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42–134 PDF 2008

FREIGHT MOVEMENT FROM ORIGIN 

TO DESTINATION 

(110–121) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

HIGHWAYS AND TRANSIT 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

APRIL 24, 2008 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JAMES L. OBERSTAR, Minnesota, Chairman 

NICK J. RAHALL, II, West Virginia, Vice 

Chair 

PETER A. DEFAZIO, Oregon 

JERRY F. COSTELLO, Illinois 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

BOB FILNER, California 

EDDIE BERNICE JOHNSON, Texas 

GENE TAYLOR, Mississippi 

ELIJAH E. CUMMINGS, Maryland 

ELLEN O. TAUSCHER, California 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

BRIAN BAIRD, Washington 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

BRIAN HIGGINS, New York 

RUSS CARNAHAN, Missouri 

JOHN T. SALAZAR, Colorado 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

DORIS O. MATSUI, California 

NICK LAMPSON, Texas 

ZACHARY T. SPACE, Ohio 

MAZIE K. HIRONO, Hawaii 

BRUCE L. BRALEY, Iowa 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

MICHAEL A. ARCURI, New York 

HARRY E. MITCHELL, Arizona 

CHRISTOPHER P. CARNEY, Pennsylvania 

JOHN J. HALL, New York 

STEVE KAGEN, Wisconsin 

STEVE COHEN, Tennessee 

JERRY MCNERNEY, California 

LAURA A. RICHARDSON, California 

ALBIO SIRES, New Jersey 

JOHN L. MICA, Florida 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

WAYNE T. GILCHREST, Maryland 

VERNON J. EHLERS, Michigan 

STEVEN C. LATOURETTE, Ohio 

FRANK A. LOBIONDO, New Jersey 

JERRY MORAN, Kansas 

GARY G. MILLER, California 

ROBIN HAYES, North Carolina 

HENRY E. BROWN, JR., South Carolina 

TIMOTHY V. JOHNSON, Illinois 

TODD RUSSELL PLATTS, Pennsylvania 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

JOHN BOOZMAN, Arkansas 

SHELLEY MOORE CAPITO, West Virginia 

JIM GERLACH, Pennsylvania 

MARIO DIAZ-BALART, Florida 

CHARLES W. DENT, Pennsylvania 

TED POE, Texas 

DAVID G. REICHERT, Washington 

CONNIE MACK, Florida 

JOHN R. ‘RANDY’ KUHL, JR., New York 

LYNN A WESTMORELAND, Georgia 

CHARLES W. BOUSTANY, JR., Louisiana 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

THELMA D. DRAKE, Virginia 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

ROBERT E. LATTA, Ohio 

(II) 

SUBCOMMITTEE ON HIGHWAYS AND TRANSIT 

PETER A. DEFAZIO, Oregon, Chairman 

NICK J. RAHALL II, West Virginia 

JERROLD NADLER, New York 

ELLEN O. TAUSCHER, California 

TIM HOLDEN, Pennsylvania 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

BRIAN HIGGINS, New York 

GRACE F. NAPOLITANO, California 

MAZIE K. HIRONO, Hawaii 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

MICHAEL A. ARCURI, New York 

CHRISTOPHER P. CARNEY, Pennsylvania 

JERRY MCNERNEY, California 

BOB FILNER, California 

ELIJAH E. CUMMINGS, Maryland 

BRIAN BAIRD, Washington 

DANIEL LIPINSKI, Illinois 

DORIS O. MATSUI, California 

STEVE COHEN, Tennessee 

ZACHARY T. SPACE, Ohio 

BRUCE L. BRALEY, Iowa, Vice Chair 

HARRY E. MITCHELL, Arizona 

LAURA A. RICHARDSON, California 

ALBIO SIRES, New Jersey 

JAMES L. OBERSTAR, Minnesota 

(Ex Officio) 

JOHN J. DUNCAN, JR., Tennessee 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

GARY G. MILLER, California 

ROBIN HAYES, North Carolina 

HENRY E. BROWN, JR., South Carolina 

TIMOTHY V. JOHNSON, Illinois 

TODD RUSSELL PLATTS, Pennsylvania 

JOHN BOOZMAN, Arkansas 

SHELLEY MOORE CAPITO, West Virginia 

JIM GERLACH, Pennsylvania 

MARIO DIAZ-BALART, Florida 

CHARLES W. DENT, Pennsylvania 

TED POE, Texas 

DAVID G. REICHERT, Washington 

CHARLES W. BOUSTANY, JR., Louisiana 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

THELMA D. DRAKE, Virginia 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

ROBERT E. LATTA, Ohio 

JOHN L. MICA, Florida 

(Ex Officio) 

(III) 

(V) 

CONTENTS Page 

Summary of Subject Matter .................................................................................... vi 

TESTIMONY 

Cardwell, Gary, Divisional Vice President, Northwest Container Services ........ 4 

Haas, Scott, Vice President of Transportation, UPS ............................................ 4 

Mullett, C. Randall, Vice Chair, Technical Oversight Committee, National 

Cooperative Freight Research Program, Transportation Research Board ...... 4 

Uremovich, Michael, CEO, Pacer International .................................................... 4 

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS 

Altmire, Hon. Jason, of Pennsylvania .................................................................... 31 

Mitchell, Hon. Harry E., of Arizona ....................................................................... 32 

Oberstar, Hon. James L., of Minnesota ................................................................. 33 

Reichert, Hon. David G., of Washington ................................................................ 38 

Richardson, Hon. Laura A. of California ............................................................... 40 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Cardwell, Gary S. .................................................................................................... 44 

Haas, Scott ............................................................................................................... 49 

Mullett, C. Randal ................................................................................................... 59 

Uremovich, Michael E. ............................................................................................ 68 

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42134.006
(1) 

HEARING ON FREIGHT MOVEMENT FROM 

ORIGIN TO DESTINATION 

Thursday, April 24, 2008 

HOUSE OF REPRESENTATIVES, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, SUBCOMMITTEE ON HIGHWAYS AND TRANSIT, Washington, DC. 

The Subcommittee met, pursuant to call, at 11:05 a.m., in Room 

2167, Rayburn House Office Building, the Honorable Peter A. 

DeFazio [Chairman of the Subcommittee] presiding. 

Mr. DEFAZIO. The Subcommittee on Highways and Transit will come to order. 

We have a hearing today on Freight Movement from Origin to 

Destination. 

I welcome the witnesses. 

Before we get to opening statements, it is sort of a bittersweet day in one way for the Committee. We are about to launch one of 

our long-term and most esteemed staff members on a new career 

or he is about to launch himself on a new career, and we are going 

to be left behind, but I am sure we will still benefit from his knowledge in the future. 

Art Chan began work on the full Committee as a chief economist. 

Sometimes I refer to economists as pointy heads, but Art is more 

of an applied kind of guy, one of my favorite economists. 

In 1995, he moved to Water Resources. Then he moved to Highways and Transit in 2000. He was a highway policy director for 

eight years, and he was key on our side of the aisle and I would 

say overall on both sides of the aisle in crafting key components of 

SAFETEA-LU. 

He has always been able to explain things to me like RABA, and 

some other mysteries of highway funding and budgeting, and I am 

sorry that he won’t be here to try and turn those things into 

English for me anymore. 

There is no one that knows Title 23 better than Art. That is for 

certain. This Committee and the Subcommittee have benefitted 

from his experience. Over the last 15 years. It will be a loss, as I 

said earlier. 

Now that he is joining the private sector and he will have more 

substantial means, Art has changed his mind about those new 

Lexus lanes on the way into Washington, D.C. and no longer feels 

they are particularly price discriminatory. 

In all seriousness, though, I wish Art well in his new endeavor, 

and I want to thank him for his years of work. 

Thank you, Art. 

2 

Mr. CHAN. Thank you. 

Mr. DEFAZIO. So, with that, Mr. Duncan, would you like to say 

anything? 

Mr. DUNCAN. Well, I also want to congratulate Dr. Chan. Art and 

I had a nice visit together yesterday, and he told me of his plans. 

He has been a valuable asset to this Committee, and he has 

worked well with people on both sides of the aisle. 

So I want to also congratulate and wish him the best as he 

moves into this new part of his life. I am sure he is going to be 

just as successful in the years ahead as he has been in past years 

in his career thus far. 

Mr. CHAN. Thank you. 

Mr. DEFAZIO. This, in a way, is a hearing about health, and we 

have actually a couple of health diagrams that I want to put up 

on the screens. One, this is 2002. It is the estimated annual daily 

average of truck flow. 

As you can see, it is pretty robust. In fact, I used this chart in 

particular on the cover of a presentation I had about our cracked 

bridge problem in Oregon when educating Members of the Committee and Congress as we went into SAFETEA-LU about how 

vital the I-5 truck route is, the third busiest in America. 

We are looking at that, but now if we go to the projects for 2035 

and suddenly it looks like a lot of either overstretched or perhaps 

clogged arteries, not so healthy, and that is why we are here today. 

I believe in the next reauthorization we have to chart a new 

course for America in dealing with our problems of movement of 

people and freight. Rather than doing triage on the existing congestion, we have to anticipate future flows, and we have to build a system to mitigate or accommodate those flows and mitigate the problems that might arise from that growth in traffic. 

What I have talked about, and I still don’t have the total vision, 

is the idea of a least cost transportation plan. Least cost, from my 

mind, obviously, it goes to the taxpayers. It goes to the public in 

terms of their costs. It goes to business. 

It would be least cost also in terms of, in my mind, impact on 

the environment and other critical factors, and it would be truly 

multimodal and would facilitate better the movement of freight. 

Freight has to become more easily mobile or, in dealing with this 

chart and these projections, with the current levels of investment, 

the idea that we are using trucks as sort of portable warehouses 

with just-in-time delivery, we are going to moving things into more 

or less permanent storage in gridlock on the system. It would be 

tremendously expensive to business, a tremendous cost to the economy, and a tremendous cost to our economic competitiveness in a 

global economy. 

I see sort of a new role here for the Federal Government in 

partnering, where the Federal Government would be implementing 

some national level planning to anticipate, get ahead of these 

issues, try and be more truly multimodal and demand accountability of the States and those who are responsible for implementing the program, so we are no longer so fragmented but more 

integrated. 

