Source: https://www.everycrsreport.com/reports/R44367.html
Timestamp: 2019-04-25 08:00:34+00:00

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This report provides an overview of federal planning and funding for freight transportation infrastructure, namely for trucks, railroads, and vessels. The report also discusses the relative performance of these modes in carrying the freight burden and examines the decline in the waterborne share. Congestion is a concern to different degrees for the three modes. freight, cargo, truck, rail, maritime, barge, shipping, port, congestion, infrastructure, RRIF, train, locks, inland waterways, army corps, dredging, harbor, surface transportation board, STB, jones act, cabotage, railroad, highway, longshore, marine highways, Title XI, shipyard, shipbuilding, ship construction, intermodal, Jones Act, FAST Act, P.L. 114-94.
The National Truck Network comprises 209,000 miles of highways that can accommodate large trucks, including the 47,000-mile Interstate Highway System.
Railroads, largely in private ownership, carry freight on 140,000 miles of track.
Barge and ship lines utilize 12,000 miles of shallow-draft inland waterways and about 3,500 inland and coastal port terminal facilities.
Air carriers provide cargo service to more than 5,000 public use airports, including more than 100 airports that handle all-cargo aircraft.
One of the freight policy goals stated in the 2015 surface transportation law, the Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94), is "to improve the flexibility of States to support multi-State corridor planning and the creation of multi-State organizations to increase the ability of States to address multimodal freight connectivity." Addressing major freight bottlenecks with federal grants can be difficult politically because it entails allocating large sums to relatively few, narrowly defined geographic areas. Also, federal funding decisions in freight transportation have the potential to create winners and losers. For example, a federal expenditure to deepen one harbor but not another could shift the flow of freight and the location of business investments and jobs.
The important role of multi-modal transportation in freight movement creates a particular challenge in setting spending priorities. Federal transportation programs are typically focused on a single mode; surface transportation, aviation, and maritime programs are authorized in separate laws and overseen by separate agencies within and outside DOT, complicating assistance to multi-modal projects, which are common in freight infrastructure. Recent changes in law have sought to reduce this artificial separation of transportation modes by allowing limited funds raised by federal taxes paid by highway users to be spent on projects that benefit entities such as railroads and water carriers, but this raises questions about the equity of cross-subsidization.
Source: Commodity Flow Survey 2017 (preliminary data), Table 1a, U.S. Census Bureau and Bureau of Transportation Statistics. Survey covers U.S. based shippers' outbound freight; it therefore excludes imports, but includes exports up to the exit point from the United States.
Note: One ton-mile equals one ton of freight shipped one mile.
Congress directed that $1.2 billion per year of federal funds apportioned to the states by formula be used for projects on this designated freight network.8 It also specified that up to 10% of a state's apportionment may be directed toward projects "within the boundaries of public or private freight rail or water facilities (including ports); and that provide surface transportation infrastructure necessary to facilitate direct intermodal interchange, transfer, and access into or out of the facility."
In addition, the FAST Act created a competitive grant program for freight projects of about $900 million per year.9 Public entities, including states and groups of states, MPOs, local governments, port authorities, and tribal governments, may apply for these funds to build highway projects, railway-highway grade crossing projects, connections to ports and intermodal freight facilities, and elements of private freight rail projects that provide public benefits. Although these competitive grants may provide no more than 60% of a project's cost, other federal assistance can be used to provide up to a total of 80%.
Congress removed most federal oversight of railroad freight rates in the 1980s. While freight railroads publish rates that are available to any shipper, most railroad freight moves at rates agreed in confidential contracts between railroads and shippers. In those contract negotiations, railroads seek to charge rates that will cover the cost of maintaining and improving their infrastructure, pay for operations, and provide a profit.
The Surface Transportation Board (STB), an independent agency, judges the reasonableness of rail rates in markets where the railroad is determined to have "market dominance," generally where a shipper is served by only one railroad and cannot ship economically by truck or water. The STB is tasked with balancing the need for railroad revenues adequate for reinvestment with the need for competitive rail rates and service. When Congress reauthorized the STB in 2015, it expanded the board from three to five commissioners and modified procedures with the intent of making the rail rate review process faster and less costly.13 Some STB practices may be outdated, according to a study by the Transportation Research Board requested by Congress. The study found that a number of STB practices and procedures date back to the period before rate deregulation in 1980.14 A controversial petition before the Board is "reciprocal switching," requiring rail carriers to hand off cargo to competing railroads at more interchange points than they do currently.15 The petition was filed by bulk shippers and is opposed by intermodal (containerized) shippers.
