largest freight rail 

companies spends more to maintain and improve their track and 

roadway than all but three of Secretary Glynn’s members at 

AASHTO spend on their State highway programs. The next two 

largest railroads would be ranked in the top ten in comparison to 

what an individual State spends on its highway network. 

The ability of the railroads to continue investing obviously will 

depend upon their ability to make an adequate rate of return. As 

the Congressional Budget Office noted in its report 2 years ago, 

profits are key to increasing capacity because they provide both the 

incentive and the means to make those new investments. 

In order to meet the projected demand, Cambridge Systematics 

did a study for the Department of Transportation report which estimated that $148 billion will need to be spent on capacity expansion 

alone, not maintaining, not replacing, capacity expansion, between 

now and the year 2035, just to maintain the freight rail market 

share. 

The Cambridge Systematics report projects that all of that 

money will probably not be coming from the freight railroads. We 

believe that there is a role for government to play because of the 

public benefits of moving freight by rail. Those benefits include fuel 

utilization, less CO2 emissions, and obviously congestion mitigation. 

Because of the public benefits, I would like to suggest a couple 

of policies that Congress may consider. 

Senator LAUTENBERG. Your full statement will be in the record 

and in order to move things along I would ask you if you have a 

few-second summary. 

Mr. HAMBERGER. I will wrap up very quickly, thank you, Mr. 

Chairman. One would be enactment of the infrastructure tax credit, which Senator Smith is a lead sponsor; enactment of the short 

line rail investment tax credit; encouragement of public-private 

partnerships, such as the FAST Corridor, the Alameda Corridor; 

and four, do no harm, that is do not enact policies that would prevent railroads from earning the very money needed to invest at a 

time we need to invest it. 

Thank you and I apologize for running over. 

[The prepared statement of Mr. Hamberger follows:] 

PREPARED STATEMENT OF EDWARD R. HAMBERGER, PRESIDENT AND

CHIEF EXECUTIVE OFFICER, ASSOCIATION OF AMERICAN RAILROADS

Introduction 

On behalf of the members of the Association of American Railroads (AAR), thank 

you for the opportunity to discuss strategies for efficient freight movement. AAR 

members account for 75 percent of U.S. freight railroad mileage operated, 92 percent of employees, and 95 percent of revenue. 

Comprehensive, reliable, and cost-effective freight railroad service is critical to our 

Nation. Today, freight railroads account for more than 40 percent of U.S. intercity 

ton-miles—more than any other mode of transportation—and serve nearly every industrial, wholesale, retail, agricultural, and mineral-based sector of our economy. 

And in the words of the former Railways Adviser at the World Bank, ‘‘Because of 

a market-based approach involving minimal government intervention, today’s U.S. 

freight railroads add up to a network that, comparing the total cost to shippers and 

taxpayers, gives the world’s most cost-effective rail freight service.’’ 

Looking ahead, the United States cannot prosper in an increasingly-competitive 

global marketplace if our freight is not delivered efficiently and cost effectively. Having adequate freight rail capacity is critical to this effort. Freight railroads must be 

27 

1 Report of the National Surface Transportation Policy and Revenue Study Commission, Volume 1, p. 4. 

able to both maintain their extensive existing infrastructure and equipment and 

build the substantial new capacity that will be required to transport the significant 

additional traffic our economy will generate. 

I respectfully suggest that Members of this Committee, your colleagues in Congress, and other policymakers have critical roles to play. Indeed, a primary obligation of policymakers is to take steps that assist—and, just as importantly, not take 

steps that hinder—railroads in making the investments needed to provide the current and future freight transportation capacity our Nation requires. 

Capacity is a Challenge Everywhere in Transportation, Including on Railroads 

As the National Surface Transportation Policy and Revenue Study Commission 

noted in a recent report, ‘‘Congestion [is affecting] every mode of surface transportation for ever-lengthening periods each day, as a result of the mismatch between 

demand and supply of limited capacity.’’ 1

To be sure, there is a tremendous amount of strength and flexibility in our Nation’s transportation systems, and the freight is still being delivered by all of the 

modes. But it is clear that all freight transportation modes are facing capacity challenges today. 

Freight railroads face capacity challenges thanks largely to substantial and sustained increases in rail traffic. From 1990 to 2007, Class I tons originated rose 36 

percent, carloads originated rose 47 percent, and revenue ton-miles rose 71 percent. 

In each successive year from 1998 through 2006, Class I railroads originated more 

tons than ever before. Growth in intermodal traffic—truck trailers and shipping containers traveling on rail cars has been especially rapid. Beginning with the second 

quarter of 2002, U.S. rail intermodal traffic rose for 20 consecutive quarters, sometimes by double-digit amounts compared with the same period in the previous year. 


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There was a slight decline in rail traffic in 2007, due mainly to the severe problems in the housing and automotive sectors. Even so, railroads operating in the 

United States moved more freight in 2007 than in any previous year except 2006. 

As a result of these substantial traffic increases, average freight rail traffic density has increased sharply. Just from 1990 to 2007, Class I car-miles per mile of 

track owned rose approximately 82 percent; revenue ton-miles per mile of road 

owned rose some 118 percent. 


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The increase in traffic and traffic density have led to capacity constraints on some 

rail corridors and points on the rail network. Railroads may differ in the degree to 

which their capacity is constrained, but there is no question that there is much less 

room on the U.S. rail network today than there was even a few years ago. 

In recent years, solid growth in the economy (the current slowdown notwithstanding) and population, improved rail service offerings, expanding international 

trade, increasingly-congested highways, sharply higher fuel prices, and other factors 

have pushed more and more freight to railroads. Even when taking into account the 

current lessened traffic demand due to the present economic conditions, analysts 

generally expect market forces to continue to encourage more freight to move by rail 

in the years ahead. 

As a result, the long-term forecast is for freight rail traffic to trend steadily higher. For example, Global Insight recently projected a 28 percent increase in U.S. 

freight rail tonnage from 2006 through 2018. The U.S. Department of Transportation recently forecast that freight railroad demand will rise 88 percent by 2035. 

If the increase in rail traffic in the 15 years following 2007 simply matches the rate 

of growth over the comparable period prior to 2007, by 2021 Class I carriers will 

be originating more than 41 million carloads—up from 31.5 million in 2006. 

The magnitude of the looming freight rail capacity issue was also borne out by 

a recent study by Cambridge Systematics, a prominent economic and transportation 

consulting firm. The purpose of the study, which focused on 52,000 miles of primary 

rail corridors, was to estimate the cost of the expansion in capacity necessary for 

U.S. freight railroads to handle the 88 percent increase in freight rail traffic forecast 

by the DOT for 2035, assuming no gain in rail’s market share of intercity freight 

movements. 

The study found that if rail capacity needs are not properly addressed, by 2035 

some 16,000 miles of primary rail corridors—nearly one-third of the 52,000 miles 

covered in the study—will be so congested that train flows would be unstable and 

congestion and service delays would be persistent and substantial. Because the rail 

system is so interconnected, this outcome would mean that the entire U.S. freight 

rail system would become, in effect, disabled. 


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30 

The significance of the network aspects of rail operations cannot be overemphasized. As rail lines are operated at or near full capacity, efficiency (including operational predictability) becomes more critical. Service disruptions caused by inefficient asset utilization can have impacts not only on the railroad involved but potentially throughout the entire rail network. 

All of this means that the characteristics of the U.S. freight railroad industry 

today are significantly different than they were in the past, when traffic levels were 

much lower and capacity was rarely an issue. The rail network faces capacity challenges now and could face a capacity crisis in the future if the necessary investments are not made. Looking ahead, as their traffic continues to grow, railroads will 

increasingly need to concentrate on building new capacity and finding ways to better 

utilize their existing capacity—while continuing to maintain existing capacity at 

high standards. 

Railroad Networks Are Extremely Complex to Plan and Operate 

In 2006 (the most recent year for which data are available), the approximately 

560 U.S. freight railroads originated 36.5 million carloads of freight—equal to approximately 100,000 carloads, on average, every day of the year. Each day, dozens 


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2 Rail traffic is not uniformly distributed each day, so on some days considerably more than 

100,000 carloads are originated. In fact, the carloadings on the heaviest business day of the 

busiest season may exceed by 40 percent those of the lightest business day of the lightest season. The variance is caused in roughly equal parts by seasonal demand and the five-day work 

week of most rail customers. These demand variations have a significant impact on rail capacity 

requirements. 

of different types of freight cars are used to haul a huge variety of products between 

thousands of different origin and destination pairs on journeys that might be only 

a mile or two—or could cover several thousand miles.2

And unlike other network industries which transmit fungible products (e.g., electricity is the same, no matter who generates it) or products that can readily be routed to particular customers using automated equipment (e.g., electronic signals for 

telecommunications), railroads must move specific railcars carrying specific commodities from specific origins to specific locations. Railroads can accomplish this 

only because they devote enormous resources to plan and operate their networks to 

meet their customers’ needs safely and efficiently. 

Different Train Types Create Different Demands on the Rail Network 

Managing the current and future use of rail network capacity is an extraordinarily complex process that involves a wide variety of elements. These include current and expected traffic volumes; the types of trains to be moved (e.g., unit trains 

vs. manifest trains, passenger trains vs. freight trains, etc.), their speed, and priority status; the quantity and quality of available assets; the availability of funds 

for new investments; pertinent laws and regulations; and much more. Sophisticated 

analytical processes (e.g., advanced computer modeling) help railroads understand 

and incorporate many of these factors into rail decisionmaking. No computer program, though, is sophisticated enough to incorporate everything that could impact 

how well a rail network runs at any point in time. Thus, railroads depend critically 

on the experiences and judgment of their employees. 

The mix of train types determines the speed and spacing of trains on a track. All 

else equal, a corridor that serves a single type of train can usually accommodate 

more trains per day than a corridor that serves a mix of train types. Trains of a 

single type can be operated at similar speeds and with more uniform spacing between the trains, in part because they have similar braking and acceleration capabilities. This increases the total number of trains that can operate over a track segment each day. When trains of different types—each with different length, speed, 

and braking characteristics—share a track segment, greater spacing is required to 

ensure safe braking distances and accommodate different acceleration rates. As a 

result, the average speed drops and the total number of trains that can travel over 

the corridor is reduced. 

Moreover, different train types and customer segments have different service requirements. For example, premium intermodal movements demand high levels of 

delivery reliability, timeliness, and speed; bulk trains (e.g., coal or grain unit trains) 

may need consistent, managed service with coordinated pick-up and delivery, but 

high transit speed is often less important; customers who own or manage their own 

fleet of freight cars may require railroads to undertake network strategies which 

help them minimize these costs, such as maximizing the number of annual loaded 

trips rail cars make; passenger trains require high speed and reliability within a 

very specific time window; and so on. In addition, a railroad must be able to move 

empty freight cars through the network in a manner which positions them to provide service based on continually-changing levels of customer demand. 

The extent to which all of these sometimes-conflicting demands seek to use the 

same portions of the rail network defines the complexity of the management problem. The more complex the demand base, the greater the mixture of differing train 

types; the more complex network management will be; and the greater the required 

capacity investment. 

Rail Network Planning 

Like firms in every other industry, railroads have limited resources. Their ability 

to meet customer requirements is constrained by the extent and location of their infrastructure (both track and terminal facilities); by the availability of appropriate 

equipment and employees where they are needed; and by the availability of funds 

necessary to augment what they already have. The constraints railroads face—particularly those involving their physical network—cannot be changed quickly. It can 

take a year or more for locomotives and freight cars to be delivered following their 

32 

3 Railroads typically have a number of projects far enough along in the planning process that 

construction can be initiated quickly if funding become available. 4 Unlike airline networks, where the period after midnight can usually be used to recover from 

the previous day’s problems, a rail network operates 24 hours a day. Thus, incident recovery 

must be accomplished while current operations are ongoing. 

order; 6 months or more to hire, train, and qualify new employees; and several years 

to plan, permit, and build new infrastructure.3

In light of these factors and many more, railroads must design effective operating 

plans that meet customer requirements within the confines of the physical constraints they face. 

The complexity of such a plan is enormous. For example, it must incorporate the 

differing types of demand placed on various portions of a network, as well as the 

changes in that demand. Sometimes these changes evolve over several (or more) 

years and are based on changes in underlying markets—e.g., the emergence of the 

Powder River Basin as the premiere source of domestic coal, the growth of imported 

goods from the West Coast, or the development of ethanol markets. At other times, 

these changes are relatively sudden—brought on, for example, by natural events 

(e.g., floods or hurricanes), economic factors (e.g., export surges due to a weaker dollar), or the loss or gain of traffic flows of a major customer or group of customers 

through plant openings or closings or the competitive bidding process. Sometimes 

these changes can be foreseen; at other times, they are wholly unexpected. 

A railroad’s operating plan must allocate this demand across a network that has 

terminal processing constraints (e.g., the number of yard tracks, locomotive facilities, configuration, etc.); line-haul capacity constraints (e.g., number of main tracks 

and crossover points between them; location and frequency of sidings; types of signaling systems; speed limits; connections with other routes; etc.); locomotive availability (e.g., the number, their horsepower, availability of support facilities for fueling and maintenance, etc.); and employee constraints (e.g., number, location, crew 

support facilities, equipment maintenance and servicing personnel, etc.). 

On every major railroad, all of these factors must be combined to develop a plan 

to move traffic safely and efficiently 24 hours per day, every day of the year. 

Sophisticated computer models are available to assist in the network planning 

process. However, these simulation results must be interpreted and validated by 

knowledgeable railroad personnel who use their judgment and experience as to what 

works and what does not. 

Because of its complexity, the development of a new network operating plan to 

accommodate substantially-changed conditions typically takes months or years, not 

days or weeks. (However, refinement of an existing plan is a continuous improvement process.) In essence, the overall planning process must create a number of 

‘‘mini plans’’ for each of the various train types (such as premium intermodal, international intermodal, coal, grain, other bulk, automotive, manifest, local, passenger, 

etc.) that overlay and share the physical network. Each network use plan also attempts to bring resolution to the thousands of competing customer interests that 

make daily use of the railroad resources. 

Managing an Operating Plan 

Implementing and managing an operating plan in the field is also challenging. 

When dealing with networks of this complexity, even the best plans will have gaps 

that must be filled with the managerial experience of knowledgeable personnel. 

Moreover, the operating situation is always fluid—day-to-day fluctuations in volume, weather, crew and equipment availability, and more can have an enormous 

impact on the ability of a railroad to manage to the dictates of its operating plan. 

Even in the best operation, trains may be late (or early), customers may not release 

cars on time, bad weather may ensue, grade crossing accidents may happen, and 

delays may occur. 