This is a tremendous challenge, and I am hoping some of the 

members of the panel today can give us ideas on how we might get 

3 

there. This is one in a number of ongoing hearings that we have 

held on this Subcommittee to try and learn the subject matter better and create a vision for the next transportation bill. 

I just had a contest to name a bill I introduced on cell phones 

on airplanes, and I gave a bottle of wine as the prize. I don’t know 

what we will do for the contest to name the next highway bill, but 

we will figure out something. 

With that, I turn to the Ranking Member, the esteemed Member 

from Tennessee, Mr. Duncan. 

Mr. DUNCAN. Well, thank you, Mr. Chairman, and thank you for 

calling this hearing, and I want to thank the witnesses for being 

here with us. 

All of us know that transportation experts have expressed deep 

concern regarding the freight capacity shortage in America’s transportation system. The last several decades, as you have noted, have 

witnessed steady growth in the demand for freight transportation 

and will continue to do so, but freight capacity, especially highway 

capacity, is expanding too slowly to keep up with the demand. 

Our witnesses today will provide testimony regarding the immediacy of the freight to mobility crisis caused by expanding freight 

transportation needs and the lack of transportation capacity. Specifically, they will address how inefficiencies in the transportation 

system impact a company’s ability to manage its supply chain. 

Over 19 billion—19 billion with a B—tons of freight valued at 

$13 trillion moves through our transportation each year. By 2035, 

demand for freight transportation is expected to increase by 92 percent. The U.S. economy depends on its interconnected transportation network to move raw materials and finished goods around 

the Country efficiently and reliably. 

The United States need to continue investing in our transportation system if we want to retain our position as a leader in the 

global economy. We also desperately need increased domestic energy production if we are going to not see diesel prices and other 

transportation costs just skyrocket in the years ahead. 

China is in the process of building a 53,000-mile national expressway which will rival the U.S. Interstate Highway System 

when it is completed in 2020. India is building a 10,000 national 

highway system, and the countries in the European Union are 

spending hundreds of billions of Euros to upgrade their existing 

network of highways, bridges, tunnels, ports and rail lines. 

If the United States does not adequately invest in its transportation infrastructure, our market share in the world economy will 

deteriorate. 

Our witnesses will bring to the table, valuable knowledge of 

freight logistics and intermodal transportation, and I hope the witnesses will help shed some light on where and how future transportation dollars should be spent. 

I yield back the balance of my time. 

Mr. DEFAZIO. I thank the gentleman. 

I just see our chart went down, but that is okay. 

I was remiss in not, at the outset, welcoming a new Member to 

the Subcommittee, Mr. Sires of New Jersey, who obviously, if we 

looked at the clogged arteries, kind of lives at the epicenter here. 

I am certain he will want to contribute to the solutions in this procVerDate Aug 31 2005 12:00 Jun 29, 2009 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 P:\DOCS\42134 JASON
4 

ess and, obviously if we look at the other end of the Country, Mrs. 

Napolitano lives right near another one of those choke points. 

Are there other Members who have a brief opening statement? 

Mrs. Napolitano. Okay, go ahead. 

Mrs. NAPOLITANO. Thank you, Mr. Chair, and thank you for 

holding this very important meeting. 

As you pointed out, I am from the Southern California area, and 

we do have big-time choke points. So anything that we can work 

with the industries to be able to address not only infrastructure 

but being able to get the product to market on a timely basis, 

whether it is transportation or highway, it means business and also 

if we are able to expedite it, then we have a solution for environmental issues. 

Along with that, of course, goes labor issues and all of those 

other good things that we have to deal with. 

I am looking forward to the testimony and again, thank you, sir. 

Mr. DEFAZIO. Thank you, Mrs. Napolitano. 

Any other Members have brief opening statements? 

Mr. COBLE. Mr. Chairman? 

Mr. DEFAZIO. Mr. Coble, yes, sir. 

Mr. COBLE. A very brief opening statement, Mr. Chairman. I appreciate your and Mr. Duncan’s calling this hearing. 

Mr. Chairman and ladies and gentlemen, I know of no domestic 

issue any more significant than the matter of freight movement 

from origin to destination. It is critically important, and I appreciate your having this hearing, Mr. Chairman. I am looking forward to the testimony forthcoming. 

Mr. DEFAZIO. Howard, for a moment there, I thought you were 

saying the movement from Oregon, and I was getting really excited, but then I realized it was southern for origin. 

Mr. COBLE. Well, then maybe Oregon may well be palatable too. 

Mr. DEFAZIO. Thank you. I appreciate it. 

Any other Members? 

If not, we will proceed to the panel then. 

The first witness will be C. Randall Mullett, Vice Chair of the 

Technical Oversight Committee, National Cooperative Freight Research Program, Transportation Research Board. 

Mr. Mullett, proceed, please. 

TESTIMONY OF C. RANDALL MULLETT, VICE CHAIR, TECHNICAL OVERSIGHT COMMITTEE, NATIONAL COOPERATIVE 

FREIGHT RESEARCH PROGRAM, TRANSPORTATION RESEARCH BOARD; SCOTT HAAS, VICE PRESIDENT OF TRANSPORTATION, UPS; MICHAEL UREMOVICH, CEO, PACER 

INTERNATIONAL; AND GARY CARDWELL, DIVISIONAL VICE 

PRESIDENT, NORTHWEST CONTAINER SERVICES. 

Mr. MULLETT. Thank you, Mr. Chairman, Ranking Member Duncan and distinguished Members of the Subcommittee. I appreciate 

being invited here before you today. 

I am Randall Mullett. I was invited here this morning because 

I am Vice Chair of the TRB’s National Cooperative Freight Research Program Technical Oversight Committee. This is a congressionally authorized applied research program that is managed by 

the TRB of the National Academies. 

5 

As you all know, the Transportation Research Board is a research institution rather than an advocacy group, and my comment 

should not be considered advocacy on their behalf. 

Mr. Chairman, you are to be commended for calling this hearing 

and for focusing attention on one of our Nation’s greatest transportation challenges, assuring a freight transportation infrastructure 

system that can meet the current and future demands of our Nation’s economy. 

Every day, hundreds of thousands of shipments containing everything from grain to computer parts flow through our ports, across 

our borders and on our rail, highway, air and waterways systems 

as part of a global, multimodal logistics program. 

This system is a complex array of moving parts that provides 

millions of good jobs to Americans, broadens the choice of products 

on store shelves, and creates new and expanding markets for U.S. 

businesses. 

Unfortunately, the system is showing signs of stress. Freight 

transportation has been described as the economy in motion. 

This illustration strengthens the indisputable truth that we cannot somehow decouple economic growth from transport growth and 

that constraints that limit the capacity of the freight system therefore place caps on our economic growth. 

Modern supply chains are intermodal, often international systems that are connected in ways that stretch the ability of government agencies and funding models that were established within 

traditional modal silos. Also, many important public policy issues 

including the environment, energy, social equity, safety and security have all become part of the transportation equation. 

More than 10 years ago, researchers warned, this broadening of 

objectives has expanded the range of relevant actors in transport 

policy and operations. 

As a consequence, the traditional transportation institutional 

framework is being forced to accommodate a wider than traditional 

range of objectives and interests at the same time there is rapid 

change in transport technology. Danger occurs when focus on the 

freight transportation system is lost in an effort to accommodate 

other public policy objectives, no matter how worthy. 

The surface transportation system, particularly highways, is 

under attack from users, safety groups, shippers, thought leaders 

and policy-makers at all levels. Lack of a shared national vision 

makes it difficult to develop public policies that address these concerns in a manner guided by established objectives and related performance measurements. 

To respond to these concerns, we must consider a systemic, holistic approach to freight transportation policy rather than the current model that focuses on discrete locations and is modal specific. 

Freight transportation extends State and national boundaries and 

moves freely among and between modes, but the current planning 

process does not. 

A patchwork of locally derived solutions does not somehow evolve 

into a national freight transportation system that supports today’s 

complex intermodal relationships. The Federal Government is the 

only entity able to focus on the national interests and develop a 

framework to identify appropriate solutions. 

6 

In conclusion, addressing the issues facing the Nation’s freight 

transportation infrastructure system will require revolutionary 

thinking, a new paradigm, if you will, that might include: 

Recognition that a traditional reauthorization program is no 

longer able to address the problems or take advantage of the opportunities associated with the freight transportation infrastructure 

system; 

A strong Federal role leading a wide variety of stakeholders in 

developing and articulating a national vision for the freight transportation system; 

A systemic view with clearly articulated national objectives; 

Strategic investments that maximize system performance with 

appropriate performance measurements and accountability; 

A focus on the full promise of true intermodal and multimodal 

freight transport to enhance the door to door movement of freight 

and seamlessly connect the U.S. economy to the rest of the world; 

A commitment to critically examine and remove existing regulatory constraints; 

And, finally, a commitment to refocus on the national freight 

transportation infrastructure system as a key to our economic vitality. 

The opportunity before us is not simply to keep up with freight 

transportation demands but to develop a long-term vision of the 

freight transportation infrastructure system that results in a supply chain that is faster, more efficient and more predictable than 

the one we have today. 

Members of the Committee, thank you very much for this opportunity to be here. I will be glad to answer any questions you may 

have. 

Mr. DEFAZIO. Thank you very much, Mr. Mullett. 

We would now move on to our next witness who would be Scott 

Haas, Vice President of Transportation for UPS. 

Thank you for being here, Mr. Haas. 

Mr. HAAS. Chairman DeFazio, Ranking Member Duncan and 

Members of the Subcommittee, thank you for your focus in this 

hearing on freight and for the opportunity for UPS to present its 

views. 

UPS frequently has an opportunity to share its experience with 

our Nation’s leaders as they tackle critical issues of the day, but 

today’s subject surely ranks well into the top tier both in importance and timeliness. 

My name is Scott Haas. Throughout my 29 years with UPS, I 

have had numerous operational assignments which have taken me 

from the Canadian border to the Gulf of Mexico. 