While Congress has largely left it to the states to determine which highway infrastructure projects will receive federal funding, it is closely involved in determining which navigation infrastructure projects will be funded. Project funding is controlled through authorizations of and appropriations to the U.S. Army Corps of Engineers' Civil Works program.17 The Army Corps builds, maintains, and operates locks, dredges channels, and builds and maintains breakwaters to support both inland and deepwater navigation. Federal funding is focused on the "waterside" portion of marine infrastructure; "landside" infrastructure—that is, terminal infrastructure on port grounds—is primarily funded by private terminal operators and publicly owned port authorities, and ultimately paid for by charges on carriers and shippers.
Enlargement of the Panama Canal has spurred interest in deepening ports on the Atlantic and Gulf coasts to accommodate larger ships, as has lifting of the crude oil export ban for some Texas ports. Since ship operators pay none of the cost of dredging, they do not consider this cost when calculating the costs and benefits of larger ships. Yet only a handful of "load center" ports can realistically expect to see larger container ships or tankers.23 Under the present financing method and planning process, each port deepening project is initiated at the local level and evaluated in isolation from other port projects, potentially leading to excess port capacity in a region or nationally. However, this approach allows communities to determine their harbor's development.
In addition to banning foreign-built ships in domestic waterborne commerce, the federal government supports domestic shipbuilding with loan guarantees and grants. The Title XI program (46 U.S.C. §53702) provides loan guarantees to vessel operators for the purpose of financing the construction of vessels in U.S. shipyards. Loan guarantees cannot exceed 87.5% of the project's cost, and the repayment period cannot exceed 25 years from vessel delivery. A 2015 DOT Inspector General audit found $644 million in default under this program.26 Congress requested an additional audit in the National Defense Authorization Act for FY2019 (P.L. 115-232, §3516).
The National Defense Authorization Act for FY2009 (P.L. 110-417) established the Assistance to Small Shipyards Grant Program. U.S. shipyards with less than 1,200 production employees are eligible to receive matching grants from DOT's Maritime Administration (MARAD) to finance capital improvements and equipment purchases. About $5 million to $15 million a year has typically been made available for this program annually, except that the American Recovery and Reinvestment Act of 2009 provided $100 million.
The Capital Construction Fund (CCF; 46 U.S.C. §53501) enables U.S. vessel owners to defer federal taxes by depositing their income in a CCF. Amounts held in a CCF may be used only to finance the construction, reconstruction, or acquisition of a vessel built or rebuilt in a U.S. shipyard. The fund is established by the ship owner subject to MARAD regulations and reporting requirements.27 About 180 domestic ship owners have established a CCF.
Under the Smoot-Hawley Act of 1930, U.S. vessel operators are liable for a 50% duty on maintenance and repairs performed on their vessels at overseas shipyards (19 U.S.C. §1466). The duty is intended to encourage U.S.-flag operators to perform repairs in domestic shipyards.
Congestion has been a prominent policy concern for truckers and truck shippers. Port congestion has been an issue for some international maritime shippers and periodically for rail shippers; congestion on some rail routes was severe in 2014, but has since abated. Coastal shipping has experienced a decades-long trend of declining volume.
Highway congestion frustrates trucking's ability to provide precise and reliable scheduling. Unreliability is costly because it requires manufacturers and retailers to carry buffer stock, reducing an efficient "just-in-time" logistics strategy to a "just-in-case" strategy.28 Highway congestion is particularly pronounced in major urban areas that contain important freight hubs such as ports, airports, border crossings, and rail yards. As identified by DOT, the 25 most congested segments for trucks are generally urban Interstate Highway interchanges.29 Five of the 25 most congested segments are in Houston. A trucking industry study estimates that 87% of the total costs of congestion for trucks is concentrated on 17% of the National Highway System.30 One difficulty in addressing infrastructure pinchpoints is that much of the benefit may flow to distributors and manufacturers located outside the state where the congestion occurs.