Although operating plans often build in some flexibility, where possible, to accommodate these variances, no plan can either predict or accommodate all eventualities 

for all portions of a rail network. Moreover, accommodation is much more difficult 

when capacity is constrained. In fact, when capacity is tight, disruptive incidents 

are more common and recovery takes longer than when the network is not fully utilized. And because the rail system truly is a network, disruptions in one portion of 

the system can quickly spread to distant points.4

The need for safe operations trumps everything else, and proper line maintenance 

is essential for safe rail operations. However, the need for maintenance adds still 

another level of complexity to rail planning. In fact, because of higher rail volumes 

and a trend toward heavier loaded freight cars, the maintenance of the rail network 

has become even more important. Railroads have no desire to return to the days 

33 

when maintenance ‘‘slow orders’’ (speed restrictions below the track’s normal speed 

limit) were one of the most common causes of delay on the rail network. That’s why 

one of the most important parts of any railroad operating plan is the accompanying 

maintenance plan with which it is integrated, and minimizing the impact of maintenance disruptions on rail operations is one of the major reasons for the additional 

main track capacity that is being added to the rail network today. 

Terminals and their operation are another key consideration for preserving fluidity in a rail network. A train may operate without delay over a segment of main 

line. However, if it cannot enter a terminal due to congestion, then it must remain 

out on the main line or in a siding where it could block or delay other traffic. The 

ability of a terminal to hold trains when necessary and to process them quickly is 

one of the key elements in preventing congestion and relieving it when it does occur. 

Thus, one of the most important factors in increasing capacity for the rail network 

is enhancing the fluidity of terminals. 

Unfortunately, terminals are often one of the more difficult areas in which to add 

capacity. They are frequently in, or near, urban areas. Expansion generally means 

high land and, potentially, high mitigation costs. And as discussed further below, 

even in less urban areas, a rail terminal is rarely considered positive by nearby residents, and its development or expansion to accommodate freight capacity growth is 

usually the subject of intense debate. 

Four-Stage Railroad Capacity Upgrade Process 

Railroads typically have four stages in the process of upgrading their capacity. 

They are explained sequentially below, but in actual practice tend to be used in parallel: 

1. Identify and implement process changes that can enhance capacity. This includes a wide variety of steps, such as redesigning the railroad’s transportation 

and operation plans (described above); redesigning, negotiating, and implementing new interchange plans with connecting railroads; redesigning yard and 

terminal operations; working with customers to improve their inbound or outbound flow processes; changing a maintenance plan; redesigning the process utilized to inspect and maintain equipment, rethinking and implementing new 

freight car distribution strategies; and redeploying locomotives for more effective utilization. 

Some of these process improvements can be designed and implemented in weeks 

or months. Others may require a year or more. 

2. Develop and deploy improved information technology and processes for utilizing that technology. This includes improvements in such areas as dispatching 

and control systems; terminal management systems; maintenance planning systems; transportation planning systems; work assignments; locomotive and 

freight car monitoring; track defect identification and diagnostic systems; and 

locomotive maintenance management systems. Some of these improvements too 

can be implemented in only a few months, while others are more complex and 

may take several years to develop and implement. 

3. Acquire and deploy assets that can be used ‘‘flexibly.’’ This includes assets 

such as locomotives, freight cars, and higher-capacity maintenance machinery. 

These items are not restricted to any particular portion of the rail network, but 

can be deployed where and when needed. Trained employees are perhaps the 

most important of the ‘‘flexible’’ assets. Equipment usually requires at least 6 

months to acquire, often after many additional months of planning and design; 

employees usually require at least 6 months to train. 

4. Adding more infrastructure, or ‘‘iron in the ground.’’ This represents longterm assets that, once in place, cannot be redeployed elsewhere. Usually, they 

take at least 1 year to deploy, and frequently take three to 10 years to plan, 

design, permit, and build. 

These include projects such as main line capacity additions (e.g., new main 

tracks, sidings, and signal systems); new terminal capacity (e.g., intermodal and 

automotive terminals, freight classification yards, locomotive and freight equipment repair and servicing facilities); large scale upgrades of choke points in 

urban areas (such as the Alameda Corridor and the series of Kansas City ‘‘flyover’’ projects); new customer access routes; major bridge additions or rebuilds; 

improving tunnel clearances; and improvements in connectivity between different portions of the rail network. 

Railroads Are Working on a Variety of Fronts to Increase Capacity 

Railroads are committed to working to meet present and projected transportation 

demands by addressing the host of factors that influence the fluidity and resiliency 

34 

of their operations, as well as the operations over the entire rail network. Examples 

of the railroads’ efforts are described below. 

Spending on Infrastructure and Equipment 

Of the many different factors that affect how well a rail network functions, the 

basic amount and quality of infrastructure and equipment are among the most significant. For this reason, U.S. freight railroads have been expending, and will continue to expend, enormous resources to improve their asset base. In fact, rail spending for these purposes has never been higher than in recent years, demonstrating 

the diligence with which railroads are responding to the capacity issue. 

Class I capital spending in 2007 was $9.2 billion. In 2003, by contrast, Class I 

capital spending was $5.9 billion. In addition, in recent years substantially higher 

percentages of rail investments have been directed to expanding capacity. If maintenance expenses are included in addition to capital spending, from 1980 through 

2007, U.S. freight railroads have invested approximately $420 billion—more than 40 

cents out of every revenue dollar. In 2006 and 2007, Class I railroads alone devoted 

more than $19 billion per year to these purposes. 

The following is just a sampling of the diverse types of capacity-enhancing investments individual Class I railroads have recently made or will soon be making: 

• BNSF plans a $2.45 billion capital commitment program for 2008, including 

leasing 200 locomotives at a cost of around $400 million and $200 million in 

track and facility expansion. The 2008 capacity expansion program comes after 

a record capacity expansion program in 2007. Major 2008 capacity expansion 

programs include continuing to double- or triple-track the Southern Transcon 

route, including a second main line across Abo Canyon in New Mexico; continuing to install double-track on a major coal route in Nebraska and Wyoming; 


610HAMB7.eps 610HAMB8.eps
35 

expanding intermodal facilities in Kansas City, Los Angeles, and Memphis; and 

adding sidings between Fort Worth and Houston. 

• Canadian National plans capital spending of around $1.5 billion in 2008, including approximately $1.1 billion on track infrastructure, $140 million on 

equipment, and approximately $250 million on transload facilities and distribution centers to grow the business. More than $300 million in rail infrastructure 

projects will be in the United States. Among many other projects, CN plans to 

complete the multi-year $100 million upgrade of the Johnston Yard in Memphis. 

• Canadian Pacific plans capital spending of $885 million to $895 million in 2008, 

about equal to what the railroad spent in 2007. Funds will go to freight cars, 

locomotives, track renewal, and other key areas. 

• CSX plans $5 billion in capital spending from 2008 to 2010. The railroad plans 

to spend some $200 million each year for the next 3 years on new locomotives 

and more than $100 million per year on freight cars, mainly for coal and automotive traffic. Infrastructure projects include terminal expansions in Atlanta, 

Buffalo, Charlotte, and Jacksonville, as well as a new intermodal terminal in 

northwest Ohio. 

• Kansas City Southern plans capital expenditures of approximately $500 million 

in 2008. KCS also plans to spend about $65 million to buy 30 new locomotives 

for U.S. operations. 

• Norfolk Southern plans to spend, in 2008, approximately $1.5 billion on capital 

investments (an increase of $148 million, or 11 percent, over 2007). Investments 

in 2008 will include a new locomotives and freight cars; the construction or expansion of facilities in Columbus and Maple Heights, Ohio; and major investments in expansion projects related to the Heartland Corridor (from the East 

Coast to the Midwest) and the Crescent Corridor (which will link the Northeast, 

Mid-Atlantic, and Central Southeast). 

• Union Pacific plans to invest a total of $3.1 billion for capital projects in 2008. 

Major investment categories include $840 million to increase network and terminal capacity, especially on coal, ethanol, and intermodal routes and in the 

Houston region. UP also plans to invest $1.6 billion to maintain and strengthen 

track infrastructure; $490 million to upgrade the locomotive and freight car 

fleet, including the acquisition of 175 high-horsepower locomotives and new covered hoppers; and $170 million to upgrade information technology systems. 

The massive investments railroads must make in their systems reflect their extreme capital intensity. Railroads are at or near the top among all U.S. industries 

in terms of capital intensity. In fact, from 1997 to 2006 (the most recent year for 

which data are available), the average U.S. manufacturer spent 3 percent of revenue 

on capital expenditures. The comparable figure for U.S. freight railroads was 17 percent, or more than five times higher. Likewise, in 2006, railroad net investment in 

plant and equipment per employee was $662,000—nearly eight times the average 

for all U.S. manufacturing ($84,000). 

36 

As a further illustration of the magnitude of rail infrastructure spending, the four 

largest Class I railroads spend far more on capital outlays and maintenance of track 

and roadway than the vast majority of state highway agencies spend on their respective highway networks. For example, only the highway agencies of Texas, Florida, and California spend more on roadway capital and maintenance than Union Pacific and BNSF each spend on their networks. CSX and Norfolk Southern are in the 

top ten compared with all states. 


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37 

Hiring New Employees 

In addition to equipment and infrastructure, personnel are a key determinant of 

rail capacity, and railroads have been aggressively hiring and training new employees. Class I railroads had 11,000 more employees in December 2007 than in December 2003, when the industry began to reverse a decades-long trend of fewer employees. The number of ‘‘train and engine’’ employees—mainly engineers and conductors 

who operate trains—was up 11 percent during this period, the number of maintenance of track and structures employees was up 5 percent, and the number of maintenance of equipment employees was up 7 percent. 

Infusion of Technology 

Technology has always played a key role in expanding rail capacity. Signaling systems have become more sophisticated; trains have become longer and heavier; locomotives have become more powerful and more reliable; and track structures have 

become more robust and thus less prone to outages for maintenance or because of 

failure. 

Freight railroads have always been at the forefront in the use of computers and 

information technology, and today railroads are rapidly expanding their use of these 

technologies to improve overall efficiency and the fluidity of their operations, thereby adding capacity without adding more infrastructure. 

For example, railroads use advanced computer modeling software in a wide variety of rail applications, from automating rail grinding schedules and improving customer demand forecasting to optimizing yard operations. CN, for example, is implementing what it calls ‘‘SmartYard,’’ complex computer software that identifies and 

analyzes every possible combination and outcome for sequencing cars in a large classification yard and simultaneously updates and communicates the car processing 

plan. The result is more efficient, faster yard operations. Other railroads are engaged in similar efforts. 

Recognizing that another way to add capacity is to move more trains faster over 

the same length of track, railroads are also working with their suppliers to design, 

implement, and improve innovative computerized ‘‘trip planning’’ systems. These 

highly-complex systems automatically incorporate and analyze a mix of ever-changing variables (e.g., crew and locomotive availability, terminal congestion, the different priority status of loads of freight, track conditions, maintenance plans, weather, etc.) to optimize how and when cars are assembled to form trains, when those 

trains depart, and how they are sequenced across the railroad in conjunction with 

the other trains that are operating. 


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38 

5 Report of the National Surface Transportation Policy and Revenue Study Commission, Volume 1, page 11. 

Trip-planning systems, electronically-controlled pneumatic (ECP) brakes, train 

control systems, heavy-axle load research, and advanced rail car and track defect 

detector systems are just a few of the many technological tools that railroads are 

using to improve equipment ‘‘cycle time’’—i.e., the total time it takes for a freight 

car to be loaded, hauled to destination, unloaded, returned to the same or a different 

shipper, and loaded again. These tools also increase the capacity of rail mainlines 

by allowing more precise braking, reducing the number of rail cars required to move 

a given amount of freight, and dramatically decreasing train delays due to equipment or track maintenance problems. 

The benefits of increased efficiency can be seen through the results of rail efforts 

to ‘‘supersize,’’ automate, and increase the velocity of traffic flows where practical. 

For example, railroads have offered trainload service to grain customers who have 

built high-speed ‘‘shuttle loader’’ elevators, which dramatically improve the efficiency of transporting grain by rail. At BNSF, for example, a typical grain car in 

shuttle service hauls approximately three times as much grain over the course of 

a year as a car in non-shuttle service. 

Expanded over a network, this type of operational efficiency can free up substantial capacity for other uses. Union Pacific, for example, has estimated that a one 

mile-per-hour increase in system-wide velocity frees approximately 250 locomotives, 

5,000 freight cars, and 180 train and engine employees to move additional traffic. 

Cooperative Alliances and Collaborations 

Railroads are also entering into cooperative alliances with each other and with 

their customers to improve capacity utilization, lower costs, and improve service. 

As just one example, in October 2007, Norfolk Southern and Union Pacific announced new westbound intermodal train service that will shorten by a day the trip 

for standard intermodal freight from the southeastern United States to Los Angeles. 

This shift began with the completion of the first phase of improvements on the Meridian Speedway—Norfolk Southern’s and Kansas City Southern’s joint venture corridor between Meridian, Mississippi, and Shreveport, Louisiana. In establishing this 

route, the railroads shortened the trip length by 130 miles compared to moving 

freight via the Memphis gateway. 

Challenges to Freight Mobility and Capacity Expansion 

The preceding section details many of the ways that railroads are diligently addressing the capacity issue. However, there are a number of serious impediments 

to meeting the rail capacity challenge which in many cases have prevented, delayed, 

or significantly increased the expense of realizing the desired capacity improvements. 

The National Surface Transportation Policy and Revenue Study Commission, in 

its final report released in January 2008, stated that, ‘‘Simply put, the Commission 

believes that it takes too long and costs too much to deliver transportation projects, 

and that waste due to delay in the form of administrative and planning costs, inflation, and lost opportunities for alternative use of the capital hinder us from achieving the very goals our communities set.’’ 5 The Commission’s point often applies to 

rail infrastructure expansion projects, including projects that involve little or no 

public financial participation. 

Under existing law, a comprehensive regulatory regime preempts state and local 

regulations (with the exception of local health and safety regulations) that unreasonably interfere with railroad operations. Moreover, detailed environmental reviews, when required, identify the impacts of railroad infrastructure projects and 

determine necessary mitigation measures. 

Nevertheless, often some members of the affected local communities still oppose 

many rail expansion projects, and their opposition tends to be quite vocal and sophisticated. Trains do make noise, rail operations may at times be disruptive to 

those who live or work nearby, and the regional or national benefits of rail freight 

service are often not readily apparent to, or deemed important by, the local population. Even those who recognize the benefits of rail freight service may prefer that 

railroads run their trains near somebody else’s building or through some other town. 

In many cases, railroads face a classic ‘‘not-in-my-backyard’’ problem. 

In the face of local opposition, railroads try to work with the local community to 

find a mutually satisfactory arrangement. These efforts are usually successful. 