Currently, I am responsible for the single largest distribution facility in the UPS network which is based in suburban Chicago. 

That facility has 7,500 employees and process 1.5 million packages 

per day, 40 percent of which arrive and depart via rail. 

In this capacity, I live every day and all too many nights in close 

proximity to the transportation challenges and opportunities that 

face UPS, our customers and the Nation as a whole. At times, this 

is particularly frustrating work, but day after day I also witness 

how obstacles can be overcome through planning, ingenuity and 

perseverance. 

7 

The U.S. and global economies depend on the movement of 

freight and increasingly on movement that is time definite and expedited. It is well documented that the U.S. transportation infrastructure is not maintained and improved at the level needed to 

sustain current activity at optimal levels, let alone the growth in 

freight that is inevitable in the future. 

During the past 50 years, the United States has had a national 

vision regarding surface transportation policy, that being the Interstate Highway System. That system has served the Nation extremely well. 

A broader vision, one that includes all modes of transportation 

and an investment in technology is now required. It should focus 

on the movement of freight and must take a coordinated approach 

that crosses the traditional barriers between modes of transportation. This vision requires the establishment of national priorities. 

It requires national and regional planning. 

Freight movements go well beyond State and local boundaries. 

Any particular shipment may move through hundreds, if not thousands, of jurisdictions. An effective national freight policy requires 

a strong Federal role, in conjunction with State and local planning, 

to ensure the development of an infrastructure that best serves national and global commerce. 

UPS understands this and is reminded of it every single day. 

Each day, the UPS network handles 6 percent of U.S. gross domestic product and 2 percent of the global gross domestic products. 

UPS is the Nation’s third largest private employer, and its workforce of 425,000 delivers 16 million packages and documents to almost 8 million customers around the world every day with a vast 

majority of those deliveries being within, to or from the United 

States. 

To accomplish this, UPS puts 94,000 vehicles, from package delivery vehicles to tractor-trailers, on the U.S. highways and roadways every day. 

As one of the largest customers of Class I railroads for the past 

25 years, many UPS trailers are put on rail cars, approximately 

3,000 rail cars every day, many of them moving to and from U.S. 

ports. 

In addition, UPS airplanes fly 1,130 daily segments in the U.S. 

which connect its national transportation network. 

But to UPS, these are not separate numbers but part of one 

seamless system, and that is how public policy should view it as 

well. Let me give you a few real world examples of how this all fits 

together. 

UPS has customers in Los Angeles that export products to China 

and, yes, we handle a lot of exports to China. In some instances, 

for smaller urgent shipments of parts, for example, a package delivery vehicle will leave a customer’s facility and use local roads 

and highways, namely the 710 Freeway, to get to our regional distribution center in the Los Angeles suburbs. 

From there, the packages to the Ontario, California, regional airport for a flight to our Anchorage air gateway in Alaska where they 

will be put on another airplane for delivery to Shanghai the next 

day. Any major congestion on those roads or highways en route to 

8 

the airport, the packages may not arrive to their destination on 

time. 

Unfortunately, surface transportation congestion isn’t solely the 

domain of the U.S. highway system. America’s Class I railroads are 

a key service partner in the UPS transportation network. Railroad 

congestion, bottlenecks and lack of fluidity—much of which can be 

attributed to inadequate railroad investment—create a ripple effect 

that impacts other modal movements within the UPS system. 

Additional rail infrastructure investment will relieve congestion 

in the network, benefit the environment and alleviate commercial 

highway traffic. 

A Chicago-land example from just yesterday is typical of the 

daily challenges that UPS faces in running our business. A westbound from the New York-New Jersey metropolitan area feeds my 

facility with approximately 54 trailer loads full of small packages 

every day. That is roughly 65,000 packages. 

We take these trailers off of that train, unload them and sort 

them to other trailers for transportation to their final destination. 

We have a four-hour window in which to operate. 

Many of those outbound trailers are loaded onto a westbound 

train headed for the Pacific Northwest. If the inbound train is delayed to the extent that it causes us to miss the outbound departure time, we have to decide to delay the final arrival of thousands 

of packages by one day or put additional trucks on the highways 

to recover service. 

We are a service company, so we put up the additional tractortrailer movements, adding more vehicles to the highway system, 

burning more fuel and increasing our costs. 

As you can tell, congestion is very costly to both UPS and our 

customers. While the company has not determined the exact cost 

of congestion, we do know that if each of our package delivery and 

over-the-road drivers is delayed 5 minutes each day, the cost to 

UPS is 100 million per year. 

Multiply this problem nationally, and the numbers are staggering, costing our economy $78 billion annually as well as 4.2 billion hours of travel delay and 2.9 gallons of wasted fuel each year 

according to the American Road and Transportation Builders Association. 

UPS firmly believes that the magnitude of this challenge is an 

opportunity for our Nation to set an example for the world regarding the establishment and maintenance of an efficient transportation system with the emphasis on the system as a whole and not 

just one or the other of its parts. 

Thank you again for the opportunity today to share UPS’s views 

on this important matter, and I too look forward to the opportunity 

to answer any questions you may have. 

Mr. DEFAZIO. Thank you, Mr. Haas. 

Next, we would turn to Michael Uremovich, Chief Executive Officer and Chairman of the Board, Pacer International, Incorporated. 

Mr. UREMOVICH. Thank you very much and thank you for the 

name. I am from a large family. So, hey, you works as well, but 

thank you very much for the opportunity to speak today, Mr. 

Chairman. 

9 

You have a prepared statement, and I won’t repeat my way 

through that. I would like to make a couple of points. 

Pacer International is a $2 billion a year company that coordinates the movement of goods for major retail stores and other 

kinds of U.S. consumer goods through the international and the domestic system. We fundamentally make a living because the transportation system is broken up into a whole bunch of pieces, and 

there isn’t anybody other than a coordinating function that could 

choose the proper mode at the proper time for that kind of a movement. 

UPS, obviously, Fed Ex and some other huge companies do that 

in their own networks and do a very, very fine job of that. Pacer, 

however, does it for smaller companies and for people who need to 

get their goods to destination on time and in the right order. 

We handle about a million loads per year on the U.S. transportation system. We run the largest double-stack container network 

in the United States. We also have a whole series of owner-operator truck drivers out there making the final deliveries. 

I want to make two additional points to my statement today, and 

that is, first and foremost, the intermodal system provides an opportunity to help a lot of what you pointed out, Mr. Chairman, relative to the artery diagram on the system. 

If we had just moved our freight, our little company’s freight on 

the trucks last year, we would have put 25,000 more trucks on the 

U.S. highways. We would have run how many more miles, we 

would have risked how many more lives, and we would have been 

terribly inefficient relative to the use of fuel, an increasingly scarce 

and expensive resource for all of us. 

So, one point I would like very much to make is that when you 

consider the national transportation policy approach, please consider—I urge you to consider—the use of maximizing each of the 

individual modes for those things that they do best. The railroads 

have made significant additional investment in their infrastructure 

over the last several years in order to help mitigate the significant 

transportation capacity crunch we had in the 2005-2006 freight 

year which was terrible for all of us. 

Secondly, however, I also urge when you make those considerations, please, please think through and consider some of the unintended consequences. It always frightens a businessman when Congress begins to talk about national policy that will somehow reach 

out and solve a whole series of problems that we have to deal with 

every day. 

This is a very, very complicated system, and it is impossible to 

tweak only one part of it and not expect it to come out some place 

else. I will give you a specific example of that that Mrs. Napolitano 

will probably be familiar with. 

When the Southern California ports choked up two years ago because of some infrastructure problems and the shipping companies 

began to reroute cargo to the East Coast, the highway between 

Charleston and Atlanta became impossible. That is not something 

that could have necessarily been foreseen by people further downstream. 

In the freight business, we have a phenomenon called the pig in 

the python, and that is if you get a problem in some part of this 

10 

system, it takes forever to work through it. It is not something that 

can simply be handled by a policy declaration and expect the thing 

to work efficiently. I urge you, when you do that, to seriously consider these unintended consequences as we go through the process. 

I share with my colleagues here at the table today, concern about 

individual local actions that do the same thing. You have to think 

of our freight business as an enormous plumbing system, and when 

you tweak a knob some place, it is either going to back up or dry 

up some place else. So, please, rely on the staff and some of the 

folks who have to make that freight move as you consider this policy. 

Again, I thank you very much for the opportunity to be with you 

here today. 

Mr. DEFAZIO. Thank you. 

I will turn to Mr. Baird who would like to introduce the next witness. 

Mr. BAIRD. I thank the Chairman. 

It is indeed a pleasure to introduce Gary Cardwell to the Committee. 

Mr. Cardwell has served as Chair of the Oregon Governors Small 

Business Council. He is a member of the Regional Freight and 

Goods Movement Task Force that is seeking ways to improve the 

regional freight system and develop strategies that address the environmental impacts of freight and goods movement. 

He has also served on the Pacific Northwest International Trade 

Association, working to promote international trade throughout the 

Northwest. 

His business, Northwest Container Service, employs close to 100 

employees and provides intermodal container transportation services throughout the Pacific Northwest. He has some innovative 

ideas to share about how we can fund projects. 

I, as a fellow Northwesterner, welcome him to the Committee 

and thank him for his testimony. 

Mr. DEFAZIO. I thank the gentleman. 

Washington can claim some credit and I would like to claim credit too since his business operates in the State of Oregon. 

With that, we would welcome Mr. Cardwell. 

Mr. CARDWELL. Thank you, Mr. Chair, and thank you, Congressman Baird, for the introduction. 

Northwest Container has been in business for 25 years. We are 

a short-haul rail provider. 

We subcontract with the Class I railroads to hook and haul from 

our facilities, utilizing our rail cars, to our facilities. It is a model 

that has worked for 25 years. We rail between the ports of Seattle, 

Tacoma and Portland. 

We average about 70,000 containers a year, which is equivalent 

to about 100,000 truck trips annually, and 85 percent of those containers are loads. The model we have tried to design—give steamships the opportunity to reload those containers with loads versus 

trucking them back as an empty. 