Diverting truck freight to rail and water modes is one possible means of mitigating congestion. While some long-distance truck freight has been shifted to rail, there are economic and policy obstacles to diverting truck freight to water, and short-distance rail freight is relatively costly. Although some industrial plants and warehouses continue to have direct rail service, in general railroads have shaped their networks to provide high-frequency service between rail yards, relying on trucks to move the freight between the rail yard and customer premises.
Railroads generally have room to increase capacity and reduce congestion by adding parallel tracks over much of their networks in rural areas. However, they face constraints in expanding their terminals in urban areas. The increasing popularity of intercity and commuter passenger rail services has placed additional demands on rail infrastructure. Some railroad operators have received federal, state, or local government support for infrastructure improvements that also benefit freight service in return for hosting more passenger trains.
Source: Bureau of Transportation Statistics, National Transportation Statistics, Table 1-50.
Notes: Lakewise is shipping on the Great Lakes. Internal is shipping on inland rivers.
Seagoing barges are more prevalent than ships in U.S. coastal service because they cost less to build and, due to Coast Guard regulations governing manning of vessels, require one-third to one-half the number of crew. Due to such cost differences, some domestic routes are served by barges instead of ships. In the 1980s, ships carried about 70% of domestic coastwise tonnage and barges carried 30%, but since then there has been a steady decline in coastwise ship tonnage, while coastwise barge tonnage has remained relatively stable (Figure 3).
Source: U.S. Army Corps of Engineers, Waterborne Commerce Statistics, National Summaries, Table 1-12.
Operating at slower speeds than ships, barges can operate economically only over shorter distances. As a result, the average haul in coastwise service has declined from around 2,000 miles in the 1980s to less than 1,000 miles today. Barges are also more limited than ships by sea conditions.
While coastwise services today are less efficient than in the 1980s, carrying less cargo tonnage but using more vessels and trips to do so, their modal competitors have been improving efficiency. Railroads carry 40% more tons per train today than they did in the 1980s by using larger railcars and longer trains, and pipelines carry more petroleum with less mileage by increasing pipe diameters.
The introduction of significantly larger container ships calling at the busiest U.S. ports has increased pressure for further automation and more rapid distribution of containers in and out of the ports. A handful of terminals have been redesigned around driverless cranes for sorting containers within the terminal. Longshore unions have been concerned about the potential reduction in workforce and change in the required skills as fewer workers are needed to operate equipment but terminals' demand for equipment mechanics and software engineers increases.
For additional freight statistics, see U.S. Department of Transportation, Office of Freight Management and Operations, Freight Facts and Figures, issued annually.
U.S. DOT, Draft National Freight Strategic Plan, 2015; https://www.transportation.gov/freight.
Government Accountability Office, Freight Transportation: Developing National Strategy Would Benefit from Added Focus on Community Congestion Impacts, September 2014, GAO-14-740, pp. 41-42, http://www.gao.gov/assets/670/665972.pdf.
National Freight Advisory Committee, Recommendations to U.S. Department of Transportation for the Development of the National Freight Strategic Plan, June 12, 2014, p. 8, http://www.dot.gov/sites/dot.gov/files/docs/NFAC%20Task%201-Recommendations%20for%20NFSP-Final%286-12-14%29.pdf.
Final results of the survey will be published December 2019.
For further information on highway funding programs, see CRS Report R44332, Federal-Aid Highway Program (FAHP): In Brief, by Robert S. Kirk.
FHWA, "Designation of the Primary Freight Network," 78 Federal Register 69520, November 19, 2013.
National Highway Freight Program, §1116 of the FAST Act.
Nationally Significant Freight and Highway Projects, §1105 of the FAST Act.
82 Federal Register 31135, July 5, 2017. Grant awards are shown at https://www.transportation.gov/buildamerica/infragrants.
§1437 of the FAST Act.
Association of American Railroads, Railroad Facts, 2017 edition, p. 15.
Surface Transportation Board Reauthorization Act of 2015, P.L. 114-110.
TRB Special Report 318, Modernizing Freight Rail Regulation, Washington, DC, 2015; http://onlinepubs.trb.org/onlinepubs/sr/sr318.pdf. The study was authorized in 2005 by P.L. 109-59 (§9007) and funded in FY2012.
Docket no. EP 711; https://www.stb.gov/Decisions/readingroom.nsf/%28search-192.168.46.10-13970%29?OpenView&Count=5000.