When agreement is not reached, however, projects can face seemingly interminable 

delays and higher costs. For example, Norfolk Southern had to endure almost 5 

years of delay and uncertainty before it was allowed to construct and begin operVerDate Nov 24 2008 10:11 Aug 29, 2012 Jkt 075679 PO 00000 Frm 00042 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\75682.TXT JACKIE
39 

6Government Accountability Office, Freight Railroads: Industry Health Has Improved, but 

Concerns About Competition and Capacity Should Be Addressed, October 2006, p. 56. 7 Congressional Budget Office, Freight Rail Transportation: Long-Term Issues, January 2006, 

p. 11. 

ating its terminal in Austell, Georgia, needed to handle rapidly-increasing intermodal traffic within the region. More recently, Union Pacific continues to suffer 

delays in double-tracking its Sunset Corridor in Arizona due to issues with a state 

agency. 

Often, local communities allege violations of environmental requirements to challenge the proposed project. Railroads understand the goals of environmental laws, 

and appreciate the need to be responsive to community concerns, but community opposition to rail operations can serve as a significant obstacle to railroad infrastructure investments, even when the opposition has no legal basis. 

These types of delays can have significant negative affects on the costs of rail 

projects, and, in turn, the ability of railroads to respond to service requests. Based 

on railroad cost index data from the AAR, just in the 5-years from the first quarter 

of 2003 through the first quarter of 2008, railroad wage rates rose 15 percent, wage 

supplements (fringe benefits, such as health insurance for employees) rose 11 percent, and the cost of materials and supplies (which includes such items as rail, 

crossties, and ballast) rose 52 percent. 

Railroads will continue to advocate that the time required for these review processes be shortened without adversely affecting the quality of that result, but until 

that happens, rail expansion projects will often be delayed unnecessarily. 

Today’s Earnings Pay for Tomorrow’s Capacity 

As described above, the railroads are diligently doing everything they believe to 

be prudent to maintain and expand their capacity to provide service, including committing record levels of investment. 

However, it is important to note that because U.S. freight railroads are overwhelmingly privately owned and must finance the vast majority of their infrastructure spending themselves, capacity investments are accompanied by substantial financial risk. As the Government Accountability Office noted in a recent report, ‘‘Rail 

investment involves private companies taking a substantial risk which becomes a 

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

and for which they must make capital charges year in and year out for the life of 

the investment.’’ 6 Accordingly, railroad capacity investments must pass appropriate 

internal railroad investment hurdles—i.e., the investments will be made only if they 

are expected to generate an adequate return. 

For this reason, adequate rail earnings are critical for capacity investment. As the 

Congressional Budget Office (CBO) has noted, ‘‘As demand increases, the railroads’ 

ability to generate profits from which to finance new investments will be critical. 

Profits are key to increasing capacity because they provide both the incentives and 

the means to make new investments.’’ 7 If a railroad is not financially sustainable 

over the long term, it will not be able to make capacity investments to maintain 

its existing network in a condition to meet reasonable transportation demand, or 

make additional investments in the replacement or expansion of infrastructure required by growing demand. 

To be sure, railroads in recent years have achieved financial results that are 

much better than their results since the 1970s. In 2006, U.S. railroads carried more 

freight than ever before, and their net income was higher than ever before as well. 

The railroads enjoyed relatively good financial results in 2007 as well. 

But these financial results need to be kept in context. Statements about railroads’ 

‘‘record profits’’ often ignore the fact that rail profitability in earlier years was relatively poor. Thus, an improvement from earlier years may be a ‘‘record,’’ yet still 

fall short of the earnings achieved by most of the other industries against which 

railroads compete for capital. In fact, that is the case with the rail industry. Rail 

industry profitability has consistently lagged most other industries—and that is still 

the case today. 

Return on equity (ROE) is a common profitability measure. According to data 

compiled by Value Line (a financial information firm), the ROE for the U.S. freight 

rail industry in 2006 was 14.0 percent—possibly the best ROE it has ever had. 

(Value Line’s railroad universe includes BNSF, CSX, CN, CP, KCS, NS, UP, and 

Genesee & Wyoming.) By contrast, the median ROE in 2006 for the 89 industries 

(encompassing around 1,700 firms) for which Value Line calculates ROE was 16.2 

percent—16 percent higher than the rail figure. In fact, in 2006 railroads ranked 

tied for 57th among the 89 industries for which Value Line calculates ROE. Value 

40 

Line data for 2007 indicate that the railroad median (14.0 percent) again fell well 

short of the median for all industries (15.8 percent). 

In other words, while recent years may have been the best financial years ever 

for railroads, they have not been sufficient to bring railroads even to the mid-point 

among all industries, and the need for financial sustainability is as pronounced 

today as ever before—especially in view of the projected investment requirements 

the industry will be facing. 


610HAMB12.eps 610HAMB13.eps
41 

According to the Cambridge Systematics study noted earlier, an investment of 

$148 billion in 2007 dollars (of which $135 billion is for Class I railroads) will be 

necessary for rail infrastructure expansion to keep pace with economic growth, meet 

the DOT’s forecast demand, and maintain (but not grow) rail’s current market 

share. That expenditure is in addition to the hundreds of billions of dollars necessary over this period to maintain and replace existing rail infrastructure, and to 

maintain and replace locomotives, freight cars, and other equipment. 

Class I railroads are anticipated to be able to generate (through earnings growth 

from the additional traffic and productivity gains) only $96 billion of the $135 billion 

needed for new capacity identified by the Cambridge Systematics study. That leaves 

a funding shortfall that could be covered by tax incentives for rail infrastructure investments, public-private partnerships, or other means. 

Railroads will continue to spend significant amounts of their own funds to address 

the capacity challenges described above. However, they are, and will continue to be, 

unable to pay for all of the capacity that would be required to serve all shippers’ 

needs all of the time. Since the amount of rail capital available for investment is 

limited, investment decisions in these circumstances focus on which investments to 

choose between, rather than solely whether a specific investment should be made. 

In such cases, those investment decisions should be based on projected returns that 

will most favor the long-term sustainability of the rail network. 

Public Involvement in Freight Rail Infrastructure Investment 

Freight railroads will continue to spend massive amounts to improve and maintain their systems. But even with their improved financial performance, funding 

constraints will likely prevent railroads from meeting optimal future rail infrastructure investment needs entirely on their own. This funding shortfall means that 

many rail projects that would otherwise expand capacity and improve the ability of 

our Nation’s farms, mines, and factories to move their goods to market; speed the 

flow of international trade; relieve highway congestion; reduce pollution; lower highway costs; save fuel; and enhance safety will be delayed—or never made at all. 

I respectfully suggest that it is in our Nation’s best interest to ensure that optimal 

freight railroad capacity enhancements are made. Policymakers can help address 

the rail capacity funding gap in several ways: 

• Rail Infrastructure Tax Incentives. S. 1125/H.R. 2116 (the ‘‘Freight Rail Infrastructure Capacity Expansion Act of 2007) calls for a 25 percent tax credit for 

investments in new track, intermodal facilities, yards, and other freight rail infrastructure projects that expand rail capacity. All businesses that make capacity-enhancing rail investments, not just railroads, would be eligible for the credit. 

The budgetary cost of a rail infrastructure tax credit (ITC) would be about $300 

million per year, but the stimulatory benefit to the economy would be much 

greater. U.S. Department of Commerce data indicate that every dollar of freight 

rail infrastructure investment that would be stimulated by a rail infrastructure 

ITC would generate more than $3 in total economic output because of the investment, purchases, and employment occurring among upstream suppliers. We 

estimate that new rail investment induced by a rail ITC would generate approximately 20,000 new jobs nationwide. 

The AAR gratefully acknowledges the support many members of this committee 

have shown toward S. 1125, and congratulates them on recognizing that a rail 

ITC addresses the central challenge of how to move more freight without causing more highway gridlock or environmental degradation. 

• Short Line Tax Credit. Since 1980, more than 380 new short lines have been 

created, preserving thousands of miles of track (much of it in rural areas) that 

may otherwise have been abandoned. In 2004, Congress enacted a 50 percent 

tax credit (‘‘Section 45G’’) for investments in short line track rehabilitation. The 

focus was on assisting short lines in handling the larger and heavier freight 

cars that are needed to provide their customers with the best possible rates and 

service. 

Since the enactment of Section 45G, hundreds of short line railroads rapidly increased the volume and rate of track rehabilitation and improvement programs. 

For example, the replacement of railroad ties, a key component of handling 

heavier cars, has increased by half a million ties per year in both 2005 and 2006 

as a result of the credit. Unfortunately, Section 45G expired in 2007. Pending 

legislation in Congress (S. 881/H.R. 1584, the ‘‘Short Line Railroad Investment 

Act of 2007’’) would extend the tax credit and thus preserve the huge benefits 

it delivers. 

42 

• Public-Private Partnerships. Public-private partnerships (PPPs) reflect the fact 

that cooperation is more likely to result in timely, meaningful solutions to 

transportation problems than a go-it-alone approach. Without a partnership, 

projects that promise substantial public benefits in addition to private benefits 

are likely to be delayed or never started at all because it would be too difficult 

for either side to justify the full investment needed to complete them. In contrast, if a public entity shows it is willing to devote public dollars to a project 

based upon the public benefits that will accrue, the private entity is much more 

likely to provide the private dollars (commensurate with private gains) necessary for the project to proceed. 

Partnerships are not ‘‘subsidies’’ to railroads. Rather, they acknowledge that 

private entities should pay for private benefits and public entities should pay 

for public benefits. In many cases, PPPs only involve the public contributing a 

portion of the initial invest-ment required to make an expansion project feasible—with the railroad responsible for funding all future maintenance to keep 

the infrastructure productive and in good repair. 

Perhaps the most extensive rail-related public-private partnership envisioned 

today is the Chicago Region Environmental and Transportation Efficiency Program (CREATE), a $1.5 billion project involving the State of Illinois, the City 

of Chicago, and major freight and passenger railroads serving the region. CREATE’s goal is to modernize and improve transportation in the region by separating tracks and highways to speed vehicle travel and reduce congestion and 

delays for motorists; updating track connections and expanding rail routes to 

reduce transit times; and adding separate, passenger-only tracks in key locations to remove bottlenecks that have slowed passenger and freight movements 

in the region for decades. The $330 million first stage of CREATE recently got 

underway. 

• Say No to Reregulation. Prior to 1980, decades of government over-regulation 

had brought U.S. freight railroads to their knees. Bankruptcies were common, 

rates were rising, safety was deteriorating, and rail infrastructure and equipment were in increasingly poor condition because meager rail profits were too 

low to pay for needed upkeep and replacement. Recognizing the need for 

change, Congress passed the Staggers Rail Act of 1980, which partially deregulated the rail industry. 

The record since Staggers shows that deregulation works. Since 1981, rail traffic is up 95 percent, rail productivity is up 163 percent, and average inflationadjusted rail rates are down 54 percent. And rail safety is vastly improved— 

the train accident and employee injury rates have plunged since Staggers. Our 

privately-owned, largely deregulated freight railroads competing fairly in the 

transportation marketplace have produced the best freight rail system in the 

world. It is the best for shippers in price and service; best for employees in compensation and safety; and best for the public in reduced pollution and highway 

gridlock. 

Despite the severe harm excessive rail regulation caused prior to Staggers and 

the enormous benefits that have accrued since then, legislation has been proposed—most recently, S. 953/H.R. 2125 (the so-called ‘‘Railroad Competition and 

Service Improvement Act of 2007’’) in the 110th Congress—that would reregulate railroads. 

Reregulation is bad public policy and should be rejected. It would prevent railroads from earning enough to make the massive investments a first-class rail 

system requires. Under reregulation, rail earnings, and therefore rail spending 

on infrastructure and equipment, would plummet; the industry’s existing physical plant would deteriorate; needed new capacity would not be added; and rail 

service would become slower, less responsive, and less reliable. 

By perpetuating the myth that service to a shipper by a single railroad is equivalent to unconstrained market power, proponents of reregulation ignore the reality that railroads face extensive competition for the vast majority of their 

business—including when a customer is served by only one railroad. Railroads 

do not oppose competition. The truth is, there is plenty of it out there already, 

either between two or more railroads, from trucks and barges, or from other 

competitive forces. And where the marketplace cannot support more than single 

railroad service, legal safeguards exist to protect against anti-competitive railroad behavior. 

The current system of rail regulation works. It allows shippers to pay the lowest 

possible rates consistent with a privately-owned rail system. It makes no sense 

to destroy the best freight rail system the world has ever seen in order to move 

43 

8 AASHTO, Freight Rail Bottom Line Report, p. 1. 9 Congressional Budget Office, Freight Rail Transportation: Long-Term Issues (January 2006), 

p. 22. 

toward a discredited system that failed in the past and would fail again in the 

future. 

Public investment in freight rail infrastructure projects is justified because the extensive benefits that would accrue to the general public by increasing the use of 

freight rail would far exceed the costs of public participation. For example: 

• Fuel efficiency—Railroads are three or more times more fuel efficient than 

trucks. In 2007, railroads moved a ton of freight an average of 436 miles per 

gallon of fuel. If just 10 percent of the long distance freight that moves by highway moved by rail instead, fuel savings would exceed one billion gallons per 

year. 

• Greenhouse Gas Emissions—Greater use of freight rail offers a simple, inexpensive, and immediate way to meaningfully reduce greenhouse gas emissions 

without harming the economy. Because of railroads’ fuel efficiency, every tonmile of freight that moves by rail instead of trucks reduces greenhouse gas 

emissions by two-thirds or more. 

• Highway congestion—Highway gridlock already costs the U.S. economy more 

than $78 billion per year just in wasted fuel and time, according to a study by 

the Texas Transportation Institute. But because a typical train takes the freight 

of several hundred trucks off our highways, freight railroads reduce highway 

gridlock, the costs of maintaining existing highways, and the pressure to build 

costly new highways. 

• Pollution—The EPA estimates that for every ton-mile of freight carried, a train 

typically emits substantially less nitrogen oxides and particulates than a truck. 

• Safety—Fatality rates associated with intercity trucking are eight times those 

associated with freight rail transportation. Railroads also have lower employee 

injury rates. 

The American Association of State Highway and Transportation Officials 

(AASHTO) has noted that ‘‘Relatively small public investments in the Nation’s 

freight railroads can be leveraged into relatively large benefits for the Nation’s highway infrastructure, highway users, and freight shippers.’’ 8 The Congressional Budget Office (CBO) has also concluded that public investment in rail infrastructure 

should be considered: ‘‘Another way of addressing the underpayment of infrastructure costs by railroads’ competitors is to provide financial assistance to the railroads.’’ Echoing AASHTO, CBO observed that, ‘‘[p]roviding Federal aid for a rail investment might be economically justified if the net social benefits were large but 

the net private benefits to railroads were insufficient to induce them to make such 

an investment.9

Passenger Railroads and Freight Railroad Capacity 

Our Nation’s privately-owned freight railroads are successful partners with passenger railroads all across the country. Around 97 percent of the 22,000 miles over 

which Amtrak operates are owned by freight railroads, and hundreds of millions of 

commuter trips each year occur on commuter rail systems that operate at least partially over tracks or right-of-way owned by freight railroads. 

Freight railroads recognize the potential national benefits of a strong national 

passenger rail system. The key question is: under what circumstances can freight 

and passenger interests advance this worthy goal? 