We all know a trucker is going to drive down with a load. He 

needs to come back as an empty. Fifty percent of the time an international container is on the highway, it is empty. That is a lot of 

containers. 

11 

Our model is designed to try to give the opportunity to reload 

those, and we have done that by developing our own infrastructure 

and our own facilities to do that. 

In providing short-haul rail service, we pick that international 

box up at the port. We truck it at our facility. Rail it down to Portland and then deliver it to the Nikes and the Columbia Sportswear 

and the Nordstrom clothes and the tire guys. That empty then 

comes back into our facility and then has the ability to reload with 

an Oregon export. 

Christmas trees are our claim to fame to Hawaii. We move about 

500,000 Christmas trees on an annual basis to Hawaii through 

Matson. 

So the idea is to reload those. One of the things is the load-load 

strategy for us has been very successful. 

We believe that there needs to be a combination of smart land 

use planning as well as new, innovation transportation packages. 

One of the problems that we see in the Pacific Northwest is that 

our importers are in one place and our exporters are in another 

place. What we are not doing is we are not moving the current new 

wave of imports into distribution centers where the exporters are. 

If we could do that, again, that container could then be reloaded 

with an export. Instead, exporters now have to retrieve empty containers before they can move their product to market, trucking 

empties all over our highway system. 

Central Valley, California is another example. Again, they are 

not rail served, so they are trucking it. They are trucking it 200 

miles inland to unload at an IKEA or a Target or a Wal-Mart. 

That empty is then brought back to the port, and the exporter 

out of that region then drives into the port to get the empty to 

bring it back in as a load. 

It is a very inefficient model. A more appropriate land use model 

would position distribution centers in a way that minimized loadempty-load container movements. 

Within the rail world, a lot of questions have been brought up 

about open access, allowing shippers on. My belief is the railroads 

don’t have capacity to provide open access. I think that is a strategy that we need to move away from. 

Instead, I urge the committee to consider supporting a program 

designed to connect existing short lines. By connecting the short 

lines with new rail investments, new freight rail systems can be 

created. Building a new rail mile is less expensive than a new 

highway mile. By investing in new rail miles, connecting short 

lines, shippers could utilize short-haul rail for intrastate, intra-region business. 

The Class I’s have designed their business model through acquisition and merger for long-haul freight movement from L.A. to Chicago, from Seattle-Portland to Memphis. They are leaving behind 

a lot of the short-haul intrastate business. 

Oregon just happens to be a tweener. We are between California 

and Seattle/Tacoma. The volume of freight traffic driven through 

downtown Portland and eventually over our new Columbia River 

bridge—20 years from now—is staggering and projected to get 

much worse. 

12 

There is a lot that could be done intrastate, intra-region that I 

think that we could do. As private owners, as short lines, toll us 

to ride on your rail network to help connect those short lines. So 

it is a program. 

I think we need to start thinking outside the box. There was actually an article in the Journal of Commerce where India has decided to do just that. The private sector will construct their own 

intermodal facilities, the country will build its rail network and you 

sign up to have them hook and haul your unit trains from one part 

of the country to the another. 

Here in the U.S., I think we need to look at that intrastate, 

intra-region that is, at this point, noncompetitive with the Class I’s. 

Let them do the long haul. Assist them in expanding and making 

that investment into their network. 

One example that I wanted to bring up also is the Connect Oregon bill. Connect Oregon was a $100 million bill. There was one 

two years ago. There was one this year. There were 250 million in 

applicants last time. There were 250 million in applicants this 

time. 

In Connect Oregon I, $45 million of the $100 million was dedicated to rebuild rail infrastructure. I believe that there will be closer to $65 million that will be used out of that program, again, for 

rebuilding the existing rail infrastructure. But what is not going in 

is development of new infrastructure to connect existing shortlines. 

The short lines need investment. A Visionary Federal and State 

program to help connect short-lines, to create those unit trains, to 

get to the Class I’s to haul long haul, is an approach we need to 

look at. 

Thank you. 

Mr. DEFAZIO. Thank you. 

We now proceed to questions from the Members. 

My first question is related to the big picture, and we may have 

some differences. Mr. Uremovich raised the issue of unintended 

consequences and concerns about national policy or national planning. 

On the other hand, we had a vision that the Federal Government 

finally delivered beginning in the Eisenhower years of an interconnected national highway system. When we finally accomplished 

that goal, we didn’t put forward a new broad vision, but we began 

to give more flexibility to the States to accomplish what they saw 

as their priorities and their needs. 

What we lack, I think, is both some level of accountability on 

how those funds are being spent and how that is applicable to 

these national problems. So I guess what I would ask members is 

how do we balance this equation? 

I don’t think what we are doing currently works well. You are 

worried about what we might do in the future because of unintended consequences, but there is something, some sort of balance 

in between. I would first direct it to you and Mr. Mullett or anybody else who wants to respond. 

Mr. UREMOVICH. Thank you. 

13 

I am simply not competent to provide any counsel regarding the 

Federal-State relationship issue. I mean that is something clearly 

that you folks are in a much better position to judge. 

Mr. DEFAZIO. Well, then if I could, just to clarify, I believe a lot 

in decentralizing and working with the States as partners and not 

dictating. But there is also a national goal here which transcends 

State borders, and that is the key, at least for some of the funds 

we are investing. 

Mr. UREMOVICH. I certainly agree that an overall view and guidance plan, if you will, is necessary and certainly one that I would 

be very, very much supportive of, as our company would be. 

However, again, I caution that frequently it seems, and I am 

sure we have all been to an airport recently when we have all seen 

situations that don’t seem to make very much sense just in a pure 

common sense way in getting on an airplane. I would hate to see 

a national transportation policy that imposed essentially unworkable kinds of tasks. 

Now, to some extent, I speak against the interests of my own 

company when I do that because we make a living and a pretty 

good one because this thing is all broken up and somebody needs 

help putting it together. All right? 

So, believe me, I am not opposed at all to coordination or rationalization or those kinds of things. I am just, like most business people, a little bit concerned when you folks come out to help us too 

much in what we do on a day to day basis. 

Mr. DEFAZIO. I share your caution. 

Mr. Mullett, do you want to share with us how you would address that? 

Mr. MULLETT. My opinion is that while the notion of some kind 

of Federal command and control system is probably way out of 

bounds, that is not the same as what I have been talking about, 

which is leadership and a vision for the system. The Federal Government does have a lot of opportunities through agenda setting, 

through appropriate measurements and accountability systems, to 

help impact this. 

I would never advocate taking away the important role that 

States and localities take in the planning process, but somebody 

has to lead. 

One of the things that you have done that is, I think, vitally important is just having these kinds of hearings that focus on the 

freight system. Freight runs on the same exact system that our 

commuters, our vacationers, our recreational drivers all operate on. 

Freight sometimes loses its place among all those other things, and 

we don’t think of it in the way of the vital role that it plays. 

I loved your artery analogy and the clogged artery. We all know 

what happens in our bodies when that happens. 

Mr. DEFAZIO. Would anybody else like to comment on this? 

Mr. Haas? 

Mr. HAAS. An additional point, I think several of us are trying 

to make is called a holistic approach to our infrastructure, meaning 

that the highway bill that funds our surface transportation with 

that mode, the highway transportation. 

The railroads are out there making decisions, investment decisions on their own. I am not even sure how we fund port expanVerDate Aug 31 2005 12:00 Jun 29, 2009 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 P:\DOCS\42134 JASON
14 

sion, the Port Authority, and then you have the FAA and the airlines. I think the point we are trying to make here is that what 

is required here is an approach that integrates all of those modes 

because that is the way freight moves today. 

The model that we are using today to make those decisions, I 

think, we all agree is a bit outdated. 

Mr. DEFAZIO. I think that is a very good point. 

We just held a hearing last month in the Rail Subcommittee on 

the need for investment, and one of the statistics we have before 

us today would be if rail doesn’t invest sufficiently to meet new demands, that we are going to see 31 billion more vehicle miles in 

2035. 

But the trick there is how do we work with, partner with? 

My State has done some innovative things with the railroads. 

Anyway, we are trying to work with them and figure out how we 

get them to make the needed investments, and then we have the 

new hedge funds buying into railroads and demanding that the 

railroads not make capital investments. So I mean we have some 

interesting problems. 

Mr. Cardwell, I am just curious, and I would love to see the article if you would provide it to the Committee. It seems like India 

has figured out a way to perhaps deal with some of that issue in 

terms of dealing with the Class I railroads, do you think? 

Mr. CARDWELL. Well, actually, they had a Class I railroad and 

they took it over, and they decided to make it their own. What they 

did is they had 19 to 20 people signed up to utilize their hook and 

haul, that all agreed to build connecting facilities to that so that 

you could deal with the ports and the inland movement and the 

outlet movement, especially for the exports of freight. 

Again, it is an approach that is more regional in the United 

States than national would be my vision. 

In Portland alone, there is only a couple of miles between the 

corp and the Portland Western. That could get you from K-Falls all 

the way up to Portland. There is probably 10 more miles from Portland into Rivergate. In the Rivergate area north of Portland is 100 

percent of the international boxes. 

However, none of those have the ability to get to Eugene, to Albany, to K-Falls because that is not a connecting service to the 

short lines. It is also not a service that the Class I railroads want 

to do. It is not unit train business. It is smaller business. 

So we are talking Lowe’s, for instance, that moved into Lebanon, 

they were going to have three days a week at 250 containers come 

in. Unfortunately, due to the economy and the housing market, 

they are down to about 50 to 100. 

We were looking at moving trains from 30 to 50 containers a 

week for them. Then those empties would be reloaded down in Eugene with the hay-straw agricultural product and then brought 

back up to Oregon, freeing up capacity through downtown. 

So the land is available. The exports are available. The Lowe’s 

model is a regional distribution model where within 100 miles, the 

distribution centers feed stores within 100 miles of all their distribution centers. 

Mr. DEFAZIO. Right, and that might add another element to what 

a national plan would consider, which would be avoided cost. What 

15 

would it cost for another lane mile if we need to accommodate the 

trucks to carry that freight or could somehow we get the Federal 

Government to partner with or somehow work, through inducement or otherwise, with rail to provide that capacity there. 