For further information on the RRIF program, see CRS Report R44028, The Railroad Rehabilitation and Improvement Financing (RRIF) Program, by David Randall Peterman.
CRS Report R45185, Army Corps of Engineers: Water Resource Authorization and Project Delivery Processes, by Nicole T. Carter.
CRS In Focus IF10020, Inland Waterways Trust Fund, by Charles V. Stern and Nicole T. Carter.
CRS Report R41430, Inland Waterways: Recent Proposals and Issues for Congress, by Charles V. Stern.
Transportation Research Board, Funding and Managing the U.S. Inland Waterways System: What Policymakers Need to Know, Special Report 315, National Academy of Sciences, 2015.
CRS Report R45211, Prioritizing Waterway Lock Projects: Barge Traffic Changes, by John Frittelli.
For further information, see CRS Report R43222, Harbor Maintenance Finance and Funding, by John Frittelli.
Load center ports refers to the practice of ocean carriers consolidating port calls at a limited number of ports because of the cost of terminal infrastructure.
Title 46, U.S. Code, chapters 81, 121, 551. There are certain exceptions to the requirements.
CRS Report R43653, Shipping U.S. Crude Oil by Water: Vessel Flag Requirements and Safety Issues, by John Frittelli.
DOT IG, "Weak Internal Controls For Collecting Delinquent Debt Put Millions Of DOT Dollars At Risk," Report No. FI-2015-065, July 9, 2015; https://www.oig.dot.gov/sites/default/files/DOT%20Delinquent%20Debt%20Final%20Report%5E7-9-15.pdf.
Just-in-time is a strategy of reducing inventory costs by increasing the timeliness of deliveries.
U.S. DOT, Freight Facts and Figures 2017, Table 4-2, p. 4-3; https://www.bts.gov/bts-publications/freight-facts-and-figures/freight-facts-figures-2017.
Transport Topics, "Congestion Creates $74.5 billion Burden for Trucking," October 18, 2018.
See testimony of BNSF and Canadian Pacific railroads at STB hearing on U.S. rail service issues, April 10, 2014; http://www.stb.dot.gov/TransAndStatements.nsf/8740c718e33d774e85256dd500572ae5/a3e019b85169e49285257d27006bc689/$FILE/final%20transcript%20for%20April%2010%202014-%20EP-724.pdf.
According to one analyst, this decline is due to a combination of lower well production, Alaska state taxes, and the cost of ocean transportation; John M. Miller, The Last Alaskan Barrel, An Arctic Oil Bonanza That Never Was (Anchorage: Caseman Publishing, 2010).
North American Transportation Statistics Interchange (NATS), http://nats.sct.gob.mx/language/en/; USACE, Waterborne Commerce Statistics, http://www.navigationdatacenter.us/wcsc/wcsc.htm.
Private owners of railroads and pipelines also must pay property taxes on their rights-of-way, in addition to paying directly for their maintenance costs.
CRS Report R44831, Revitalizing Coastal Shipping for Domestic Commerce, by John Frittelli.
83 Federal Register 22993, May 17, 2018.
46 U.S.C. §8104(d) and (e)(1).
National Research Council, Crew Size and Maritime Safety (Washington, DC: National Academy Press, 1990), pp. 39-40, 77-78.
See the Energy Independence and Security Act of 2007 (P.L. 110-140) and the National Defense Authorization Act for FY2010 (P.L. 111-84). MARAD's marine highways website; http://www.marad.dot.gov/ships-and-shipping/dot-maritime-administration-americas-marine-highway-program/.
§405 of the Coast Guard and Maritime Transportation Act of 2012 (P.L. 112-213).
Parsons Brinckerhoff, "East Coast Marine Highway Initiative M-95 Study," October 2013.
Written testimony of Katie Farmer, BNSF Railway Co., Senate Committee on Commerce, Science, and Transportation, Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security, Hearing on "Keeping Goods Moving," February 10, 2015.
A metric for measuring truck wait times can be difficult, as truckers have disputed the accuracy of Customs and Border Protection's wait times at land border crossings.
FMC Supply Chain Innovation Team Final Report; https://www.fmc.gov/supplychain.aspx.

References: §53702
 §3516
 §53501
 §1466
 §1116
 §1105

§1437
 V. 
 V. 
 §8104

§405