As noted earlier, because of substantial and sustained traffic increases, U.S. 

freight railroads are moving more freight than ever before, and demand for freight 

rail service is projected to grow sharply in the years ahead. Passenger rail growth 

would come on top of growth in freight traffic. That’s why, going forward, capacity 

will likely be the single most important factor determining our ability to provide the 

high quality rail service that will be essential for both freight and passengers. 

While recognizing existing Amtrak statutory authority regarding use of freight 

railroad-owned facilities, the AAR has developed principles which we believe should 

govern new passenger rail use of freight-owned facilities: 

• Freight railroads should not be forced to give passenger railroads access to their 

property; rather, access should be voluntarily negotiated. 

• Freight railroads should be fully compensated for the use of their assets by passenger trains. 

44 

• Freight railroads should be adequately protected from liability. 

• Freight railroads should not be asked to pay for capacity increases needed to 

accommodate passenger service. 

These principles are grounded in the tremendous importance of freight railroads 

to America’s producers and consumers. Freight railroads lower shipping costs by billions of dollars each year and produce an immense competitive advantage for our 

farmers, manufacturers, and miners in the global marketplace. If passenger railroads impair freight railroads and force freight that otherwise would move by rail 

onto the highway, those advantages would be squandered. Moreover, highway gridlock would worsen; fuel consumption, pollution, and greenhouse gas emissions would 

rise; and our mobility would deteriorate—outcomes that are completely contrary to 

the goals of expanding passenger rail in the first place. 

As part of its work, the National Surface Transportation Policy and Revenue 

Study Commission received a report from the Passenger Rail Working Group 

(PRWG), which provided a long-term vision for passenger rail development in this 

country. The authors of that report should be commended for helping policymakers 

focus on the important issue of intercity passenger rail. Freight railroads appreciate 

that the PRWG concurs that passenger rail progress must be complementary to— 

not in conflict with—freight rail development. 

We believe that future passenger rail initiatives, especially on the scale envisioned by the PRWG, will increasingly require separate assets dedicated to passenger operation, rather than the incremental initiatives most typical of past passenger rail expansion. This more visionary approach would enable faster and more 

reliable passenger service, and would minimize the substantial operational, engineering, legal, and other impediments that often hinder the ability of freight railroads to accommodate passenger trains. 

This approach will be costly, but so will any approach to meaningfully enhancing 

passenger rail. Policymakers must understand that no passenger system in the 

world pays for its operating and capital expenses solely from the fare box. But there 

are substantial public benefits from high-speed intercity passenger rail. Freight railroads believe that the public benefits of a truly attractive and competitive national 

passenger rail capability will exceed public costs, and look forward to working with 

all appropriate parties to make those benefits a reality. 

Conclusion 

America today has the best freight rail network in the world. Still, it is clear that 

rail capacity will have to increase as the economy and population expand in the 

years ahead. Railroads are working hard to ensure that adequate capacity exists to 

meet our future freight transportation needs. Meanwhile, policymakers can help by 

instituting targeted tax incentives for projects that expand rail capacity, engaging 

in more public-private partnerships for freight rail infrastructure projects, and ensuring that the legislative and regulatory structure under which railroads operate 

is conducive to further investment in rail capacity. 

Senator LAUTENBERG. Thank you very much. 

Mr. Larrabee? 

STATEMENT OF REAR ADMIRAL RICHARD M. LARRABEE, 

(RET.), U.S. COAST GUARD; DIRECTOR OF COMMERCE, PORT 

AUTHORITY OF NEW YORK AND NEW JERSEY 

Mr. LARRABEE. Chairman Lautenberg, Ranking Member Smith, 

distinguished Members of the Committee: Thank you for the invitation to testify today. I appreciate the opportunity to provide some 

insight into improving the efficiency of future freight movement. 

My name is Richard M. Larrabee. I’m the Director of Port Commerce for the Port Authority of New York and New Jersey. In this 

capacity I’m responsible, along with other private and public partners, for the promotion, protection, and development of the Port of 

New York and New Jersey, which includes facilities in both New 

York and New Jersey. 

The Port Authority is a bi-state agency which oversees not just 

seaports, but also other transportation facilities, such as airports, 

45 

bridges, and tunnels, and rapid transit commuter systems. From 

this unique perspective, we have the benefit of a macro view of how 

different modes of transportation interrelate and work to strengthen the region while moving people and goods safely and efficiently. 

We also recognize the importance of increasing costs of modernizing and rebuilding infrastructure to ensure continued economic 

expansion. 

With a 4 percent growth last year, the Port of New York and 

New Jersey outperformed many of the major ports throughout the 

country. We believe our continued growth is due in part to our location as a gateway to the largest, most affluent consumer market in 

North America. But location and marine terminals capacity alone 

will not be able to sustain the movement of over 5 million TEUs 

a year. 

We link increased cargo movement through our port facilities to 

our strategic investments in port infrastructure, investments in 

dredging, rail, road, and in some cases in our terminals themselves. 

Since September 11, 2001, when formulating the Port Authority’s 

budget our focus first and foremost has been on security. Second 

is maintaining a state of good repair for our facilities. Once funding 

for these two items is allocated, only a small fraction of the budget 

remains for capital investments and new initiatives. We prioritize 

these projects, focusing on alleviating choke points along the supply 

chain. 

With this in mind, we have embarked on a 10-year $2 billion 

capital plan to continue to ensure that our facilities in the port are 

able to handle the forecasted annual growth of 5 to 7 percent over 

the next 10-year period. 

Sustainability, ensuring that we are good stewards of the land, 

is also a driving factor. One of the agency’s goals is to continue to 

move more freight from the roads to rail. Although approximately 

80 percent of the containerized cargo entering our port stays within 

the region, a significant and growing portion heads to points west 

and north. About 13 percent of the port’s cargo moves by rail today, 

but we are investing nearly $600 million in our on-dock rail infrastructure to increase that proportion to about 20 percent over the 

next decade. 

However, much of our investment is in jeopardy if other funding 

sources, public or private, are not identified to expand the freight 

rail system nationally. According to AASHTO, without sufficient investment by 2020 only half of the forecasted growth in freight rail 

tonnage can be accommodated by the current freight rail system. 

Enhancing our Nation’s freight system should and must be in the 

forefront of any discussion of transportation. It’s imperative that 

port authorities and logistics companies have a partner in the Federal Government for this effort, as a local or regional approach will 

not completely suffice. 

To assist in the process of organizing trade and cargo flows, the 

Federal Government could map the international transportation 

system from a national perspective and propose national corridors 

to accommodate the anticipated freight flows. Regional projects 

could be measured for their national significance, how they would 

work within that system as a whole. 

46 

Such an example can be seen in the Federal Principles and 

Guidelines for Water and Related Land Resource Implementation 

Studies, which describe the analytical and policy framework for determining the appropriate participation of the Federal Government 

in dredging projects. At least on a conceptual level, we believe a 

similar approach could work looking at regional projects for national benefit. 

New national investments in freight capacity will need innovative Federal financing systems. A piecemeal approach is not and 

will not meet the needs of our Nation’s crumbling and stressed infrastructure. Just as airports and highways have a reliable source 

of funding, so must freight infrastructure. The Highway Trust 

Fund and Passenger Facility Charge at airports have provided a 

reliable funding source for systems investments in our Nation’s 

roads and airports. Seaports and intermodal connections should 

have a comparable funding mechanism to provide needed systematic investment. 

Our freight transportation system is the blood circulation system 

of our Nation’s economy. We don’t want congested arteries. 

It’s going to take time and a great deal of funding to maintain 

and enhance the freight movement system in the Nation. While 

we’re working on this, the international trade and demand for 

freight transportation will continue to grow. The world is not waiting for us. If our system can’t keep up, the Nation’s economy will 

become less competitive and we’ll suffer. I respectfully urge this 

committee to formulate and recommend a workable approach before we are truly overwhelmed with congestion and the loss of 

freight mobility that is so vital to our national economy. 

Thank you again for the opportunity to testify this afternoon. 

[The prepared statement of Mr. Larrabee follows:] 

PREPARED STATEMENT OF REAR ADMIRAL RICHARD M. LARRABEE, (RET.), U.S. COAST

GUARD, DIRECTOR OF COMMERCE, PORT AUTHORITY OF NEW YORK AND NEW JERSEY

Good afternoon. Honorable Chairman Lautenberg and Ranking Member Smith 

and distinguished Members of the Committee, thank you for the invitation to testify 

before you today. I appreciate the opportunity to provide some insight into improving the efficiency of future freight movement. 

My name is Richard M. Larrabee, and I am the Director of Port Commerce for 

the Port Authority of New York and New Jersey (the Port Authority). In this capacity, I am responsible, along with other private and public partners, for the promotion, protection, and development of the Port of New York and New Jersey, which 

includes facilities in Bayonne, Elizabeth, Jersey City, and Newark, New Jersey, as 

well as in Staten Island, and Brooklyn, New York. 

The Port Authority is a bi-state agency that oversees not just seaports, but also 

other transportation facilities such as airports, bridges and tunnels, and a rapid 

transit commuter system. From this unique perspective, we have the benefit of a 

macro view of how different modes of transportation interrelate and work to 

strengthen the region while moving people and goods safely and efficiently. We also 

have direct expertise of the importance—and increasing cost—of modernizing and 

rebuilding infrastructure to ensure continued economic expansion. 

With 4 percent cargo growth in 2007, the Port of New York and New Jersey outperformed many major ports throughout the country, which declined or grew less 

than 1 percent in the same period. We believe our continued growth is due in part 

to our location as a gateway to the largest and most affluent consumer market in 

North America, with nearly 100 million consumers within a single day’s travel. But, 

location and marine terminals with capacity alone would not be able to sustain the 

movement of 5,097,496 TEUs. 

We link increased cargo movements through our port facilities to our strategic investments in port infrastructure, which have increased our port’s ability to handle 

47 

1 AASHTO—Freight-Rail Bottom Line Report, 2003. 

future capacity—investments in dredging, rail, road, and in some cases in the terminals themselves. Since September 11, when formulating the Port Authority’s budget, 

our focus, first and foremost, is on security. Second is maintaining a state of good 

repair for our facilities. Once funding for these two items is allocated, only a small 

fraction of the budget remains for capital investments and new initiatives. We 

prioritize those projects, focusing on alleviating chokepoints along the supply chain. 

With this in mind, we have just embarked on a 10 year $2 billion capital plan to 

continue to ensure that our facilities are able to handle the forecasted annual 

growth of 5–7 percent over the next 10 years. 

Sustainability, ensuring that we are good stewards of the land, is also a driving 

factor. One of the agency’s goals is to continue to move more freight from roads to 

rail. For each container we place on a train, we save 1.7 truck trips, reducing emissions and improving congestion on our local roads. Although approximately 80 percent of containerized cargo entering the port stays within the region, a significant 

and growing portion heads to points west and north. About 13 percent of the port’s 

cargo moves by rail today, but we are investing $600 million in on-dock rail infrastructure to increase that proportion to about 20 percent over the next decade. However, much of our investment is in jeopardy if other funding sources, public or private, are not identified to expand the freight rail system nationally. 

According to the American Association of State Highway and Transportation Officials (AASHTO), without sufficient investment, by 2020, only half of the forecasted 

growth in freight rail tonnage can be accommodated by the current freight rail system. The balance would likely shift to trucks and the highway system.1 This would 

have a detrimental effect on our environment, and increase congestion on roads that 

are shared with local residents. 

We recognize that our port facilities—and the Port Authority’s bridges and tunnels—are just one link in the global supply chain. The Port Authority can partner 

with others, but has no authority to invest infrastructure assets beyond its Port District—a 25-mile zone circumscribed around the Statue of Liberty. We are working 

with our tenants and local partners in state and local government to make strategic 

investments outside of the gates of our ports—for roads and rail and warehousing— 

but our efforts alone will not ensure the continued efficiency of national freight 

movement. 

Enhancing our Nation’s freight system should and must be at the forefront of any 

discussion of transportation. It is imperative that port authorities and logistics companies have a partner in the Federal Government for this effort, as a local or regional approach will not suffice. 

Working together, as partners, we can develop a consistent policy that the industry can rely on for funding and prioritizing projects. 

The Federal Government is providing policy and governance leadership to meet 

our Nation’s security needs; similar policy leadership is desirable in meeting our 

country’s growing transportation needs. The Safe, Accountable, Flexible and Efficient Transportation Equity Act—A Legacy for Users (SAFETEA–LU) took a step 

in this direction with the creation of the National Surface Transportation Policy and 

Revenue Study Commission. 

To assist in the process of organizing trade and cargo flows, the Federal Government could map the international freight transportation system from a national perspective and propose national corridors to accommodate the anticipated freight 

flows. 

Regional projects could be measured for their national significance—how they 

work with the system as a whole. Such an example can be seen in the current Federal approach to deepening the channels of the Nation’s navigable waters. The importance of ports, channels and inland waterways has been well established as a 

major means of commercial transportation and as part of national defense. Congress 

uses a disciplined approach to funding the maintenance and improvement of the Nation’s navigation system. Individual navigation channel improvements must be demonstrated to be in the Federal interest before becoming eligible for Federal funding. 

The Federal Principles and Guidelines for Water and Related Land Resources Implementation Studies, which were approved in 1983, describes the analytical and policy 

framework for determining the appropriate participation of the Federal Government 

in dredging projects. ‘‘Local sponsors’’, such as port authorities, propose channeldeepening projects and the U.S. Army Corps of Engineers determines the costs and 

expected benefits of proposed projects as part of its determination of the Federal interest. In the past, the benefits have been almost exclusively determined by estimating the transportation cost savings that would result to the Nation’s economy 

with the proposed improvement. Projects with a positive cost-benefit analysis are elVerDate Nov 24 2008 10:11 Aug 29, 2012 Jkt 075679 PO 00000 Frm 00051 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\75682.TXT JACKIE
48 

igible for consideration for Federal funding, but such projects must subsequently be 

authorized, and funded, by Congress. Additionally, total project costs are typically 

shared between the local sponsor and Federal Government. At least on the conceptual level, we believe a similar approach could be developed as an equitable framework for determining whether Federal funding should be applied to rail and other 

projects that could have a significant benefit to the Nation. 

New national investments in freight capacity will need innovative Federal financing systems. A piecemeal approach has not and will not meet the needs of our Nation’s crumbling and stressed infrastructure. Just as airports and highways have a 

reliable source of funding, so must freight infrastructure. The Highway Trust Fund 

and Passenger Facility Charge (PFC) at airports have provided a reliable funding 

source for system investments in our Nation’s roads and at airports. Seaports and 

their intermodal connections should have a comparable funding mechanism to provide needed systematic investments. The public benefits of these investments require some form of acknowledgement and compensations. The freight transportation 

system is the blood circulation system of our Nation’s economy; we don’t want congested arteries. 