I think it is a very interesting problem, one I would hope people 

would address, although I thought at the outset that you were kind 

of recommending nationalization of railroads. I know you are having some frustrations, but I have only had one other person recommend that to me, who was one of the most conservative people 

in my district who owned a lumber mill after the merger of UP and 

SP. 

He waxed poetic. He said, couldn’t we go back to the way it was 

in World War II? 

I said, well, I wasn’t around in that era. 

He said, oh, the government did a great job running the railroads. 

I pointed out that is socialism, but he was so frustrated with his 

inability to get the railroad to move his goods. 

So I think there is an appropriate role here for the government. 

Something that is in the interest of many of these individual firms 

may not serve the national interest, and we may need to somehow 

induce them to better serve the national interest. 

Mr. UREMOVICH. You might, Mr. Chairman, find a closer example of this kind of thing if you examine what some of the ports are 

doing in the U.S. Southeast in some of the regional planning and 

regional transportation activities that are going on down there. I 

don’t believe they are connecting rail networks at that particular 

point, but it is a very clear example of folks recognizing that individual locales are no longer in a position to do some of the things 

that are required to be done. 

Mr. DEFAZIO. Okay. Thank you. I thank the panel. 

Mr. Coble. 

Mr. COBLE. Thank you, Mr. Chairman. 

Good to have you all with us, gentlemen. 

Mr. Haas, it is distressing to learn or to hear that congestion 

may be costing UPS up to $100 million a year. Are there strategies 

that UPS uses to hopefully reduce the impact of this congestion 

and the cost associated with it? 

Mr. HAAS. Yes, we have several. 

One is the computerized routing that we use to minimize the 

number of miles traveled. There has been an awful lot of press 

lately about the fact that UPS routes its drivers to only make 

right-hand turns. I had a discussion about it last night as a matter 

of fact. 

I know everybody smiles when we say that, but the fact of the 

matter is if you think about sitting at an intersection with a stoplight, in most places, you can take a right-hand turn immediately 

rather than sitting there, waiting and burning fuel. It saves us a 

lot of time and fuel as well. 

On the tractor-trailer side, we measure the number of minutes 

that our tractor-trailer drivers sit idling every day. I get a report 

every morning that tells me how many minutes we spend with the 

motor running and the wheels not turning. We, obviously, take a 

16 

look at that and decide which corridors are causing us the most 

fuel burn unnecessarily and reroute where possible. 

But, by definition, keep in mind that those major arteries, and 

I will go back to Chicago because I am most familiar with that. If 

we have construction on the Dan Ryan, for example, and we have 

to reroute around that, the definition of those ulterior routes are 

not as efficient by design as the original one. 

So, yes, we have electronics to help us with it, but there is no 

solution, long term, for what we are here to talk about today. 

Mr. COBLE. Thank you, Mr. Haas. 

Mr. Mullett, in your written testimony, you state that we can no 

longer afford to spend limited Federal resources on projects that do 

not meet the most important national needs. Are there specific 

Federal programs that exist today that you feel should be eliminated because they do not serve national needs? 

Mr. MULLETT. No, sir, there are no programs that I think need 

to be eliminated. Rather, I would say we need to concentrate in the 

freight world on things like corridors of national significance and 

do a better job, I think, of analyzing from a national perspective 

where those dollars can be invested that have the most impact on 

making the system efficient and effective. 

Mr. COBLE. I got you. 

Mr. Haas, let me come back to you for a second question. In your 

written testimony, you state that the Country needs a coordinated 

approach that breaks down the traditional barriers between different modes of transportation similar, probably, to Congressman 

Mica’s concept of a National Transportation Strategic Plan. 

Do you feel, Mr. Haas, that some in the transportation community would resist removing these modal barrier because of fear of 

perhaps losing market share or dedicated Federal funding? 

Mr. HAAS. I believe initially that may be the case in some places, 

but as an example I will go back to the Class I railroad situation 

for just a second, not to say that regional issues are not important, 

but if we can use the Class I model as it stands today. Their investment, although it has been fairly healthy in the last few years, is 

not keeping up. Someone mentioned 2005-2006 years were a nightmare from a railroad perspective. 

I don’t know if you brought this up when you were talking to the 

railroads, Mr. Chairman, a couple days ago, but one example would 

be a trust fund established for the Class I railroads similar to what 

we have for the highways. 

To your point, I do think they resist that, at least initially, but 

I think if done correctly it would not only provide the necessary 

funding, which on occasion they will say they don’t have, but direct 

it in ways which will increase the fluidity and the speed of those 

railroads. 

Mr. COBLE. Mr. Chairman, this has been an informative hearing, 

I think, and again thank you all for being here. 

I have to go to another meeting imminently. Did anyone else 

want to weigh in on the question I put to Mr. Haas before I conclude? 

Mr. UREMOVICH. The only thing that I might add there is that 

the modal boundaries are probably more strongly drawn here in 

17 

Washington these days than they are drawn in the private community. 

As Mr. Haas pointed out, all of us work on all the modes all the 

time, so we are very familiar with them. I am not so sure that that 

is the case when you talk about the various Federal railroad bureaucracies and air bureaucracies and port bureaucracies here in 

Washington. 

Mr. COBLE. I want my friend from Oregon to take note that I am 

yielding back before the red light illuminates. 

Mr. DEFAZIO. You get credit for next time, Howard. That is incredible, especially since you are not known to talk real fast. 

Mr. COBLE. Thank you, Mr. Chairman. 

Mr. DEFAZIO. Thank you. Good questions. 

I will recognize Members on the Democratic side in the order in 

which they appeared for questions, and Mr. Sires would be first. 

Mr. SIRES. Thank you, Mr. Chairman. 

The district I represent includes the North Port and the Elizabeth Port. One of the things that over the weekend I did was with 

the Army Corps of Engineers, watched the dredging that is going 

on. 

As you talked, it just frightens me because I see the Panama 

Canal being widened. They are building these super tankers. They 

are putting these cranes on these ports that can lift two boxes at 

a time. If you can see, there is no white up there. Everything is 

red. 

We have a huge UPS hub in Secaucus, New Jersey, which already clogs up the highways, but skip it. We get a lot of jobs there. 

Mr. HAAS. I am glad you see the tradeoff. 

Mr. SIRES. I worked there as a college student. 

I mean where are we headed with these super tankers? 

Even the Newark Bay Bridge in New Jersey, they are talking 

about raising it because these super tankers can’t make it through 

there. Are we preparing? Are you prepared to handle all this 

freight that is coming in? 

The area already is so congested. Let’s face it, most of the rail 

lines over the years have been paved over. I am frightened to death 

of what you are talking about here. I mean how are we going to 

deal with some of this? 

Nobody seems to be focusing on when all this freight is coming 

in. They are talking a few years, and I know the port grows sometimes 10 percent a year, of the freight that comes in. 

Anybody? 

Mr. UREMOVICH. Certainly in these cases, there are not going to 

be any easy answers, and there are going to be some very, very difficult choices and tradeoffs to be made. As Mr. Mullett pointed out, 

you have a whole series of competing, not just economic but social, 

questions regarding these kinds of solutions. 

Certainly, I would not offer any silver bullet, if you will, because 

I don’t know if there is one. There won’t be easy choices or easy 

solutions, only intelligent choices. 

Mr. HAAS. I think it starts with elevating the issue, and I think 

that is what this Committee, and I commend you for doing it. I 

think it has to be a national dialogue. Up until this point, at least 

18 

outside of Washington, it doesn’t appear that that is the case from, 

like I said earlier, a holistic point of view. 

Then, secondly, I will go back to this comprehensive strategy 

again. You are absolutely correct. If we don’t take a look at the entire intermodal network, a lot of it is going to be forced onto those 

arteries. 

I keep looking at them. I like that picture too. I keep looking at 

those red arteries, particularly in the area of the Country that you 

come from. It will only get worse unless we take a look at it from 

a comprehensive strategic standpoint. 

Mr. CARDWELL. I will add, the statistics say the United States 

needs to add 1.5 million TEUs of port capacity a year to keep up 

with imports. 

The drawing up there, three years ago in 2005, to 2015, freight, 

container freight will double. It doesn’t say that, but that is what 

is going to go on by 2015. 

The next bill is an extremely important bill to think outside the 

box because it will be out in 2009 and go to 2015. So thinking 

multimodal, thinking ocean and thinking rail in how we can help 

ourselves is going to be a big part of that transportation bill. 

Mr. SIRES. I only spoke about the New Jersey side. I didn’t even 

mention the New York side, what is going on, all the growth on the 

New York side. 

Any silver bullets? No? All right. 

Thank you very much, Mr. Chairman. 

Mr. DEFAZIO. Thank you. 

I would now turn to Mrs. Drake who was first on the Republican 

side. 

Mrs. DRAKE. Thank you, Mr. Chairman. 

Gentlemen, thank you all for being here. 

I represent the Port of Virginia. So it is fascinating for me to 

hear your testimony today. 

I think everyone in America knows the number one issue in Virginia is transportation and the problems that we have had trying 

to address our transportation needs. My big concern in our district 

is how do you grow that port and meet the needs that you are talking about if the transportation system doesn’t support that? 

We are going to be the start of the Heartland Corridor in Portsmouth, Virginia. We are very, very proud of that. We are talking 

about a pilot program to barge containers between our ports which 

certainly would get trucks off the road. 

I want to start with Mr. Cardwell because you talked about 

something near and dear to our hearts, and that is the containers 

and these empty containers. I wasn’t aware, and I don’t think 

America is either, that probably 50 percent of those trucks you are 

looking at on the highway are carrying empty containers. So one 

of my questions is: Is there work being done right now on how to 

get around this issue? 

Is there some way that those containers could be shared between 

companies, almost like a lease system where you don’t ship them 

back empty? They sit somewhere until they are filled and come 

back because my understanding is there is a very narrow window 

of time before they have to be sent back to where they originated. 

Maybe that is something. 

19 

But is somebody looking at that issue? 

Mr. CARDWELL. I am not sure. 

I think, again, the issue is more smart land use planning, putting imports where exports are. No one wants to move an empty, 

railroads, truckers. It doesn’t pay to move an empty. 

So what we need to do is develop a better system where the importers are where the exporters are. They get immediately reloaded 

and back. 

In order to grow the ports to where they are going to be, there 

is a lot of talk of inland intermodal centers. So, again, you are railing 150 miles into an area where the exporters are. That container 

is unloaded. It is loaded and brought back. 

The ports do not have the capacity in the future to store empties. 

So the whole idea of future inland intermodal centers is to rail off 

the port, out with loads, to get reloaded and then rail those loads 

back onto the port and immediately put on the ship and out. 

You can’t build enough land. If you look at the ports today in 

L.A., Long Beach, New Jersey, Oakland, California, it is going to 

have to be the model. They can’t continue to handle the empty volume that they do and be able to handle the future growth that is 

needed by this Country. 

Mr. UREMOVICH. With due respect to Mr. Cardwell, I will tell you 

unequivocally that half the movements in this Country in containers are not empty. All right. They are simply not. 

If you look at the empty miles statistics, I am sure from UPS or 

certainly from my company, our boxes are under load at least 80 

percent of the time. All right. 

I happen to live in Virginia Beach, so I see that all the time. 

There are some empty movements, but we would not be in business, and I would argue that no transportation company around 

would be in business if we were moving half the time, empty. 

Mr. HAAS. Yes, I would agree with that. We do, on a small scale, 

have some partnerships. It is a relatively recent effort on our part 

to eliminate empty movements. 

But as an example, if we have an imbalance of loaded trailers 

on the highway network, going east to west, and the railroads have 

the exact opposite, we partner with them so that our empties are 

used. We use their containers on a chassis on the highway, and 

they use them coming back in the other direction. 

Mr. CARDWELL. Maybe I should clarify that. Intrastate, intra-region, the majority of those, 50 percent of those containers are going 

to be empty. Cross-country, long-haul, I think they are correct. I 

think a majority of those are loaded. 

Mrs. DRAKE. That is a concern because of the number of trucks 

on the road. 

But, Mr. Mullett, just real quick because I am running out of 

time, I think everyone agrees we are under-investing in our transportation system across the board, and we talk a lot about publicprivate partnerships. We talk about tolling, congestion pricing. Are 

there any other things you would suggest for us to have in that? 

Certainly, in Virginia, we are trying to work on that issue. 

Mr. MULLETT. Yes. I don’t think there are any additional ones 

that have not been tabled. If you are looking for something that no 

one has thought about, I don’t believe that that is the case. 

20 

What I do believe is very, very important is that we look at this 

full range of things as tools that are in out tool box that we can 

use and don’t get caught up in this one absolutely is the end game 

or this one is absolutely the end game. 

I do think that we have under-invested in our infrastructure. I 

think reasonable fuel tax increases are probably appropriate. I also 

think there is sixty to eighty billion dollars of private equity money 

sitting out there and funds that want to invest in our infrastructure and if we can put a proper framework in to allow that to happen, that that can probably happen. 

Now that is not to say that every public-private partnership is 

good. There need to be constraints and frameworks around those, 

but we have a lot of different mechanisms that we can look at. If 

we are not willing to look at them all and consider them all, I don’t 

think we will ever reach the level of investment that we need to 

have to really make a difference to meet the future needs. 

Mrs. DRAKE. Thank you, Mr. Chairman. I yield back. 

Mr. DEFAZIO. I thank the gentlelady. 

Next would be Mrs. Napolitano. 

Mrs. NAPOLITANO. Thank you, Mr. Chairman, and thank you for 

holding this hearing. 

I have a great interest in highway movement. I worked for Ford 

Motor Company in transportation for 12 years and have a great interest in goods movement as well as public safety on the highways 

and increasing the support for expanding freeways and highways 

to be able to accommodate not only truck traffic but also people 

going to work, et cetera. 

Several things come to mind as I am looking at that map on the 

wall. Any of you do nighttime deliveries? 

Are you even considering looking at what is being proposed with 

maglev to be able to utilize it to be able to move big containers 

through Maglev? 

Those are ideas that are being floated around here in Congress 

and also discussed especially at the L.A. Port. Long Beach and Los 

Angeles, recently, they are looking at establishing in three phases 

maglev container movements. While it sounds great, they are asking for Federal funding and, of course, the public to pay for a lot 

of the transit improvements. 

I feel that the railroads have to great partners in this, and so I 

would like some of your opinions on this. 

Mr. UREMOVICH. I can’t speak to the maglev at all, but I do know 

that in your area during the 2005-2006 crunch, one of the benefits, 

if you will, coming out of that was that a number of our customers, 

particularly in the Inland Empire and down in the Long Beach 

area, were willing to shift to night receipt. 

For years, many of our customers were unwilling to do that because it does raise their costs. Night work typically pays different 

than day work. So that is becoming increasingly common. It is not 

yet the norm. 

Mrs. NAPOLITANO. Well, during the Olympics in Los Angeles, 

back when Mayor Bradley was in office, Ford went to nighttime delivery with a lot of other folks, and they found it really created a 

lot of solutions because you didn’t have the pollution, you didn’t 

have the traffic, you didn’t have congestion on the highways. All 

21 

they needed was to be able to set aside a special area where the 

driver had keys to make the delivery to. That worked. In fact, they 

are still doing it. 

So there are other benefits from something of that nature, and 

I was just wondering if any of you have gone to that. 

Mr. HAAS. Not necessarily what you are speaking to but necessarily because of the way our network works, a good chunk, I 

want to say the majority of our tractor-trailer movements, not the 

ultimate delivery to your home but the tractor-trailer movements 

that we have in our movements occur at night, but it is just by design. It is the way our network works. We didn’t do that to help 

relieve congestion during the day. 

Mr. MULLETT. I can’t speak about the Maglev situation, but I can 

tell you that a researcher named Jose Vargas at Rensselaer 

Polytech has done a good bit work in this notion of delivering at 

night in New York and what that might ultimately mean. 

I think that his research shows that depending on the type of deliveries that are being made, there is good applicability to that but 

that when you get into can you get everybody to take their delivery 

at night or does it create two different deliveries in the same area, 

one during the day and one at night, and he also did a lot of work 

on what does it really mean in terms of energy consumption and 

energy use for keeping all these places open in the evening. 

I think that the research indicated, at best, that it was very 

questionable about whether that was a good policy from that point 

of view for everything. 

Now, are there specific instances that it makes a whole lot of 

sense? Yes, and in the commercial markets we are seeing an awful 

lot of people are taking advantage of that when they can. 

Mrs. NAPOLITANO. Do you have any suggestions then to add, alternatives ways to add highway capacity? 

I know we have to have investment to be able to, Federal investment as well as State investment to be able to do the upgrades or 

widening of roads. But consider, in some areas, you have an eminent domain, so that is out of the question. Would you then look 

at planning on a second level, elevated? 

Mr. UREMOVICH. I have no idea. 

Mr. MULLETT. I am not an engineer, so I can’t make. I know that 

that has been looked at different places, and it has been tried at 

different places 

Mrs. NAPOLITANO. Well, that would add capacity. 

Mr. MULLETT. Right, and I also think there are some other public 

policy things that are really hard decisions to make, but I think we 

have the ability now to do some good research in connectivity between modes and are there ways that we can do some modal shifting. 

There is also, I think, the opportunities now to do some research 

in looking at truck productivity and how do we handle that. We are 

building some constraints at our ports and our borders that have 

to do with security protocols and things like that. 

So that, while I think that physical infrastructure is definitely 

something that needs to be looked at and has to happen, there are 

other short-term public policy decisions that we can probably look 

at that might have some small but more immediate impacts. 

22 

Mrs. NAPOLITANO. Thank you, Mr. Chair. 

Mr. HAAS. I am not an engineer. 

Mrs. NAPOLITANO. I am sorry. Go ahead. 

Mr. HAAS. I am not an engineer either, but I do believe that anything we set our sights on is possible. It usually comes down to 

funding, and it may surprise some people in the room that my company is not opposed to increases in the fuel gas tax, provided with 

the caveat, of course, that it is directed and we know that it is directed and there is accountability to its direction to increase these 

highways and the byways that we use. 

If that includes double-stacking highways on top of one another, 

I am sure that is possible, but it requires an awful lot of money. 

We understand that. We are not opposed to it as long as it funded 

to the proper place. 

Mrs. NAPOLITANO. Thank you, Mr. Chair. 

Mr. DEFAZIO. I thank the gentlewoman for her questions. 

I would now turn to Mr. Brown. 

Mr. BROWN. Thank you, Mr. Chairman. 

Thank you, gentlemen, for being here and part of this discussion 

this morning. 

The interstate system has certainly been a big concern of mine. 

I know we haven’t really made any improvements since 1954, 

thereabouts, except maybe add additional lanes. I was just wondering if you all could give me some input. 

My thought would be, as we look at the reauthorization bill, that 

we take a look at freight movement, traffic movement and maybe 

try to find alternative routes rather than to just keep expanding 

the original routes which we really haven’t done much about that 

since the original in 1954, looking at maybe Interstate 2 or some 

aspect of that. 

You know we have the decision we are going to making pretty 

soon when the Panama Canal is completed, and a lot of that freight 

that is stopping over in Los Angeles and over on the West Coast 

is going to be coming through the canal and coming up to the East 

Coast, and the movement is going to be going in a different direction. 

Just for general discussion, how do you think, as we propose the 

next reauthorization, that we should address the interstate system. 

We will start with Mr. Mullett. That would be good. Thank you. 

Mr. MULLETT. This is a very, very difficult question because, as 

you know, it involves an awful lot of planning and analysis of 

freight flows, future demographic changes in the Country. If you 

are going to put a brand new road in or add additional corridors 

in different areas, those things have to be taken into consideration. 

I subscribe to the field of dreams theory of road building, which 

is build it and they will come. It is because of the hydraulic nature 

of the freight system. If it bumps up against a capacity constraint 

some place, it is going to find an alternative route, whether it is 

an alternative mode or an alternative road, and we are seeing 

those things happen now. 