It is going to take time—and a great deal of funding—to maintain and enhance 

the freight movement system in the Nation. While we are working on this, international trade and demand for freight transportation will continue to grow. The 

world is not waiting for us—if our system can’t keep up, the Nation’s economy will 

become less competitive and will suffer. This is a very real problem that requires 

a very realistic solution. I respectively urge this committee to formulate and recommend a workable approach before we are truly overwhelmed with congestion and 

lose the freight mobility that is so vital to the national economy. 

Thank you again for allowing me the opportunity to testify before you today. 

Senator LAUTENBERG. Thank you very much. 

Mr. Vanselow? 

STATEMENT OF GLENN VANSELOW, EXECUTIVE DIRECTOR, 

PACIFIC NORTHWEST WATERWAYS ASSOCIATION 

Mr. VANSELOW. Mr. Chairman, Senator Smith, Members of the 

Committee: Thank you for inviting me to testify. I am Glenn 

Vanselow, Executive Director of the Pacific Northwest Waterways 

Association. PNWA is a nonpartisan, nonprofit. We represent ports, 

towboat companies, steamship operators, agriculture and forest 

products shippers in Washington, Oregon, Idaho, and northern 

California. 

Our Nation’s economy relies on safe, efficient, and reliable transportation. I will focus on navigation, but please note, efficient water 

transportation requires efficient land-side transportation. A bottleneck in any one link can prevent American producers from connecting with their domestic and foreign markets. 

Annually 2.5 billion tons move by water within, to, and from the 

United States. $2 trillion moves in international trade and that 

generates $21 billion in customs revenue to the U.S. Treasury each 

year. 

Pacific Northwest ports ship 90 million tons of cargo worth $60 

billion. The Columbia River is the Nation’s number one gateway for 

the export of wheat and barley. Seattle and Tacoma form the country’s third largest gateway for containerized cargo. 

A typical barge can carry 1,500 tons on the Mississippi and 3,500 

tons on the Columbia and Snake Rivers. That compares with 100 

tons by rail car or 29 tons per truck. For the Columbia River, loading a typical grain ship with 55,000 tons of wheat for export requires four barge tows or 550 rail cars or 1,900 trucks. 

Larger carrying capacity translates into energy efficiencies. The 

Chairman has already cited the U.S. Maritime Administration’s 

49 

Texas Transportation Institute study comparing truck, rail, and 

barges. If I may say, Mr. Hamberger and I had a chance to chat 

beforehand. 413 ton-miles per gallon, 436 ton-miles per gallon, why 

quibble? Why quibble? Navigation carries 576 ton-miles per gallon. 

The details are in my written testimony. 

Those fuel savings translate into environmental benefits, with 

navigation producing fewer air emissions as well. 

Each year $1.5 billion is collected from inland and deep draft 

navigation user fees. The combined collections are far in excess of 

expenditures. Despite this surplus, navigation needs are not being 

met. There is a backlog of maintenance and new construction that 

is multiple billions of dollars. 

The Harbor Maintenance Tax was designed to fully fund dredging of deep draft ports. $1.4 billion is collected each year. Only 

$900 million is spent. The surplus is over $4 billion today. The 

GAO estimates that it will grow to $8 billion in just 3 years, 2011. 

The Inland Waterways Trust Fund collects $80 to $100 million 

a year. It provides half of the new construction on the inland waterways. That Fund had a surplus for many years, but that surplus 

will be gone by 2009. 

The Administration has proposed a new inland waterway lockage 

fee. It would increase the tax fourfold for barging on the Columbia 

and Snake Rivers. The PNWA opposes this new tax as long as the 

combined navigation user tax collections are in excess of expenditures. Rather than propose new taxes, we urge the Administration 

to spend funds that are currently being collected. 

Underfunding navigation hurts the country and it hurts the Pacific Northwest. The PNWA tracks appropriations for 32 navigation 

projects in the Pacific Northwest. Those are detailed also in our 

written testimony. The administration’s budget adequately funds 

only three of our region’s top 32 projects. Congressional adds are 

needed for the other 29, including to maintain the Columbia River 

channels and the locks on the inland system, dredging and jetty repair at Oregon coastal ports, to meet endangered species requirements at Seattle’s Lake Washington Ship Canal, to study and prepare Seattle’s Elliott Bay Seawall, and for a long-term sediment 

management study at Humboldt Bay in California. 

Congress has responded with increased funding in past years. 

Those hard-fought increases are important and they are very much 

appreciated, but they’re not sufficient. We urge Congress to reinvigorate our Nation’s infrastructure by funding navigation at levels 

that match the overall collections of user taxes. That would add 

$500 million annually nationwide. User fees were instituted to 

meet specific funding needs. The funds collected must be spent. 

Congress has the authority. We urge you to exercise that authority. 

Thank you for your support. We look forward to working with 

you to ensure that our Nation’s transportation infrastructure provides a solid foundation for a robust American economy. Thank you 

for this opportunity to testify. 

[The prepared statement of Mr. Vanselow follows:] 

50 

PREPARED STATEMENT OF GLENN VANSELOW, EXECUTIVE DIRECTOR, 

PACIFIC NORTHWEST WATERWAYS ASSOCIATION

Mr. Chairman, Members of the Committee, 

Thank you for the opportunity to testify today on the important topic of freight 

mobility. I am Glenn Vanselow, Executive Director of the Pacific Northwest Waterways Association. PNWA is a non-partisan, non-profit association that represents 

freight mobility interests, including port authorities, towboat companies, steamship 

operators, shippers of cargo, agricultural producers, forest products manufacturers 

and other transportation interests in Washington, Oregon, Idaho and northern California. 

Our nation’s economy relies on a safe, efficient and cost-effective transportation 

system. That system includes road, rail, water and air. My colleagues on the panel 

are addressing trucking and rail. I will focus on navigation. But I do so while noting 

that efficient water transportation requires efficient landside transportation as well. 

For international and domestic trade, intermodal connections are critically important. A bottleneck in any one link reduces the strength of the supply chain connecting producers with their domestic and foreign markets. 

Economic Benefits of Navigation 

Annually, more than 2.5 billion tons of cargo move by water within, to and from 

the United States. Nearly 1.6 billion of those tons move in international trade, with 

a value of over $2 trillion. Waterborne international trade generates over $21 billion 

annually in U.S. Customs revenue to the U.S. Treasury. The total direct and indirect economic impact of waterborne commerce is 8.4 million jobs, and over $300 billion in personal income. 

In my region, the Pacific Northwest, our ports ship nearly 90 million tons of cargo 

worth over $60 billion. The Columbia River is the Nation’s number one gateway for 

the export of wheat and barley, and the third largest grain gateway in the world. 

The Ports of Seattle and Tacoma are the third largest gateway for containerized 

cargo in the country. 

Environmental Benefits of Navigation 

A typical barge can carry 1,500 tons on the Mississippi River System and 3,500 

tons on the Columbia Snake River System. That compares with 100 tons per rail 

car and 29 tons per truck. 

The modal comparison for the Mississippi River System in Figure 1 is from a 2008 

U.S. Maritime Administration (MARAD) study completed at the Texas Transportation Institute at Texas A&M: 


610VANSE1.eps
51 

In Figure 2, PNWA prepared the same comparison for the Columbia Snake River 

System. 

For the Columbia Snake River System, delivering cargo to load a typical grain 

ship with 55,000 tons of wheat would require 4 barge tows, 550 rail cars, or 1,900 

trucks. 

The differences in carrying capacity translate into differences in energy efficiency. 

Below is a chart showing the relative energy efficiencies of truck, rail and barge 

transportation on the Mississippi River System, courtesy of the MARAD/Texas 

Transportation Institute study. 

The chart shows ton-miles per gallon, or how many miles a ton of cargo can be 

carried on one gallon of fuel. Fuel efficiencies are improving for all three modes, yet 

navigation continues to move more cargo, more miles, for every gallon of fuel. 

The fuel savings translate into proportionate navigation benefits for the environment, with fewer emissions of hydrocarbons, carbon monoxide, nitrous oxide and 

particulate matter. Figure 5 is a table from the 2008 MARAD study showing a comparison of emissions. 


610VANSE2.eps 610VANSE3.eps
52 

Navigation Funding 

Since 1789, the Federal Government has exerted control over navigation channels 

and channel improvements. In 1824, Congress delegated authority over the Nation’s 

navigation system to the U.S. Army Corps of Engineers. Operations and maintenance and new construction of navigation projects are funded annually in the Energy and Water Development Appropriations bill. Since 1978 there has been a user 

fee on the Nation’s inland waterways, the Inland Waterways User Fee. In 1986, 

Congress established a user fee for deep draft coastal ports and harbors, the Harbor 

Maintenance Tax. 

Each year, a total of $1.5 billion is collected from the inland and deep draft user 

fees. That is in addition to the $21 billion in Customs duties that are collected. Despite the collection of these fees, navigation needs are not being met. There is a significant backlog of maintenance and new construction. 

The Harbor Maintenance Tax was established to collect fees to provide 100 percent of the cost of operations and maintenance, primarily dredging, of the Nation’s 

deep draft and coastal ports and harbors. Approximately $1.4 billion is collected 

each year and symbolically placed in the Harbor Maintenance Trust Fund, but only 

about $900 million is expended. Currently, the surplus of collections over expenditures is over $4 billion. The GAO reports that the surplus is expected to grow to 

$8 billion by 2011. Rather than being used for their intended purpose, at least $500 

million of these user fees is instead used to balance the Federal budget. 

The Inland Waterways Fuel Tax was created to collect fees to provide for 50 percent of the cost of new construction and rehabilitation of locks on the Nation’s inland waterways. It collects 20 cents per gallon of fuel used by towboats on the inland waterways. Each year it collects about $100 million, but that has decreased 

to about $80 million as towboats have become more fuel efficient. The Inland Waterways Trust Fund had a surplus for many years, but now, expenditures are projected 

to surpass collections in 2009. The Administration has proposed instituting a new 

inland waterway tax which would replace the fuel tax with a lockage fee for each 

barge. The proposal would increase the user tax approximately four-fold for barging 

on the Columbia and Snake Rivers. 

PNWA opposes this new tax. Currently, the combined government navigation user 

tax collections are far ahead of expenditures. That is expected not only to continue, 

but to grow for the foreseeable future. 

Despite collections far exceeding expenditures, the Administration does not propose sufficient funding to maintain the existing navigation system or to meet future 

needs. For decades, during both Republican and Democratic administrations, we 

have had to look to Congress for increases over and above the inadequate Administration budget proposals. 

As an example of how this affects the Pacific Northwest, I have attached a copy 

of PNWA’s appropriations request for FY 2009. We track 32 navigation projects 

from Humboldt Bay in California, up the Oregon Coast, along the entire length of 

the Columbia Snake River System in Oregon, Washington and Idaho, to the Ports 

of Seattle and Tacoma and the northern reaches of the Puget Sound in Washington. 

Of those 32 navigation projects, 29 are in need of additional funding. In other words, 

the Administration’s budget proposal provides adequate funding for only three of 

our region’s 32 navigation projects. 

Additional funding is needed in all categories . . . general investigations, new 

construction and routine operations and maintenance. Here are a few examples. 


610VANSE4.eps
53 

On the Columbia Snake River System, Congressional adds are needed to maintain 

authorized channel depth throughout the Columbia and Lower Willamette project. 

Two of our eight locks need Congressional adds for routine operations and maintenance. Five need adds for major maintenance and repairs. One needs additional 

funding for dredging to maintain authorized channel depth. 

Oregon’s coastal ports need funds added for routine dredging to maintain their 

navigation channels and for jetty repairs. 

In Puget Sound, the Lake Washington Ship Canal needs a Congressional add to 

meet Endangered Species Act requirements. More funding is needed for the Elliott 

Bay Seawall study in Seattle. 

In California, Humboldt Bay needs funding to complete a long term sediment 

management feasibility study. 

Congress has responded in past years. Those hard fought increases have been important, and very much appreciated, but they have not been sufficient to prevent 

navigation infrastructure from further deteriorating. We encourage Congress to reinvigorate our Nation’s navigation infrastructure by funding navigation at levels 

that match the overall collection of user taxes. That is what is necessary to meet 

our Nation’s vital economic needs. That would equate to an annual increase of $500 

million nationally. 

Unfortunately, having money in a Federal trust fund does not mean that the 

money is actually available to be spent for its designated purpose. That is wrong. 

User fees were instituted to meet a specific funding need. The funds collected from 

navigation user fees must be spent to meet navigation needs. Congress has the authority to make this happen. We urge Congress to exercise that authority. 

We appreciate your past and continued recognition of the ways our Nation’s transportation infrastructure provides a foundation for a robust American economy. We 

look forward to working with you to ensure that our transportation infrastructure 

is capable of meeting our Nation’s needs. 

Thank you for this opportunity to testify. I am happy to answer any questions 

you may have. 

(Attachment: PNWA FY 2009 Energy and Water Appropriations Requests) 

PNWA FY 2009 Energy and Water Appropriations requests 

Deep Draft Navigation 

More than 60 million tons of cargo, worth $36 billion, moves in international trade 

across the docks of Oregon and Washington ports. The Puget Sound and Columbia 

River gateways are some of the largest in the country for: containers; wheat, barley 

and corn exports; and automobile imports. PNWA supports continued investment in 

the development and maintenance of the Federal navigation projects that support 

this important economic activity. 

Construction (CG) FY 2008 

President’s 

FY 2009 

Budget Level 

Support 

Additional 

Funds 

Total 

Request 

for 

FY 2009 

Columbia River Channel Improvement Project 14,760,000 36,000,000 0 36,000,000 

John Day Major Rehab Study (funding is located in 

dam safety program) 

1,000,000 2,000,000 0 2,000,000 

Mt. St. Helens sediment control 9,247,000 1,410,000 6,410,000 

Evaluate fish passage alternatives, dredge to maintain flood control 5,000,000 

Lower Columbia River ecosystem restoration 1,688,000 1,500,000 3,080,000 

Water Resources Education Ctr. site, plan/design 

Sandy River Delta site, plan Vancouver Lake site 

1,580,000 

Lake Washington Ship Canal seismic analysis 0 0 450,000 450,000 

Humboldt Bay Long-Term Sediment Management 

feasibility study 

107,000 0 500,000 500,000 

General Investigations (GI) FY 2008 

President’s 

FY 2009 

Budget Level 

Support 

Additional 

Funds 

Total 

Request 

for FY 

2009 

Elliott Bay Seawall study (Port of Seattle) 590,000 0 1,025,000 1,025,000 

Lake Washington Ship Canal restoration study 369,000 0 650,000 650,000 

54 

We are pleased to note that the following critical infrastructure item was included 

in the President’s budget: 

• $675K for plans and specs for the Columbia River jetties major rehab (funding 

is part of the ‘‘Columbia River at the Mouth’’ account) 

Operations & Maintenance (O&M) FY 2008 

President’s 

FY 2009 

Budget Level* 

Support 

Additional 

Funds 

Total 

Request 

for 

FY 2009 

Columbia River at the Mouth (MCR) 14,583,000 14,873,000 15,273,000 

South jetty beneficial use site study 400,000 

Columbia & Lower Willamette River below Vancouver 

& Portland (C&LW) 

23,461,000 24,973,000 27,469,000 

Maintenance dredging on C&WL, at Westport Slough 

($810K) and the Old Mouth of the Cowlitz ($450K), 

major maintenance report for pile dikes 

2,496,000 

Columbia River between Vancouver & the Dalles 448,000 640,000 814,000 

Additional maintenance dredging 174,000 

Coos Bay (Port of Coos Bay) 5,609,000 4,769,000 10,852,000 

Additional maintenance dredging, North Jetty interim repair, jetty major maintenance report 6,083,000 

Yaquina Bay & Harbor (Port of Newport) 1,247,000 1,482,000 1,972,000 

Maintenance dredging, engineering analysis of north 

jetty extension 

490,000 

Lake Washington Ship Canal 5,506,000 7,554,000 8,154,000 

Design for modification to diffuser well (for improved 

passage of ESA-listed fish) 

600,000 

Humboldt Harbor & Bay (Port of Humboldt Bay 5,181,000 5,144,000 5,600,000 

Additional maintenance dredging 456,000 

* The President’s budget only specifies funding for O&M on a regional basis. These project amounts were obtained from the U.S. Army Corps of Engineers. 