So I definitely think that that thought process has merit, and I 

know there is research underway about those long-term capacity 

flows, long-term demographic changes that might help shed some 

light on that kind of planning. 

23 

Mr. BROWN. Mr. Haas? 

Mr. HAAS. Keeping in mind, as I mentioned before, this integrated approach because, to Mr. Mullett’s point, if freight is an example, and I didn’t come here to beat up the railroads. I know it 

sounds like I am. 

If freight on a railroad is bumping up against capacity issues, it 

is going to go on a highway, no different than the highway flows. 

If we run into one of those arteries up there that is severely over 

capacity, we are going to find another way to do it. If that is going 

back to the rail, now you are bumping up against the same issue. 

So, like I said before, I think the biggest piece of this discussion 

should be centered around the way to look at all of those modes 

at the same time. I think that is a better approach to take. 

Mr. BROWN. I know you are certainly tracking your lost time by 

congestion on the highways, and it is interesting to see the movement on that. Are you seeing a sizeable increase? 

Mr. HAAS. The best comparison I am prepared to give you, and 

this may not answer your question but I think it will, is our network in the Oklahoma area. I think most folks know that there is 

not a whole lot of congestion, and your map shows that, in Oklahoma. Our tractor-trailer drivers spend on average, in their 10- 

hour day, 21 minutes idling. 

In the New York and New Jersey area, we have an hour and 

nine minutes. Same fundamental activity, putting those tractortrailer units together which requires some running of the engine to 

build up the air pressure, but the vast majority of that difference 

between 21 minutes and an hour and 9 is sitting in traffic, not 

moving, with the engine running. 

Mr. BROWN. So that is costing you about 10 percent of overhead, 

maybe even more, just sitting in traffic. 

Mr. HAAS. Correct, in that area, yes. 

Mr. BROWN. Right. 

Mr. Cardwell, in relation to the question I asked about the Panama Canal, do you have any advice for the eastern seaboard ports 

versus what is going to happen, I guess, when the Panama Canal 

comes with your experience on the West Coast? 

Mr. CARDWELL. My understanding is there is going to be a lot 

more freight going shipped from Asia directly to the East Coast 

versus stopping on the West Coast and going over, but at the same 

time you have the Port of Houston is expanding and growing. The 

Panama Canal is certainly going to give the ability to bring larger 

ships through, and they are going to, in turn, get paid to do that. 

So, again, there is going to be a lot more capacity that is going 

to be coming into New York and New Jersey as well as the West 

Coast. Again, we have to find a way of making, generating 1.5 million TEUs of capacity a year, and that may be one way of doing 

it because it is not all going to continue to go to L.A. and Long 

Beach. 

They have talked about how Seattle and Tacoma. Tacoma wants 

to grow from 2 million TEUs to 10 million TEUs. Seattle wants to 

go from two to four. However, there isn’t the rail capacity to deal 

with half of that growth. So it is going to eventually either there 

will be new ports crop up or they will find other ways of getting 

24 

to where they need to go, which is typically where the consumption 

is. 

I will just add one more thing. If we are going to think outside 

the box as far as new routes and new highways, again, a new rail 

mile is less expensive than a new highway mile. I think we need 

to think about the whole package of water, rail and highway. 

Mr. BROWN. I think with the reauthorization of the new highway 

bill, I think that is going to be the total, also including air as part 

of that formula too. 

Thank you very much, gentlemen. 

Mr. DEFAZIO. I thank the gentleman. 

On the Democratic side, we now turn to Mr. Lipinski. 

Mr. LIPINSKI. Thank you, Mr. Chairman. I would like to thank 

you for holding this hearing today. 

It is really good to hear from out witnesses and thank you for 

your testimony. This is a really critical although, unfortunately, 

overlooked aspect of our economy and how important it is to our 

Country. 

Thank you for your testimony on this and really talking about 

having a greater investment and smarter investment in our transportation infrastructure. 

In particular, I would like to recognize Mr. Haas who is the Vice 

President of Transportation at the UPS facility in my district in 

Hodgkins. I will be going past there at least four times the next 

couple days. 

I think that it is no coincidence here that after the Chairman’s 

questions on the Democratic side, we had a Representative from 

the New York-New Jersey area and a Representative from California. Well, now it is time for one of the other hubs that is really 

seeing issues with congestion in Chicago. 

I would like to ask Mr. Haas, where do you think we should be 

looking in terms of investing in transportation infrastructure in the 

Chicago area? 

It is very important for certainly my district and the people who 

live in the Chicago area to improve the situation with the congestion, but it is also critical for the Country, Chicago being the hub 

for rail, roads and also aviation although that is not included in 

here. 

I really think we have a great opportunity with Chairman 

DeFazio’s leadership and Chairman Oberstar’s leadership on the 

next highway bill to really do something significant. 

Mr. Haas, what do you think is most important to invest in, in 

the Chicago area? 

Mr. HAAS. Okay, two things really, Congressman, on the rail 

side. 

The scenario that I painted earlier this morning when the westbound train is leaving to Chicago, what typically happens, and I 

know you have seen this, is that the Chicago-land area is such a 

thoroughfare for railroads in general, that when one of those railroads has an issue—it could be 200, 300 miles from Chicago—there 

is not enough capacity in that network so that it starts to back up. 

When one is late, there is another behind it. There is another behind that. They all converge on the City of Chicago, and everything 

comes to a grinding halt. 

25 

You have sat at the crossroads just like I have and waited forever for these freight trains to come through there. That just sends 

a ripple effect that I have to believe that everyone else in Chicago 

who uses the railroads feel the same impact. 

Everything in my system backs up. A lot of it is timed and scheduled to take advantage of off times during the day for highways. 

When that scheduled gets thrown off, it just throws fuel on the fire, 

for lack of a better term. 

So, initially, I think this highway infrastructure improvement 

issue to be addressed. I mentioned earlier the possibility of a trust 

fund for the railroads. My intuition is they are not entirely in favor 

of that at this point, but done correctly, I think it is the right thing 

to do. 

Then from a highway standpoint, again, you and I travel back 

and forth on the same highways and byways, I am sure, during the 

rush hour in Chicago. 

I don’t think it is any different from the major hubs of activity 

you see up there, but an investment in the Chicago-land area that 

is a public-private partnership—and I know that you are thinking 

of a project right now that is very familiar to you called CREATE— 

would be a nice, efficient way of using a combination of public policy and private investment. I know that is not fully funded, it may 

never be, but in my opinion that is the right path to take. 

Mr. LIPINSKI. We are talking about CREATE. What about anything in terms of highway projects that you think would be helpful 

in the area to ease the congestion? Is there anything particular? 

Mr. HAAS. Specific routes, you mean? 

Mr. LIPINSKI. Yes. 

Mr. HAAS. Well, I think what is going on, and this is not going 

to mean much to the rest of the people in the room, but I think 

what is going on I-88 right now. As you know, all the growth from 

Chicago is going west and northwest. So that artery from downtown the western suburbs, there are current expansion plans or 

current expansion going on there right now. 

I got to believe that the other artery that is going to cause us 

bigger issues going forward than we recognize right now is 290 

going up to the northwest, if you are looking for specific arteries. 

Mr. LIPINSKI. Certainly, any congestion that is going on in Chicago area has the impact with all the traffic that comes through, 

has an impact on freight movement through the entire Country. So 

I think all those are important. 

As I said earlier, I think it is a great opportunity that we have 

in this next transportation bill to very smartly invest in transportation and to really have a national plan in terms of a vision of 

what we should be doing to help move freight through the Country. 

I thank all the witnesses for their testimony. 

Mr. DEFAZIO. Okay, thank you. 

All right, we would now turn to Mr. Arcuri. 

Mr. ARCURI. Thank you, Mr. Chairman, for convening this hearing and, gentlemen, thank you very much. I found your comments 

very informative. It has been a real learning experience for me, and 

I appreciate your input here and your testimony. 

A couple of points that I would like to ask you about: We talk 

a lot around here about globalization, and we talk about how effecVerDate Aug 31 2005 12:00 Jun 29, 2009 Jkt 000000 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 P:\DOCS\42134 JASON
26 

tive it is in terms of bringing cheaply made products into this 

Country from other places, places like China. 

Listening to you, it certainly strikes me as the fact that while we 

may be getting our widgets pretty cheaply from China, the cost is 

dramatically rising of getting those widgets to the consumers, the 

John Q Public in America. Eventually, the cost of getting them, if 

we don’t do something, from where they are made in China to the 

people is going to be higher than the actual cost of production and 

eventually make it probably be what many of us would like to see 

and that is promote domestic production of some of these things. 

Do any of you have a comment on that? 

Mr. UREMOVICH. Perhaps Mr. Mullett from TRB can address this 

as well, but I think if you look at the numbers over the last, let’s 

say, 10 or 20-year period of time, you will find that the transportation or logistics component of total cost has come down dramatically. As a result of increasing productivity in the freight business 

itself as well as the removal of some regulatory barriers and things 

like that, I think it has actually come down. 

Now that doesn’t speak to the most recent, let’s say, last year 

spike in fuel prices which may change things rather dramatically 

in the longer term where that is concerned. 

Perhaps Mr. Mullett has something. 

Mr. MULLETT. I can’t answer about the globalization notion, 

though I think that if you look back over time that as transportation got faster and more efficient and we kept less inventory, we 

were able to source things and use markets that were international 

and truly international. 

Your comments are right, that freight transportation and logistics have continued to drop as a percentage of GDP and goods sold 

until the last couple years. Most of that trend started to change pre 

the spike in fuel and oil prices. So that is, in large part I think, 

attributable to congestion and lack of capacity that puts strain on 

the system. 

When we get this shifting back and forth between is it in inventory or is it in movement and just in time, it becomes very, very 

scary to people that are involved in purchasing internationally because those lengthened supply chains have more risk. 

Now is that risk enough to cause them to start moving things 

back to the United States, back to North America from where they 

have been purchasing and selling now? I don’t know, but I do anticipate that those kinds of shifts will continue to take place over 

time. I don’t know that there are any models that accurately predict how that would happen or how we might be able to influence 

that. 

Mr. ARCURI. Thank you. 

Those comments, I think, bring me to the point that I think is 

the most important point, the question that I have. That is that I 

am looking at some of the background from the hearing, and I am 

looking at Hudson Institute projection that was made that showed 

the annual growth from 2000 to 2020. It shows that air freight will 

probably increase by 4 percent—this is their prediction anyway— 

trucking, 2.5 percent; rail, 2 percent; and barge, 0.7 percent. 

Now what I find interesting about that is that the two that are 

going to increase the most are probably the two most dependent 

27 

upon fuel prices. As the fuel prices continue to go up, where do 

these projections sit? 

We try to make decisions here in this Committee as to where to 

focus our limited resources. If we are focusing our resources in a 

place that projections are saying are going to increase, like let’s say 

on the roads, but gas goes up so dramatically that it may not be 

the most effective and efficient way to do it. So what we need is 

input. 

Fuel prices probably aren’t going to go down. I mean we may see 

some fluctuations. We are certainly hopeful about it, but that may 

not happen. So what we need, I think, is some help from people 

you and your business to tell us where do you anticipate the future 

being in terms of moving your products. 

I mean that is the big question. That is what we are trying to 

determine. With limited amount of resources, where do we put it? 

Do we put it in fixing our roads, do we put it in improving our airports or do we put it in improving the rail? 

I don’t mean to put you on the spot, but therein I think is the 

real conundrum for us in terms of where do we focus our resources. 

Do any of you have any thoughts on that? 

Mr. UREMOVICH. I can’t speak specifically to the Hudson study 

because I am not familiar with the numbers and whether they are 

talking ton miles or dollars or how they took it. 

The freight business, generally speaking, moves relatively slowly 

in its changes in modes. The last big shift was the shift to 

containerization and domestic containerization in the late sixties, 

seventies and early eighties. I think that was the last major big 

shift. 

So I don’t know whether. I don’t see anything from our perspective that would significantly alter the kinds of growth patterns in 

spite of the fuel situation, at least insofar as it exists today. I mean 

if it doubled or tripled from where it is today, everything obviously 

would be out the window. 

I don’t see anything that is going to cause a massive modal disruption that would be inconsistent perhaps with what the folks at 

the Hudson Institute or elsewhere. 

Mr. ARCURI. But I mean if the gas prices continue to rise, the 

ability to bring in cheap products from places like China is definitely going to affect, I think, demand. 

Mr. UREMOVICH. Perhaps, it might. It would most likely first affect modal shift. It would probably move more traffic toward the 

intermodal system because that is roughly three times as efficient 

from a fuel perspective as over-the-road truck. 

That doesn’t work very well where you are in short-haul lanes, 

all right, the last 100 miles, your last 200 miles, 300 miles. It is 

much more difficult. 

Again, there are a whole bunch of tradeoffs here, and my crystal 

ball is certainly not clear enough to describe where that is going 

to come out. 

Mr. CARDWELL. I was watching the Business Channel this morning, and actually they were talking about the food shortage and the 

cost of food. Actually, over the last six months, the transportation 

of food has gone from 5 to 10 percent of the cost of producing the 

food. 

28 

To answer your question, I think we need to invest in all the 

modes. Again, there isn’t one fix to have just a highway package 

or just a rail. I think it is a combination of all of them that are 

going to get us out of this. 

It is just going to continue to grow, and it is just going to continue to get bigger. There is no one magic button to say let’s invest 

300. California has a $2 billion bond package that is coming out, 

and the majority of that is going into multimodal transportation. 

I just think we need to think more about multimodal. The railroads are great for the long haul, but that last 100 miles becomes 

extremely difficult. What are we going to do within that last 100 

miles? What are we going to do intrastate to help out? 

Mr. HAAS. Congressman, can I answer? 

Mr. ARCURI. Yes. Go ahead. 

Mr. HAAS. I think I understand the depth of your question. We 

are struggling with it a little bit up here as you can tell. 

I think whether the product is made in Southeast Asia or, based 

on rising fuel costs, it comes back to the Southeast United States, 

if we want this economy to continue to be the robust world leader 

that we expect it to be, those goods have to move to the end consumer, to your point about the last 100 miles. 

No matter what the shifts are in the economics in this global 

economy that we live in, this Nation has to have a transportation 

infrastructure that moves it no matter where it is made. That is 

really what we have been talking about all day. 

I am not trying to dismiss your point. 

Mr. ARCURI. No, no. I understand. 

If I may, thank you, Mr. Chairman? 

You mentioned earlier you hope that we here in Congress don’t 

do things that hurt you, that we sort of give you the room to expand. Well, we have to look into our crystal ball, and we have to 

make determinations because there is a limited amount of resources that we have to apply, and we have to decide in which way 

to apply them best. 

So, please understand, I am not trying to be difficult, but I am 

trying to get some input from you as to what ways you believe 

would be the best for us to focus the limited resources, your tax 

dollars, that we have to apply to improve, so we can get the goods 

cheaply. 

Thank you, Mr. Chairman. I appreciate your indulgence. 

Mr. DEFAZIO. That was a good line of questioning. 

I would just observe, $2 billion for the eighth largest economy in 

the world, which is what California is, is a pathetic amount of 

money, just as the amount of money we are investing nationally is 

pathetic. 

When I took the Subcommittee to Europe, I think one of the most 

telling statistics, and it doesn’t go to the particular issue before us 

today, but it is very telling. One second tier city in Europe, Barcelona, is investing almost as much money in one subway line than 

the entire United States of America is investing Federally in transit. Now that is kind of pathetic. 

So we are heading toward third world infrastructure which is 

something new. Formerly first world infrastructure quickly fell to 

29 

the bottom of the heap with the levels of investment we are putting 

in nationally. 

Two billion dollars may sound like a lot of money, but in the 

California economy, it is nothing. Better than nothing, I guess, but 

not much. 

Ms. Hirono. 

Ms. HIRONO. Thank you, Mr. Chairman. 

I hear all of you saying that what we should be focusing on is 

really an intermodal transportation system nationally. I think with 

the jurisdictional scope of this Committee as well as the full Committee, I hope that our decisions will be informed by that kind of 

perspective. 

I was particularly interested, Mr. Haas, in Mr. Eskew’s Getting 

America Moving Again article as we were talking about how best 

to move freight as well as, in my view, passengers. I was interested 

in item five which says that we should use technology to make 

more efficient use of what we already have, and I am wondering. 

For example, in Hawaii, we have gridlock on every island but 

particularly on Oahu, and it occurs to me that we should be using 

technology to keep traffic moving. 

I am wondering, do you have any information as to how well the 

States and localities are doing at implementing these kinds of technologies at least to keep things moving on what we have now, our 

highway system now? 

Mr. HAAS. I think with respect to point number five, I believe it 

was, Mike makes two points in that article. One is that there are 

systems out there to monitor traffic electronically. If we had this 

loop technology embedded in our highways, we could predict ahead 

of time where the traffic congestion is and give commuters and 

businesses like ours, options to bypass that traffic before we get 

into it. 

With respect to your question about how we are doing with that, 

I am not aware that we are doing very well at all. That is just a 

concept that we know works, that is out there but not being used 

on any large scale that I am aware of. 

The second point he makes is wrapping goods with technology, 

meaning that this lean supply chain that we have talked about a 

couple of times is enhanced by making sure that the goods that are 

moving are wrapped in technology, so you can make decisions on 

the fly. 

One of the benefits of that is to keep it moving at all times, so 

you are not warehousing product, meaning that I move product 

from Point A to a warehouse, warehouse to Point B. I go from Point 

A to Point B, and it takes congestion off our highway systems, one 

movement instead of two. 

Ms. HIRONO. I think it is really important where the technology 

is already there that we do everything we can to encourage the 

local and State Governments to utilize those technologies. 

Then I was also looking at number eight, increase modal capacities, and what leaped out at me was the statement regarding making capacity, increasing capacity. He gives an example of Asian 

ports handle 18,500 containers annually per acre a facility whereas 

our ports only average just 3,900 containers. What the major reasons for this kind of a difference in terms of handling capacity? 

30 

Anybody? 

Mr. UREMOVICH. In one of my prior lives, I was Vice President 

of American President Lines in California, and we saw exactly the 

same kind of productivity differences. A lot of it had to do with 

they work the ports 24 hours a day, 7 days a week in Asia. They 

have work rules for a whole variety of reasons that make it more 

efficient in terms of a throughput basis, and that has not changed. 

As you probably know, we are in the midst now and have just 

begun the negotiations of the West Coast labor agreements with 

the ILWU. So that has started. 

But a lot of it had to do with structural barriers around the labor 

rules and working, the speed with which the folks worked on the 

docks, fundamentally. 

There was not a technological difference, though some of those 

ports are smaller. So they tend to have greater throughputs per 

acre just because that is the way the arithmetic works, and ours 

tend to be spread out a little more and be wheeled operations as 

opposed to grounded operations, primarily. 

Ms. HIRONO. If you are saying that most of this is due to labor 

issues? 

Mr. UREMOVICH. There are a variety of issues. Among some of 

them are the way the ports are designed because, as I described, 

in the U.S., many of the ports are wheeled operations as opposed 

to grounded operations. So you tend to use land less efficiently, but 

you use other things more efficiently. That is not the only measure 

of throughput in a terminal. 

Secondly, yes, there were significant differences in the way the 

work rules are structured. 

Ms. HIRONO. I don’t want anyone to get the impression that 

hard-fought labor gains are what we are going to look at to make 

our ports more efficient. 

I think that is all the questions I have for now. This has been 

a really informative hearing, and I thank all of you very much for 

your testimony. I yield back. 

Mr. DEFAZIO. I thank the gentlelady. 

Unless Members have further questions or there is something 

that someone on the panel feels was said that they really want to 

enumerate further, if not, then I will thank you for your time and 

your testimony. When you come up with a grand idea on how we 

put this all together, I would be happy to take credit for it and insert it in the next bill. 

[Laughter.] 

Mr. DEFAZIO. Thank you very much. 

The Committee stands adjourned. 

[Whereupon, at 12:40 p.m., the Subcommittee was adjourned.] 

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73 

Æ 


42134.049