Columbia Snake River System Inland Navigation 

Barging on the Columbia Snake River system carries 10–12 million tons of cargo 

worth $1.5–2 billion annually. Barging feeds 50 percent of the wheat exports and 

25 percent of the containers handled at the Lower Columbia ports. It is the lowest 

cost, most fuel efficient, and cleanest mode of cargo transportation. Ongoing support 

of this inland waterway is critical to the health of the regional economy and the 

success of our deep draft ports. 

We are pleased to note that the following critical infrastructure needs were included in the President’s budget: 

• $1.56M for the Lower Monumental downstream lock gate plans & specifications. 

• $1M for pintle bearings and $3M for tainter valves at The Dalles. 

• $2.5M for tainter valves at John Day. 

• $6.7M for the Programmatic Sediment Management Plan for the Lower Snake 

River. 

55 

Operations & Maintenance (O&M) FY 2008 

President’s 

FY 2009 Budget 

Level* 

Support 

Additional 

Funds 

Total 

Request 

for FY 2009 

Bonneville Lock & Dam 14,040,000 11,701,000 12,472,000 Routine O&M activities 771,000 The Dalles Lock & Dam 3,680,000 7,696,000 8,370,000 Routine O&M activities, replace navlock control system 674,000 John Day Lock & Dam 4,336,000 7,049,000 11,646,000 Design and contract for navlock lift gates friction drum crack repair ($3.5M) Design and contract for navlock lift gates friction drum crack repair ($3.5M), rehab spillway crane, rebuild turbine pumps 4,597,000 McNary Lock & Dam 5,283,000 1,251,000 5,509,000 Derrick crane rehabs ($1.1M) Derrick crane rehabs ($1.1M), dredge Ice Harbor Cut, tainter valve and hydraulic system design, 

waterstop repair 

3,216,000 

Engineering/design for replacement of electrical and mechanical equipment in major maintenance report; funding for miter gate actuating arm repair 992,000 Repair floating mooring bits 50,000 Ice Harbor Lock & Dam 3,748,000 1,735,000 3,060,000 Planning, engineering and design phase for the replacement of the upstream gate and operating machinery per major maintenance report 700,000 Repair leaks in the floating guide wall and rehabilitate the upstream navlock gate controls 625,000 Lower Monumental Lock & Dam 2,962,000 5,241,500 0 5,241,500 Little Goose Lock & Dam 1,357,000 1,550,000 4,000,000 Navlock waterstop repair, downstream gate pintle parts ($1.5M) downstream gate pintle parts ($1.5M), and plans/specs for major maintenance report 2,400,000 Repair floating mooring bits 50,000 Lower Granite Lock & Dam 3,649,000 5,486,000 7,801,000 Repair waterstops in navlock between monolith 3 and 5; repair upstream tainter gate; fund major 

maintenance report activities 

1,215,000 

Dredge federal nav channel near Port of Clarkston ($1.1M) Dredge federal nav channel near Port of Clarkston ($1.1M) 1,100,000 

Note: Items in gray represent priority needs on the inland Columbia Snake River System. 

*The President’s budget only specifies funding for O&M on a regional basis. These project amounts were obtained from the U.S. Army Corps of Engineers. 

56 

PNWA Member Shallow Draft Commercial and Recreational Ports 

PNWA supports full funding for these critical projects. These ports, home to fishing fleets, marinas and significant commercial and recreational facilities, are critical 

to the economic survival of their communities. Many have small populations, and 

the ports provide employment for a significant proportion of community. 

Operations & Maintenance (O&M) FY 2008 

President’s 

FY 2009 

Budget 

Level* 

Support 

Additional 

Funds** 

Total 

Request 

for FY 2009 

Oregon 

Tillamook Bay & Bar (Port of Garibaldi) 1,850,000 35,000 4,932,000 

Jetty repair, major maintenance report, plans & 

specs; maintenance dredging 

4,897,000 

Yaquina River (Port of Toledo) 580,000 0 632,000 632,000 

Siuslaw River (Port of Siuslaw) 691,000 583,000 2,650,000 

Dredging, ocean disposal site evaluation, north & 

south jetties major maintenance report 

2,067,000 

Umpqua River (Port of Umpqua) 1,370,000 635,000 784,000 1,419,000 

Rogue River (Port of Gold Beach) 427,000 587,000 1,271,000 

Dredging, evaluate north & south jetties 684,000 

Chetco River (Port of Brookings Harbor) 409,000 574,000 448,000 1,022,000 

Washington 

Swinomish Channel (Port of Skagit County) 467,000 0 691,000 691,000 

Columbia River at Baker Bay (Port of Ilwaco) 598,000 3,000 840,000 843,000 

Columbia River b/t Chinook & Sand Island (Port of 

Chinook) 

229,000 6,000 699,000 705,000 

* The President’s budget only specifies funding for O&M on a regional basis. These project amounts were obtained from the U.S. Army Corps of Engineers. 

** Unless otherwise specified, additional requested funds are for maintenance dredging needs. 

Senator LAUTENBERG. Thank you all for your important testimony. 

I’ll start with a question for you, Administrator. The 2005 

SAFETEA–LU highway bill required the Bush Administration to 

put together a comprehensive plan for a national intermodal 

freight policy by last summer. We’ve not even seen a progress report. What’s the status of this plan? 

Mr. BRUBAKER. Mr. Chairman, that is an outstanding question. 

I’m going to have to defer to some of the staff here and get an answer for the record for you on exactly where that is. I will dive into 

that, though, as soon as I get back and call your staff and find out. 

[The information referred to follows:] 

STATUS OF THE COMPREHENSIVE PLAN FOR INTERMODAL FREIGHT POLICY

On Friday, August 15, Thomas Bolle and Jeff Onizuk from the Research and Innovative Technology Administration (RITA) staff, met with Subcommittee staffer 

Stephen Gardner as a follow-up to the June 10 freight hearing. During that meeting, Stephen indicated that in terms of the status of the comprehensive plan for 

intermodal freight policy, they would like to know where RITA stands now, with a 

focus on methodology and metrics. He also indicated that following that discussion 

they would like to discuss the scope, structure, and plan for intermodal activities 

and the Office of Intermodalism within the Department. It was agreed that the best 

way to follow-up on these issues was to schedule a meeting with RITA Administrator Paul Brubaker and Subcommittee staff following the August recess. 

Senator LAUTENBERG. It’s an important program and I would 

hope that your people would have been able to present it to you 

with the start of this meeting. 

Without a comprehensive national strategy for freight movement, 

this administration seems incapable of putting good data to use to 

57 

craft policy and make investment decisions to meet our transportation challenges. What have you got by way of specific examples 

of how the data that you collect is being used for shaping Federal 

transportation policy? 

Mr. BRUBAKER. Yes, sir. That was one of the main points in my 

oral testimony, is the quality of the existing data that we currently 

have around freight movement from a holistic, multimodal and 

intermodal way. We don’t have the kind of quality complete picture 

of the existing movement of freight flow that we would like. For example, one of the programs that’s under my responsibility is the 

Commodity Freight Flow Survey and that data by the time we get 

it, collect it, analyze it, and release it is 18 months to 2 years old. 

What we need to have is a real-time picture of the performance 

of the supply chain. We know that data exists. We know that there 

are ways to collect that data, leveraging technology. In fact, one of 

the University Transportation Centers that we fund down at Georgia Tech actually collects that type of information on a private sector-funded project, where they are able to track container shipments across the country, across the various modes. They can tell 

you real-time exactly where their shipments that they’re tracking 

for a private sector client, like I mentioned, are in the supply 

chain. 

What it’s revealing is information that we as a Department really need to know in terms of where the bottlenecks are in the existing supply chain. That’s one piece of it. 

The other piece of it is we know, based on what information we 

do have, that there are some significant choke points in the supply 

chain and we’ve taken some steps and implemented some programs, particularly Corridors of the Future, where we’re looking at 

freight flow up and down some of the most historically crowded corridors, where you’ve got freight competing with passenger movement, to try to relieve congestion in those areas. 

But the bottom line is from our perspective the data that we currently collect is inadequate and we are undertaking some pretty extensive efforts and reviews to try to assemble the right kind of data 

sets, understanding what’s relevant and trying to revector, fundamentally revector our data collection, so that we can support—— 

Senator LAUTENBERG. It’s a bit disconcerting that this crisis 

we’re facing has been coming on for some time, and I would have 

thought that someplace in your Transportation Department, this 

information would have been part of routine management. Very 

frankly, it’s tough to accept the fact that at this point in time that 

you don’t have the facility to do it. 

I’m going to go on to my colleagues and we’ll have another round 

of questions. With that, Senator Smith, the Ranking Member of the 

Subcommittee. Senator Smith? 

STATEMENT OF HON. GORDON H. SMITH, 

U.S. SENATOR FROM OREGON 

Senator SMITH. Thank you, Senator Lautenberg. 

All of you, thank you. Your testimony has been very helpful. Admiral Larrabee and Glenn, good to see you. Nice to have you. 

Thank you for coming back here. 

58 

I think we’re touching on a very, very important issue. Whenever 

I go to Seattle or Portland or Long Beach—and I’m sure it’s the 

same at the Port of New Jersey and New York—the infrastructure 

is operating at near capacity, whether you’re talking highway, rail, 

or shipping. I wonder if anyone is looking at our navigation system, 

if you look at the congestion we’re seeing. 

Do you know of any estimates to the impact on our economy of 

congestion in the maritime system? Is anybody focusing on the 

maritime component? We’ve talked highway, we’ve talked rail. 

Mr. LARRABEE. Senator, I think a good example would be the 

labor issues on the West Coast in 2002, when the southern California ports were closed. We estimated that for each day that those 

ports were closed the U.S. economy was losing about a billion dollars a day. I think most Americans don’t understand the vital role 

that ports play in this logistics, very complex logistics system. 

The example that I’ve given could be substituted by a major 

storm. It could be substituted by a terrorist event or in many ports 

congestion, which simply overwhelms the system. Right now, I 

think from our perspective in New York and New Jersey we believe 

that we’ll see a doubling of cargo in the next 10 years. Our port 

has taken a very systematic approach to improving access through 

a 50-foot channel which we’re in the middle of constructing right 

now, spending a good deal on terminals, but primarily right now, 

from my testimony, spending in excess of $600 million on rail infrastructure and another $400 million on roadways around the port, 

only to be able to accommodate the kind of growth that we think 

is coming. Those were all investments being made for the most 

part locally. 

Senator SMITH. Well, that’s why I wonder if anybody’s broken 

down the portion of the cost that is attributable to the lack of channel maintenance and port facility expansion. It just seems to me 

that in all of our conversations here, I think rail is doing a great 

job, we’re certainly investing a lot in highways, and heaven knows 

we need to do more of both, but the shipping component I think 

is grossly undervalued in terms of what it’s contributing. 

Glenn, when you talk about the Snake and Columbia Rivers, four 

barges, the equivalent of 1900 trucks. Think of what that means 

in terms of energy use, in terms of congestion on our highways, and 

the cost imposed on our highways where we could be investing in 

these port facilities to the great energy advantage of our country. 

Mr. VANSELOW. One of the things that I pointed out was an administration proposal to create a new lockage fee on the inland waterways, which would in our area be about a fourfold increase. It 

seems as though it goes against other administration and other national policies to in essence try to jack up the cost of moving cargo 

on the most energy efficient and least polluting mode of transportation. 

Senator SMITH. As you know, Glenn, every year we get our port 

budget zeroed out for basic dredging. My point is maybe some of 

these monies that we’re collecting, in the billions of dollars, ought 

to be used to make sure we’re maintaining our channels and expanding our port facilities, to the advantage of all these other 

modes of transportation. I just don’t know that we have a very 

intermodal kind of planning process. 

59 

When you look at the growth that’s projected in all of these 

areas, I think we’re leaving out a piece of this. That’s what my 

questioning is meant to highlight. 

My point—people say, well, you need to raise some more fees, 

we’ve got to raise some taxes. The Harbor Maintenance Tax is an 

ad valorem tax. It goes to the value. As those values go up, this 

is going to be creating a tremendous amount of money. As those 

values go up, why do we need a new tax? Why can’t we direct those 

increased values at both increased capacity and maintenance? 

Mr. VANSELOW. For both Republican and Democratic administrations we’ve had the problem that the Administration in the President’s budget underfunds those collections dramatically. Again, 

we’re at $4 billion-plus today. It will be growing by approximately 

a billion dollars a year over the next few years. 

Senator SMITH. Well, my friend the Chairman—it’s easy to pick 

on the Bush Administration. We had the same problem with the 

Clinton Administration. This isn’t a Republican or Democratic 

problem. 

Senator LAUTENBERG. He said that and I heard it. I was disappointed to hear it. 

Senator SMITH. This is money that we are taking. We’re already 

collecting enough taxes and we’re just simply spending it on other 

general fund issues. But the point is the inefficiencies that flow 

from this, the energy waste that comes from this, is a bipartisan 

shame and I think we ought to fix it. 

That probably goes to the Finance Committee. I happen to be on 

that committee. I’m taking this up there, too. 

Mr. VANSELOW. Thank you, sir. 

Senator SMITH. But what I would like, my take-home to this is 

that we have not a Republican problem, not a Democratic problem, 

not a tax collection problem. We have a tax allocation problem. 

Thank you, Mr. Chairman. 

Senator LAUTENBERG. Thanks very much. 

Senator Carper? 

STATEMENT OF HON. THOMAS R. CARPER, 

U.S. SENATOR FROM DELAWARE 

Senator CARPER. Mr. Chairman, thanks very much. 

I’m going to be joined here shortly in the anteroom by the President of the University of Delaware, so I’m going to ask some questions and then slip out and then come back for the second round 

if I could. 

I appreciate very much your holding this hearing. This is a very 

important hearing for us, not just in the Northeast but for our 

country, and we express our thanks to our witnesses for coming 

today. 

Senator Lautenberg along with former Senator Trent Lott and 

myself and others have worked on legislation for a number of years 

that seeks to find a way for us to coexist between passenger rail 

and freight rail and find ways where the Federal Government and 

State governments would partner in terms of expanding availability, not just for passenger rail service, but also freight rail service. 

60 

As you know, in my old role as Governor, if we wanted to build 

highways, roads, or bridges, the Federal Government usually put 

up about 80 percent of the funds, the State would put up 20 percent of the funds. If we wanted to build a transit project, the State 

would put up about 50 percent, the Federal Government would put 

up another 50 percent. But if inter-city passenger rail made sense 

to meet our passenger needs or meet our transportation needs in 

our state, the Federal Government would put up nada, nothing, 

and the states would be expected to fund 100 percent. 

I know we’ve made decisions to fund in some case roads, highways, bridges, or maybe transit when it was really more appropriate or more efficient to use intercity passenger rail. We have the 

opportunity, I think the potential, for creating some partnerships 

where the Federal Government will put up some money, the states 

will put up some money, maybe for-profit freight railroads will put 

up some money, and we could add to their capacity and their capacity that intercity passenger rail could utilize as well. 

Let me just ask you to sort of respond to that notion and tell me 

what you like about it and what you don’t. 

Commissioner Glynn? 

Ms. GLYNN. Well, I think—particularly when it comes to the railroads, which do operate within highly defined and constrained 

rights-of-way, the type of interplay you’re talking about makes a lot 

of sense for both passenger and the freight rail systems. For this 

reason, AASHTO has been very interested in some of the ideas, tax 

credit ideas and others, that would help functionally both the passenger system and the freight rail system. 

It is very important as we look at tax credits and we look at benefits to what are private companies that we make sure that the 

public benefits are identified and realized. Intercity passenger rail 

as well as transit are two of the places where those benefits can 

functionally interplay positively with the freight rail operators and 

relieve one of the major sources of congestion and choke points that 

right now are a problem for both the freight railroads and the 

intercity passenger rail system, which has so much to give this 

country. 

Senator CARPER. Thank you. 

Others, please? Mr. Hamberger? 

Mr. HAMBERGER. Thank you, Senator. Let me thank you for your 

leadership, Senator Carper, on the floor last week and Beth 

Osborne, for crafting an amendment that takes recognition of the 

public benefits of moving freight by rail, moving people by rail, and 

trying to reduce the vehicle miles traveled both on the passenger 

side and the freight side. 

I think that conceptually we are really trying to head in the 

same direction. We are supporting the Amtrak bill on the floor of 

the House this afternoon. Our individual companies are making an 

individual bilateral effort, in partnership with Amtrak, even as we 

speak, to pick out individual corridors and trying to address ontime performance, some of which can certainly be tied to the capacity constraints that are out there. Perhaps we can improve operations and get on-time performance where it needs to be. 

We are committed to trying to improve on-time performance with 

Amtrak and trying to expand capacity for both. As we say, the inVerDate Nov 24 2008 10:11 Aug 29, 2012 Jkt 075679 PO 00000 Frm 00064 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\75682.TXT JACKIE
61 

herent advantage of moving freight by rail is just as true for moving people by rail, and we’ve got to move both, but we’ve got to 

have enough capacity for both. It cannot be one in lieu of the other. 

Senator CARPER. We have something in Delaware we call 

DELTRAC, D-E-L-T-R-A-C. You probably have something like this 

in New York, maybe other states that you are from. But the idea 

is to use technology to better utilize the true capacity of our road 

system, whether it’s smart signaling or when there’s a mishap to 

clean it up, fix it up, get traffic moving in the right away. We call 

it DELTRAC and the idea is to get better capacity out of what we 

already have. 

My hope is that we can find a way to do that with rail. If we’re 

smart, maybe we can pull that off. 

My time has expired. I want to come back for a second round. 

I’m going to go meet with our university president and I’ll come 

back. Thank you for responding. 

Anybody else have a quick comment on the issue that I raised? 

Anybody at all? Mr. Brubaker? 

Mr. BRUBAKER. I just wanted to mention that I think innovation 

is something that we believe very deeply can squeeze additional capacity out of existing infrastructure. The comment was made earlier about freight movement by sea. We’ve actually got a program 

called Maritime Domain Awareness, where what we’re doing is 

we’re actually getting visibility of ships as they’re entering ports or 

nearing ports or even en route to ports, where we can actually help 

guide them, much in the same way we guide planes into airports, 

so that they arrive just in time, so that we can better manage capacity at ports. That’s an idea that we’re looking at. 

Similar type things with managing rail capacity. The only difference there is it requires significant cooperation between privately held or quasi-governmental agencies like port authorities, as 

well as the railroads, in order to squeeze that additional capacity 

out. 

You mentioned sort of that tradeoff between highway investment 

and rail investment and some other investments in terms of movement of freight. We tend to focus on things we are a little bit more 

in control of. What we’re trying to do is change the paradigm so 

that we’re taking a more holistic look of all the elements of all the 

modes in the supply chain and having a better understanding of 

how they interact, and then work and reach out to the private sector and the port authorities to better manage the infrastructure. 

Senator CARPER. Thanks for sharing that with us. 

Thanks very much, Mr. Chairman. I’ll be right back. 

Senator LAUTENBERG. Mr. Brubaker, I was a little bewildered, to 

say the least, when I asked you about the SAFETEA–LU highway 

bill that required a comprehensive plan and apparently caught you 

by surprise. The section of the program that you handle is I assume the chief Department responsible for developing that information. 

What went wrong? This was due in 2005. It was instructed to be 

done by last summer, almost a year ago. Were you surprised at all 

or interested enough to make inquiries about where things were 

without having now—you’ll forgive me, sir—having to search for 

staff to report on it? 

62 

Mr. BRUBAKER. Sir, I will find out exactly what the history of 

this is. 

Senator LAUTENBERG. So you haven’t had a chance to look for it 

before? 

Mr. BRUBAKER. No, sir, I have not. Just in the interest of full disclosure, I’ve been on this job a little less than a year and I’ve tried 

to inventory all of my SAFETEA–LU requirements, and apparently 

that one is not one that has been brought to my attention. I will 

promise you I will find the answer to that question and get back 

to you. 

Senator LAUTENBERG. Please. It’s so important because it’s fundamental to our planning. 

Mr. BRUBAKER. I agree. 

Senator LAUTENBERG. I wanted to ask this question generally. 

Some have suggested that we could reduce truck traffic on our 

highways by using barges and ships to move freight between two 

U.S. ports on marine highways. But a shipment from overseas that 

then travels between these two U.S. ports, Mr. Vanselow, faces 

double taxation because it pays the Federal Harbor Maintenance 

Tax twice. 

Now, might removing this tax for the domestic portion of this 

shipment provide incentive for these so-called short-sea shipping 

moves to get more trucks off the road? 

Mr. VANSELOW. If you don’t mind, Mr. Chairman, I’m going to 

use your question to speak a little more broadly about the Harbor 

Maintenance Tax. First, industry does not object to a tax. We do 

believe that it is necessary to fund navigation. These are all Federal channels. They are all maintained by the U.S. Army Corps of 

Engineers. They are all appropriated by Congress, and it is the 

user fee that should be paying for that. 

The user fee does have some issues. One we’ve talked about, the 

surplus. Others, we have had an issue at our north and south borders, where Seattle and Tacoma, for example, are competing with 

Vancouver, B.C., and they are advertising no Harbor Maintenance 

Tax here, trying to woo cargo away from U.S. ports. This is cargo 

destined to U.S. importers, but moving through a foreign country 

to get there. So there are other issues. 

We do believe that we do need to take care of those kinds of 

movements. If a cargo is taxed once coming into the United States, 

that ought to be all that it is taxed. 

Senator LAUTENBERG. But also the unavailability of the full revenue stream that is developed there has retarded progress. 

Mr. VANSELOW. One of the issues that we have is it is the largest 

ports in the country that need the ability to exercise short-sea shipping because of their capacity constraints. We have a problem 

through OMB and administration priorities, it is the largest ports 

in the country that are the top priority for getting funding for expenditure out of that Harbor Maintenance Tax. The smaller ports, 

which could be the feeder ports, are the ones that Senator Smith 

just remarked are zero in the Administration’s budget proposal. We 

have to come to Congress to ask for more. 

So if we could more broadly spend that—it’s not just L.A. and 

Long Beach that needs money. Their overflow opportunities go to 

63 

Oxnard and Port Hueneme and elsewhere on the California coast. 

We have the same issues in the Pacific Northwest. 

Senator LAUTENBERG. Mr. Hamberger, we spend some $40 billion 

a year on highways, $15 billion on our aviation system, but little 

to none on rail. What do you think we could do better to balance 

the Federal transportation policies, to encourage investment in all 

modes of transportation? 

Mr. HAMBERGER. Well, the difference, of course, for freight railroads is that we are privately owned. So I think it would be most 

appropriate for the Federal Government to provide an investment 

tax credit, an investment tax incentive, to encourage even more investment than the industry is already undertaking. 

As you know, we spent on average about 17 or 18 percent of all 

revenue over the last 10 years, on capacity expansion. We have 

done a survey of our members and if the legislation co-sponsored 

by Senator Conrad and Senator Smith were to pass we believe that 

an additional $1.5 billion would be spent just by the railroads on 

capacity expansion. It’s new capacity. That would create about 

30,000 jobs immediately, not when a government agency says it’s 

OK to start building. But these are projects that are on the drawing board, ready to go, for which capital does not now exist. The 

tax incentive would move those projects forward. We think it would 

be helpful in job creation, but it also provides $1.5 billion of more 

capacity per year. 

I would point out one of the reasons that a lot of Mr. Vanselow’s 

members support that legislation and the American Association of 

Port Authorities supports it is because it would also be available 

to anybody who invests in new capacity. That is to say if somebody, 

a private investor, were to want help to finance a new intermodal 

yard, a land-side facility near a port, the rail pieces of it would be 

eligible for the investment tax credit. 

So I think that that is something that could be done immediately. The second companion piece, of course, is the short line tax 

credit, which expired at the end of 2007. In the first year it was 

enacted, half a million additional ties were purchased in comparison to the number from the previous year. And these are short 

lines that need to upgrade their track to be able to get into the 

heavier service. 

So it works and I think that would be the first thing. The second, 

of course, is the public-private partnerships that everybody has referenced. I would echo Commissioner Glynn’s comments that these 

are not handouts, this is not a subsidy. The private sector should 

pay for the private sector benefits and the public sector should pay 

for the public sector benefits, and in that way it is truly a win-win. 

Mr. BRUBAKER. Mr. Chairman, if I might. 

Senator LAUTENBERG. Yes. 

Mr. BRUBAKER. Just to piggyback on what’s been said, there are 

some programs, one of which was authorized under SAFETEA–LU, 

which is the private activity bond. We actually received, the Department’s received, a couple of applications, actually three applications, for intermodal freight transfer facilities, two of which are 

in the State of Illinois, with the idea of eliminating bottlenecks in 

and around Chicago. That amounts, those three applications, total 

64 

some $2.2 billion and will, if they’re fully funded, are going to wind 

up adding capacity to handle over two million containers per year. 

So there are some activities that we’re engaged in, as well as 

some TIFIA financing as well. 

Senator LAUTENBERG. Thank you. 

I’m going to turn over the chairmanship to my distinguished colleague from Delaware. Since our interests are so closely connected, 

I feel safe in saying that I’m sure that Senator Carper will follow 

up his interest in railroads and freight movement. These two little 

states of ours represent a lot of seagoing business and a lot of important transportation facilities. So, please. 

Senator CARPER [presiding]. Thank you, Mr. Chairman. 

I was telling Senator Lautenberg earlier today, when we were on 

the floor during a series of votes, that normally I take the train 

from Delaware to Washington almost every day and then back at 

night. Yesterday I took the train the other way, from Wilmington 

to Philadelphia in the morning, and then a bit later in the morning 

from Philly to New York City, and early afternoon from New York 

back down to Wilmington. 

I wasn’t surprised—the first train left Wilmington for New York, 

oh, about 8:05 and it was still rush hour and the train was full, 

not surprisingly. We left Philadelphia about 10 o’clock going to 

New York and it was not rush hour and the train was full. We left 

New York a little bit after 2 o’clock, not rush hour, and the train 

was standing room only. I thought to myself, something’s going on 

here. Something is going on here. Amtrak is, especially in the 

Northeast Corridor right now, sort of bursting at the seams in 

terms of providing capacity. 

I know the freight lines throughout the country face a similar situation. It would be great if we could be smart enough to figure out 

how to address both of these at least to some extent. A friend of 

mine likes to say ‘‘how to kill two stones with one bird.’’ Maybe we 

can find a way to kill two birds with one stone. 

Now that I am the Chair of the hearing, I think I’d like to call 

up a couple of bills of mine. 

[Laughter.] 

I’m the only one here, at least for now—six staff just jumped me 

all at once to make sure I didn’t do that. 

A question initially for Commissioner Glynn. Do people call you 

‘‘Commissioner’’? 

Ms. GLYNN. Yes, sir. 

Senator CARPER. All right. That’s the same as ‘‘Secretary,’’ like 

a cabinet secretary? 

Ms. GLYNN. It is, sir, yes. 

Senator CARPER. Ann Canby used to be our Secretary of Transportation in Delaware, but I think she was also once the Commissioner of Transportation in New Jersey. 

Ms. GLYNN. She has been many things and I’m sure will be many 

more. 

Senator CARPER. I loved working for her when I was Governor. 

[Laughter.] 

Ms. GLYNN. We all do. 

65 

Senator CARPER. In fact, she was the person who recommended 

Beth Osborne to us, which was one of the best hires we ever made 

in my Senate office. 

But Commissioner Glynn, I think you mentioned in your testimony that government tends to divide transportation responsibility 

by mode. Here in the Senate we have, as you probably know, rail 

and air jurisdiction in this Committee. Over in the Committee on 

Environment and Public Works, we have jurisdiction over highways. In the Banking Committee we have transit. I serve on all 

three, so I get to play on all of them. I think I’m the only Senator 

who serves on all three. 

But at the U.S. Department of Transportation, I think each agency focuses on the movement of machines, trucks, trains, planes, 

cars, and ships. But I have found that people don’t necessarily 

travel in this way. We like to get from point A to point B quickly, 

we like to get there conveniently, we like to get there in a way 

that’s affordable. 

Much of the time, we use multiple modes for one trip. In Wilmington, a lot of people, until recently and even still, will take 

their car or a bus or a taxi or something to go to the Wilmington 

train station, will get on the train, will travel to BWI. We take a 

shuttle from BWI getting off the train to the airport. Then we take 

an airplane wherever we want to go. 

But that’s the way people move, and we do that because it’s so 

affordable as a result. Freight movement is similar. You have businesses and consumers who just want to receive their goods quickly, 

they want to get them safely, they want to receive them affordably. 

Here’s my question. It’s a long lead-in to a fairly short question, 

but how do we break through what we call government stovepiping 

to ensure that we institute policies here that facilitate a smooth 

flow of goods and I suppose of people, too? 

Ms. GLYNN. That has been one of the challenges since the various TEA’s began. And it is one that remains for us. Looking at the 

problem from the standpoint of our customers, looking at the problem from the standpoint of functionality, rather than our own jurisdictions, has proved very hard for all of us. Yet it is something that 

we need to keep working at. 

Ports are perhaps the best examples of this because ports are by 

nature multimodal and intermodal. That is their business. The fact 

that we have one stream of revenue going to dredging, another 

stream going to rail improvement or not, a third one going to truck 

access, and all of this, each coming from an environment where the 

contribution may be viewed against a finite set of purposes and resources, tends to make each investment a zero sum game. 

That is one of the problems that we have been striving against, 

and I must say that Ann Canby has been very diligent in encouraging us to strive against, so that we do break through those stovepipes and that we look at it from the standpoint of how can we address all aspects of this choke point, not simply the rail aspect, not 

simply the road aspect, not simply the depth of water—all aspects 

of each choke point. 

If we can address the choke points, that will inure to the benefit 

of the entire system because the entire system is interdependent. 

Senator CARPER. Anyone else on this particular point? 

66 

Mr. BRUBAKER. Yes, sir, if I may. 

Senator CARPER. Yes, sir, Mr. Brubaker. Do people call you ‘‘Administrator Brubaker’’? 

Mr. BRUBAKER. Yes, that’s fine. 

My office produced a document called ‘‘Transportation Vision for 

2030’’ back in January and the whole notion here was that we 

would begin to focus exactly how you described, on origin to destination for passenger movement, origin to destination for freight 

movement and really, because we’ve got the Office of Intermodal 

within the Research and Innovative Technology Administration, 

really focus on cross-modal activities and actually encourage the 

other modal administrators—and they have been very, very receptive, some of whom sort of refer to their stovepipes as the ‘‘silos of 

excellence.’’ But nevertheless it’s important that we break down 

those silos and begin to work across modes, because truly it is how 

we move freight and we move people. It is multimodal, as I hope 

we pointed out here today, and we really need to focus on how people move and how freight moves as well, because that is in essence 

how we’re going to crack the code. 

Senator CARPER. Thank you. 

Yes, sir, Mr. Hamberger. 

Mr. HAMBERGER. People call me Mister Ed. 

Senator CARPER. They’ve probably called you worse, and certainly me too. 

Mr. HAMBERGER. Yes. 

We have a freight stakeholders coalition that was quite active in 

the last surface transportation bill. The Association of American 

Port Authorities was the honorary chair, and it included the American Trucking Association, our association, and others. John 

Horsley of AASHTO, for this upcoming authorization, has been 

very active in trying to get everybody in the room together under 

AASHTO’s banner to take a look and make some significant contributions to the National Transportation Policy and Revenue Commission report that Secretary Peters chaired. 

So I think there is a recognition that it’s not just inside the halls 

of government, but also those of us in the private sector need to 

make sure that we’re cooperating and working together as well. 

Senator CARPER. All right, thank you. 

We’ve been joined in the hearing by my Chief of Staff, Jim Reilly, 

and he has with him the President of the University of Delaware, 

Pat Harker. We were just chatting outside the hearing when I was 

in and out of the room, and the last question I’m going to ask was 

actually one that he just raised to my own mind. 

I was privileged for a while in the late 1990s to serve on the Amtrak Board of Directors. Kind of ironic. I was Governor at the time. 

I was nominated by the President, confirmed by the Senate, and 

served on the Amtrak Board. There is now another person named 

Tom Carper who serves on the Amtrak Board. It’s not a real common name and it’s caused enormous confusion for people, who say 

how can Carper be in the Senate and still serve on the Amtrak 

Board? It’s a different guy, a lot smarter guy, I think. 

But I was talking with President Harker when I was out meeting 

with him in the conference room and I was sharing with him a little bit about what we were discussing here. I reflected back on one 

67 

of the things we tried to do during my time on the Amtrak board. 

We said, Amtrak doesn’t do badly in terms of paying for its expenses out of the fare box in densely populated corridors. They actually do pretty well, including the Northeast Corridor. But when 

running these long distance trains in a lot of cases Amtrak loses 

its shirt, and the taxpayers end up subsidizing a fair amount of 

that. 

We came up with the notion of how do we do a better job of covering our costs on long distance trains, by in some instances putting on a couple of extra cars on the train, to carry, not people, but 

commodities, in some cases commodities that are time sensitive in 

terms of their delivery. We negotiated with the freight railroads to 

make sure that they didn’t object and so that we could use their 

tracks and provide this service. 

I left the Board and the idea, which started off with a fair 

amount of fanfare, kind of died out. I thought at the time that it 

was a good idea. I’m still convinced it might be a good idea. President Harker said to me that at an earlier time in his life—he came 

to us from Wharton, where he was the President of the Wharton 

School until this past year. But he said as an engineer he had 

worked on a variety of projects involving subway transit systems 

within large cities, and he came up with the notion, or folks he was 

working with came up with the notion, of in some cases putting a 

rail car along with transit, maybe at the back of the train, to carry 

commodities from place to place where you have such tie-ups. I saw 

it yesterday in New York City—with trying to move trucks and delivering goods, not just the taxis, but just a lot of trouble trying to 

move trucks around the city; and suggested that their idea was to 

use the transit system, get the stuff underground. UPS or whoever 

is providing the delivery could still be there and run at the transit 

stops, run a delivery service once the commodities are offloaded 

from subways. 

Anybody want to take a shot at that, either Amtrak’s original 

idea when I was on the Board or what President Harker sort of 

outlined? I probably didn’t do justice to your idea, Mr. President. 

But would you just react to either of those ideas? 

Mr. BRUBAKER. If I could, as good an idea as it is, of course, Senator, it just did not work in application, for two reasons that I’m 

aware of, and I’ll get you more on this. It was a few years ago. But 

if memory serves correct, one is of course that people and freight 

move at different times and at different speeds. When the Amtrak 

train comes into the 30th Street Station there in Philadelphia, it’s 

there for about 5 minutes, which is not nearly enough time to either unload or hook up additional cars. 

Senator CARPER. We weren’t talking about moving freight in the 

Northeast Corridor. 

Mr. BRUBAKER. Well, in any event, the point being that wherever 

the train and the passenger is moving it is usually at a different 

time and a different speed than the freight. 

Then second, in many cases the station is not configured to handle additional cars, and so either it would be hanging out onto the 

main line or they’d have to go somewhere else to pick up. It just 

conceptually sounded good, but out there in practice did not work, 

and I think they consequently pulled the plug on it. 

68 

Senator CARPER. The stationmaster in Sioux City says: Fred, 

where are we going to put all these bananas? 

Mr. BRUBAKER. Yes. 

Senator CARPER. All right. How about the second half of that? 

This is the idea that I’ve done a poor job in describing of President 

Harker’s, but an idea of maybe using transit and, if you will, appending to a subway or a MARC train or something, a vehicle or 

cars that can carry such things other than people? Does that resonate or make any sense? Is anybody doing it? Maybe somebody’s 

doing it and we don’t even know about it. 

Ms. GLYNN. I’m not aware of anyone who’s doing it, but I am 

acutely conscious of the fact that, at least in the New York City 

subway system and I believe in most of the larger ones, we’re 

scrounging for track capacity and station capacity. So except on off 

hours—and in off hours, of course, all things become possible—to 

give up that platform capacity to a new use would be probably difficult. 

There is of course, particularly on off hours and on weekends, a 

different situation, and I know that some systems have, for instance, started offering different things such as bicycle cars on 

weekends, so that people who want to travel with their bicycle, go 

to the beach, whatever, it is easier for them to do it. It’s not quite 

the freight issue, but it does help give us a little more flexibility 

when it comes to mobility. 

Senator CARPER. We have buses in Delaware, people can take 

their bike to the beach, and take it on a bus. 

Yes, sir? 

Mr. BRUBAKER. We may also want to examine some of the safety 

implications of such an arrangement, because obviously passenger 

rail cars are built for strict safety standards, whereas freight cars 

are built to lesser safety standards, and what happens when you 

combine the two. It could be pretty—there could be some pretty significant unintended consequences. 

Senator CARPER. Fair enough. 

I have one more question. I won’t ask it here; I’ll ask it for the 

record, and if you’ll take a moment and respond to it. And I think 

other colleagues of ours may have questions that we’d like to pose 

to you. If you’d take a few minutes to respond to those questions, 

we’d all be grateful. 

Let me just ask our staff here, any idea how long we leave the 

record open for questions to be posed for our witnesses? 2 weeks? 

2 weeks. 

Again, we appreciate very much your being here and responding 

to our questions. It’s been enjoyable and I think highly informative, 

and as it turns out this is important stuff. So thank you very much. 

With that, this hearing is adjourned. Thank you. 

[Whereupon, at 3:56 p.m., the hearing was adjourned.] 

(69) 

A P P E N D I X 

PREPARED STATEMENT OF HON. SUSAN M. COLLINS, U.S. SENATOR FROM MAINE

Mr. Chairman, the skyrocketing price of diesel fuel is putting an increasing strain 

on our trucking industry. To illustrate the problem, consider this fact. In 1999, a 

Maine truck driver could purchase $500 of diesel fuel and drive from Augusta, 

Maine, all the way to Albuquerque, New Mexico. Today, a driver who purchases 

$500 of diesel and leaves Augusta would not even make it to Altoona, Pennsylvania, 

and because diesel prices continue to increase, the problem is only getting worse. 

I recently met with Kurt Babineau, a small business owner and second generation 

logger and trucker from the Penobscot County town of West Enfield, Maine. Like 

so many of our truckers, Kurt has been struggling with the increasing costs of running his operation. All of the pulpwood his business produces is transported to Verso 

Paper in Jay, Maine, a 165-mile roundtrip. This would be a considerably shorter trip 

except that current Federal law forbids trucks weighing more than 80,000 pounds 

from driving on Interstate 95 north of Augusta. Instead, these heavy trucks are 

forced off the modern four-lane, limited-access highway, and onto smaller, two-lane 

secondary roads that pass through cities, towns, and villages. 

This law not only increases the distance that trucks must travel, it increases their 

travel time and results in a higher consumption of diesel fuel. In fact, Kurt estimates that permitting his trucks to travel on all of Interstate 95 would save him 

118 gallons of fuel each week. At approximately $4.50 a gallon, and including savings from his drivers spending less time on the trip, he could save more than $700 

a week, and more than $33,000 and 5,600 gallons of fuel each year. These savings 

would not only be beneficial to Kurt’s bottom line, but also to his employees, his 

customers, and to our Nation as we look for ways to decrease the overall fuel consumption. 

To help provide assistance to our truckers, I recently introduced the Commercial 

Truck Fuel Savings Demonstration Act, with my senior colleague Senator Olympia 

Snowe as the chief cosponsor. Our legislation would create a two-year pilot program 

that would permit trucks carrying up to 100,000 pounds to travel on the Federal 

Interstate system whenever diesel prices are at or above $3.50 a gallon. 

Permitting trucks to carry up to 100,000 pounds on Federal highways would lessen the fuel cost burden on truckers in three ways. First, raising the weight limit 

would allow more cargo to be put into each truck, thereby reducing the numbers 

of trucks needed to transport goods. Second, trucks carrying up to 100,000 pounds 

would no longer need to move off the main Federal highways where trucks are limited at 80,000 pounds and take less direct routes on local roads requiring considerably more diesel and extended periods of idling during each trip. Finally, trucks 

traveling on the interstate system would save on fuel costs due to the much superior 

road design of the interstate system as compared to the state and local roads. 

Trucking is the cornerstone of our economy as most of our goods are transported 

by trucks at some point in the supply chain. Some independent truckers in Maine 

have already been forced out of business due to rising fuel costs. More businesses 

are facing a similar fate if relief is not provided. The Commercial Truck Fuel Savings Demonstration Act offers an immediate and cost effective way to help our Nation’s struggling trucking industry, and individual drivers like Kurt Babineau. 

Thank you for the opportunity to submit my statement, which I hope will generate increased awareness of the need to address the problems facing the movement 

of freight by truck throughout the country. 

RESPONSE TO WRITTEN QUESTION SUBMITTED BY HON. FRANK R. LAUTENBERG TO

HON. PAUL R. BRUBAKER

Question. The Bush Administration has tried to eliminate one of the Federal Government’s most powerful public-private partnership tools when it comes to freight 

investment—the Railroad Rehabilitation and Improvement Financing (RRIF) proVerDate Nov 24 2008 10:11 Aug 29, 2012 Jkt 075679 PO 00000 Frm 00073 Fmt 6601 Sfmt 6621 S:\GPO\DOCS\75682.TXT JACKIE
70 

gram. This program provides low-interest loans and loan guarantees for rail infrastructure projects and could help fund projects to reduce major chokepoints like in 

Chicago. Why has the Bush Administration tried to kill this program, given its tremendous potential to help improve our infrastructure? 

Answer. The President’s 2009 budget does not propose terminating the RRIF program, but instead proposes reforming it to improve its effectiveness. Likewise, the 

Administration has sent authorizing legislation to Congress to sharpen the program’s focus. The Administration continues to accept and process loan applications 

and administer the Railroad Rehabilitation and Improvement Financing (RRIF) program. 

However, the Administration questions the program’s current design and purpose 

for several reasons. First of all railroads—including Class I railroads that generate 

tens of billions of dollars in annual revenue—are fully eligible for credit assistance 

under the program. Privately-owned rail companies that have access to the Nation’s 

financial markets have powerful competitive incentives to effectively tap into those 

markets. The Administration has proposed limiting RRIF eligibility to small railroads only which are most in need of assistance. Second, in the event of a default 

on a RRIF loan, the Federal Treasury would be responsible for covering consequent 

losses. Given that Congress expanded the program’s size by 10-fold—from $3.5 billion to $35 billion—those losses could be substantial. The Administration would 

limit the amount of funds a railroad could borrow, corresponding with the focus on 

small companies. Finally, railroads already benefit from several 2004 changes to the 

tax code, including relief from diesel fuel taxes. The Administration has proposed 

legislative reforms for the program to prioritize assistance to meet demonstrated 

needs and to ensure the efficient use of taxpayers’ funds and to better protect the 

Federal interest. The Department has also recently published a notice of proposed 

rulemaking as a part of the process for administratively addressing some of the concerns with the program. 

Æ